The Centers for Medicare and Medicaid Services’ Approach to Value-Based Purchasing

Abstract

Although evidence suggests that both the quality and the affordability of health care can be improved1, it is likely that such improvements will come at great cost. Healthcare expenditures in the United States (U.S.) are expected to rise precipitously - from $1.5 trillion in 2005 to over$4 trillion in 2016.2 Medicare, the nation’s single largest health care purchaser, spent an estimated $425 billion on health services in 2007. With the projected growth in Medicare beneficiaries, the amount may surpass$800 billion by 2017, placing the government under significant pressure to control health care costs.3 This article is intended as a brief summary of the Centers for Medicare and Medicaid Services’ (CMS) experience and its prospective strategies for health care quality improvement, including relevant legislation and potential future trends for value-based programs under CMS