Pay-for-performance (P4P) initiatives have been discussed since the early 1990s, but support for the concept has grown recently, fueled by experience with quality of care measures, endorsements by key players and research that underlines the need for quality improvements and reform to the physician payment system. This synthesis examines the evidence on P4P. Key findings include: About one-third of U.S. physicians already face quality-based incentives under their managed care contracts. These measures most often relate to clinical targets, efficiency, patient satisfaction and use of information technology, but apply to a limited set of specific diseases and preventive care services. While 80 percent of plans pay for meeting benchmarks, 20 percent pay for improvements in performance. Overall, incentive payments are small, averaging at most 5 percent of total payments. While large-scale, “real-life” research consistently shows improvement in quality indicators when P4P is in place, it is hard to disentangle the impact of P4P from that of other simultaneous quality initiatives. Evidence of P4P impact from small controlled studies has not been positive. Doctors are generally supportive of P4P but concerned about how well it can be implemented.