Perverse Perceptions of the Impact of Pay for Performance on Healthcare Disparities
*James P. Scanlan, James P. Scanlan, Attorney at Law 

Keywords: healthcare disparities,pay-for-performance, disparities measurement

Pay for Performance (P4P) programs are increasingly discussed as means of improving healthcare and reducing costs. But concerns have been raised that such programs may increase healthcare disparities. It has therefore been suggested that effects on disparities be included as performance criteria in P4P programs. Such discussions, however, have overlooked the ways that, solely for reasons related to the shapes of the distributions of factors associated with experiencing a favorable event (whether receipt of a particular type or level of care or a favorable health outcome), standard measures of differences between rates tend to be affected by the overall prevalence of the event. There are four commonly used measures of healthcare disparities: (a) relative differences in rates of experiencing favorable events; (2) relative differences in rates of failing to experience those events; (c) absolute differences between rates: and (d) odds ratios. Sound P4P programs tend to increase overall favorable event rates. As that happens, relative differences in favorable event rates tend to decrease while relative differences in rates of failing to experience those events tend increase. For relatively uncommon events (less than 50% for all groups) increases in overall rates tend to increase absolute differences between rates; for relatively common events (more than 50% for all groups) increases in overall rates tend to reduce absolute differences. Differences measured by odds ratios tend to change in the opposite direction of absolute differences. Thus, choice of measure frequently will determine whether a healthcare disparity is regarded as increasing or decreasing. The failure to recognize the patterns by which the referenced measures tend to be affected by the overall prevalence of the event examined has already led to mistaken perceptions both in the United States and abroad about the impact of P4P on healthcare disparities. The adverse consequence of the failure to recognize the patterns will increase substantially if effects on disparities are included as performance criteria in P4P programs. This presentation will explain the above-described patterns in contexts of observed changes in various event rates over time and discuss the misperceptions that have arisen in those contexts. It will also explain a method for measuring healthcare disparities that is unaffected by the overall prevalence of the event at issue.