MIPS (Merit-based Incentive Payment System)
A CMS value-based payment program under which eligible clinicians receive positive, negative, or neutral adjustments to their Medicare Part B payments based on performance across four categories: quality, cost, improvement activities, and promoting interoperability (health IT use). MIPS was established by MACRA in 2015 and applies to most clinicians billing Medicare Part B above the low-volume threshold.
Why this matters for your clinic
MIPS directly adjusts how much you get paid per Medicare claim. High performers receive a positive payment adjustment on all Medicare claims for that payment year. Low performers receive a negative adjustment. The adjustments are applied two years after the performance year (your 2024 performance affects 2026 Medicare payments), which makes them easy to ignore until they hit your remittance.
The performance categories shift over time and the scoring methodology is updated annually. Quality performance alone is not enough for a high score. Improvement Activities and Promoting Interoperability contribute significantly to the composite score, and clinics that ignore those categories often score below the performance threshold even if their clinical quality metrics are strong.
MIPS participation is also a prerequisite for exceptional performance bonuses and a pathway to understanding whether a more advanced alternative payment model (APM) makes financial sense. The data infrastructure built for MIPS reporting is often the same infrastructure needed for value-based contract management.
What good looks like
CMS publishes annual MIPS performance threshold scores and payment adjustment percentages in the Physician Fee Schedule final rule. The exact adjustment percentages change each year. CMS also publishes QPP (Quality Payment Program) participation data showing score distributions across eligible clinicians.
Example
A 4-provider physical medicine group earns a MIPS composite performance score of 82 out of 100 in 2024. This places them in the positive payment adjustment range. Their Medicare billing in 2024 was $480,000. The positive MIPS adjustment for 2026 payments adds approximately 1% (the 2026 max positive adjustment is +1.05%, the lowest in program history per CMS QPP) to their Medicare reimbursement on claims, worth roughly $4,800 per year in additional revenue without any change in patient volume or coding. Negative adjustments still go up to -9% — a low scorer in the same practice would face up to a 9% reduction on the same revenue base.
From Sorso
MIPS is not optional for most Medicare-billing practices above the low-volume threshold. We include MIPS performance tracking in the monthly reporting we build for clients with Medicare exposure because a 9% negative adjustment on Medicare revenue is a material financial hit.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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