There is little empirical information to support the assumption that pay-for-performance incentives will lead to improved quality of care. This project will evaluate the impact of the PacifiCare Health System's Pay-for-Performance program, which was launched in January 2003 in more than 200 group practices in California. The study will examine whether aligning payment with standards of care can: 1) improve mean performance for 10 quality measures; 2) reduce variation in quality among physician groups; and 3) have a spillover effect on other measures of quality not directly linked to financial incentives. Project staff will compare changes in the performance of group practices in California with practices in Oregon and Washington that are not exposed to such incentives.