MIPS (Merit-based Incentive Payment System)

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is a federal legislation that required CMS to create the metric-driven Merit-based Incentive Payment System (MIPS) track of the Quality Payment Program to reward clinicians for value over volume based on performance points scored according to national percentiles. MIPS scores determine Medicare Part B reimbursement and rate providers against national peers.

As mandated by the Bipartisan Budget Act, the Centers of Medicare & Medicaid Services (CMS) gradually increases the MIPS performance threshold toward the goal of establishing the national historical median by the 2022 performance year.

MIPS requirements therefore evolve annually, requiring eligible clinicians participating in the program—who are scored on resource use, quality, clinical practice improvement, and EHR utilization—to keep pace with updates to the MACRA Final Rule. Additionally, as mounting MIPS performance requirements raise the track’s measurement-based financial and reputational stakes, clinicians must keep or exceed the pace of their MIPS peers.

How important is your 2020 MIPS performance? Consider a few bottom-line facts as you head into MACRA Year 4.

FACT 1—MIPS Is Competition

MIPS points, scored according to national percentiles, means you’re in competition with every MIPS practitioner. As MACRA transition leniencies wane, retiring “pick your pace” options, measure benchmarks and score thresholds reach new heights—ramping up the competition among clinicians in MACRA Year 4 to achieve well beyond average MIPS scores.

Gone are the days when MIPS participants could skate by with minimal attention focused on their merit-based performance. MIPS success now demands an organization-wide commitment to continuous performance improvement.

FACT 2—MIPS Is Marketing

Beginning in 2018, MACRA required CMS to publish MIPS composite scores and other MIPS data through its Physician Compare initiative.

MIPS publishes each practitioner’s score within 12 months following the performance year, allowing consumers to see their practitioners rated on a 100-point scale and learn how they compare to other healthcare providers.

Transparent MIPS scores impact revenue connected to patient attraction and retention, but the ramifications come with greater liability. CMS ties the MIPS score to the practitioner, so that if the practitioner changes practices, he or she brings along the score, which then influences physician recruiting, contracting, and compensation plans.

The effects of 1 low-performing year, in other words, extend several years beyond the corresponding payment year.

Tip: If you had a low-performing year, your quickest route to recovery is to invest every effort in following up with a record-high performance.

FACT 3—MIPS Incentives Are Funded by Penalties

As you probably know, each MIPS point a provider earns above the performance threshold (PT) results in higher incentives. Conversely, each MIPS point below the PT, to an established limit, penalizes the provider. Because few providers will receive a zero-payment adjustment resulting from their 2020 MIPS scores, rewards in the 2022 payment year will exceed dollar amounts awarded in the first 3 years of the program.

Low performers in 2020 stand to lose 9% of their Medicare Part B revenue (in 2022). To worsen matters, the financial penalty siphoned off their hard-earned reimbursement will go directly to their high-performing competitors.

Amid escalating competition for incentives—and difficulty in avoiding penalties—MIPS clinicians who ensure their medical coders, billers, and practice managers receive effective annual MACRA education will have the advantage and bank substantial gains on their investment.

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MIPS Performance Categories

MIPS tracks data in four performance categories:

  • Quality,
  • Cost,
  • Improvement Activities, and
  • Promoting Interoperability.

Quality Performance Category

The Quality component of MIPS is the highest weighted performance category, worth at least 45% of a clinician or group’s MIPS final score in the 2020 performance year.

CMS set the data completeness threshold at 70% (for Part B claims, QCDR measures, MIPS CQMs, and eCQMs) of all eligible encounters.

Note: Administrative claims measures, CMS Web Interface measures, and the Consumer Assessment of Healthcare Providers Survey (CAHPS) for MIPS measures have different data completeness requirements. If a measure’s criteria are not met, the clinician could earn as little as 1 point (3 points for small practices) for a measure.

As of 2019, CMS reduced the Quality denominator by 10, and the measure will receive 0 points for groups that submit 5 or fewer quality measures and do not meet the CAHPS for MIPS sampling requirements.

Follow these steps to determine the number of encounters you need to submit to meet a measure’s data completeness criteria:

  1. Choose measures applicable to the practice.
  2. Determine the eligible populations, per measure specifications, such as demographics and codes.
  3. Verify reporting frequency, per measure specifications, and multiply it by the determined population (this is your eligible instances).
  4. Divide your eligible instances by 60% to learn your minimum number of submissions to meet data completeness.

Quality Performance Category Reporting Requirements

To achieve the highest score in this category (60 points), clinicians will need to report on at least six quality measures, including at least one outcome measure or high-priority measure. Clinicians can choose from over 206 measures and must collect a full calendar year of data.

Specialty Set Measures

While providers aren’t restricted to measures listed in the specialty sets that apply to them, they may find these sets helpful when selecting measures. Ultimately, though, providers should choose measures based on how their performance compares with corresponding benchmarks. They must, though, have a 20-case minimum to submit.

Always refer to measure specifications to verify applicable measures—even for those measures within the provider’s specialty set, as not all will be applicable. If the specialty set includes less than six applicable measures, report only the applicable measures. For the selected measures, if a provider or group sees less than 20 eligible patients, only the minimum score can be earned. Also, when outcome measures don’t apply to a practice, chose another high-priority measure.

All-Cause Hospital Readmission

Practices with 16 or more providers and at least 200 eligible cases are included in the additional measure for All-Cause Hospital Readmissions. CMS will calculate this measure from claims data and will score in the same way as the other Quality measures (that have benchmarks), from 3 to 10 points.

With the All-Cause Hospital Readmissions measure, the maximum increases from 60 Quality measure points to 70 Quality measure points (110 to 120 points if reporting via the CMS Web Interface). Clinician groups that submit their data via the CMS Web Interface and administer the CAHPS for MIPS survey have 130 points available.

Improvement Activities Performance Category

The Improvement Activities (IA) performance category focuses on care coordination, beneficiary engagement, and patient safety. Changes in Year 4 include two new activities, seven modified activities, and 15 removed activities.

The IA category is worth 15% of the MIPS final score. To get full credit, a clinician or group must complete activities equal to a maximum 50 points or be a in a Patient-centered Medical Home, Medical Home Model, or similar specialty practice and a MIPS APM.

Clinicians can calculate their performance in this category with AAPC’s MIPS calculator—or use the following scoring formula for Improvement Activities (IA):

IA Score = Total points for completed activities / 50 x 15

Clinicians earn points with high-weighted activities worth 20 points each and medium-weighted activities worth 10 points each. Certain clinicians earn double-points for each improvement activity (High-weighted activities are worth 40 points, and medium-weighted activities are worth 20 points.):

  • Small practices
  • Providers in practices located in a rural area (in a ZIP code designated as rural in the most recent HRSA Area Health Resource File data set)
  • Providers in practices located in a geographic Health Professional Shortage Area
  • Non-Patient Facing Providers or Groups

Patient-facing encounter codes determine non-patient facing status. A non-patient facing MIPS eligible clinician is:

  • An individual who bills 100 or fewer patient-facing encounters (including telehealth)
  • A group with 75% of the clinicians billing under the group’s TIN meeting the definition of a non-patient facing individual

The list of patient-facing encounter codes includes evaluation and management (E/M) codes and surgical and procedural codes.

To earn full credit for an activity, clinicians must perform the activity for 90 continuous days during the performance period.

A group or virtual group may attest to an improvement activity when at least 50% of its MIPS eligible clinicians participate in or perform the activity. At least 50% of the group’s NPIs must perform the same activity for the same continuous 90 days in the performance period.

Because this performance category will be reported through attestation, clinicians should maintain documentation to justify their Yes/No statement in case of an audit.

Promoting Interoperability Performance Category

Promoting Interoperability replaced Meaningful Use to continue the effort for secure exchange of health information and the use of certified EHR technology (CEHRT). For most providers, this category is worth 25% of the MIPS final score.

In some cases, a provider may qualify for an exception from this performance category. In these circumstances, the Promoting Interoperability performance category is reassigned a weight of 0% and the Quality performance category is increased from 45% to 70%.

Beginning in Year 3, the MIPS provider must use 2015 CEHRT. The four Promoting Interoperability include:

  • Health Information Exchange (HIE)
  • Provider to Patient Exchange
  • Public Health and Clinical Data Exchange
  • ePrescribing (10 pts)
  • Query of Prescription Drug Monitoring Program (5 bonus pts) (optional)

Clinicians are required to report certain measures from each of the four objectives, unless an exclusion is claimed. MIPS eligible clinicians who may qualify for an automatic exception from this category include:

  • "Hospital-based” clinicians (those with 75% or more of their Medicare encounters occurring in place of service 21 (hospital), 22 (on-campus outpatient hospital), or 23 emergency room)
  • "Non-patient facing” clinicians (those who don’t typically see patients face-to-face (e.g., radiology, anesthesiology) who bill fewer than 100 patient-facing CPT® codes to Medicare in a 12-month period). CMS has provided a list of the patient-facing CPT® codes. If reporting as a group, at least 75% of the eligible clinicians in the group must meet the non-patient facing criteria.
  • Mid-level providers who are in their first year as a MIPS eligible clinician.

MIP Scoring – Promoting Interoperability

In 2019 CMS eliminated base, performance, and bonus scoring and finalized a new scoring methodology. Performance-based scoring will be at the individual measure level. Each measure will be scored based on the MIPS eligible clinician’s submission of a numerator or denominator, or a yes or no response, where applicable. Also, CMS requires the Security Risk Analysis measure and does not award points for this requirement.

