The Centers for Medicare & Medicaid Services (CMS) launched the Value-Based Purchasing (VBP) Program in 2013 to reward hospitals that provided high-quality care.
Under the Value-Based Purchasing Program, hospitals are eligible for an increase or decrease in their Inpatient Prospective Payment System rate, a model that determines Medicare reimbursement for each hospital based on the quality of care provided.
In fiscal year 2019, the payments are supported through a 2 percent reduction of Diagnosis-Related Group funding for all hospitals, which in turn is distributed between eligible facilities according to performance.
The performance measurement domains for the 2019 Hospital Value-Based Purchasing Program are:
- Clinical Care
- Person and Community Engagement
- Efficiency and Cost Reduction
For the year, the total amount of available funds is approximately $1.9 billion.
Overall, about 56 percent of hospitals received positive adjustments in 2019.
Of those receiving bonuses, the average adjustment rate was 0.61 percent, with an average estimated increase in revenue of about $124,354. Hospitals with high positive adjustment rates tended to be smaller, and the majority of facilities earning rates over 1 percent had less than 100 beds.
The highest estimated revenue earners had modest rate increases, though their larger size translated to greater bonus payments overall.
Among penalized hospitals, the average adjustment was -0.39 percent, with an average estimated revenue decrease of nearly $156,256. Compared to hospitals with positive rate adjustments, the facilities were usually larger, averaging 255 staffed beds versus 173.