Types of Incentives for Performance-Based Payment Systems

Appropriate incentives represent an important component of performance-based payment systems. Research indicates the importance of establishing meaningful—as measured by the actual dollar amount—financial incentives (Bremer et al., 2008). The incentives should reward provider improvement on specific measures that are important to the overall success of the treatment program.

Three incentive categories include:

• Treatment Provider Incentives
• Data Collection Incentives
• Spread Project Incentives

The most common of the three are treatment provider incentives. However, a few states are starting to use organizational and administrative incentives to improve data quality and spread or to share innovative changes with peers and other key stakeholders.