Option 2: Physician Groups. Under this option, rewards for performance would be determined on the basis of the performance of groups of physicians. The group would be responsible for distributing the rewards, allowing for such options as investing some of the money in operational costs. There are advantages to this approach. For example, it would allow physicians to aggregate cases, addressing the issues of sample size and reward size that arise under option 1. Team-oriented care and shared accountability would also be promoted. Finally, rewarding groups could mitigate concerns about public reporting and the stigma of poor performance that arise in measuring the performance of and rewarding individual physicians. Therefore, this option may also enable more rapid implementation of a pay-for-performance program. A disadvantage of this option, however, is that holding specific providers responsible for the care of specific patients would be difficult. The distribution of rewards would be complicated, but this would be an issue for groups themselves to address. Another disadvantage of distributing rewards at the group level is that there is currently a disparity in clinical quality between care delivered by individual and small-practice physicians as compared with large physician groups (Bodenheimer et al., 2005). This method would likely increase that gap.

Option 3: Combination of Options 1 and 2. This option would initially reward physician groups until measures that could reliably assess care at the individual physician level were available. Physicians would be allowed to opt to be rewarded at either level during the transition to the long-term approach of using individuals as the unit of analysis.

(2) an advanced medical home;4 or (3) an integrated health care system. The responsible source of care would be accountable for the attribution of care delivered by the beneficiary’s various providers, as well as for the patient’s improved outcomes, safety, and efficiency. Being accountable for the patient would include being in charge of guiding the patient through the complex health care system, making referrals, checking for contraindicated medications, and having an integrated medical record with a complete medical history. The responsible source of care should be compensated for serving this function.


The definition used here has been modified to refer to multiple primary care practices linked through information technology systems that pool resources to support the structural capabilities needed to provide a coordinating function. Such structural capabilities include having nurse educators and dieticians. The term was originally developed by the American College of Physicians (ACP, 2006).

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement