MIPS 101: A Guide to the Merit-Based Incentive Payment System

March 30, 2020 by Antonio Arias, MBA, CHBME

Topics: Medical Billing, Revenue Cycle Management, Practice Management

In the decade following the passage of the 2010 Affordable Care Act (ACA), there has been a variety of incentive programs utilized to help shift the healthcare industry from a fee-based model to a value-based model. For several years, healthcare practices had to be comfortable with three major programs: Meaningful Use (MU), Physician Quality Reporting System (PQRS), and Value-Based Modifier (VBM). Understanding the ins and outs of each program proved complicated and, at times, burdensome.

In 2015, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA), which went into effect in 2017 and rolled three incentive programs into one unified structure known as the Merit-Based Incentive Payment System (MIPS). The legislation repealed the Medicare Part B Sustainable Growth Rate (SGR) reimbursement formula and replaced it with a new value-based reimbursement system called the Quality Payment Program (QPP). The QPP consists of two tracks: Advanced Alternative Payment Models (Advanced APMs) and MIPS.

How Does MIPS Work?

Under the MACRA guidelines, Medicare quality and value programs were essentially integrated into composite “performance scores” for each participating clinician. The Centers for Medicare & Medicaid Services (CMS) measures individual scores against a defined performance threshold; those doctors whose previous year’s average score equals that of the performance threshold do not have their medical billing payments affected, but those who fall short see a negative adjustment. To further encourage physicians to improve their scores, high performers can earn bonus payouts, with $500 million allocated to provide additional incentives to performers with scores in which exceed the exceptional performance threshold (the thresholds increase each MIPs year).

A MIPS score measures performance in four particular areas, each one weighted to a set value that is adjusted each year. 


Quality remains the key focus of MIPS performance incentives. This category was previously assessed by PQRS. It evaluates the quality of care that a healthcare practice delivers, based on specific performance measures created by CMS in consultation with professional and stakeholder groups. Clinicians must choose and report on six measures that are most relevant to their practice, including one outcome measure. For 2020, Quality makes up 45% of the total MIPS score.

Promoting Interoperability (PI)

Previously known as the Advancing Care Information, this category emphasizes patient engagement and the electronic exchange of health information through certified electronic health record technology (CEHRT). It evaluates how well clinicians share health information with other clinicians and other health facilities to coordinate patient care. Prior to MACRA, this category was assessed by the Meaningful Use incentive program. For 2020, PI makes up 25% of the total MIPS score.

Improvement Activities

The new performance category created under MACRA legislation, this area measures how well clinicians improve their care processes, enhance patient engagement, and increase access to care. As with the Quality performance scores, clinicians can choose the activities that are most relevant to their healthcare practice when they participate in the program. This category makes up 15% of the total MIPS score in 2020.


Formerly measured by the VBM score, the Cost category calculates the total cost of care provided based on the participating clinician’s Medicare claims. A variety of cost measures are used to assess the total cost of care throughout the year for a clinician’s patients. While this category was not initially calculated as part of the final MIPS score, it went into full effect in 2018. For 2020, it makes up 15% of the score.

Why MIPS Wasn’t a Huge Change

Although the passage of the MACRA legislation created a great deal of anxiety among healthcare practices concerned over how the changes would impact their value-based reporting, in practice, the change wasn’t as significant as some people feared. There are a few reasons why the transition proved relatively smooth (at least as far as healthcare regulations go!):

It Measures What Practices Were Already Reporting

MIPS is designed to award bonuses and impose penalties to physicians based on whether they score above or below certain thresholds on the quality measures currently assessed via PQRS, VBM, and Meaningful Use. The three existing reporting programs wrapped to a close by 2018, but their existing standards were folded into MIPS’s four new assessment categories. Money from penalties that would have been assessed under the previous programs remained in the Medicare physician fee schedule, increasing total payments compared to the old baseline.

