The Illinois Quality Incentive Program (QUIP) offers nursing homes a separate bonus payment per Medicaid day for achievement of each of 6 quality standards. Using data from 809 participating nursing homes between 1985–1988, this study found that over 90% of eligible facilities chose to participate annually. Success in achieving bonus payments in multiple standards increased over time, with 27% qualifying for 5 or 6 components by 1988. But the validity of the individual measures and the relationship between achievement of QUIP standards and resident quality was not firmly established. The resident satisfaction standard proved insensitive, with 92% of participating facilities qualifying on this standard.