Value-based care meets a costly administrative reality

Clinical takeaway: Working in value-based payment environments may mean more administrative work around reporting, documentation, and care coordination, making streamlined workflows especially important for keeping those demands manageable day to day.

Value-based payment is designed to make health care more efficient, but meeting those goals can add substantial administrative work. Hospitals have to track performance, report quality measures, coordinate care, manage financial risk, document clinical complexity, and maintain the data systems behind that work. A new analysis suggests those demands are associated with significant additional hospital spending.

Participation in the mandatory CMS value-based payment programs was associated with more than $3 billion in additional salary-related administrative costs annually nationwide. For the Hospital Value-Based Purchasing, Hospital Readmissions Reduction, and Hospital-Acquired Condition Reduction programs, the average increase was about $850,000 per hospital each year. Participation in the Comprehensive Care for Joint Replacement model was associated with another $1.4 million per hospital each year.

For clinicians, the findings help show how those requirements can translate into additional day-to-day work. The authors said hospitals may have expanded staffing and workflows in these areas to meet program requirements. Those demands may also build over time as organizations train staff, adapt reporting processes, and adjust administrative workflows.

To examine these costs, the researchers analyzed Medicare cost reports from 4,332 general acute care, critical access, and long-term acute care hospitals from 2006 through 2020. They compared administrative costs at hospitals participating in mandatory value-based payment programs with costs at hospitals not subject to those programs, while taking into account differences in the patients they served and health care policies in each state.

Higher costs were consistent across several comparison groups. For hospitals participating in the Hospital Value-Based Purchasing, Hospital Readmissions Reduction, and Hospital-Acquired Condition Reduction programs, annual administrative costs were $1.23 million higher than at Maryland acute care hospitals not subject to the programs, $930,000 higher than at critical access hospitals, and $650,000 higher than at long-term acute care hospitals. Hospitals participating in those programs plus the Comprehensive Care for Joint Replacement model had larger differences, ranging from about $2.1 million to $2.8 million per hospital annually.

The authors pointed to overlapping reporting requirements as one source of avoidable complexity: “Currently, hospitals report to multiple portals and track similar measures under different programs, creating redundancy and confusion.” They recommended more standardized reporting and fewer duplicative measures. For clinical teams, the broader implication is that the burden of value-based care depends not only on what is measured, but also on how much work is required to measure it.

Source: Zhou Z, et al. (2026 Aug 7) JAMA Health Forum. Mandatory Value-Based Payment Programs and Hospital Administrative Costs