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Incentives for health care providers to take better care of Medicare patients

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linking provider payment

Hospitals now have an extra incentive to improve their quality of care. They're paid higher for taking better care of their patients. This is called the Value-Based Purchasing (VBP) Program. It aims to help you get healthier and lower your health care cost.


High quality care in the hospital can help you get better faster. Better care processes reduce the chance of errors that can lead to infections, complications and more medical bills. The VBP program rates and pays hospitals based on clinical factors and patient feedback. Examples:

  • Whether hospitals follow best clinical practices when treating a heart attack.
  • Whether patients get clear instructions on follow-up care.
  • How pleased patients are with their hospital stay.
  • How often patients are readmitted after a hospital stay.

Here's what's different

Before, Medicare used the same rate to pay all hospitals. Now, Medicare pays a higher rate to hospitals that have a better record of clinical care and patient satisfaction.


How it impacts you

Whether you're enrolled in or eligible for Medicare or not, the VBP program is good news for you because hospitals have more reason to improve the care you get when you're admitted. When your hospital experience and health results are better, hospitals get higher payments.

How will hospitals be scored?

The program rates how well hospitals handle cases such as heart attacks and surgery. It looks at hospital procedures and types of medicines and treatments. These are factors that can directly affect your health.


See the list of measures

If Medicare pays higher rates, how does that result in savings?

First, Medicare will reduce payments by 1% across the board. The savings are used as rewards for hospitals that improve care. Better care can lead to faster healing and fewer complications. In turn, this means shorter hospital stays and fewer prescriptions that need to be filled. These add up to savings.

Why is the program limited to hospitals?

The Value-Based Purchasing Program focuses on hospitals because the largest Medicare payments are for hospital services. Medicare covers millions of hospital stays in a year. And one-third of Medicare patients who are released are back in the hospital again within a month. So there's a strong need to improve hospital care.

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