This study examined the pay-for-performance incentives used by medical groups for primary care and specialist physicians. Between March 2006 and March 2007, the medical director, president or senior administrator of 229 medical groups participated in a 35-minute structured telephone survey. The survey gathered information on two aspects of quality-based payment: The extent to which medical groups received pay-for-performance incentives based on quality and patient satisfaction; and the extent to which those medical groups compensate their primary care and specialty physicians with pay-for-performance incentives based on quality and patient satisfaction.

Key Findings:

• Nearly one-fourth of large medical groups surveyed pay their member physicians partially based on measure of quality and patient satisfaction.
• Fifty-two percent of large medical groups received bonus payments based on quality and patient satisfaction measures.
• For primary care physicians, bonuses averages 7.6 percent; for specialists, the average was 6.1 percent.
• Whether the medical group chooses to pay performance bonuses to its individual physicians is significantly associated with whether the medical group receives pay performance bonuses.

Overall, the survey found that the prevalence of external performance bonuses paid by insurers to large medical groups is larger than the prevalence of performance bonuses paid by the medical groups to the primary care and specialist physicians.