Understanding Merit-Based Incentive Payment System (MIPS)

Did you know that compliance with MIPS costs $12,800 per clinician annually? Besides, physicians spend 53 hours annually on MIPS-related tasks. 

In the US, all physicians must participate in the MIPS program. However, there are a few exceptions:

• If you are a qualifying participant in an advanced alternative payment model (APM).
• If you receive fewer than 200 Medicare Part B patients.
• If you bill less than $90,000 in Part B covered professional services annually.
• If you are in your first year of participating in the Medicare program.

If any of the above is true, you are exempt from the program.

This guide will cover everything you need to know about MIPS reporting, categories, calculation, and challenges. So, continue reading!

What is MIPS Reporting?

It stands for Merit-based Incentive Payment System. It was established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). 

It is a program that determines future reimbursement adjustments for physicians treating Medicare Part B patients. But, how? Well, it evaluates providers based on technology use, cost, quality, and practice improvement activities. 

When did it come into effect? On January 1, 2017. It combined three existing quality and value reporting programs, namely Meaningful Use (MU), Value-based Modifier (VBM), and Physician Quality Reporting System (PQRS), into a single point-based program. Simply put, it is a major catalyst that is transforming the healthcare space from fee-for-service to value-based care.

For context:

• Physician Quality Reporting System (PQRS): It requires providers to report data on quality measures.
• Meaningful Use/EHR Incentive Program (MU): It focuses on the meaningful use of certified EHR technology (CEHRT) to improve patient care.
• Value-Based Modifier (VBM): It assesses the quality and cost of care provided.

Medicare MIPS Performance Categories

Did you know there are four MIPS performance categories that Medicare uses to evaluate participating physicians? These are discussed below:

1. Promoting Interoperability (PI)

The focus of this category remains on the electronic exchange of health information using CEHRT. It is an important metric to ensure improved patient engagement and care coordination.

It primarily focuses on the following five objectives:

• Electronic prescribing.
• Health information exchange.
• Provider to patient exchange.
• Public health and clinical data exchange.
• Protection of patient health information.

2. MIPS Quality Measures

This MIPS performance category is used to evaluate patient experiences, healthcare processes, and outcomes to ensure they align with the set goals. 

There are several types of MIPS quality measures available. Some of these are discussed below:

High-Priority Measures

They primarily focus on specific goals set by regulatory agencies. These include care coordination, patient experience, safety, and efficiency.

For example: Documentation of current medications in the medical record.

Outcome Measures

These measures focus on the effects of a treatment or intervention, both positive and negative. 

For example: Readmission after coronary artery bypass graft (CABG) surgery.

Process Measures

These evaluate whether the provider followed standard-of-care guidelines that are proven to maintain and improve health outcomes.

For example: Aspirin at arrival for acute myocardial infarction.

3. Cost

The Centers for Medicare & Medicaid Services (CMS) calculates this MIPS performance category automatically using administrative medical claims data. It helps evaluate the total cost of care provided to Medicare beneficiaries. That is, healthcare providers don’t have to submit separate data for this category.

But why does it matter? It helps gauge whether the patient is receiving the right care at the right time.

Note that 35 cost measures are available for the 2026 performance period.

• 2 population-based cost measures focused more broadly on primary and inpatient care.
• 33 episode-based cost measures based on care settings, chronic conditions, medical conditions, and acute inpatient medical conditions.

4. Improvement Activities 

It involves participating in activities that improve patient care and clinical practice. These include shared decision-making, patient engagement, and population health management.

MIPS Reporting Requirements

This section will cover the reporting requirements for each performance category:

Quality Measures Reporting Requirements (30% Weightage)

You must fulfill the following reporting requirements for MIPS quality measures:

• Submit data for six quality measures, including at least one outcome measure. But what happens when an outcome measure is unavailable? Then you must select a high-priority measure. OR, you can report a complete specialty measure set.
• You must record data for the complete calendar year from January 1, 2026, to December 31, 2026.
• You are required to report on at least 75% of the eligible cases (patients) for each measure, regardless of the insurance carrier.

Cost Measures Reporting Requirements (30% Weightage)

Note that you do not need to perform manual MIPS data submission for this category. The reason? As established in the previous section of this guide, CMS automatically calculates these scores using administrative claims data.

Note: CMS collects performance data for the full calendar year (January 1, 2026, to December 31, 2026).

However, healthcare providers receive performance feedback on cost measures so they can identify areas for efficiency without sacrificing quality.

Promoting Interoperability Reporting Requirements (25% Weightage)

Since this MIPS performance category focuses on the electronic exchange of health information through CEHRT, you must fulfill the following requirements:

• Complete the Safety Assurance Factors for EHR Resilience (SAFER) Guides self-assessment.
• Perform and attest to a Security Risk Analysis during the calendar year.
• Provide your CMS EHR certification ID.
• Use an EHR certified to the current ONC criteria.
• Submit a minimum of 180 continuous days of performance data to the CMS.

Improvement Activities Reporting Requirements (15% Weightage) 

Reporting requirements for this MIPS category are as follows:

• If you have a small practice, rural, non-patient-facing, or health professional shortage area special status, you must attest to one activity (high or medium-weighted).
• All other clinicians are required to attest to two activities.

How are MIPS Scores Calculated?

