Tom S. Lee, Ph.D.

The Merit-Based Incentive Payment System (MIPS), a new value-based program for Medicare Part B providers, will reward high-performing physicians with incentives of up to 27 percent of Part B baseline payments, while the lowest-performing providers will pay penalties equal to nine percent of Part B.  By rolling up meaningful use (MU), the physician quality reporting system (PQRS), value-based payment modifier (VBM), and other quality initiatives under a single umbrella, MIPS is indeed “the new black” for Part B value-based payments. 

The vast majority of practice providers receiving Part B payments will be subject to MIPS, projected to begin in January 2017. MIPS providers can each earn up to 100 MIPS performance points annually across four performance categories: MU (max 25 points), PQRS/VBM quality (30 points), VBM cost or resource use (30 points), and clinical practice improvement (15 points).  Hence, 85 percent of MIPS is determined by success according to MU, PQRS, and VBM program rules.

Each year, CMS will define a performance threshold, say 50 points, such that a provider earning 50 points will receive zero percent payment adjustments.  A score of 51 will earn a slight incentive, 49 will incur a slight penalty, and the incentive or penalty increases the further the points earned are away from 50.  For instance, a score of 70 might earn an incentive of seven percent, whereas a score of 40 could incur a penalty of three percent. Consequently, every MIPS point translates into dollars.  In addition, CMS sets the performance threshold so that those receiving incentives take money from those receiving penalties, as the entire program is designed to be globally budget neutral.  Hence, MIPS differs greatly from the existing MU program in that “not everyone can win” and from the current VBM program, where performance scores within a broad middle range do not incur penalties.  MIPS intensifies competition among practices nationally and ratchets up the financial stakes.   

In addition to the direct financial impacts, MIPS also publicly reports each provider’s MIPS score on the CMS Physician Compare website.  Consumers will see that Dr. Smith earned 78 points out of 100, whereas Dr. Jones earned only 54 points.  Once consumers see a low score for a provider, it can take years to reverse the reputational damage, particularly as the reported score may reflect a performance period one to two years in the past.

The MIPS legislation was passed by a wide bipartisan majority in Congress in April 2015, as part of the broader Medicare Access and CHIP Reauthorization Act (MACRA), and is now in the CMS rulemaking process. The government is currently creating the MIPS rules and will launch the program in January 2017.  Many details need to be finalized, such as whether providers can earn points for partial MU achievement and how quality data will be submitted to the program. There will likely be only a two-month period between the publication of the MIPS final rule and the start of the program.

What should you do now? First, get educated. Understand what has already been approved in the Congressional legislation versus additional details still being formed in the rulemaking process.  With the start of the program only about a year away, it is not too early to make certain decisions now which can save work or rework later.  For example, the approved legislation grants practices with Patient-Centered Medical Home (PCMH) certification the full 15 points possible in the MIPS clinical practice improvement category.  As a result, PCMH organizations may be well served by maintaining their certifications rather than allowing them to lapse.  To learn more details about what has been finalized within MIPS, see this 

Second, re-examine your existing ways of managing the MU, PQRS, and VBM programs.  It will be difficult to do well under MIPS, while controlling administrative costs, if these programs are not managed in coordination with each other.  For instance, MU and PQRS place differing demands on a practice’s EHR system.  Rather than discussing options with an EHR vendor about MU and PQRS in isolation from each other, it is more efficient to first understand the commonalities and differences across these two components of MIPS, and then have a single discussion about both with the vendor. 

Third, identify which one or two components of MIPS you want to excel at in the first year. The broad scope of MIPS may make it difficult to initially score well versus peers nationally in all four performance categories.   Leverage your strengths and mitigate your weaknesses to be as close to “good enough” as possible.  Once the final MIPS rule is published, try to predict what your MIPS score will be based on your existing performance metrics in advance of the conclusion of the performance year.

Tom S. Lee, Ph.D., helps provider organizations prepare for pay-for-performance programs. He is the Founder and CEO of  

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