Grumbach et al13 analyzed survey responses from 766 physicians to determine the effects of payments that MCOs use, in addition to base compensation, to influence service use decisions and productivity. Their responses revealed that physicians believe that HMOs use financial incentives to influence productivity, service use (referrals and hospitalizations), the quality of patient care, patient satisfaction, and prescription use. Physicians reported that financial incentives in the form of bonus payments, on average, amounted to 7% of their median net practice income, or approximately $10 500. Fifty-eight percent of respondents who were eligible to receive incentive payments reported that these payments were linked to individual and group performance. Fifty-seven percent of respondents reported feeling pressure to limit referrals, and, of these, 17% believed that this pressure negatively impacted the quality of patient care. Respondents whose practices contained a greater share of MCO enrollees indicated that they felt more financial pressure to limit referrals and that this compromised the quality of patient care.