and the diversity of information systems and operational supports in various practice settings. Financial incentives adequate to ensure early and broad physician participation in the submission of performance measures and public reporting should be used. Consideration should be given to benefits such as linking accelerated payments or the physician annual payment update to public reporting. Initial measure sets for pay for performance may need to be limited in some physician settings. In establishing the size of the reward pools proposed above, CMS will need to strike a balance between providing financial incentives sizable enough to lead to near-universal participation and recognizing that initial measure sets are narrow, presenting an incomplete picture of a provider’s performance.

The transformational changes in the health care delivery system envisioned in the Pathways series of reports will depend upon the adoption of both longitudinal measures of quality that cut across settings and payment rewards that are substantial. The pay-for-performance strategy should move as soon as practical from a relatively narrow, provider-specific approach to a more comprehensive, longitudinal set of measures and substantial rewards that encompass all Medicare providers.

A monitoring system should be incorporated into the implementation process to inform future decisions about the pace of expansion of performance measure sets and make it possible to determine whether the voluntary approach initially recommended for physicians is achieving the goal of near-universal participation.

Recommendation 7: The Secretary of DHHS should develop and implement a strategy for ensuring that virtually all Medicare providers submit performance measures for public reporting and participate in pay for performance as soon as possible. Initially, measure sets may need to be narrow, but they should evolve over time to provide more comprehensive and longitudinal assessments of provider and system performance. For many institutional providers, participation in public reporting and pay for performance can and should begin immediately. For physicians, a voluntary approach should be pursued initially, relying on financial incentives sufficient to ensure broad participation and recognizing that the initial set of measures and the pace of expansion of measure sets will need to be sensitive to the operational challenges faced by providers in small practice settings. Three years after the release of this report, the Secretary of DHHS should determine whether progress toward universal participation is sufficient and whether stronger actions—such as mandating provider participation—are required.

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