System and method for reducing healthcare costs by improving care and encouraging healthy behaviors. A web-based or telephonic program using health plan sponsor funded financial incentives, offered to patients and providers for declaring or demonstrating adherence or providing a reason for non-adherence to performance standards. Financial incentives are contingent upon patient's and provider's agreement to allow the other to confirm or acknowledge the other's declaration or demonstration of adherence or non-adherence reason. Combining financial incentives with a set of checks and balances motivates participation in the program and adherence to the performance standards. Performance standards include evidence-based treatment guidelines, information therapy, wellness and prevention solutions, care management, and other methods proven to control costs by improving behaviors and healthcare. The system and method achieves improved health and more affordable healthcare by aligning the interests of providers, patients/consumers, and health plan sponsors in a win-win-win arrangement.