CMS Hospital Quality & Compliance Programs

Collected 2026-07-21. Confirm time-sensitive details against the linked primary sources.

This file summarizes the CMS hospital quality and value-based programs most relevant to hospital compliance, quality, and revenue-cycle teams.

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1. Hospital Inpatient Quality Reporting (IQR)

What it is: A pay-for-reporting program. Subsection(d) hospitals paid under IPPS must report on a set of quality measures (claims-based, chart-abstracted, eCQMs, and structural/survey measures). Hospitals that do not meet requirements receive a one-quarter reduction of their annual payment update (a quarter of the applicable percentage increase). Who runs it / specs: Measure specifications live on QualityNet. Key point for clients: IQR is about submitting data, not performance thresholds. Data feeds public reporting (Care Compare) and several value-based programs. Links: - Program page: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/inpatient-reporting-program - Measures (QualityNet): https://qualitynet.cms.gov/inpatient/iqr/measures

2. Hospital Outpatient Quality Reporting (OQR)

What it is: The outpatient analog of IQR for hospital outpatient departments, tied to the OPPS. Non-participation reduces the outpatient payment update. Links: - Program page: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/outpatient-quality-reporting-program - Measures (QualityNet): https://qualitynet.cms.gov/outpatient/oqr/measures

3. Hospital Value-Based Purchasing (VBP)

What it is: A pay-for-performance program that adjusts IPPS payments based on performance across four weighted domains: - Clinical Outcomes (e.g., 30-day mortality measures) - Safety (e.g., healthcare-associated infections, CDI/MRSA, complications) - Person and Community Engagement (HCAHPS patient experience) - Efficiency and Cost Reduction (Medicare Spending Per Beneficiary) Funded by a 2% withhold of participating hospitals' base operating DRG payments, redistributed as value-based incentive payments. Net effect can be positive or negative per hospital based on the Total Performance Score (TPS). Links: - Program page: https://www.cms.gov/medicare/quality/value-based-programs/hospital - Methodology (QualityNet): https://qualitynet.cms.gov/inpatient/hvbp

4. Hospital Readmissions Reduction Program (HRRP)

What it is: A pay-for-performance program that reduces payments (up to 3%) to hospitals with excess 30-day risk-standardized readmissions. Uses a payment-adjustment factor applied to all Medicare fee-for-service base operating DRG payments. Condition/procedure cohorts (six): acute myocardial infarction (AMI), heart failure (HF), pneumonia, COPD, elective primary total hip/knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). Mechanics: Performance is assessed over a rolling multi-year period; the excess readmission ratio (ERR) drives the penalty. A proposed sepsis readmission measure is under consideration for future years (see 03_recent_rules_and_deadlines.md). Links: - Program page: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/hospital-readmissions-reduction-program-hrrp - Methodology (QualityNet): https://qualitynet.cms.gov/inpatient/hrrp/methodology

5. Hospital-Acquired Condition (HAC) Reduction Program

What it is: Penalizes the worst-performing quartile of hospitals on measures of hospital-acquired conditions by reducing all Medicare payments by 1%. Measures include CMS PSI-90 (patient safety composite) and CDC NHSN healthcare-associated infection measures (CLABSI, CAUTI, SSI, MRSA bacteremia, C. difficile). Links: - Program page: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/hospital-acquired-conditions-present-admission-indicator - Methodology (QualityNet): https://qualitynet.cms.gov/inpatient/hac

6. Medicare Promoting Interoperability Program

What it is: Requires eligible hospitals and critical access hospitals (CAHs) to demonstrate meaningful use of certified EHR technology (CEHRT), reporting on objectives/measures (e-prescribing, health information exchange, provider-to-patient exchange, public health/clinical data exchange) plus required eCQMs. Failure to report affects the payment update (and, for CAHs, payment). Links: - Program page: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs - Hospital resources (QualityNet): https://qualitynet.cms.gov/pi

7. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR)

What it is: A reporting program for the 11 statutorily PPS-exempt cancer hospitals (paid outside IPPS). Focuses on oncology-relevant safety, infection, and outcome measures. Links: - Program page: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/pps-exempt-cancer-hospital-quality-reporting - Measures (QualityNet): https://qualitynet.cms.gov/pchqr

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Quick reference: penalty vs. incentive

Program	Type	Financial mechanism
IQR	Pay-for-reporting	Up to ¼ of annual update reduced if not met
OQR	Pay-for-reporting	Outpatient update reduced if not met
VBP	Pay-for-performance	2% withhold redistributed by Total Performance Score
HRRP	Pay-for-performance	Up to −3% on base operating DRG payments
HAC Reduction	Pay-for-performance	−1% on all Medicare payments (worst quartile)
Promoting Interoperability	Reporting/attestation	Payment update reduction if not a meaningful EHR user
PCHQR	Pay-for-reporting	Applies to PPS-exempt cancer hospitals

Note: exact percentages, measure sets, and reporting periods are set annually by the IPPS/OPPS rules — always confirm the current fiscal/calendar year in 03_recent_rules_and_deadlines.md and the linked QualityNet pages.