A Randomized Controlled Trial of a Pay-for-Performance Initiative to Reduce Costs of Care for High-Need Psychiatric Patients

Objective: Pay-for-performance (P4P) initiatives hold promise for improving health care delivery but are rarely applied to behavioral health or tested in randomized controlled trials (RCTs). This RCT examined the effectiveness of a P4P initiative to reduce total cost of 24-hour care among patients with high needs for psychiatric care in a large county in California. Methods: From August 2016 to March 2022, a total of 652 adult residents of Santa Clara County, California, were enrolled in a P4P initiative (mean +/- SD age=46.7 +/- 13.3 years, 61% male, 51% White, and 60% diagnosed as having a bipolar or psychotic disorder). Participants were randomly assigned to usual full-service partnerships from the county (N=327) or a comparable level of care from a contractor who agreed to a schedule of financial penalties and rewards based on whether enrollees (N=325) used more or less care than a historical cohort of similar county patients. The primary outcome was total cost of 24-hour psychiatric services. Secondary outcomes were costs of each of the 24-hour care services. Results: The proportion of the total sample that used 24- hour psychiatric services decreased over the 36-month study period. Intent-to-treat analyses revealed no differences between the two study conditions in total care costs during the follow-up period. No significant care utilization differences were observed between the two conditions in most of the individual 24-hour services. Conclusions: A P4P initiative for high-need patients was no more effective than usual care for reducing costs of 24- hour psychiatric care. Psychiatric Services 2024; 75:863-871; doi: 10.1176/appi.ps.20230481