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Nashville Business Journal Awards Healthcare 2024
Sep 5, 2023 12:00:00 AM7 min read

What Is MIPS? Understanding Healthcare's Merit-Based Incentive Payment System

Understanding MIPS (the Merit-Based Incentive Payment System) is a strategic necessity in today's healthcare technology landscape. MIPS lies at the intersection of quality patient care and financial incentives, so it's important healthcare providers and business leaders understand the program's requirements and benefits. In this article, we'll unravel the intricacies of MIPS so you can optimize your organization's healthcare technology strategies to maintain a competitive edge and provide the best patient care. 

What is MIPS? 

MIPS is a performance-based payment program within the U.S. healthcare system. MIPS is kind of like a report card for healthcare providers. It assesses and rewards healthcare providers based on the quality of care they deliver to Medicare beneficiaries. MIPS incentivizes providers to deliver the best care they can: Higher scores can lead to more funding, while lower scores could mean less. 

MIPS was designed to consolidate and streamline several existing Medicare quality reporting programs like the Physician Quality Reporting System (PQRS), Value-Based Payment Modifier (VM), and the Medicare Electronic Health Record (EHR) Incentive Program into a single framework. It also introduced several measures to help reduce the administrative burden on healthcare providers and make participation more manageable. 

MIPS Performance Categories 

MIPS evaluates and scores healthcare providers across four performance categories. The categories contribute to an overall composite performance score (CPS), which ultimately determines the provider's Medicare reimbursement adjustments. Each category carries a certain weight to the composite performance score: 

  1. Quality

    (45% of CPS): The quality category measures effectiveness, safety, and efficiency of care, as well as the whole patient experience. Healthcare companies can boost their quality score in MIPS by leveraging healthcare technology solutions such as electronic health records (EHRs), telehealth applications, and AI-driven diagnostic tools, which not only improve service delivery efficiency but also enhance patient safety and satisfaction.
  2. Cost

    (15% of CPS): The cost category analyzes the cost efficiency of the care provided to patients. It takes into account Medicare Part B expenditures and looks at variables such as hospital readmission rates, the use of services, and the appropriateness of the procedures carried out. Healthcare companies can achieve a high score in the cost category of MIPS by deploying healthcare technology solutions like predictive analytics and AI-driven tools to optimize resource allocation, streamline processes, and ensure appropriate, cost-effective patient care decisions. 
  3. Promoting Interoperability

    (25% of CPS): This category evaluates how well providers can share and exchange patient health information electronically and engage patients through their EHRs. Healthcare companies can achieve a high score in the Promoting Interoperability category of MIPS by effectively utilizing health information exchange systems and keeping up with advancements in EHR technology.
  4. Improvement Activities

    (15% of CPS): The improvement activities category measures the implementation of projects and activities that improve clinical practice or care delivery. For example, implementing patient portals and secure messaging platforms that prevent HIPAA violations can help providers achieve a higher score in the improvement activities category of MIPS because these technologies enable patients to engage more effectively with their care team. 


Our team of experts created this FREE HIPAA compliance checklist so you can know where your organization stands.



MIPS Scoring 

Achieving a high score in MIPS is critical as it not only leads to increased Medicare reimbursement, bolstering the financial health of healthcare providers, but also signifies the delivery of high-quality, efficient, and patient-centric care, which enhances the overall patient experience and satisfaction. 

MIPS scoring works on a point system, with a maximum of 100 points. Each performance category has a set number of points available, which aligns with its relative weight in the total score: Quality (45 points), Cost (15 points), Promoting Interoperability (25 points), and Improvement Activities (15 points). Healthcare providers earn points within each category based on their performance and the reporting of certain required measures. The points from each category are then summed to create the final score, which determines the Medicare payment adjustment received by the provider. 

How to Calculate MIPS Adjustments 

MIPS calculations can be complex, and the specific requirements, measures, and scoring methodologies can change from year to year. Generally, based on your performance, you'll receive a MIPS payment adjustment. This adjustment can be positive, negative, or neutral. 

