their field, in part because of lower income and increased workload (Moore and Showstack, 2003). An even further decrease in payments could exacerbate this problem. The problem may be compounded if decreased payments lead those already in primary care practices to leave the profession (Sox, 2003). Lack of acceptance may increase if providers are not consulted during the process of program implementation in order to allay some of these concerns.

The committee concludes that most providers have the capacity and desire to improve the care they deliver—an essential component of a successful pay-for-performance program. A lack of acceptance by providers would not only disrupt the management of a pay-for-performance program, but potentially hinder the entire quality agenda. If payers rely on pay for performance as a pathway to improving care and health outcomes, progress along that pathway will be forestalled if a majority of providers refuse to participate. Fundamentally, providers must believe in and accept the system not just because of the rewards they may receive, but also because they believe in its ability to advance the quality agenda. That goal will not be realized if action to achieve the system is delayed by a lack of acceptance of program terms among providers.

Forestalled Reform Efforts

If payers or policy makers focus too intensely on pay for performance as a major solution to the current inadequacies of the payment system, they may fail to recognize other mechanisms that might work as well or better. In the context of the need for pay for performance to be a learning system, as emphasized throughout this report, payers and policy makers should remain aware of other options that could enhance or replace pay-for-per-formance strategies. On the other hand, policy makers could decelerate progress by focusing too much on potential unintended negative consequences, diverting attention from the intended positive consequences of rewarding higher quality and better outcomes to improve the quality of care received by all Medicare beneficiaries. This is not meant to imply that the implementation of pay for performance should proceed without caution, but to emphasize that the possible unintended adverse consequences should not hinder progress.

Shifted Costs

Assuming the pay-for-performance program will involve a reduction in base payments (see Chapter 3 on use of existing funds), when Medicare pays less for a service, providers could try to shift those unreimbursed costs to the private sector. Cost shifting results when decreased reimbursements

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