Value-Based Care

HNI FYI #4: What Does Value-Based Care Mean to a Hospital?

Hospitals are an integral part of the value-based care model, serving as the arena for improved patient outcomes.

Under a value-based care model, hospitals are monetarily incentivized for providing better care at a reduced cost.

Today, hospitals can participate in a variety of the Centers of Medicare & Medicaid Services value-based programs listed below:

    • End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    • Hospital Value-Based Purchasing (VBP) Program
    • Hospital Readmission Reduction Program (HRRP)
    • Value Modifier (VM) Program (also called the Physician Value-Based Modifier or PVBM)
    • Hospital Acquire Conditions (HAC) Reduction Program
    • Skilled Nursing Facility Value-Based Program (SNFVBP)
    • Home Health Value-Based Program (HHVBP)
    • Quality Payment Program


To get more granular, let's walk through the Hospital Value-Based Purchasing Program.

The Centers for Medicare & Medicaid Services states:

"The Hospital VBP Program rewards acute care hospitals with incentive payments for the quality of care provided in the inpatient hospital setting. This program adjusts payments to hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they deliver. The Hospital VBP Program encourages hospitals to improve the quality, efficiency, patient experience and safety of care that Medicare beneficiaries receive during acute care inpatient stays by:

      • Eliminating or reducing adverse events (healthcare errors resulting in patient harm).
      • Adopting evidence-based care standards and protocols in order to obtain the best outcomes for Medicare patients.
      • Incentivizing hospitals to improve patient experience.
      • Increasing the transparency of care quality for consumers, clinicians, and others.
      • Recognizing hospitals that provide high-quality care at a lower cost to Medicare.


The program works by:

      • Withholding participating hospitals’ Medicare payments by a percentage specified by law (2%).
      • Using the estimated total amount of those reductions to fund value-based incentive payments to hospitals based on their performance in the program.
      • Applying the net result of the reduction and the incentive as a claim-by-claim adjustment factor to the base operating Medicare severity diagnosis-related group (MS-DRG) payment amount for Medicare fee-for-service claims in the fiscal year associated with the performance period."


In order to succeed in these programs, hospitals need access to integrated tools that guide their providers' value-based practice and give the operations teams insight to track progress and make real-time adjustments. HNI's proprietary software, VitalsMD®, was created to service hospitals' value-based care needs by providing:

    • Real-time, integrated data
    • Collaboration and care coordination tools
    • MIPS quality reporting
    • Patient risk scoring
    • BPCI identification
    • Readmission tracking
    • Tailored KPI dashboards
    • Clinical pathway informatics
    • Integrated coding integrity support
    • Clinical documentation engine
    • Provider decision support


Interested in learning more about value-based care? See what value-based care means to providers and patients.

The concept of value-based care is relatively new and complex. That's why we created our educational series called “HNI FYI” — to educate our readers about value-based care and its impact on healthcare. Make sure to subscribe to the HNI Insider blog and follow our social media accounts for more HNI FYI posts as we continue to share them.


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