Whereas numerous policies have been adopted to improve quality of care in nursing homes over the past several decades-with varying degrees of success-health care payment has been a largely untapped but potentially powerful policy tool to improve quality of care. Recently, however, payers have invested significant resources in the development and implementation of pay-for-performance (P4P) programs for nursing homes. The authors present results from a survey of state Medicaid agencies documenting the use and structure of P4P in nursing homes. Although the number of states that are implementing nursing home P4P is growing, the structure of these incentives varies across states, and little evidence exists to guide the planning or implementation of these initiatives.