Quality is a top priority for hospitals today. The Center for Medicare and Medicaid Services (CMS) is committed to changing from a passive payer service to a value-based purchaser of quality of care. CMS is using a three-pronged strategy to achieve this goal—not paying for poor quality, establishing price and quality transparency through public reporting of data, and using enforcement authority to prosecute quality failures and unnecessary care. Despite reimbursement challenges, hospitals need to engage physicians on the medical staff to perform well under value-based purchasing.