Hospital Value-Based Purchasing Overview


The Hospital VBP Program is part of the Centers for Medicare & Medicaid Services’ (CMS’) long-standing effort to link Medicare’s payment system to improve healthcare quality, including the quality of care provided in the inpatient hospital setting.

The program implements value-based purchasing to the payment system that accounts for the largest share of Medicare spending, affecting payment for inpatient stays in approximately 3,000 hospitals across the country.

Hospitals are paid for inpatient acute care services based on the quality of care (as evaluated using a select set of quality and cost measures), not just quantity of the services they provide. Section 1886(o) of the Social Security Act sets forth the statutory requirements for the Hospital Value-Based Purchasing (VBP) Program.


The Hospital VBP Program is designed to promote better clinical outcomes for hospital patients, as well as improve their experience of care during hospital stays, while reducing costs to make care affordable. Specifically, Hospital VBP seeks to encourage hospitals to improve the quality and safety of care that Medicare beneficiaries and all patients receive during acute-care inpatient stays by:

  • Eliminating or reducing the occurrence of adverse events (healthcare errors resulting in patient harm).
  • Adopting evidence-based care standards and protocols that result in the best outcomes for the most patients.
  • Re-engineering hospital processes that improve patients’ experience of care.
  • Increasing the transparency of care for consumers.
  • Recognizing hospitals that are involved in the provision of high-quality care at a lower cost to Medicare.


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

The following categories of hospitals are excluded from the program:

  • Hospitals subject to payment reductions under the Hospital Inpatient Quality Reporting (IQR) Program.
  • Hospitals excluded from the Inpatient Prospective Payment System (IPPS), such as psychiatric, rehabilitation, long-term care, children’s, critical access, and 11 Prospective Payment System (PPS)-exempt cancer hospitals. In addition, hospitals located in Puerto Rico and other United States territories are also excluded.
  • Hospitals that are located in the state of Maryland participating in the Maryland All-Payer Model.
  • Hospitals cited for deficiencies during the applicable fiscal year performance period(s) that pose an immediate jeopardy (IJ) to patients’ health or safety.
  • Hospitals with an approved extraordinary circumstance exception specific to the Hospital VBP Program. For more information about CMS' extraordinary circumstances exception policy, refer to the Extraordinary Circumstances Exceptions Request page.
  • Hospitals that do not meet the minimum number of cases, measures, or surveys, as determined by the HHS Secretary. For information about minimum number of cases and measures, refer to the Eligibility page.

Paperwork Reduction Act (PRA) Disclosure Statement

The following PRA Disclosure Statement applies to forms and other information collection requirements associated with the Hospital VBP Program:

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0938-1022 (expires 01-31-2022). The time required to complete this information collection is estimated to average 10 minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to CMS, Attention: PRA Reports Clearance Officer, 7500 Security Boulevard, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

****CMS Disclosure**** Please do not send applications, claims, payments, medical records or any documents containing sensitive information to the PRA Reports Clearance Office. Please note that any correspondence not pertaining to the information collection burden approved under the associated OMB control number listed on this form will not be reviewed, forwarded, or retained. If you have questions or concerns regarding where to submit your documents, please contact the Hospital Inpatient Value, Incentives, and Quality Reporting Outreach and Education Support Contractor at (844) 472-4477.

QualityNet requires Internet Explorer with JavaScript enabled on it.

Steps to enable JavaScript in Internet Explorer
  1. Click on the Tools menu option at the top of the page.
  2. Select Internet Options from the drop-down menu.
  3. From the dialog box, choose the Security tab.
  4. Click on Custom Level.
  5. Set Active Scripting to Enable.
  6. Click OK to close the custom settings dialog.
  7. Click OK to close the Options dialog.