If your score is above the threshold, you'll receive a positive adjustment, potentially earning you a financial incentive. Exceptional performers may also receive additional incentives in the form of additional positive adjustments. If your score is below the threshold, you may receive a negative adjustment, leading to a reduction in Medicare reimbursements. If your score is close to or at the threshold, you may receive a neutral adjustment. As of 2022, the MIPS payment adjustments were between -9% to +8.25%. 

The MIPS adjustment is typically applied to Medicare Part B payments two years after the performance year. For example, performance in 2023 will affect payments in 2025. Healthcare providers should consult the most recent guidelines and resources provided by the Centers for Medicare & Medicaid Services (CMS) to accurately calculate their MIPS adjustments. 

How to Participate in MIPS 

To participate in MIPS, healthcare providers report on various aspects of patient care and their practice’s overall performance. This data is collected and submitted to Medicare, which evaluates it to assign it a performance score.   

Eligible clinicians participating in MIPS have a few options for how they can report and participate, depending on their practice and preferences:   

  • Individual reporting: Reporting as an individual means that performance is assessed and based on personal data and activities. Eligible clinicians are responsible for their own MIPS scores and payment adjustments.   
  • Group reporting: Eligible clinicians within a group practice can choose to report as a group. Here, the group’s performance is evaluated collectively, and each clinician in the group receives the same MIPS score and payment adjustment based on the group’s performance as a whole.  
  • Virtual group reporting: A virtual group is a combination of individual clinicians or groups who come together virtually to report on MIPS as a single entity. This option allows for more flexibility in forming groups and can be beneficial for smaller or solo practices. 
  • AMP (Alternative Payment Model) entity reporting: Eligible clinicians participating in certain APMs can report MIPS data at the APM entity level. This means that their MIPS performance is assessed and based on the data and activities of the entire APM entity, which includes all participating clinicians within that APM. APMs are value-based payment models designed to promote high-quality and cost-effective care. 

MIPS Reporting Process 

Once you evaluate your reporting options and select the one that aligns best with your practice's goals and resources, it's time to begin the MIPS reporting process by following these steps. 

  1. Eligibility Check: Determine if you are eligible for MIPS participation. Most healthcare providers who bill Medicare Part B and exceed the low-volume threshold are eligible. 
  2. Choose a Participation Option: 
    1. Full Participation: Report data for all MIPS categories to potentially earn higher incentives. 
    2. Partial Participation: Report data for select MIPS categories to avoid penalties. 
  3. Select Reporting Methods: Choose how you'll report data for each MIPS category. This can include claims-based reporting, EHR data submission, qualified registry reporting, or group reporting for eligible clinicians in a group practice. 
  4. Collect and Submit Data: Gather and submit data for the four MIPS performance categories
  5. Review Feedback: After submitting data, review your MIPS performance feedback provided by CMS to understand your performance and potential payment adjustments. 
  6. Payment Adjustment: Based on your MIPS performance, CMS will determine whether you receive positive or negative payment adjustments, affecting your Medicare reimbursements. 
  7. Improvement Planning: Use your performance feedback to identify areas for improvement and develop strategies to enhance your MIPS scores in subsequent reporting years. 

Benefits of MIPS 

MIPS compliance offers healthcare companies several key advantages, including improved reimbursement adjustment rates, access to additional funding opportunities from Medicare, and better quality patient care. From a healthcare technology perspective, MIPS also provides a structure for healthcare providers to evaluate and refine their use of healthcare IT. 

For example, MIPS encourages advancements in technologies that allow for immediate access to test results, medication lists, and the ability to schedule appointments online. This creates a seamless flow of information, enhanced decision-making, and reduced healthcare inefficiencies. These advancements showcase your organization's commitment to quality care, boosting your reputation in the healthcare industry and attracting more patients. 

By actively participating in MIPS, healthcare providers not only optimize their Medicare reimbursements but also drive the evolution of healthcare technology, resulting in improved patient outcomes and a stronger industry reputation. 

Using MIPS Today 

In today's evolving healthcare landscape, effective participation in MIPS can significantly enhance your practice's performance and patient care quality. If you're ready to maximize your Medicare reimbursements and drive technological evolution in your practice, it's time to embrace MIPS fully. Not sure where to start or need a hand with your MIPS reporting process? Our team of experts is ready to help you navigate this journey towards improved patient outcomes and a stronger industry reputation. Schedule a free consultation today.