Making pay-for-performance work in Medicaid

Findings from a Medicaid pay-for-performance (P4P) demonstration suggest that "money talks" only sometimes, when supportive program elements give it voice. In this paper we examine five Medicaid-focused health plans that implemented new financial incentives for physicians to improve the timeliness of well-baby care. By contrasting the experiences of plans with better and worse outcome trends, we identify key program features--including strong communication with providers and placing enough dollars at stake to compensate providers for the effort required to obtain them--taking into account the starting point. The findings also highlight barriers to improvement that future Medicaid P4P efforts should consider.