Many OECD countries are experimenting with new methods of providing incentives to providers to improve the quality of health care, often known as “pay for performance” (P4P). Yet it remains unclear – in part due to a lack of good data – whether these new ways of paying providers (hospitals, primary care, integrated systems) significantly improve the quality of care and increase value for money in health. Experience to date suggests that it is possible to improve quality and efficiency by paying for it, for example in public health interventions such as cancer screening, and in getting physicians to follow evidence-based guidelines for chronic conditions like diabetes and cardiovascular disease. This chapter looks at cases where P4P appears to be producing good results and analyses the numerous factors that affect the implementation of incentive programmes, such as the challenges involved in establishing quality measures, collecting data, and monitoring it for performance – a prerequisite for designing effective P4P schemes.