The scores for each of the individual measures will be added together to calculate the score of up to 100 possible points. If exclusions are claimed, the points for measures will be reallocated to other measures.

Cost Performance Category

In Year 4, Cost will be calculated at 20% of the MIPS final score. The weight for this performance category will continue to increase until it reaches 30% of the MIPS final score by payment year 2024, as required by MACRA.

But of the 4 MIPS performance categories, clinicians don’t have control over the Cost portion of their final score. Or do they?

Although the Centers for Medicare & Medicaid Services (CMS) assesses performance in this category using claims data (instead of data submission or attestation), medical coders and auditors who understand the measures CMS uses to evaluate their clinicians’ claims data will be worth their weight in gold.

Factor Cost into the MIPS Final Score

The goal of the Cost performance category is to track national healthcare spending and to use the resulting data, adjusted for risk and other factors, to create benchmarks (see the accompanying sidebar, “What Are Benchmarks?”) for value-based care. CMS uses these benchmarks as a gauge for performance.

The Cost performance category is worth 15% of an eligible clinician or group’s MIPS final score this year. By Performance Year 2022, it will be worth 30%, as required by MACRA. With cost quickly becoming a significant factor in the MIPS final score—the determining factor for MIPS payment adjustments—time is of the essence for clinicians to assess their performance.

The motivation to do so in performance year 2020 is a Medicare Part B single conversion factor somewhere between plus or minus 9% in payment year 2022.

The Cost performance category is assigned a weight of 0% for MIPS eligible clinicians who will be scored under the Alternate Payment Model (APM)—a second track for participation in the QPP—scoring standard because these MIPS APM participants are already being assessed on cost and utilization through their APM entity.

Review Cost Measures for Clues

In MACRA Year 4, CMS will evaluate cost using eight episode-based measures in addition to the two measures used the previous two years (clinicians weren’t scored the first year of MIPS, but data was collected). The measures for this performance period are:

  • Total Per Capita Cost for All Attributed Beneficiaries (TPCC)
  • Medicare Spending Per Beneficiary (MSPB)
  • Episode-based measures:
    • Procedural
      • Elective Outpatient Percutaneous Coronary Intervention
      • Knee Arthroplasty
      • Revascularization for Lower Extremity Chronic Critical Limb Ischemia
      • Routine Cataract Removal with Intraocular Lens Implantation
      • Screening/Surveillance Colonoscopy
    • Acute Inpatient Medical Condition
      • Intracranial Hemorrhage or Cerebral Infarction
      • Simple Pneumonia with Hospitalization
      • ST-Elevation Myocardial Infarction with Percutaneous Coronary Intervention

Understand Measured Criteria

Each measure’s criteria are different, so let’s look at them individually to ascertain what is being measured and how.

Total Per Capita Costs

The TPCC measure assesses total Medicare Parts A and B expenditures for a patient attributed to an individual clinician or clinician group during a performance period (Jan. 1 – Dec. 31) by calculating the risk-adjusted, per capita costs. Patients are attributed to a clinician or clinician group based on the amount of primary care services (shown in Table A) they received by their primary care clinician (PCC)—or specialist, if they don’t see a PCC—during the performance period. Attributable patients must reside in the United States and be enrolled in both Medicare Parts A and B (unless newly enrolled) for the full year. The case minimum for this measure is 20 attributable patients.

Table A: Applicable primary care services for the TPCC measure

CPT®/HCPCS Level II Code Short Description
99201-99025 New patient, office, or other outpatient visit
99211-99215 Established patient, office, or other outpatient visit
99304-99306 New patient, nursing facility care
99307-99310 Established patient, nursing facility care
99315-99316 Established patient, discharge day management services
99318 New or established patient, other nursing facility service
99324-99328 New patient, domiciliary or rest home visit
99334-99337 Established patient, domiciliary or rest home visit
99339-99340 Established patient, physician supervision of patient (patient not present) in home, domiciliary, or rest home
99341-99345 New patient, home visit
99347-99350 Established patient, home visit
99487-99489 Complex chronic care management
99495-99496 Transitional care management
99490 Chronic care management
G0402 Initial Medicare visit
G0438 Annual wellness visit, initial
G0439 Annual wellness visit, subsequent
G0463 Hospital outpatient clinic visit (electing teaching amendment hospitals only)

Medicare Spending Per Beneficiary

The MSPB measure assesses total Medicare Parts A and B expenditures incurred by a single patient attributed to an individual clinician or clinician group during the episode window (up to three days prior to, during, and 30 days following a qualifying inpatient hospital stay) and compares these costs to expected costs.

Each patient MSPB episode is attributed to the MIPS eligible clinician who billed the largest amount of Medicare Part B-allowed charges during the episode window (barring exclusions). The minimum case volume for this measure is 35 patients.

