Health-care consumers, payers, and regulatory agencies have become increasingly concerned about the rising cost and perceived deficiencies in the quality of health care in the United States. Pay-for-performance initiatives, otherwise known as value-based purchasing, are gathering political and public support as a method to address these problems. The Centers for Medicare and Medicaid Services is moving rapidly toward a system in which reimbursement is linked to quality of care. Serving as a first step, the Medicare Physician Quality Reporting Initiative (PQRI) is a program that rewards providers for reporting their performance on certain quality measures. Participating providers receive a bonus equal to 2% of their entire Medicare reimbursement for the calendar year if they successfully report on at least three measures for 80% of relevant patients seen during that year. The performance data are submitted via specifically designated Current Procedural Terminology II codes that are added to the usual codes submitted on the billing claim. Physicians should strongly consider participating in PQRI because it is likely to form the framework for future pay for performance, in which the dollars at stake may be much higher.