Which mechanism is designed to align reimbursement with quality and efficiency, often using targets for outcomes and costs?

• A. Pay-for-performance
• B. Capitation
• C. Fee-for-service
• D. Global budgeting

Answer: (A)

Pay-for-performance ties reimbursement to how well care is delivered, rewarding or penalizing providers based on measured quality and efficiency. The idea is to set targets for outcomes (like readmission rates, infection rates, or patient safety) and costs, then adjust payments to reflect performance against those targets. This creates a direct financial incentive to improve quality and control costs, encouraging care coordination, prevention, and value-focused practices.

Capitation pays a fixed amount per patient regardless of services, which emphasizes budgeting and cost control but isn’t inherently linked to quality targets. Fee-for-service pays for each service, encouraging more services rather than better outcomes. Global budgeting sets an overall spending cap for an organization, controlling costs but not typically tying payments to specific quality or efficiency metrics.