Hospital Performance in the First 6 Years of Medicare’s Value-Based Purchasing Program

Abstract

The Medicare value-based purchasing (VBP) program, ongoing since 2013, uses financial bonuses and penalties to incentivize hospital quality improvements. Previous research has identified characteristics of penalized hospitals, but has not examined characteristics of hospitals with improvements in VBP program performance or consistent good performance. We identify five different trajectories of program performance (improvement, decline, consistent good or poor performance, mixed). A total of 11% of hospitals were penalized every year of the program, 24% improved their VBP program performance, 14% of hospitals consistently earned a bonus, while 18% performed well in the program’s early years but experienced declines in performance. In 2013, organizational and community characteristics were associated with higher odds of improving relative to performing poorly every year. Few variables under managers’ control were associated with program improvement, though accountable care organization participation was in some models. We find changes in VBP program metrics may have contributed to improvement in some hospitals’ program scores.