Merit-based Incentive Payment System (MIPS)

Key facts

Created by

MACRA (2015); first performance year 2017

Regulations

42 CFR Part 414, Subpart O

Performance categories

Quality, Cost, Improvement Activities, Promoting Interoperability

Payment timing

Adjustment applies two years after the performance year

Maximum negative adjustment

Minus 9 percent, since payment year 2022

What is MIPS?

MIPS replaced three earlier Medicare programs: the Physician Quality Reporting System, the Value-Based Payment Modifier and the Medicare EHR Incentive Program for eligible professionals. It is one of two paths in the Quality Payment Program; the other is participation in an Advanced Alternative Payment Model (APM).

Each year, eligible clinicians receive a final score from 0 to 100. CMS compares that score with a performance threshold, and the result sets a positive, neutral or negative adjustment to their Medicare Part B payments two years later.

How MIPS scoring works

The final score is built from four weighted performance categories, shown here with their standard recent weights:

• Quality (30 percent): clinical quality measures reported by the clinician or group.
• Cost (30 percent): measures CMS calculates from Medicare claims, with no reporting required.
• Improvement Activities (15 percent): attestation to activities that improve care processes.
• Promoting Interoperability (25 percent): use of certified electronic health record technology.

Why MIPS matters

MIPS adjustments are budget neutral, so penalties on low scorers fund bonuses for high scorers. Because most clinicians score above the threshold, positive adjustments have tended to be small, and for many practices the real stakes are avoiding the penalty and managing reporting burden.

CMS publishes MIPS final scores in its public clinician data, keyed to National Provider Identifier (NPI). Analysts use them to gauge practice sophistication, electronic health record use and quality reporting capacity, and to compare clinicians within a specialty or market.

Who MIPS applies to

MIPS applies to eligible clinician types, such as physicians, nurse practitioners and physician assistants, who exceed the low-volume threshold. A clinician or group is excluded with $90,000 or less in Part B allowed charges for covered professional services, 200 or fewer Part B patients, or 200 or fewer covered professional services. Qualifying APM Participants are also excluded.

Since 2023, CMS has offered MIPS Value Pathways (MVPs), specialty-focused measure sets intended to replace traditional MIPS reporting over time. Program rules change through each annual Physician Fee Schedule final rule.