Pay-for-Performance (PFP) is becoming increasingly viewed as a viable means of responding to the ever increasing pressure for economy, continuity, and consistency in the delivery of health care. Pay-for-Performance is an important development in the move toward a more quality-driven health care system. The quality improvement mission of today's PFP programs is to provide realistic incentives encouraging physicians and hospitals to deliver quality health care in an efficient and cost-effective manner. Central to PFP is the enhancement of the essential patient-physician relationship. Existing guidelines developed by the American Medical Association, as well as guidelines published by the Joint Commission on Accreditation of Healthcare Organizations, describe how PFP programs work and how the various players in the health care system--physicians, patients, insurers, payers--are potentially affected by PFP. Several health plans have already adopted functional PFP programs. Overall, PFP programs show promise for improving the quality of care while helping to contain costs.