In 1997, the New York State Department of Health began enrolling an estimated 1.7 million Medicaid beneficiaries into fully capitated managed care plans. That initiative was linked to the Quality Improvement Incentive program, a pay-for-performance approach. The proposed project will evaluate the impact of two interventions within that program: 1) the automatic assignment of Medicaid beneficiaries to managed care plans, whereby plans with better performance receive a higher percentage of auto-assignees; and 2) the adjustment of capitation rates based on plans' performance on 10 quality-of-care measures and five consumer satisfaction measures. As the first study of its kind to evaluate the impact of pay-for-performance in the public sector, it will help guide the evolution of performance-based payment programs in the state, while also providing information to other states about the value of this approach.