CMS pay-for-performance targets for hospitals

The Centers for Medicare & Medicaid Services (CMS) imposes financial penalties to hospitals that do not meet the standards for quality of care. The pay-for-performance (PFP) programs include:

  • Hospital Readmissions Reduction Program (HRRP)
  • Value-Based Purchasing Program (VBP)
  • Hospital-Acquired Conditions Reduction Program (HACRP)

The three-part aim of the CMS PFP programs1

  1. Better care for individuals
  2. Better health for populations
  3. Lower costs

Cost to the system

In 2020, hospitals that fell short of meeting these standards received penalties from CMS, with these national results:

  • Total pay-for-performance impact: $942 million
  • HRRP impact: $550 million
  • VBP impact: $823K
  • HACRP impact: $391 million

Common traits2

Research shows those who are successful in these models have some things in common:

  • Data-driven decision-making
  • Care variability reduction
  • Patient optimization
  • Care transitions
  • Physician engagement
  • Cost reduction

Success in the New Reality

For the foreseeable future, PFP programs are here to stay. To be successful in this new reality, providers must ensure quality, cost-efficient care. To learn more, access CMS resources, including the toolkit referenced in footnote 2. For guidance on implementing or optimizing a service line structure within your organization, contact Kimberly Wright, RN, AVP of Clinical Services, at


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