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  • Hospital Value-Based Purchasing Program

    Medicare is required by the Affordable Care Act to implement a program by October 2012 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 HVBP Program will fund incentive payments through a percentage withhold the hospitals' Medicare payments for each discharge. The initial incentive 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 Percent 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, which 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 performance on 17 measures: 13 clinical process of care measures, three mortality measures, and the HCAHPS.


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