Value Based Purchasing

The Patient Protection and Affordable Care Act (ACA) of 2010 established a Medicare Value Base Purchasing (VBP) program to pay hospitals for their actual performance on quality measures, rather than just the reporting of those measures, beginning in fiscal year 2013 (FY 2013). The VBP program applies to most acute-care hospitals. The Center for Medicare and Medicaid Services (CMS) pays hospitals for treating Medicare patients. In the program, CMS withholds from each hospital a percentage of base DRG payment. The percentage withheld started at a maximum of 1 percent in FY 2013 increases to a maximum of 2 percent in FY 2017 and stays at 2 percent unless it is changed by law. Each hospital has the ability to earn back none, some, all or more than the percentage withheld based the scores achieve on the identified quality measures. This program is a “zero sum game”. All of the money is earned back by the hospital’s so if a hospital does really well it takes financial resources from one that does less well. CMS has the ability to charge what it is measuring each year. All measures that are included in VBP must be publicly reported for one year on CMS website Hospital Compare,

The VBP is scored on four domains. Currently, each domain represents 25% of the total score that is calculated and then used to rank all of the Medicare participating hospitals. The clinical care domain measures assess estimates of deaths in the 30 days after entering the hospital for a specific condition (reported as the “survival” rate; therefore, higher percentage rates are favorable). Patients who received high-quality care during their hospitalizations and their transition to the outpatient setting will likely have improved outcomes. The specific conditions are acute myocardial infarction (AMI) 30-day mortality rate (The death (mortality) rate indicates whether a patient with an AMI diagnosis died within 30 days of their hospitalization); Pneumonia (PN) 30-day mortality rate (The death (mortality) rate shows whether a patient with a PN diagnosis died within 30 days of their hospitalization).

The patient-and caregiver-centered experience of care/care coordination domain in Hospital VBP isd based on the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) Survey. HCAHPS is a national, standardized survey that asks adult patients about their experiences during a recent hospital stay. The domain score encompasses eight important dimensions of hospital quality: communication with nurses, communication with doctors, responsiveness of hospital staff, cleanliness and quietness of hospital environment, communication about medicines, discharge information, care transition, and overall rating of hospital.

The safety domain measures assess a broad set of healthcare activities that affect patients’ well-being. These measures include in-hospital falls with hip fracture, hospital acquired bed sores, and other adverse events and select healthcare-associated infections.

The efficiency and cost reduction domain measures the cost of care, The Medicare spending per beneficiary measure is based on payment for services provided to a beneficiary during the care episode that is from 3 days prior to an inpatient hospital admission through 30 days after discharge. The payments include lab tests, physician fees, and costs of skilled nursing, rehab and home care services. The payments are standardized and adjusted so that variation in geographic costs and patient health status are removed.

More information on the measures in Value Based Purchasing can be found at

Healthcare Council through its various programs and committees work with members to improve processes that may positively impact any of the measures related to VBP.