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  • Hospital Value-Based Purchasing Program

    Medicare is required by the Affordable Care Act to implement a program in October 2012 (FY 2013) that links a portion of hospitals payments to their quality and cost of care. Under the Hospital Value-Based Purchasing (HVBP) Program, hospitals will receive incentive payments based on their relative performance on certain measures or how much their performance improves compared to a baseline period.   

    Incentive Payment Withhold

    The Program will fund incentive payments through a percentage withhold of hospitals' Medicare payments for each discharge. The initial payment withhold will be 1 percent but will increase to 2 percent over 5 years. High performing hospitals could receive incentive payments in excess of their initial withhold while payments to low performing hospitals will remain below their initial withhold.

    Hospitals Value-Based Purchasing Withhold 

    FY 2013 


    FY 2014 


    FY 2015 


    FY 2016 


    FY 2017 



    Performance Measures

    Performance measures for the Hospital Value-Based Purchasing Program will be drawn from the Hospital Inpatient Quality Reporting program (Hospital IQR), the Medicare pay-for-reporting program for hospitals. This ensures that hospitals are familiar with reporting measures before basing payments on their performance. The initial performance period (FY 2013) will include 12 clinical process of care measures and 1 patient experience of care measure. The latter is a composite of several patient experience of care indicators from the Hospital Consumer Assessment of Healthcare Providers & Systems Survey (HCAHPS).

    In FY 2014, hospitals payments will be tied to their performance on 13 additional measures:  three mortality measures, eight Hospital Acquired Condition (HAC) measures, and two patient safety indicators (PSIs). Click here for a list of the 2013 and 2014 performance measures.





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