Pay-for-performance is being applied at the physician level to stimulate improvements in qual- ity of care and cost efficiency; however, little is known about how physicians will respond. We interviewed physicians exposed to a financial incentive program in California to identify possible barriers to the successful application of financial incentives by exploring physicians’ opinions of and experiences with pay-for-performance programs. Reasons physicians cited for quality deficiencies included insurance coverage limitations and lack of patient compliance, time, and proper physician oversight. Physicians believe that they play a sig- nificant role and have a moderate to high degree of control over quality of care and that it is important to self-monitor. Physicians expressed the need for accurate and timely data, peer comparisons, and more patient time, staff support, and consultations with colleagues to successfully monitor and deliver quality care. Many support increased pay for deliv- ering high-quality care but question measurement accuracy, bonus payment financing, and health plan involvement. (Am J Med Qual 2006;21:367-374) Keywords: pay for performance; P4P; financial incen- tives for physicians Over the last decade, many studies have docu- mented substantial deficiencies in the quality of care delivered in the United States. 1-4 In a national exam- ination of the quality of care delivered to adults, McGlynn and colleagues 5 found that, on average, patients received recommended care only 55% of the time, and there was wide variation in adherence to clinically recommended care across medical condi- tions. 5 To close the quality gap, the Institute of Medicine (IOM) recommended the creation and align- ment of payment policies to support the delivery of quality care. 6 In the United States, a number of pay- ment reform experiments are under way in the public and private sectors that offer a variety of incentives to providers with the explicit goal of stimulating qual- ity improvements and reducing costs. For example, the Rewarding Results program, cosponsored by the Robert Wood Johnson Foundation and the California HealthCare Foundation, provided funding to 7 demonstration projects to design, implement, and evaluate incentive programs to reward physicians, medical groups, and hospitals for higher quality care. 7 Changing physician behavior is a key compo- nent to achieving improvements in quality of care. Although financial incentives are hypothesized to affect clinician behavior to deliver higher quality care, there is limited information about how best to design such programs or about their impact. 8 Much 367 AUTHORS’ NOTE: Dr Teleki is an associate policy researcher, Dr Damberg is a senior policy researcher, Ms Pham is a survey coordinator, and Ms Berry is a senior behavioral scientist, RAND Health. The authors have no affiliation with or financial interest in any product mentioned in this article. Financial support for this research came from the Robert Wood Johnson Foundation (RWJF) as part of the Rewarding Results initiative. The health plan and RWJF played no role in the design and conduct of the study or in the analysis of the data. Drs Damberg and Teleki designed the survey protocol, conducted the interviews, and ana- lyzed the data. Ms Berry conducted the focus groups and assisted with protocol design. Ms. Pham recruited physicians and coded data for analysis. Drs Damberg and Teleki wrote the manuscript and are the guarantors. Drs Damberg and Teleki had full access to the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis. No competing interests are declared. Ethical approval was granted from the Institutional Review Board of RAND. Corresponding author: Stephanie Teleki, RAND Corporation, 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 (e-mail: teleki@rand.org). American Journal of Medical Quality, Vol. 21, No. 6, Nov/Dec 2006 DOI:10.1177/1062860606293602 Copyright © 2006 by the American College of Medical Quality Will Financial Incentives Stimulate Quality Improvement? Reactions From Frontline Physicians Stephanie S. Teleki, PhD Cheryl L. Damberg, PhD Chau Pham, MS Sandra H. Berry, MA