Pay-for-performance initiatives in medicine are proliferating rapidly. Neonatal intensive care is a likely target for these efforts because of the high cost, available databases, and relative strength of evidence for at least some measures of quality. Pay-for-performance may improve patient care but requires valid measurements of quality to ensure that financial incentives truly support superior performance. Given the existing uncertainty with respect to both the effectiveness of pay-for-performance and the state of quality measurement science, experimentation with pay-for-performance initiatives should proceed with caution and in controlled settings. In this article, we describe approaches to measuring quality and implementing pay-for-performance in the NICU setting.