Pay-for-performance compensation: moving beyond capitation.

Although capitation has been instrumental in lowering healthcare costs, it also has generated growing concern about quality of and access to healthcare services. Shifting to pay-for-performance compensation programs, however, allows health plans and physicians to balance economic incentives and operational outcomes, which in turn encourages improved performance and benefits providers, payers, and patients alike. A successful pay-for-performance program requires selection of appropriate performance criteria, accurate assessment of the financial impact, development of an effective means of communication between the health plan and physicians, and gradual implementation of the plan.