Analysis raises questions on whether pay-for-performance in Medicaid can efficiently reduce racial and ethnic disparities.

In 2006 Massachusetts took the novel approach of using pay-for-performance--a payment mechanism typically used to improve the quality of care--to specifically target racial and ethnic disparities in hospital care for Medicaid patients. We describe the challenges of implementing such an ambitious effort in a short time frame, with limited resources. The early years of the program have yielded little evidence of racial or ethnic disparity in hospital care in Massachusetts, and raise questions about whether pay-for-performance as it is now practiced is a suitable tool for addressing disparities in hospital care.