MIPS Ushers in a New Era, Part 1

Eliminating use of a formula to set base physician payment rates

After more than 17 years, it’s time to say goodbye to the Medicare Sustainable Growth Rate (SGR), a method used to control physician spending by linking physician payments to volume growth. Enacted by the Balanced Budget Act of 1997, not much attention was paid to the SGR until 2002 when Medicare’s base payment rate was cut by 4.8%. The “doc fix” era was ushered in when, in 2003, Congress passed a legislative fix to block SGR-related reductions, an action that has been taken annually ever since.

April 16, 2015 brought an end to the “doc fix” era when President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law. Nicknamed the “dox fix” legislation, MACRA introduced the SGR’s replacement which provides two pathways for updates to physician payments: 1) the Merit-Based Incentive Payment System (MIPS) and 2) participation in Alternative Payment Models (APMs).

The Merit-Based Incentive Payment System

MIPS combines three programs currently in existence-the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBM) and the Electronic Health Records (EHR) Program-into one, comprehensive program. A new program called Clinical Practice Improvement1  completes the four pillars of MIPS which eliminates use of a formula to set base physician payment rates.

Exhibit A: Four Performance Categories

Physicians will be measured annually under MIPS based on the Centers for Medicare and Medicaid Services (CMS) deriving a total composite performance score of 0 to 100 based on performance in each of the four pillars called “performance categories” (Exhibit A). Each physician’s composite score will be compared to a “performance benchmark” or “threshold” defined as the mean of the composite performance scores for all Eligible Professionals (EP) during a period prior to the performance period. Comparing an EP’s composite performance score to the performance benchmark or threshold will determine any resulting payment adjustments. MIPS is a true zero sum game meaning for every EP who receives a positive payment adjustment, there will be one who receives a negative adjustment.

MACRA provides for positive payment updates of 0.5% through 2019, which may be offset by the MIPS payment adjustments of up to +/- 4% in 2019 (based on a 2017 performance year). Exhibit B shows escalating payment adjustments capping at up to +/- 9% in 2022 into perpetuity. Positive or negative adjustments based on a prior period is a familiar concept, e.g. this is the methodology currently used to calculate PQRS adjustments.

Exhibit B: MIPS Implementation Timeline

The MIPS composite performance score will be based on a scale of 0-100 points and the program pillars are weighted as follows:

  • PQRS quality measures and the VBM (up to 30 points)
  • VBM cost or Resource Use measures (up to 30 points)
  • Meaningful Use of Electronic Health Records (up to 25 points)
  • Clinical Practice Improvement (up to 15 points)

Clinical Practice Improvement

Clinical Practice Improvement is worth up to 15 points in the composite scoring and examples of what may be in this category include:

  • Expanded practice access (e.g. same day appointments, after-hours access for clinician advice)
  • Population management (e.g. monitoring health conditions of individuals to provide timely healthcare interventions or participating in a Qualified Clinical Data Registry (QCDR))
  • Care coordination (e.g. timely communication of test results, timely exchange of clinical information to patients and other providers)
  • Beneficiary engagement (e.g. establishment of care plans for individuals with complex care needs, beneficiary self-management assessment and training, and using shared decision-making mechanisms)
  • Patient safety and practice assessment (e.g. use of clinical or surgical checklists and practice assessments related to maintaining certification)
  • Participation in an APM

The ACR has also recommended activities that may qualify including:

  • Participation in a QCDR and other qualified registries
  • Promoting imaging appropriateness among ordering physicians
  • Demonstrating leadership in protocol optimization and management

Eligible Professionals

Part B EPs in 2017 and 2018 include physicians, physician assistants, nurse practitioners, clinical nurse specialists, and nurse anesthetists. This list expands to include physical or occupational therapists, speech-language pathologists, audiologists, nurse midwives, clinical social workers, clinical psychologists, and dietitians or nutrition professionals in 2019 and succeeding years.

There are three classes of Part B providers who are exempt from MIPS and these include:

  • Providers participating in an APM, e.g. the Medicare Shared Savings Program
  • Providers not exceeding a low patient-volume threshold
  • Providers who enroll in Medicare Part B for the first time during a performance year

Every EP’s MIPS score will be published on the CMS Physician Compare consumer website and for the first time, consumers will be able to view their Medicare providers rated on a scale of 0-100 in comparison to peers.

Alternative Payment Models

MACRA also provides for an Alternative Payment Model (APM) Pathway which allows EPs to avoid MIPS participation if they are eligible for and participating in an APM. EPs or groups of EPs who participate in certain types of APMs and who meet defined payment thresholds are eligible for a 5% incentive payment beginning in 2019 and continuing for six years. They are also eligible for a .75% adjustment to the base conversion factor beginning in 2026 which is .5% higher than non-APM participants (see Exhibit B).

APMs are currently defined as a CMS Innovation model, a Medicare Shared Savings Program Accountable Care Organization (ACO) and a CMS demonstration under Section 1866C of the Social Security Act. APMs are expected to evolve with more ambitious value-based payment models, e.g. episode-of-care payments for chronic illnesses, which will require providers to shoulder a significant level of cost risk.

Barbara F. Rubel, MBA, FRBMA, senior vice president, marketing and client services, provides comprehensive support services for MSN Clients from the Request for Proposal process through account implementation.


  1. Clinical Practice Improvement includes activities organizations such as the American College of Radiology (ACR) have identified as critical to improving care delivery or those which the Secretary of Health and Human Services has determined are likely to improve patient outcomes.
  2. The estimated publication date for a Proposed MIPS Rule is July 2016, http://www.saignite.com/resources/faq-about-merit-based-incentive-payment-mips.
  3. MedPac is a nonpartisan legislative branch agency that provides the U.S. Congress with policy advice on the Medicare program, http://www.medpac.gov/.
  4. Yochelson, M. “MedPac discussed obstacles to new doctor payment system,” Medicare Report, October 21, 2015, http://www.bna.com/medpac-discusses-obstacles-n57982062498/.

About The Author