At the beginning of a new year, a physician notices something odd on the Medicare remittance. There is a payment adjustment column showing a 9 percent reduction. The practice manager calls the billing team. Nobody can give a clear answer. After some digging, someone traces it back to MIPS performance from two years earlier. The practice had participated, submitted some data, assumed everything was fine, and never followed up on the actual score. The score was not fine.

This plays out in medical practices every year. MIPS is one of those programs that practices know they are supposed to deal with but never fully understand until the payment hit shows up. By then the performance year is long over and nothing can be changed.

MIPS stands for Merit-based Incentive Payment System. It is the main quality payment track for eligible clinicians who bill Medicare Part B. What a practice scores in MIPS during a given year determines whether their Medicare payments go up, go down, or stay flat two years later. For any practice with meaningful Medicare volume, a swing of five to nine percent on total Medicare reimbursements is real money. Not theoretical money. Money that either shows up or does not.

This guide explains what MIPS is, who falls under it, how the scoring actually works, what the payment consequences are, and what practices need to do to come out ahead.

Where MIPS Came From?

MIPS was created by MACRA, the Medicare Access and CHIP Reauthorization Act of 2015. MACRA eliminated the old Sustainable Growth Rate formula, which had become a running joke in physician circles because Congress kept passing last-minute fixes to stop automatic payment cuts that were never actually going to be allowed to happen. The doc fix became an annual ritual.

MACRA replaced all of that with two payment tracks. The first is MIPS. The second is the Advanced Alternative Payment Model track, for practices taking on real financial risk through programs like accountable care organizations. Most physician practices end up in MIPS by default because the APM track requires participation in specific CMS-approved models that are not available to every specialty or every market.

The policy idea behind MIPS is simple even if the execution is not. Instead of paying physicians purely based on how many services they perform, MIPS adds a performance layer. Quality, efficiency, use of health technology, and clinical improvement activities all factor into whether your Medicare payments get bumped up or cut back. The volume-based fee-for-service model still exists underneath MIPS. MIPS just adds a modifier on top of it.

In the 2023 MIPS performance year, more than 750,000 clinicians were eligible. Roughly 93 percent of those who submitted data avoided a negative adjustment or earned a positive one. The practices that took penalties were almost all ones that submitted nothing at all or submitted so little that their score came in below the threshold. Non-participation is by far the most expensive MIPS mistake a practice can make.

Who Needs to Participate in MIPS

Not every Medicare-billing clinician is required to participate. CMS sets thresholds each year, and falling below any one of them gets a clinician classified as a low-volume exception, meaning they are off the hook for that year.

The Three Eligibility Thresholds

To be required to participate in MIPS, a clinician must exceed all three of the following during the prior period:

• More than 200 Medicare patients seen
• More than 200 covered professional services provided
• More than $90,000 in Medicare Part B allowed charges

The clinician doesn’t have to be involved in any of these three areas if they fall short of any of the three. As such, they may still elect to be involved in the program, as long as there are no penalties associated with their lack of participation. Because the threshold numbers vary slightly from year-to-year for full time physicians, solo practitioners with small Medicare patient panels, and new providers that have just entered into the Medicare system, it’s good practice for all of them to check on this annually.

Who Is Exempt?

Clinicians who qualify as participants in an Advanced APM are excluded from MIPS entirely. They receive a separate five percent APM incentive instead. New Medicare enrollees are also excluded in their first year of billing Part B.

Beyond those categories, MIPS covers a broad range of clinician types: physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists. If you bill Medicare Part B and exceed the thresholds, MIPS applies to you.

Group vs. Individual Reporting

Practices choose each year whether to report as a group under the practice TIN or as individual clinicians under their own NPIs. Group reporting pools everyone’s performance together. This helps lower-performing clinicians when the group average is higher than their individual numbers would be. It hurts high performers when the group average drags their scores down.

Look at both options before the performance year ends. The math is not always obvious, and the right choice changes depending on the mix of clinicians in the group and how the quality measure data looks across the team.

The Four MIPS Performance Categories

MIPS scoring is built on four categories. Each one carries a specific weight toward the final composite score. The 2024 weights are used throughout this guide.

