What it means to you: In the last five years, the number of pay-for-performance programs has nearly quadrupled, according to this report. Although the nearly 150 programs in place vary widely, at least half of the 75 that responded to the survey reported significantly improved clinical performance, and a third demonstrated cost savings.

The scoop: In the United States, most physicians and hospitals receive a standard amount of money for the work they do—regardless of the patient outcome and quality of service provided. This system doesn’t reward excellence or punish mediocrity, but offering bonuses for quality healthcare opens its own can of worms. Take a closer look.

· Read the risks and recommendations of pay-for-performance programs, proposed by Dr. Elliott Fisher — a member of the Institute of Medicine committee appointed to write “Rewarding Provider Performance: Aligning Incentives in Medicare.”

· Read a Modern Healthcare article that questions the motives and methodology used in popular pay-for-performance models.

Learn more: One state has made pay-for-performance work: California’s Pay for Performance Program, which was initiated in 2001. Read the program’s five-year report and its strategic plan for the next five years.