The MIPS score ranges from 0 to 100 points. It is calculated by aggregating the points earned in four performance categories, each weighted according to CMS guidelines.

With that said, let’s review the calculation process:

Understand the Point Distribution Per Category

CMS determines your performance within each performance category to find your total MIPS score:

1. Quality

• You can earn a maximum of 30 points.
• CMS awards you points for each of the six quality measures you report.
• You earn points based on how your performance compares to historical benchmarks.

2. Cost

• It has a maximum of 30 points.
• CMS automatically calculates this using administrative claims data.
• Points are assigned by comparing your data with that of other healthcare practitioners or groups for specific cost measures.

3. Promoting Interoperability

• This category has a maximum of 25 points.
• You can earn these points based on your performance on specific objectives, such as patient access and e-prescribing.

4. Improvement Activities 

• Within this MIPS category, you can earn up to 15 points.
• You can earn these points by attesting to the completion of activities.
• Most healthcare providers must complete two high-weighted or four medium-weighted activities to get full points.

The MIPS Score Calculation Formula

Note that the final MIPS score is the sum of the weighted points from each category.

Let’s review an example to understand how the calculation works!

Imagine a physician earns the following percentages in each performance category:

• Quality: 80% (0.80 x 30 = 24 points)
• Cost: 70% (0.70 x 30 = 21 points)
• Promoting Interoperability (PI): 90% (0.90 x 25 = 22.5 points)
• Improvement Activities (IA): 100% (1.00 x 15 = 15 points)

Thus, based on this data, the final MIPS score will be:

• Total Score: 24 + 21 + 22.5 + 15 = 82.5 points

How Does the Score Impact Physicians?

Once the total MIPS score is calculated, CMS compares it against a performance threshold, which is currently 75 points.

• Above the Threshold: Results in a positive payment adjustment on Medicare Part B payments.
• At the Threshold: You receive a neutral (0%) adjustment.
• Below the Threshold: Leads to a penalty, i.e., a negative payment adjustment, which can be as high as -9%.

What is a Good MIPS Score?

A good score for the 2026 performance year is 75 points or higher.

How to Submit MIPS Data?

You can ensure MIPS data submission to CMS by any of the following methods:

1. Direct Submission

This is the easiest way to submit the data. How does it work? Groups or healthcare practitioners can submit data directly from their CEHRT using a secure application programming interface (API).

Simply put, your EHR system communicates directly with the CMS Quality Payment Program (QPP) portal. This way, you eliminate the risks of transcription errors.

2. Sign-In and Upload

Another method is to manually upload your MIPS performance data files to the QPP website. For this, data must be in specific file formats, most commonly QRDA III (XML) or QPP JSON.

How does it work? First, log in to the QPP portal. Next, navigate to the ‘submission’ section. Then, upload the files generated by your EHR or registry.

3. Third-Party Intermediaries

If you do not want to handle the data submission in-house, outsource it to an external organization. These include:

• Health IT Vendors: Some EHR vendors manage the MIPS data submission process.
• Qualified Registries: These entities collect clinical data from you and submit it to CMS on your behalf.
• Qualified Clinical Data Registries: These are similar to registries but often track specialty-specific measures.

MIPS Reporting Challenges

The following are some of the key challenges physicians and group practices encounter in MIPS reporting:

Data Accuracy & Completeness

The biggest challenge in MIPS reporting is to meet the 75% data completeness threshold. 

Data gathering is challenging for healthcare providers with a diverse patient population. The reason? You are required to submit data for all patients, i.e., Medicare and non-Medicare beneficiaries. 

Misreporting a single denominator or numerator can lead to a zero score for that measure.

For context, 

• Numerator: The target quality actions defined within the measure.
• Denominator: The total number of eligible patients.

EHR Limitations

Note that even if you use CEHRT, overcoming technical barriers is challenging. That is, sometimes EHRs may not be configured to capture specific data points for every MIPS measure. As a result, healthcare providers are required to perform the manual workarounds.

That’s not all; transitioning to a new EHR system during a performance year can result in fragmented data. That is, it becomes nearly impossible to aggregate a full calendar year report without significant manual effort.

Specialty-Specific Gaps

Specialized clinics, such as ophthalmology, struggle to reflect their daily practice with general MIPS quality measures.

As a result, specialists end up reporting on topped-out measures where even a 100% score yields minimal points.

Ever-Evolving Regulations

CMS updates MIPS rules, measures, and performance thresholds annually. This means that a score that earned a bonus last year might only result in a neutral adjustment this year. 

Moreover, the weight of the performance category may also shift with changing regulations. 

High Administrative Burden

Small and medium-sized practices often struggle to maintain the level of administrative supervision required for MIPS compliance.

Partner With MediBillMD 

To summarize, MIPS is a CMS program that evaluates Medicare-participating physicians based on performance measures, such as quality, promoting interoperability, improvement activities, and cost.

But reporting for MIPS is not a piece of cake if your revenue cycle management (RCM) is strained. Effective RCM aligns directly with MIPS by transforming coding accuracy, data collection, and clinical documentation into higher, value-based reimbursements.

Thus, if you want a good MIPS score, you must first streamline your revenue cycle. If you lack the resources to handle revenue cycle operations in-house, feel free to outsource RCM services to professionals at MediBillMD.