The impact of financial incentives on quality of health care

Milbank Q. 1998;76(4):649-86, 511. doi: 10.1111/1468-0009.00109.


Purchasers of health care could offer financial incentives to plans or providers in order to increase quality. Unfortunately, the current health care market, in which quality is rarely measured and there is no risk adjustment, actively discourages both plans and providers from maximizing quality, resulting in a poor overall level of quality, both in fee-for-service arrangements and health maintenance organizations. Health plans and providers will not focus on quality until mechanisms to correct for risk differences among enrollees can be developed. Although such risk adjustment will be the most important stimulus for quality, it should also be linked to improvements in information systems and agreement on a minimum benefits package, quality reporting standards, and financial solvency requirements.

Publication types

  • Comparative Study
  • Research Support, Non-U.S. Gov't
  • Review

MeSH terms

  • Delivery of Health Care / economics
  • Delivery of Health Care / standards
  • Evaluation Studies as Topic
  • Fee-for-Service Plans / economics*
  • Fee-for-Service Plans / standards*
  • Fee-for-Service Plans / statistics & numerical data
  • Health Maintenance Organizations / economics*
  • Health Maintenance Organizations / standards*
  • Health Maintenance Organizations / statistics & numerical data
  • Health Services Research
  • Humans
  • Morbidity
  • Patient Satisfaction
  • Quality Indicators, Health Care
  • Quality of Health Care / economics*
  • Quality of Health Care / statistics & numerical data
  • Reimbursement, Incentive*
  • Risk Adjustment
  • Treatment Outcome
  • United States