Quality: 30 Percent of the Score

Quality is where most practices put the most work. The requirement is to report on six quality measures, including at least one outcome measure or high-priority measure. CMS maintains a list of hundreds of measures. Practices pick six that fit their clinical work and patient population.

Scores are based on how the practice’s performance compares against national benchmarks. Top decile performance earns maximum points. Average performance earns moderate points. Below the minimum threshold earns nothing. The total Quality score averages across all six measures.

Measure selection is where practices either set themselves up for a strong score or struggle unnecessarily. The right six measures are the ones where the practice’s patient population gives the highest likelihood of strong performance and where data collection is manageable. Picking measures randomly or defaulting to familiar ones without looking at benchmark distributions is a common mistake that costs points.

• At least one outcome measure must be included. If none apply to the specialty, a high-priority measure substitute.
• Data completeness requires reporting on at least 70 percent of eligible patients per measure. Below 70 percent earns zero for that measure regardless of how good the performance numbers are.
• New measures without established benchmarks may not score competitively. Stick to measures with published benchmark data.
• CMS publishes benchmark distributions for every measure. Review them before finalizing your measure set.

Promoting Interoperability: 25 Percent of the Score

This category was called Meaningful Use for years before CMS renamed it. It measures how effectively a practice uses its certified electronic health record system to share information, give patients access to their records, and connect with public health systems.

The category requires a certified EHR. Without one, the score for this entire 25 percent category is zero unless a hardship exception is granted. No workaround exists for that.

The required measures cover:

• Electronic prescribing: sending prescriptions to pharmacies electronically rather than on paper.
• Health information exchange: sending and receiving patient summaries during care transitions.
• Patient access: making health records available to patients through a portal or connected app.
• Public health reporting: submitting immunization data or electronic case reports to public health agencies.

Practices with a reasonably current EHR that has the patient portal activated can usually achieve a competitive PI score without doing much beyond their normal workflow. The measures mostly reflect things a modern EHR does by default. Practices on outdated systems or paper documentation face a much harder road here.

Improvement Activities: 15 Percent of the Score

This category gives credit for participating in activities that improve how care is delivered. CMS maintains a list of over 100 recognized activities. Practices select activities from the list, perform them for at least 90 consecutive days during the performance year, and then attest that they did them.

The category is satisfied by completing either two high-weight activities or four medium-weight activities. The activities cover a wide range of clinical and operational improvements including care coordination programs, patient safety initiatives, shared decision-making tools, and quality improvement programs.

Many practices are already doing things on the list without knowing it qualifies. A practice participating in a team-based care model, using a patient satisfaction survey, or implementing depression screening is likely already performing activities that count. The problem is that doing the activity without submitting the attestation earns zero. The QPP system needs to know it happened.

Cost: 30 Percent of the Score

Cost is the one category that requires no action from the practice. CMS calculates it automatically from Medicare claims data. There is nothing to submit and no way to opt out.

Two main measures feed the Cost score. The total amount of money spent by Medicare on a particular physician’s care for a given beneficiary over a period of time (episode) compared to the average for other physicians with similar types of cases, taking into account the type of case and its associated costs. Episode-based cost measures consider the costs associated with episodes related to certain diagnoses such as knee replacements or heart surgeries.

Since the cost metric is based upon a claim payment source rather than a submission made by your practice, the only method you have of affecting this metric is through your direct care delivery/management. Reducing unnecessary tests, improving coordination of care while patients are in the hospital, reducing avoidable hospital readmission rates and eliminating redundant medical services will contribute to lowering the per-physician/beneficiary cost number over time. Physicians participating in Accountable Care Organizations (ACO’s) or formalized care management initiatives that collect and report these metrics generally receive higher scores regarding cost than do physicians who provide isolated care without using a coordinated process.

How the Final Score Works and What It Means for Payment

The composite MIPS score is a weighted average across all four categories. With 2024 weights of 30 percent Quality, 25 percent PI, 15 percent IA, and 30 percent Cost, the math produces a score on a 100-point scale.

