The report Rewarding Provider Performance,1 recently released by the Institute of Medicine, concludes that early experience with pay-for-performance has been promising and recommends that Medicare begin to phase in this strategy to foster comprehensive and system-wide improvements in the quality of health care. Even though the effectiveness of pay-for-performance in medical care has been evaluated in fewer than 20 studies and the conclusions on its impact have been mixed, the need for reform is so great that beginning to move cautiously in this direction has been endorsed by the panel involved in the Institute of Medicine's report.
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