Hospital Value-Based Purchasing

The Hospital Value-Based Purchasing Program seeks to improve patient safety and experience by basing Medicare payments on the quality of care provided, rather than on the quantity of services performed. Hospital VBP affects payment for inpatient stays in more than 3,000 hospitals across the country.

Under this program, Medicare rewards hospitals with payments based on either how well they perform on certain quality measures or how much they improve their performance. These bonus payments are funded by a 2% reduction in all payments.

Hospital VBP is budget neutral. This means that the entire 2% reduction must be paid back to participating hospitals. The highest-performing hospitals can earn back bonuses greater than the payment reduction, while others may receive minimal payment increases or not earn a bonus payment at all.