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Pay for Performance

Partner Institute: 
Department of Health Policy and Management, School of Public Health, Seoul National University
Survey no: 
(15) 2010
Soonman KWON
Health Policy Issues: 
Qualitätsverbesserung, Vergütung
Current Process Stages
Idee Pilotprojekt Strategiepapier Gesetzgebung Umsetzung Evaluation Veränderung/Richtungswechsel
Implemented in this survey? ja ja nein nein ja nein nein


Health Insurance Review and Assessment (HIRA) of the National Health Insurance applied pay for performance to 43 general hospitals for acute myocardiac infarction and caesarean section. Hospitals are classified into five categories in terms of (relative) performance measured by volume, process and outcome. Hospitals in the first (highest) performance group or those with improvement in performance during one year received incentive pay, which was 1 percent of the total reimbursement of the year.

Purpose of health policy or idea

To improve the quality of health care, HIRA (Health Insurance Review and Assessment), which is the claim review and reimbursement agency of the national health insurance of Korea, provided additional pay to hospitals with better performance. The pay for performance was applied to two services, namely Acute Myocardiac Infarction (AMI) and caesarean section.

  • For AMI, performance was measured in terms of volume (number of inpatient cases), process (use of thrombolytic agent within 120 minutes of hospital arrival), PPCI (Primary Percutaneous Coronary Intervention) after 120 minutes of hospital arrival, aspirin medication at hospital arrival, prescription of aspirin at discharge, prescription of beta blocker at discharge), and outcomes (mortality within 30 days).
  • Performance of C-section is measured by risk-adjusted C-section rate, which is a difference between actual C-section rate and the expected C-section rate, estimated taking into account patients' characteristics.

The performance of the 43 biggest general hospitals was first evaluated at the end of 2008 and then 2009. Additional reimbursement as a financial incentive was paid based on the result of the performance evaluation at the end of 2009.

Main points

Main objectives

To improve the quality of care

Type of incentives

Financial incentive

Groups affected

Providers, Patients


Characteristics of this policy

Innovationsgrad traditionell innovativ innovativ
Kontroversität unumstritten neutral kontrovers
Strukturelle Wirkung marginal recht fundamental fundamental
Medienpräsenz sehr gering recht hoch sehr hoch
Übertragbarkeit sehr systemabhängig systemneutral systemneutral

Political and economic background

Acute Myocardiac Infarction (AMI) and caesarean section are serious health care problems in Korea. Mortality of heart disease per 100,000 persons doubled to 30 in ten years. Caesarean section rate in Korea is greater than 30 percent, one of the highest in OECD countries, and the variations across hospitals and regions are still significant.

Purpose and process analysis

Current Process Stages

Idee Pilotprojekt Strategiepapier Gesetzgebung Umsetzung Evaluation Veränderung/Richtungswechsel
Implemented in this survey? ja ja nein nein ja nein nein

Origins of health policy idea

People are getting more and more interested in quality of care. The National Health Insurance, which has been concerned more and more with health care cost, has begun paying attention to quality issues and pay for performance, i.e., payment based on the evaluation of hospital performance in terms of quality. The Health Insurance started evaluating the clinical quality of care for AMI and C-section in 2008. At the end of 2009, health insurance used only financial incentives and gave additional reimbursement to high-performing hospitals and those with improvement in performance. In the next round of evaluation (at the end of 2010), the Health Insurance will also use disincentives and will cut reimbursement to hospitals from the lowest perfomance group.

Initiators of idea/main actors

  • Kostenträger

Approach of idea

The approach of the idea is described as:

Innovation or pilot project

Pilot project - applied to 43 hospitals

Stakeholder positions

Health care providers are opposed to the pay for performance. They criticize that the current fee schedule is already too low, and facing resource constraints, the Health Insurance will use the new policy mainly to reduce reimbursement. They are also concerned that the performance measures have limitations in measuring the true quality of care.

Actors and positions

Description of actors and their positions
Health Insurance Review and Assessmentsehr unterstützendsehr unterstützend stark dagegen
Ministry of Health and Welfaresehr unterstützendsehr unterstützend stark dagegen
Korean Hospital Associationsehr unterstützenddagegen stark dagegen
Scientific Communitysehr unterstützendsehr unterstützend stark dagegen

Influences in policy making and legislation

No need for legislation.

Actors and influence

Description of actors and their influence

Health Insurance Review and Assessmentsehr großsehr groß kein
Ministry of Health and Welfaresehr großsehr groß kein
Korean Hospital Associationsehr großgroß kein
Scientific Communitysehr großgroß kein
Scientific CommunityHealth Insurance Review and Assessment, Ministry of Health and WelfareKorean Hospital Association

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

In December 2009, pay for performance was applied to 43 big general hospitals for AMI and C-section. The hospitals were classified into five categories in terms of (relative) performance. Hospitals of the first (highest) performance group or those who improved performance during the previous year received an incentive pay, which was one percent of the total reimbursement of the year. In 2010, a reduction of reimbursement as disincentive will be introduced to low-performing hospitals, and the evaluation will be extended to more hospitals.

Compared to 2008, seven hospitals improved their performance regarding care for AMI-patients and five hospitals regarding C-section. For example, mortality and inpatient days have declined for AMI patients, and normal delivery has increased. For both services, variation in the performance of hospitals has declined thanks to the increase in the average performance of hospitals in the lowest-performing group. The results of evaluation were provided to hospitals and disseminated to the public through the website of HIRA ( The information is also provided to the National Emergency Management Agency for emergency service.

Expected outcome

Evaluation of the quality of care, provision of financial incentives, and dissemination of performance information will be a very effective policy to improve quality. Each hospital gets information about its quality level compared to other hospitals, thus has an financial incentive to improve quality, and faces competitive pressure to improve quality as consumers are provided with information on the performance of hospitals.

Impact of this policy

Qualität kaum Einfluss starker Einfluss starker Einfluss
Gerechtigkeit System weniger gerecht neutral System gerechter
Kosteneffizienz sehr gering high sehr hoch


Sources of Information

Author/s and/or contributors to this survey

Soonman KWON

Empfohlene Zitierweise für diesen Online-Artikel:

Soonman KWON. "Pay for Performance". Health Policy Monitor, December 2009. Available at