In short, MIPS is the new Medicare payment incentive/penalty system which will begin in 2019. The Medicare Access and CHIP Reauthorization Act of 2015 (also known as the SGR repeal or 'doc fix') included the creation of a new pay-for-performance program called the Merit-Based Incentive Payment System (MIPS). In 2019, MIPS will replace the current PQRS, EHR, and VBM as we know it now. It is also important to note that this program is budget neutral meaning that for every provider that gets a pay increase, there is a provider whose pay is decreased by the same amount.

How does MIPS work? Basically, it calculates a provider's quality or performance score which is then applied to provider payments which will go either up or down based on a provider MIPS score. By the year 2022, signficiant payment adjusts will take place. The following table shows the adjustment amounts by year:





+/- 4%

+/- 5%

+/- 7%

+/- 9%

How is a provider's score calculated? A MIPS score is calculated base on the following four things:

  1. Quality (up to 30 points): initially, this includes measures from PQRS, EHR MU, and Qualified Clinical Data Registries (QCDRs),
  2. Resource use (30 points): initially includes measures from VBM and episodes of care,
  3. EHR Meaningful Use (25 points): EHR Meaningful Use: demonstrated by use of a certified system (not likely to apply to hospital-based physicians), and
  4. "Clinical practice improvement" (this is something new) (15 points): gives credit for clinical practice improvement activities such as MOC Part IV & QCDRs.

This composite score is then compared to a "benchmark" which will be the mean or median of the composite performance scores for all MIPS eligible professionals during a period prior to the performance period. Think back to the bell-curve from high-school match and you get the picture.

Will MIPS apply to everyone? Basically, yes. There are only a few exceptions to the MIPS payment adjustments, such as providers in rural areas, certain specialties and those participating in Advance Payment Models (APMs). Currently, APMs mostly consist of Accountable Care Organizations (ACOs), medical homes (e.g., Patient Centered Medical Homes), and bundled payment models. Providers participating in APMs are further incentivized by a 5 percent pay increase (from 2019-2015) over their non-participating peers.