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Lessons Learned from VBP Performance

October 23, 2019

Each year, acute-care hospitals participating in the Centers for Medicare & Medicaid Services’ (CMS) Hospital Value-Based Purchasing (VBP) program receive scores based on their performance. According to CMS’ website, they designed the VBP program with the intent of making “The quality of care better for hospital patients” and “Hospital stays a better experience for patients.” VBP provides incentive for hospitals to administer excellent care, with the scores they receive determining the amount of Medicare reimbursements they earn, allowing them to further invest in their performance and cultivate higher scores.

Performance scores are evaluated in four equally weighted domains:

  • Safety
  • Clinical Outcomes
  • Efficiency & Cost Reduction
  • Person & Community Engagement (also known as the Hospital Consumer Assessment of Healthcare Providers and Systems, or HCAHPS®)

Each domain receives a score and is then weighted to arrive at the Total Performance Score (TPS) that determines the Medicare reimbursements earned or lost.

Currently, over half of US acute-care hospitals are eligible to participate in VBP (59%). To be eligible for VBP, hospitals must meet the minimum criteria for three of the four VBP domains:


With each domain weighted equally, it’s important to score high enough in each domain so your TPS reaches the break-even point for your hospital to earn back the 2% of Medicare reimbursements withheld to fund the VBP program. Indeed, increasing reimbursements from CMS requires a balanced approach to addressing all domain measures. CMS looks at many factors when assigning VBP reimbursements, so hospitals should strive to improve healthcare from multiple perspectives for the best possible care.

The most recent VBP public reporting from calendar year 2017 shows that 55% of hospitals participating in VBP earned funds paid in calendar year 2019 (represented in lime color below). Taking a deeper dive into Person and Community Engagement (HCAHPS) performance alone (blue circle), only 40% of all hospitals in VBP are scoring high enough on HCAHPS to reach the break-even point for VBP earnings. The overlap of these two variables show that 30% of hospitals in VBP are over the break-even point in both their TPS and HCAHPS performance.


Interestingly, hospitals are earning money from VBP, but not all VBP-earning hospitals are doing so because of their HCAHPS scores. This heightens the opportunity to increase earnings by improving HCAHPS performance, which will ultimately raise a hospital’s TPS and positively impact the patient experience.

With continual research, relaying of HCAHPS findings, and expert consulting for improvement planning, PRC has helped organizations optimize their HCAHPS performance since the program’s implementation in 2006. To learn more about PRC’s Patient Experience and CAHPS survey solutions and their value to your organization, please contact us at [email protected].


Sources and Further Reading:

Hospital Value-Based Purchasing

The Hospital Value-Based Purchasing Program