Understanding the Merit-Based Incentive Payment System

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The Merit-Based Incentive Payment System (MIPS) adjusts eligible clinician's Medicare payments based on performance in four categories: 

MIPS Eligibility and Participation Options 

Physicians and multiple other clinician types are eligible for and required to participate in MIPS, as long as they also meet certain other requirements as outlined by CMS.1

Eligible clinicians may participate in MIPS as individuals or at the group practice or APM Entity level. Each year, CMS evaluates each Tax Identification Number/National Provider Identifier (or TIN/NPI) combination, as well as each (TIN), for MIPS eligibility. A single clinician (NPI) who bills Medicare under multiple TINs will receive an eligibility determination for each unique TIN/NPI combination he or she practices under and may be required to satisfy the requirements of MIPS under each separate practice. Additional information about the MIPS eligibility determination process and timeline can be found here.

CMS also evaluates clinicians and groups to determine if they fall into any special status categories (e.g., hospital-based, small practice, rural, etc.). Special status clinicians and groups must still participate in MIPS, but qualify for reduced reporting requirements in certain performance categories. 

CMS also will identify practices and clinicians who are "facility-based" and eligible for facility-based scoring. In general, group practices and clinicians identified as facility-based are attributed to a single facility with a Hospital Value-Based Purchasing (VBP) score. CMS will automatically use the VBP Program score of the hospital in lieu of a MIPS score if the VBP score is more favorable than the clinician's combined Quality and Cost category scores under MIPS. The intent of this policy is to eventually reduce reporting burden for these types of clinicians. CMS has multiple resources on facility-based scoring available for download through the QPP Resource Library, including the Facility-based Quick Start Guide.

Clinicians can check their MIPS-eligibility, including their eligibility for any special status categories and/or facility-based scoring, using the QPP Participation Status Tool. The tool is searchable by NPI and will show eligibility for each unique group practice that the NPI is affiliated with. 

Scoring and Payment Adjustments 

Performance in each MIPS category is weighted and aggregated to determine a clinician's or group practice's MIPS final composite score. Certain categories of clinicians, such as those who meet CMS' definition of hospital-based or ASC-based, qualify for automatic re-reweighting of the Promoting Interoperability category to 0%. If the clinicians does not qualify for re-weighting of any other category, the weight of the Promoting Interoperability category is generally redistributed to the Quality category.

CMS has the authority to adjust the weights of the MIPS performance categories each year. 2021 MIPS performance category weights are as follows: 

Performance Category

Category Weight
Hospital-Based Clinicians
Category Weight
Non Hospital-Based Clinicians
Quality 65% 40%
Cost 20% 20%
Promoting Interoperability 0% 25%
Improvement Activities 15% 15%

Following the performance year, each clinician and group is assigned a MIPS final composite score, which ranges from 0 to 100 points. These scores are compared to a national performance threshold to determine a clinician's or group's Medicare payment adjustment two years following the performance year (e.g., 2021 performance will impact 2023 Medicare payments). The performance threshold is set by CMS each year and represents the minimum number of points needed to avoid a penalty. Payment adjustments are determined on a linear sliding scale such that clinicians or groups with scores at the MIPS performance threshold will receive a neutral adjustment, while those with a score of 100 will receive the highest positive payment adjustment assigned for that year. Those who do not meet the performance threshold will be subject to a negative payment adjustment. 

For the 2021 performance year/20223 payment year, CMS increased the performance threshold to 60 points (from 45 points). Thus, in 2021, clinicians and groups need to score at least 60 total points under MIPS to avoid a Medicare penalty in 2023. The maximum negative adjustment for the 2020 performance year/2022 payment year is set in statute at -9.0%. Since MIPS is a budget neutral program, CMS cannot determine the range of positive payment adjustments for any given year until it knows the total amount collected in negative adjustments. CMS typically releases final payment adjustment amounts in the summer prior to each payment year. 

MACRA also authorizes $500 million for the first six years of MIPS for exceptional performance bonuses. For the 2021 performance year, clinicians scoring between 85-100 points are eligible to receive an additional positive payment adjustment from this pool of funding. 

Note that historically, MIPS positive adjustment amounts have been relatively low compared to negative adjustment amounts. For example, the maximum negative adjustment in 2021, based on 2019 performance, was -5.0% while the maximum positive adjustment was only +1.79% (which includes the additional adjustment for exception performance). CMS predicts that clinicians will have the opportunity to earn higher maximum positive payment adjustments in the future as the agency continues to increase the MIPS performance threshold, making it more difficult for certain clinicians to avoid a penalty. At the same time, MIPS positive payment adjustments over the next year or two may be lower than usual due to a large number of clinicians who apply for an exemption from MIPS penalties due to COVID-19.  

Payment adjustments are made at the Medicare Part B claim level two years following the performance year. CMS typically releases performance feedback, final scores and payment adjustment amounts in the summer prior to the payment year. Application of the payment adjustment is at the TIN/NPI level. If a TIN does not participate in MIPS as a group, each individual clinician will receive his/her own performance score and MIPS payment adjustment. If a TIN participates in MIPS as a group, and none of the clinicians participate as individuals, each clinician will receive the same score and payment adjustment based on the group's performance across all four categories of MIPS.

Data Submission Mechanisms 

Clinicians and groups may collect and report data for MIPS via multiple mechanisms, which are listed here. Although is it common for clinicians and groups to rely on a single mechanism, they are permitted to use multiple mechanisms across performance categories (e.g., report quality measures via claims and improvement activities via QCDR) and within performance categories (e.g., report quality measure A through claims and quality measure B through a registry). 

Members who are not eligible for claims-based reporting because of the size of the practice will have to look to other registries or their EHR. A list of Qualified Registries QRs and QCDRs approved for 2021 can be found in CMS' QPP Resource Library. Clinicians also can find out if their EHR is federally certified and whether it has the capacity to submit MIPS data to CMS by searching the Certified Health IT Product List.  

MIPS data generally can only be submitted to CMS during the MIPS data submission period, which typically occurs from January 2 through March 31 of the year following the performance year (except for quality measures reported via Medicare claims, which are submitted to CMS throughout the performance period). 

MIPS Exceptions 

Note that if you are eligible for MIPS in 2021, but feel there are circumstances out of your control that make it difficult for you to meet program requirements (including the impact of COVID-19), you may apply for an exception to meeting certain or all MIPS program requirements. In certain circumstances, these exceptions may be applied automatically. More information about these exceptions can be found here.

Additional Information

More detailed information about how to participate in MIPS is available through the QPP Resource Library and the QPP Webinar Library.