MIPS: Merit-based Incentive Payment System

What is MIPS?

The Merit-based Incentive Payment System (MIPS) is one of two tracks under the Quality Payment Program (QPP) established by MACRA in 2015. MIPS consolidates three legacy programs — PQRS, the Value-based Payment Modifier, and Meaningful Use — into a single composite scoring system for Medicare-eligible clinicians.

The Four MIPS Categories

MIPS scores are calculated from four performance categories, each weighted differently for 2026:

• Quality (30%): Performance on 6+ quality measures compared to national benchmarks. Each measure is scored 1–10 points based on decile ranking.
• Cost (30%): Medicare spending per beneficiary and episode-based cost measures. No reporting required — CMS calculates automatically from claims data.
• Promoting Interoperability (25%): Electronic health record use, patient engagement, and health information exchange activities scored against required objectives.
• Improvement Activities (15%): Credits for care coordination, population health, beneficiary engagement, and patient safety activities. Most require 90-day performance periods.

Payment Adjustment Implications

The 2026 performance year (affecting 2028 Medicare payments) applies adjustments ranging from +9% for exceptional performers to -9% for poor performers. The performance threshold — the minimum score to avoid a penalty — rises each year. In 2026, clinicians must score above 75 points to receive a positive adjustment. Scores below 18.75 result in the maximum negative adjustment.

Why MIPS Analytics Matters

For a mid-size practice billing $2M/year in Medicare, a 9% penalty represents $180,000 in lost revenue annually. Conversely, exceptional performance bonuses from the exceptional performance threshold (currently 89+ points) can add meaningful revenue. Real-time MIPS tracking throughout the performance year — not just at year-end — is essential to optimize your final composite score and select the highest-performing measures before the submission deadline.