The Eligible Professionals (EPs) Didn’t Change 

Doctors of Medicine or Osteopathy, Dental Surgery or Dental Medicine, Podiatric Medicine, or Optometry became eligible for inclusion in MIPS in 2019, along with chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, physical therapists, occupational therapists, and clinical psychologists. Other professionals paid under the physician fee schedule may be included in MIPS beginning in 2021, pending the creation of viable performance metrics. Professionals receiving a significant portion of their revenues from alternative payment models were largely excluded.

It Boosted Revenue Cycle Management

The American Academy of Family Physicians (AAFP) called MIPS “the first real opportunity for high-performing physicians to earn substantial bonuses, and for all physicians to avoid penalties if they meet prospectively established quality thresholds.” Payments to professionals under MIPS started in 2019, beginning with 4 to 9 percent “performance improvements payments.” 

It Changes a Bit Year Over Year

When it comes to Quality, the standards to which EPs are held are set and published annually. Each year, the Secretary of Health and Human Services (HHS) publishes through notice and comment rulemaking a list of quality measures to be used in the forthcoming MIPS performance period, and eligible professionals can vote on and select which measures make the final cut.

Should You Hire a MIPS Expert for Your Practice?

The doctors and nurses in your office are experts at what they were formally trained to do: diagnose and treat patients in their specialty. Your top coders, administrators, and billers have all earned expertise in their fields, too (whether through professional education or on-the-job know-how).

Preparing for MIPS

When it comes to incentive program participation, however, almost no one is a true expert… which is perhaps why everyone – doctors, billers, and front desk alike – tends to think they are.

For many practices, adherence to government programs such as MIPS is an all-hands-on-deck exercise across the office, with dozens of people handing off reporting responsibilities to one another. Often, the efforts are excessively inefficient.

According to an MGMA survey, nearly half of physician practices spend more than $40,000 per full-time physician per year on complying with Medicare payment and incentive programs. The costs mount for a variety of reasons – from the loss of physician productivity to staff training needs to IT expenses.

Part of the problem is that program requirements are an ever-moving target. For example, MIPS is subject to a variety of alerts, deadlines, and reporting changes. Responding to those changes effectively takes concerted coordination among staff, service providers – such as your medical billing service or EHR partner. But if your whole office “shares” MIPS expertise (or a collective lack thereof), there may be no point person monitoring for updates and ensuring they’re met – let alone herding the necessary forces to meet them in an efficient, streamlined way. That lack of ownership and management can lead to reporting mistakes and turn MIPS participation into a morale-killing exercise. 

The Value of a “MIPS Manager”

By hiring a dedicated MIPS expert to manage program adherence – or training up one of your existing staff members to act as your end-to-end ‘MIPS Manager’ – you can minimize office-wide inefficiencies while boosting your odds of obtaining incentives.

Consolidating expertise with a central staff member can even help others stay informed in a more cohesive way. For example, your MIPS Manager can share email updates with your office on program requirements, results, and reimbursements. That kind of knowledge sharing can help make MIPS participation feel more tangible and impactful (as opposed to being perceived as “just another” a required reporting exercise).

So how should you start? Contact your HHS Regional Extension Center to ask questions and connect with a MIPS education partner. From there, assess whether you have enough resources in-house to put a staff member on this complex initiative full-time, or whether you may need outside help.

We’d recommend all practices determine who their dedicated MIPS expert is and invest in keeping them as knowledgeable as possible. If that’s beyond your current practice’s means, consider working with a trusted medical billing firm with a wealth of incentive-program expertise of their own.

At NCG Medical, we’ve helped numerous healthcare practices meet the ever-shifting demands of MIPS requirements to ensure they get the reimbursements they’re entitled to. Our team of medical billing experts keeps a close eye on the latest regulatory changes to make sure our clients are engaging in best practices. To find out what an experienced medical billing service can do for your healthcare practice, contact us today for a consultation.

Working with a medical billing firm may help your practice prepare for MIPS earn incentives under the current Medicare reporting programs. For more information, contact NGC Medical Billing.

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