The Medicare Prescription Drug, Improvement, & Modernization Act of 2003 (MMA) directed a study of the compensation of physicians in traditional fee-for-service (FFS) Medicare. This study explored linking physician compensation to efficiency -- defined as providing & ordering a level of services that is sufficient to meet a patient¿s health care needs but not excessive, given the patient¿s health status. This report: (1) estimates the prevalence in Medicare of physicians who are likely to practice inefficiently; (2) examines physician-focused strategies used by health care purchasers to encourage efficiency; & (3) examines the potential for CMS to profile physicians for efficiency & use the results. Includes recommendations. Charts & tables.