The performance threshold for 2024 is 75 points. A score exactly at 75 produces no adjustment, positive or negative. A score above 75 produces a positive payment adjustment on Medicare Part B reimbursements. A score below 75 produces a negative adjustment.

The maximum negative adjustment for not submitting any MIPS data at all is currently 9 percent. The maximum positive adjustment varies based on how the payment pool calculates each year, but additional exceptional performance bonuses are available for very high scorers.

How to Submit MIPS Data

Direct EHR Submission

Practices with modern certified EHRs can push Quality and PI data directly to CMS through their vendor’s QPP submission connection. The EHR collects the data, the vendor manages transmission, and the practice confirms submission was accepted. This is the cleanest option for practices whose EHR generates the required measure data and whose vendor supports direct QPP reporting.

Qualified Registry

A qualified registry collects clinical data from the practice and submits it on the practice’s behalf. This works well for specialty practices whose EHR does not natively support their preferred quality measures, or for practices that want a third party managing the submission process to reduce the risk of errors and missed deadlines.

Registries charge a fee, usually per provider. For practices that have previously submitted late, submitted incomplete data, or received unexpectedly low scores, the registry cost is often recovered through better performance and avoided penalties.

Qualified Clinical Data Registry

Specialty societies in cardiology, orthopedics, oncology, and other fields operate their own clinical data registries called QCDRs. These registries offer specialty-specific quality measures that may not be available in the standard CMS measure library. Using a QCDR often results in higher Quality scores because the measures are built around what that specialty actually does clinically, rather than general measures that may not apply well.

Claims-Based Submission

Some quality measures can be submitted by adding CPT Category II codes or G-codes directly to Medicare claims. This is the simplest option technically but also the most limited in terms of which measures are available. It works for small or solo practices that do not have the infrastructure for EHR or registry submission but want to report something to avoid a complete non-reporting penalty.

Exceptions and Special Situations

Small Practice Status

Practices with 15 or fewer eligible clinicians get five bonus points added to their composite score automatically. They also get a reduction in the Cost category weight, which matters because Cost is harder to influence directly. Small practices are also eligible for free one-on-one MIPS technical assistance through CMS-funded support organizations. These organizations are genuinely helpful and far underutilized.

Hardship Exceptions

CMS grants exceptions that waive or reweight certain categories for practices facing extreme circumstances. Natural disasters, major infrastructure failures, public health emergencies, and specific EHR hardship situations all qualify. The exception has to be applied for through the QPP system before the submission deadline. Practices that experienced qualifying situations but never filed for an exception do not receive any retroactive benefit. File the application on time or the opportunity is gone.

MIPS Mistakes That Show Up Year After Year

After working with practices on MIPS compliance, the same errors come up constantly. These are worth knowing by name.

• Not checking eligibility at the start of the performance year. A practice that grew its Medicare panel and crossed the threshold without realizing it discovers the obligation too late to participate meaningfully.
• Choosing quality measures without reviewing benchmark distributions. A measure where the practice performs at the 50th percentile earns far fewer points than one where performance is in the top quartile.
• Reporting on fewer than 70 percent of eligible patients for each measure. This fails the data completeness requirement and earns zero points for the measure regardless of performance quality.
• Completing improvement activities but not submitting the attestation. The activity must be logged in the QPP system to count for anything.
• No certified EHR. Without CEHRT, the entire 25 percent PI category scores zero unless a hardship exception is filed.
• Submitting data at the last minute and not confirming the submission was accepted. A technically failed submission after the deadline is treated as a non-submission.
• Ignoring the Cost score until the final composite is posted. By then nothing can be changed.
• Missing the submission deadline entirely. It falls in late March following the performance year. Late submissions are not accepted. There is no grace period.

Final Thoughts

MIPS program has been running since 2017, the rules have gotten more refined over time, and the financial stakes have stayed real. Practices that build MIPS into their operational calendar, pick measures thoughtfully, document improvement activities as they happen, and check their scores before the performance year ends will always do better than those treating it as a once-a-year scramble in March. The difference shows up in the payment adjustment column two years later. And once you understand what that column means, the work of doing MIPS right is a lot easier to justify.