HHS Strategic Plan, Fiscal Years 2007–2012 (Strategic Plan). Value-Based Purchasing

11/22/2015

Value-based purchasing is the use of payment methods and other incentives to encourage substantive improvement for patient-focused, high-value care. At HHS, value-based purchasing is in its early stages of development. The Tax Relief and Health Care Act of 2006 (H.R. 6111) lays the groundwork for CMS to establish many models for financial and nonfinancial incentives used in value-based purchasing programs or strategies. Programs such as Medicare Hospital Pay for Performance, Medicare Demonstration Project to Permit Gainsharing, and the Premier demonstration are viewed as one component of a broader strategy of promoting health care quality. At least 12 States throughout the country have already implemented a wide range of value-based purchasing initiatives under Medicaid. States are using both payment differentials and nonfinancial incentives, such as auto-enrollment and public reporting, to reward performance. CMS will provide technical assistance to those States that voluntarily elect to implement value-based programs. CMS also will encourage States to include an evaluation component to provide evidence of the effectiveness of this methodology.

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