Episode-based Measures

Episode-based measures only look at items and services related to applicable episodes of care, identified by procedure and diagnosis codes reported on Medicare B claims or Medicare Severity Diagnosis-related Group (MS-DRG) codes on Medicare Part A claims.

Each episode-based measure (listed above) has a corresponding measure code list file. The Measure Codes List file is an Excel workbook that provides clinicians with the specific codes and logic that apply to the Cost measure, including episode triggers (applicable codes for the measure), exclusions, episode sub-groups, assigned items and services, and risk adjusters (e.g., Hierarchical Condition Category codes).

Acute Inpatient Medical Condition measures are a little different than Procedural measures in that the episodes are attributed to each MIPS eligible clinician who bills inpatient evaluation and management (E/M) claim lines during a trigger inpatient hospitalization—determined by the MS-DRG—under a Tax Identification Number (TIN) that renders at least 30% of the inpatient E/M claim lines in that hospitalization.

Episode-based measures have minimum case volumes that the MIPS eligible clinician or group must meet to be scored on a given measure:

  • The minimum case volume for Procedural measures is 10 episodes.
  • The minimum case volume for Acute Inpatient Medical Condition measures is 20 episodes.

MIPS eligible clinicians and their support staff should review each measure’s specifications and code list to determine which ones CMS uses to score them. Table B lists each episode-based measure’s trigger codes. Review the actual files for complete metrics.

Table B: Episode-based measures descriptions and trigger codes

Measure Trigger Code(s) or MS-DRG(s)
Routine Cataract Removal with Intraocular Lens (IOL) Implantation 66984
Intracranial Hemorrhage or Cerebral Infarction MS-DRG 064-066, 070-072
Knee Arthroplasty 27446-27447
Elective Outpatient Percutaneous Coronary Intervention (PCI) 92920, 92921, 92928, 92929, 92933, 92934, 92937, 92938, 92943, 92944, C9600-C9608
Simple Pneumonia with Hospitalization MS-DRG 93-95
Revascularization for Lower Extremity Chronic Critical Limb Ischemia 35302-35305, 35371, 35372, 35556, 35570, 35571, 35583, 35585, 35587, 35656, 35671, 37224-37231
Screening/Surveillance Colonoscopy 45378, 45380, 45381, 45384, 45385, G0105, G0121
ST-Elevation Myocardial Infarction (STEMI) MS-DRG 246-251

Create a Line of Defense

Beginning with the 2022 MIPS performance period/2024 MIPS payment year, the Cost performance category% score takes into account improvement scoring. Plan now for a positive future. And remember—your best defense is always documentation and coding that justifies the quality care your clinicians provide.

Take Control of Cost

Three critical steps help clinicians assess their performance in this MIPS category:

  1. Determine if clinicians meet case minimums of attributable patients for the Medicare Spending Per Beneficiary (MSPB) and Total Per Capita Cost for All Attributed Beneficiaries (TPCC) measures.
  2. Determine if clinicians may be assessed under any of the eight episode-based measures by auditing claims for:
    • Episode triggers and windows
    • Item and service assignment
    • Exclusions
    • Attribution methodology
    • Risk adjustment variables
  3. Review benchmarks to determine achievement points and calculate a Cost performance category score (for comparison purposes).

What Are CMS Cost Benchmarks?

CMS establishes a single, national benchmark for each Cost measure, based on claims data from the performance period. As such, there’s an approximate six-month lag between the performance period ending and clinicians finding out how they measured up. For example, the Medicare Spending Per Beneficiary (MSPB) and Total Per Capita Cost for All Attributed Beneficiaries (TPCC) benchmarks used to determine a Merit-based Incentive Payment System (MIPS)-eligible clinician’s 2019 Cost performance category won’t be made public until this summer.

To calculate the Cost performance category for 2020 performance, the CMS will assign one to 10 achievement points to each scored measure based on the clinician or clinician group’s performance on the measure compared to the performance period benchmark.

This year, there are 10 Cost measures, for a possible 100 points total; and the weight of this category is 15% (.15).

The Cost performance category score formula is:

[Earned Points] ÷ [Total Possible Points] = [Percentage]
[Percentage] x [Weight] = [Score]

MIPS Final Score

Performance in the 4 MIPS categories, plus bonus points, factor into a clinician’s annual MIPS score, which CMS caps at 100 points. The category breakdown for the 2020 performance year is:

  • Quality 45% weight, or 60 MIPS points maximum)
  • Cost (15% weight, or 15 MIPS points maximum)
  • Promoting Interoperability (25% weight, or 25 MIPS points maximum)
  • Improvement Activities (15% weight, or 15 MIPS points maximum)
  • Small Practice Bonus (5 MIPS points)
  • Complex Patient Bonus (5 MIPS points maximum)




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