The Impact of a Merit-Based Incentive Payment System on Quality of Healthcare: A Framed Field Experiment

Abstract

We study the impact of a merit-based incentive payment system on provider behavior in the primary care setting using new experimental methods that leverage healthcare simulations with patient actors. Our approach allows us to exogenously change a provider’s incentives and to directly measure the consequences of alternative payment systems. Within our sample, we find that merit-based incentive payment systems increase the number of the incentivized measures met, but also lower quality of care through unintended effects on adherence to standards of care and patient satisfaction.