P4P: rumors of its demise may be exaggerated.

Although pay for performance (P4P) faces numerous challenges, it may be too soon to relegate it to the list of failed healthcare reform strategies. In practice, many payers understand the limitations of performance incentives and have made efforts to avoid the worst pitfalls through targeting provider organizations rather than individual physicians and directly addressing the needs of potentially vulnerable patient populations. Thoughtful design and implementation of P4P may therefore yield improved value with minimal negative consequences. Because of the critical role payment incentives play in guiding practice patterns, it is hard to imagine substantial reform of the delivery system without coordinated changes in payment.