Table 4.

Examples of Medicare Payment Program Payment Adjustments Through the Medicare Payment Systems in 2023

Medicare Payment Programs	Penalties/Rewards in Medicare Payment Systems
Quality Payment Program (clinicians)	Payment adjustments through the Physician Payment System. Penalties up to 9% and rewards up to 2.33% based on specified measures for providers participating in MIPS. For providers participating in Advanced APMs, shared losses or savings with CMS and reward of 3.5%.
Hospital Value-Based Purchasing Program	Payment adjustments through the Acute Care Hospital Inpatient Prospective Payment System. Penalties up to 2% for acute care hospitals based on quality of care (clinical outcomes, safety, patient experience, efficacy) provided in the inpatient setting. Reward (budget neutral) for highest performing hospitals.
Hospital Readmissions Reduction Program	Payment adjustments through the Acute Care Hospital Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System. Penalty up to 3% based on 30-day all-cause hospital readmissions for specific conditions and procedures.a
Hospital-Acquired Condition Reduction Program	Payment adjustments through the Acute Care Hospital Inpatient Prospective Payment System. Penalty of 1% based on one measure of patient safety and five hospital-acquired infection rates.b Facilities in the lowest performing 25% are penalized.
Hospital Inpatient Quality Reporting Program	Payment adjustments through the Acute Care Hospital Inpatient Prospective Payment System. Penalty of 25% of the annual payment rate update if all abstracted and electronic quality metric inpatient reporting requirements are not met.
Ambulatory Surgical Center Quality Reporting Program	Payment adjustments through the Ambulatory Surgical Center Payment System. Penalty up to 2% if reporting requirements are not met.
Skilled Nursing Facility Value-Based Purchasing	Payment adjustments through the Skilled Nursing Facility Prospective Payment System. Penalty up to 2% based on 30-day all-cause hospital readmissions. Reward (budget neutral) for highest performing facilities.
End-Stage Renal Disease Quality Incentive Program	Payment adjustments through the End-Stage Renal Disease Prospective Payment System. Penalty up to 2% to renal dialysis facilities based on a total performance score of several clinical and reporting measures.
Home Health Value Based Purchasing	Payment adjustments through the Home Health Prospective Payment System. Beginning in 2025, penalties and rewards up to 5% for home health agencies based on a set of quality measures.

MIPS = Merit-Based Incentive Payment System, APM = Alternative Payment Model.

^aAcute myocardial infarction, chronic obstructive pulmonary disease, heart failure, pneumonia, coronary artery bypass graft surgery, elective primary total hip arthroplasty, elective primary total knee arthroplasty.

^bCentral line-associated bloodstream infection, catheter-associated urinary tract infection, surgical site infection for abdominal hysterectomy and colon procedures, methicillin-resistant Staphylococcus aureus bacteremia, Clostridium difficile infection.