Medicare must find new ways to achieve cost control without limiting access to beneficial services. We propose a payment model incorporating comparative effectiveness research to encourage Medicare to pay equally for services that provide comparable patient outcomes. The model would include higher payments for services demonstrated by adequate evidence to provide superior health benefits compared to alternative options. New services without such evidence would receive usual reimbursement rates for a limited time but then be reevaluated as evidence emerged. In spite of the substantial political hurdles to changing Medicare reimbursement, efforts should be made to use comparative effectiveness research to reward superior services, improve incentives for cost-effective innovation, and place Medicare on a more sustainable financial footing.