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RESEARCH OBJECTIVE: The Home Health Value‐Based Purchasing (HHVBP) Model provides financial incentives for quality improvement to home health agencies in nine states with the goal of improving quality and efficiency of care for Medicare beneficiaries. The maximum Medicare payment adjustment increases during each of the five years of the model, ranging from ±3% in 2018 to ±8% in 2022. Our goal is to understand the early impact of the HHVBP Model on quality, utilization, and Medicare spending during its first three years (2016–2018), which includes the first year in which payment adjustments to agencies took effect. STUDY DESIGN: CMS randomly selected nine states to participate in the HHVBP Model starting January 2016, with mandatory participation from all agencies. Agencies in these states received performance scores for 20 measures of quality of care used to determine their payment adjustment relative to other agencies within their state. To evaluate the effects of HHVBP, we used a difference‐in‐differences design and multivariate linear regression to compare differences in the changes in outcomes of the nine HHVBP states with those in the 41 comparison states for three years pre‐intervention (2013–2015) through the first three years of the model (2016–2018). We evaluated agency performance using Outcome and Assessment Information Set (OASIS)‐based quality measures and measures of claims‐based Medicare fee‐for‐service (FFS) health care utilization and spending. POPULATION STUDIED: Medicare and Medicaid patients receiving home health care in the nine HHVBP states and forty‐one comparison states. PRINCIPAL FINDINGS: We found evidence of slightly greater improvements in most measures of improved functional status used to determine payment adjustments in HHVBP states relative to non‐HHVBP states. Compared to non‐HHVBP states, Medicare FFS beneficiaries who received home health care in the nine HHVBP states had a relative decrease in unplanned hospitalization rate (−1.8%) and in skilled nursing facility (SNF) stays (−4.9%) from pre‐HHVBP implementation average levels. Conversely, we observed a 2.4% increase in emergency department (ED) visits relative to the average pre‐implementation rates for HHVBP states. Overall, we found evidence of a 1.2% reduction in Medicare spending due to HHVBP, corresponding to an average $141 million reduction in annual Medicare spending in HHVBP states over the first three years of the model. The reduction in spending among home health Medicare FFS patients was driven primarily by reductions in inpatient hospital spending (−2%) and SNF spending (−4%). We did not find an appreciable difference in savings between the third year—in which payment adjustments were applied—and the first two years of the model prior to HHVBP agencies receiving payment adjustments. CONCLUSIONS: Through the HHVBP Model's first three years—which includes the first year of payment adjustments to agencies—we found modest impacts of HHVBP: lower growth in Medicare spending, declines in unplanned hospitalizations and use of SNFs, somewhat greater increases in ED use, and somewhat greater improvements in many OASIS‐based quality measures among home health patients in the HHVBP states. IMPLICATIONS FOR POLICY OR PRACTICE: The findings from current and subsequent research will inform policymakers, home health care patients, and other stakeholders about potential benefits of expanding the model to include agencies in other states. PRIMARY FUNDING SOURCE: Centers for Medicare and Medicaid Services.