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Value-Based Purchasing (VBP) Program

What is the value-based purchasing (VBP) program?

The Value-Based Purchasing Program is an incentive program created by the Centers for Medicare and Medicaid Services (CMS) as a way to reward hospitals who provide high-quality care to Medicare beneficiaries. The program was first established as part of the 2010 Affordable Care Act (ACA), and implemented at U.S. hospitals starting in the 2013 fiscal year.

Hospitals participating in the VBP program are assessed in four different performance areas:

  • Safety
  • Clinical care
  • Efficiency and cost reduction
  • Care coordination / patient and caregiver-centered experience of care

Each of these performance areas is assigned the same 25 percent “weight,” which CMS uses to calculate a hospital’s total performance score. In assessing a hospital’s overall performance, CMS also considers achievement, improvement, and consistency points.

Achievement points are awarded to all hospitals who perform better than the baseline in each of the selected clinical and quality measures, while improvement points are awarded to each hospital that has improved upon their own previously reported quality measures. Consistency points are awarded to hospitals who perform at or above the 50th percentile in HCAHPS patient satisfaction scores.

CMS uses all of this scoring information to determine whether a facility will receive a financial bonus or penalty adjustment based on the care services they administered.

Why is the value-based purchasing (VBP) program important in healthcare?

By reimbursing hospitals based on the care quality that they provide, the Value-Based Purchasing Program helps to both improve overall healthcare delivery and patient experience.

With increased reporting requirements, the VBP program also helps hospitals improve documentation and adopt new evidence-based standards for care delivery. This creates greater accountability among healthcare providers, and might even help to reduce or eliminate medical errors related to misdiagnosis, medication administration, or unnecessary treatment.