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Pay-for-Performance Programs to Reduce Racial/Ethnic Disparities: What Might Different Designs Achieve?

The Issue

Pay-for-performance programs hold promise to improve the quality of health care while decreasing its costs, but they may have unintended consequences for minority patients. For example, providers may be motivated to cherry-pick patients whom they perceive as most likely to improve their quality scores, in turn reducing access for other patients. It may also be the case that initiatives reward well-resourced providers, leaving hospitals that serve large numbers of poor minority patients at a disadvantage.

What the Study Found

With Commonwealth Fund support, researchers used Hospital Quality Alliance data on more than 4 million patients at 4,500 hospitals to analyze the effects of different pay-for-performance designs on disparities in care between minority and white patients. The researchers found that many hospitals treat whites and minorities equitably. The top-performing hospitals in terms of quality had disparity scores—calculated as the quality score for whites minus the quality score for each minority group—of only 1 to 2 percentage points, meaning that the care provided to whites was only slightly better than that provided to minority patients. But many of these top performers provided an equal or better quality of care to minority patients.

The study also confirmed previous research that found minorities tend to be treated in hospitals that have poor quality scores. Therefore, pay-for-performance programs could have the unintended consequence of penalizing these hospitals and their patients.


Medicaid pay-for-performance programs should focus on both improving quality of care and reducing racial and ethnic disparities. One way is to use a two-stage approach in which a hospital is eligible for a reward for meeting an initial quality improvement threshold and then subsequently rewarded if disparities are reduced. "Until disparities in care are eliminated," the authors conclude, "it is important to ensure that pay-for-performance programs are implemented in ways that do not unfairly disadvantage facilities that care for the most vulnerable patient groups."

Publication Details



J. S. Weissman, R. Hasnain-Wynia, R. M. Weinick et al., "Pay-For-Performance Programs to Reduce Racial/Ethnic Disparities: What Might Different Designs Achieve?" Journal of Health Care for the Poor and Underserved, Feb. 2012 23(1):144–60.