42 CFR §412.162

1. (a)General. If a hospital meets or exceeds the performance standards that apply to the Hospital VBP Program for a fiscal year, CMS will make value-based incentive payments to the hospital under the requirements and conditions specified in this section.
2. (b)Value-based incentive payment amount.
   1. (1)Available amount. The value-based incentive payment amount for a discharge is the portion of the payment amount that is attributable to the Hospital VBP Program. The total amount available for value based incentive payments to all hospitals for a fiscal year is equal to the total amount of base-operating DRG payment reductions for that fiscal year, as estimated by the Secretary.
   2. (2)Calculation of the value-based incentive payment amount. The value-based incentive payment amount is calculated by multiplying the base operating DRG payment amount by the value-based incentive payment percentage.
   3. (3)Calculation of the value-based incentive payment percentage. The value-based incentive payment percentage is calculated as the product of all of the following:
      1. (i)The applicable percent as defined in § 412.160.
      2. (ii)
         1. (A)For fiscal years before FY 2026, the hospital's Total Performance Score divided by 100; or
         2. (B)Beginning with FY 2026, the hospital's Total Performance Score divided by 110; and
      3. (iii)The linear exchange function slope.
3. (c)Methodology to calculate the value-based incentive payment adjustment factor. The value-based incentive payment adjustment factor for each discharge is determined by subtracting the applicable percent as specified in § 412.160 from the value-based incentive payment percentage and then adding that difference to one.