Find-A-Code Focus Newsletter

Hospital Value-Based Purchasing (VBP) Program

By Bonnie G. Schreck, BS, CCS, CPC, COC, CPC-H, COBGC
December 14, 2015

The Affordable Care Act of 2010 established the Hospital VBP Program, which

applies to payments beginning in FY 2013 (discharges on or after October 1, 2012)

and affects payment for inpatient stays in hospitals across the country.  Under the

Hospital VBP Program, Medicare makes incentive payments to hospitals based on


  •  How well they perform on each measure, or
  •  How much they improve their performance on each measure compared to their
                performance during a baseline period

The Center for Medicare and Medicaid Services (CMS) bases hospital performance

on an approved set of measures and dimensions, grouped into the following specific

quality domains:

  •  Clinical Process of Care Domain
  •  Patient Experience of Care Domain
  •  Outcome Domain
  •  Efficiency Domain

As you can see below, there have been added quality measurements between

FY2013 to FY2016:

      Domain                     FY 2013 Weight           FY 2014 Weight              FY 2015-FY2016

Clinical Process of Care             70%                         45%                               20%
Patient Experience of                30%                         30%                               30%


Outcome                                   N/A                          25%                               30%

Efficiency                                   N/A                          N/A                                20%

The Hospital VBP Program is funded by a percentage withheld from participating

hospitals’ Diagnosis-Related Group (DRG) payments. This applicable percentage

varies until FY 2017.

                          Fiscal Year                                                 Applicable Percentage

                             2013                                                                 1.0%

                             2014                                                                 1.25%

                             2015                                                                 1.50%

                             2016                                                                 1.75%

                    2017 and subsequent years                                   2.0%

The funds held back are redistributed to hospitals based on their Total Performance

Scores (TPS). The amount earned by each hospital depends on the range and

distribution of all eligible and participating hospitals’ TPS scores for a fiscal year. It

is possible for a hospital to earn back a value-based incentive payment percentage

that is more than, equal to, or less than the applicable reduction for that program


For more information on the Hospital Value-Based Purchasing  (VBP) Program, visit

this link on the CMS website:


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