The transition to a value-based purchasing model for the delivery of healthcare services has been in the works since Congress passed the Medicare Modernization Act (MMA) of 2003. The legislation commissioned the Institute of Medicine (IOM) to develop strategies which link performance to payment in the Medicare program—to support a “pay for performance” approach to the U.S. healthcare system. The system encourages risk sharing and pay for performance, rather than pay for the number of procedures performed.
The value-based purchasing (VBP) program, more formally known as the hospital value-based purchasing (HVP) program, provides a direct response to rising healthcare costs and quality of care issues by using a performance-based payment strategy that offers financial incentives to providers based on their performance. The 2010 Patient Protection and Affordable Care Act officially authorized the Centers for Medicare & Medicaid Services (CMS) to create rules to make value-based purchasing of healthcare services a legal framework within the Medicare program.
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