BACKGROUND Starting in fiscal year 2013, the Hospital Value-Based Purchasing (HVBP) program introduced quality performance–based adjustments of up to 1% to Medicare reimbursements for acute care hospitals. METHODS We evaluated whether quality improved more in acute care hospitals that were exposed to HVBP than in control hospitals (Critical Access Hospitals, which were not exposed to HVBP). The measures of quality were composite measures of clinical process and patient experience (measured in units of standard deviations, with a value of 1 indicating performance that was 1 standard deviation [SD] above the hospital mean) and 30-day risk-standardized mortality among patients who were admitted to the hospital for acute myocardial infarction, heart failure, or pneumonia. The changes in quality measures after the introduction of HVBP were assessed for matched samples of acute care hospitals (the number of hospitals included in the analyses ranged from 1364 for mortality among patients admitted for acute myocardial infarction to 2615 for mortality among patients admitted for pneumonia) and control hospitals (number of hospitals ranged from 31 to 617). Matching was based on preintervention performance with regard to the quality measures. We evaluated performance over the first 4 years of HVBP. RESULTS Improvements in clinical-process and patient-experience measures were not significantly greater among hospitals exposed to HVBP than among control hospitals, with difference-in-differences estimates of 0.079 SD (95% confidence interval [CI], −0.140 to 0.299) for clinical process and −0.092 SD (95% CI, −0.307 to 0.122) for patient experience. HVBP was not associated with significant reductions in mortality among patients who were admitted for acute myocardial infarction (difference-in-differences estimate, −0.282 percentage points [95% CI, −1.715 to 1.152]) or heart failure (−0.212 percentage points [95% CI, −0.532 to 0.108]), but it was associated with a significant reduction in mortality among patients who were admitted for pneumonia (−0.431 percentage points [95% CI, −0.714 to −0.148]). CONCLUSIONS In our study, HVBP was not associated with improvements in measures of clinical process or patient experience and was not associated with significant reductions in two of three mortality measures. (Funded by the National Institute on Aging.)

Recent evidence suggests the trend toward vertical integration will likely continue as providers respond to changing payment models and market factors. A growing body of research on comparative health system performance suggests that integration of physician practices with hospitals might not be enough to achieve higher-value care. More information is needed to identify the health system attributes that contribute to improved outcomes, as well as which policy levers can minimize anticompetitive effects and maximize the benefits of these affiliations.

The use of financial incentives to improve quality in health care has become widespread. Yet evidence on the effectiveness of incentives suggests that they have generally had limited impact on the value of care and have not led to better patient outcomes. Lessons from social psychology and behavioral economics indicate that incentive programs in health care have not been effectively designed to achieve their intended impact. In the United States, Medicare's Hospital Readmission Reduction Program and Hospital ValueBased Purchasing Program, created under the Affordable Care Act (ACA), provide evidence on how variations in the design of incentive programs correspond with differences in effect. As financial incentives continue to be used as a tool to increase the value and quality of health care, improving the design of programs will be crucial to ensure their success.