Value-Based Purchasing
Centers for Medicare & Medicaid Services




As a result of The Affordable Care Act of 2010, Centers for Medicare & Medicaid Services (CMS) initiated The Hospital Value-Based Purchasing (VBP) Program, which rewards acute-care hospitals across the country with incentive payments for the quality of care provided to the Medicare population. Under the Hospital VBP Program, Medicare makes incentive payments to hospitals based on either performance or improvement on each measure, compared to their baseline period. The Hospital VBP Program was implemented beginning of Fiscal Year 2013.

Scope of Report

Report’s Intended End Users

Hospitals are awarded incentive payment for quality of care for the Medicare population

Understanding the Score


Total Performance Score is calculated as a percentage and ranges 1 to 100 percent.


VBP is calculated annually. Baseline and performance period differs from one domain or measure to another. Report offers national-, state-, and hospital-level data for each measure


As defined in Social Security Act Section 1886(d)(1)(B), the program applies to subsection (d) hospitals located in the 50 states and District of Columbia, including acute care hospitals in Maryland.


  • Hospitals subject to payment reductions under the Inpatient Quality Reporting (IQR) Program
  • Hospitals excluded from Inpatient Prospective Payment System (IPPS) such as Psychiatric, Rehabilitation, Long- term care, Children’s and 11 Prospective Payment System- (PPS) exempt Cancer Hospitals
  • Hospitals that are under Section 1814 (b)(3) and have received an exempt from the VBP Program from Secretary of the Department of Health and Human Services (DHHS)
  • Hospitals sited by DHHS Secretary for deficiencies during the applicable fiscal year performance period(s) that pose an Immediate Jeopardy (IJ) to patient health and safety
  • Hospitals that do not meet minimum number of cases, measures, or surveys, as determined by the DHHS Secretary. Minimum required cases differ by measure.

Data Source

Source: FY 2015 Inpatient PPS Proposed Rule Quality Provisions Webinar. June 2, 2014. Association of American Medical Colleges


CMS assesses each hospital’s total performance by comparing Achievement and Improvement Scores for each applicable Hospital VBP measures. CMS uses a Threshold (50th percentile) and Benchmark (mean of the top decile) to determine how many points are awarded for the Achievement and Improvement scores. CMS compares the Achievement and Improvement scores and only uses whichever is greater.

  • To determine the Clinical Process of Care and Outcome domain scores, points are added across all measures.
  • The Patient Experience of Care domain score is the sum of a hospital’s Hospital Consumer Assessment of Healthcare Providers and Suppliers (HCAHPS) base score and that hospital’s HCAHPS Consistency score.

Achievement Points are awarded by comparing a hospital’s rates during the performance period with all hospitals’ rates from a baseline period:

  • Hospital rates at or above benchmark = 10 Achievement points
  • Hospital rates below the Achievement threshold = 0 Achievement points
  • If the rate is equal to or greater than the Achievement threshold and less than the benchmark = 1 – 10 Achievement points

Improvement Points are awarded by comparing a hospital’s rates during the performance period to that same hospital’s rates from a baseline period:

  • Hospital rates at or above benchmark = 9 Improvement points
  • Hospital rates at or below baseline period rate = 0 Improvement points
  • If the hospital’s rate is between the baseline period rate and the benchmark = 0 – 9 Improvement points

Consistency Points are awarded by comparing a hospital’s Patient Experience of Care dimensions rates during the performance period with all hospitals’ Patient Experience of Care rates from a baseline period:

  • If all dimension rates are at or above Achievement threshold = 20 Consistency points
  • If any dimension rate is at or below worst-performing hospital dimension baseline period rate = 0 Consistency points
  • If the lowest dimension rate is greater than the worst-performing hospital’s rate but less than the Achievement threshold = 0 – 20 Consistency points

Total Performance Score CMS calculates a hospital’s rate by combining the greater of either the hospital’s Achievement or Improvement points for each measure to determine a score for each domain. Rate for each domain will be weighted (Table below) and final score will be calculated by adding weighted domains together.
Weighted Value of Each Domain per Fiscal Year (FY) 2013- 2017

The Hospital VBP Program is funded by a flat percentage withheld from participating hospitals’ Diagnosis-Related Group (DRG) payments. This applicable flat percentage varies each year as follows:

The law requires the total amount of value-based incentive payments in aggregate be equal to the amount available for value-based incentive payments. CMS finalized a linear exchange function to translate Total Performance Scores into Value-Based Incentive Payments.


Source: Department of Health & Human Services, Acute Care Hospital Inpatient Prospective Payment System, Payment System Fact Sheet Series, ICN 006815, April 2013


CMS bases hospital performance on an approved set of measuresand dimensions, grouped into specific quality domains. Domains differ in each fiscal year.


Improvement Tools

Improvement tools and resources can be found at