Pay-for-Performance (P4P)

Pay-for-performance (P4P) is a remuneration system in which part of the payment is dependent on performance as measured against a defined set of criteria. Although a P4P system can be structured in several ways, the common elements to all systems are (1) a set of targets or objectives that define what will be evaluated; (2) measures and performance standards for establishing the target criteria; and (3) rewards—typically, financial incentives— that are at risk, including the amount and the method for allocating the payments among those who meet or exceed the reward threshold.