This proposal describes the California Physician Performance Measurement and Reporting (CPPMR) project, which will be conducted by the Pacific Business Group on Health (PBGH) in partnership with major employers, health plans, and consumer groups. The primary goal of the CPPMR project is to improve health care quality by stimulating market demand for high-quality physicians through the publication of individual physician quality and efficiency performance information. PBGH anticipates that market forces will direct health care purchasers and consumers to high quality physicians after reliable information is made available to inform their decisions. We also anticipate that physicians who do not perform well will be motivated to improve. In short, we feel that good information about physician performance plus market dynamics will lead to substantial improvements in health care quality. The CPPMR will use the AHRQ-supported RAND Health Quality of Care series, in combination with methodological advancements in physician-level performance measurement, to develop reliable and useful measures. We will use these measures and CMS claims data to develop indicators of physician quality and efficiency. The CPPMR measurement system will be based on improved methodologies such as modified episode of care methods and improved severity-of-illness adjustments. We anticipate that performance results will be generated for over 30,000 physicians in California. The CPPMR has the potential to directly improve health care for tens of millions of people. CPPMR results will be published through HealthScope.org, PBGH's consumer information website. The general public, will have access to quality and efficiency information about tens of thousands of California physicians. We anticipate that several large health plans - including Blue Cross of California, Blue Shield of California and United Health Plan - will make the information available to their members. The impact of the CPPMR will be expanded through the involvement of major consumer organizations such as AARP. While initially based on California data, the project can be considered a pilot that represents 10% of all Medicare claims data nationally. There are immediate and direct applications as a national model for CMS. National health plans and employers are involved as partners, so they will specifically consider how the quality and efficiency metrics and applications tested in California could be applied in other states.