CMS Announces Bonuses and Penalties for 2014 VBP Program Ranging from +0.88% to -1.14%


CMS posted a list on its website of the 2014 bonuses and penalties applicable to each subsection (d) hospital participating in the value-based purchasing (VBP) program.  The posted rate increases or reductions are effective for discharges beginning on or after October 1, 2013.  The highest bonus awarded to a hospital is 0.88% (Arkansas Heart Hospital) and the largest penalty assessed is 1.14% (Indian Medical Center).  The average penalty for hospitals nationwide is 0.26%, which is an increase from the prior year’s 0.21% average penalty. 

There was significant state variations in performance, however, with at least 60% of hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin receiving higher Medicare payment while at least two thirds of hospitals in California, Connecticut, Nevada, New Mexico, New York, North Dakota, Washington and Wyoming will experience decreases in Medicare reimbursement.

The VBP program is a budget-neutral pay-for-performance program in which virtually all subsection (d) hospitals start with a 1.25% reduction in payments for 2014 but those withholdings are then redistributed, in a budget-neutral manner, to hospitals that perform well on various quality measures.  The total amount of money being redistributed in 2014 is about $1.1 billion.  The up-front reduction, currently at 1.25%, will increase by 0.25% each year until 2017, at which point it will top out at a redistribution of 2% of total Medicare reimbursement.

CMS’s chart displaying each provider’s 2014 VBP rate is available here. Kaiser Health News has an interactive chart showing how individual hospitals fared under both the VBP program and the readmission reduction program available here.

Reporter, Daniel J. Hettich, Washington D.C., +1 202 626 9128,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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