learning system that is intrinsic to the design and activities of the program. Such a learning system would build on previous experiences and enable Medicare to better fulfill its congressional mandate to serve beneficiaries. In addition, it is expected that the private sector would closely attend to the Medicare experience, supporting the government’s mission to articulate national goals and leveraging private resources in concert with the public program. Conversely, the absence of a scientifically valid, comprehensive, integrated, and flexible system—one that facilitated learning from experience—would likely contribute to the failure of a pay-for-performance program. Aggressive actions are necessary now to take full advantage of the opportunity offered by pay for performance by increasing the knowledge base regarding the nexus of reimbursement, provider behavior, and quality of health care.

Recommendation 10: The Secretary of DHHS should implement a monitoring and evaluation system for the Medicare pay-for-performance program in order to:

  • Assess early experiences with implementation so timely corrective action can be taken.

  • Evaluate the overall impact of pay for performance on clinical quality, patient-centeredness, and efficiency.

  • Identify the best practices of high-performing delivery settings that should be shared with others to improve care throughout the nation.

This active learning system should be complemented by the identification of a more conventional research agenda through consensus among the major stakeholders and at the national level. This research agenda should address identified gaps in payment methodologies and the incorporation of new measures, and create the context for future investigations as actual experience with pay for performance raises new questions.


Performance measures will be used to evaluate the benefits of pay for performance and to identify the effects of its implementation on health outcomes. Ideal measures should have the following characteristics:

  • Pertain to the domains of interest—clinical quality, patient-centeredness, and efficiency.

  • Link to meaningful clinical outcomes.

  • Be clearly defined.

  • Be easily implemented.

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