PURPOSE: We tested for direct and indirect effects that performance-based reimbursement (PBR) in primary care has on perceived individual and organizational quality of care, and the role of illegitimate tasks and moral distress as potential mediators. METHOD: We used results from the Longitudinal Occupational Health survey in Healthcare Sweden with data collected in 2021, 2022, and 2023. The sample of primary care physicians who answered at all 3 years and were aged 68 or less was 433. Performance-based reimbursement was measured using a single item. The Bern Illegitimate Tasks Scale measured illegitimate tasks, and moral distress was measured with a 10-item scale. Six items from the English National Health Staff Survey were used to measure the quality of individual and organizational care. RESULT: Of the 433 participants, 70% reported that PBR negatively impacted their work. Performance-based reimbursement was negatively associated with illegitimate tasks (b = -0.160
95% CI, -0.240 to -0.080) and moral distress (b = -0.134
95% CI, -0.210 to -0.058). These work factors were in turn associated with both individual and organizational quality of care. Using mediation models, we found an indirect effect (b = 0.011
95% CI, 0.004 to 0.021) but no direct effect (b = 0.062
95% CI, -0.019 to 0.143) between PBR on the quality of individual care. CONCLUSION: Performance-based reimbursement systems should account for the experience of individual primary care physicians to ensure effective, safe, and quality care, as this study shows how the level of illegitimate tasks and moral distress due to a PBR system can undermine care delivery. Consequently, it is imperative for stakeholders to consider how health care systems relate to the health care staff's experience, well-being, and the care being provided.