This article describes a performance-based quality evaluation program developed by a partnership of insurers for a nationwide preferred provider organization (PPO) which uses indicators to monitor for practice deviations from PPO standards representing four components of patient care--administrative efficiency, patient satisfaction, medical practice standards, and clinical outcome. Quality improvement efforts to eliminate deviant practices through indirect organizational strategies and direct communication with preferred physicians are also described. The program's strengths are its effective use of available data, its potential application to other organizations with a loosely connected network of providers, and its ability to simultaneously monitor care received over time by individual patients in various settings (hospitals, physician offices).