Dr. Mark McClellan, Administrator for the Centers for Medicare and Medicaid Services, drafted a letter this week to two House Republicans laying out his agency's plans to implement a pay-for-performance system for Medicare providers. McClellan's letter was in response to House Ways and Means Committee Chair Bill Thomas (R-Calif.) and Rep. Nancy Johnson (R-Conn.) June 16th request for help with efforts to move Medicare toward such a program. In his response, McClellan provided specifics on the development of quality indicators, reporting systems and the size of incentives necessary to encourage reporting. Medicare hopes to have performance measures for specialties that account for 90% of physician spending. He said providers might need only "limited adjustments" in pay as incentive, noting increased payments of 0.4% were sufficient to persuade hospitals to submit quality data. CMS is planning to launch a pilot test using claims data to measure physicians' use of health care services and soon will use the data to compare physician's performance.