MIPS stands for the Merit-based Incentive Payment System, a program run by the Centers for Medicare and Medicaid Services (CMS) that ties a portion of clinicians’ Medicare payments to how well they perform on specific quality and cost measures. If you bill Medicare for Part B services, MIPS directly affects how much you get reimbursed. Clinicians who score well earn a bonus on future Medicare payments, while those who score poorly face a penalty of up to 9%.
MIPS is one of two tracks under the Quality Payment Program (QPP), which was created by the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015. The other track involves joining an Advanced Alternative Payment Model. Most clinicians who participate in QPP do so through MIPS.
How MIPS Scoring Works
Under MIPS, clinicians collect and submit performance data to CMS each calendar year. CMS also gathers some data independently, particularly around cost. All of this information feeds into a final score on a 0 to 100 scale, which determines the clinician’s payment adjustment two years later. For example, data from the 2025 performance year will affect Medicare reimbursements throughout 2027.
The performance threshold, the score you need to avoid a penalty, is set at 75 points through 2028. Score exactly 75 and your payments stay the same. Score above 75 and you receive a positive adjustment. Score below 75 and you face a negative adjustment on a sliding scale, with the maximum penalty locked at 9% by law. Positive adjustments are subject to a scaling factor that keeps the program budget-neutral, meaning bonuses are funded by the penalties collected from lower-scoring clinicians.
The Four Performance Categories
Your MIPS final score is a weighted combination of four categories, each measuring a different aspect of clinical practice.
Quality accounts for 30% of the final score. Clinicians choose from a library of measures relevant to their specialty and report data throughout the year. Starting with the 2024 performance period, at least 75% of eligible patient encounters must be captured for each measure to meet data completeness requirements.
Cost is the one category clinicians don’t have to report themselves. CMS calculates it using Medicare claims data, looking at measures like Total Per Capita Cost and Medicare Spending Per Beneficiary, along with 33 episode-based cost measures that track spending tied to specific procedures or conditions.
Promoting Interoperability focuses on meaningful use of certified electronic health record (EHR) technology. Clinicians must use an EHR system that meets federal certification criteria, collect data on required measures for at least 180 continuous days during the performance year, and attest to several statements covering topics like information blocking prevention, security risk analysis, and patient safety practices.
Improvement Activities covers actions that improve clinical practice, care coordination, or patient engagement. Examples include participation in patient safety organizations, use of shared decision-making tools, or expansion of practice access. This category is generally the easiest to fulfill, requiring completion of a limited number of activities from an approved list.
Who Has to Participate
Not every clinician who bills Medicare is subject to MIPS. Eligibility hinges on what CMS calls the low-volume threshold, a three-part test based on the dollar amount of Medicare Part B charges, the number of Medicare patients seen, and the volume of covered professional services provided during a determination period. You must exceed all three elements to be required to participate.
If you fall below all three thresholds, you’re exempt. If you exceed one or two but not all three, you may be eligible to opt in voluntarily. Opting in lets you earn a positive payment adjustment without the risk of being penalized if you don’t participate, though you’d still need to report data to receive any bonus. CMS checks eligibility using claims data from defined segments of the year, so your status can shift if your patient volume changes.
Reporting Timeline and Deadlines
MIPS follows a consistent annual cycle. The performance year runs from January 1 through December 31. After the year ends, a submission window opens for clinicians to send their data to CMS. For the 2025 performance year, that window runs from January 2, 2026 through March 31, 2026. Payment adjustments based on 2025 performance then take effect on January 1, 2027 and apply to all Medicare Part B claims through December 31, 2027.
This two-year lag between performance and payment is important to understand. A poor score in one year won’t show up as a reduced reimbursement until two years later, which can create a delayed financial impact that catches some practices off guard.
Traditional MIPS vs. MIPS Value Pathways
Clinicians currently have more than one way to meet their MIPS requirements. Traditional MIPS is the original framework where you select measures and activities from across the four categories. MIPS Value Pathways (MVPs) offer a more streamlined alternative, grouping measures and activities around specific clinical topics or conditions so reporting is more relevant to a clinician’s actual area of practice.
MVPs are designed to reduce reporting burden while making performance data more meaningful. They’re finalized through the Physician Fee Schedule rulemaking process and are available as an option alongside traditional MIPS. There’s also the APM Performance Pathway (APP) for clinicians who participate in certain alternative payment models but still need to report under MIPS.
What MIPS Means Financially
The financial stakes are real but bounded. The maximum negative adjustment is 9% of Medicare Part B payments, applied across an entire payment year. For a practice that bills several hundred thousand dollars annually to Medicare, a 9% cut is significant. Scores between 18.76 and 74.99 receive a negative adjustment on a sliding scale between 0% and negative 9%. Scores at or below 18.75 receive the full 9% penalty.
On the positive side, clinicians scoring above 75 receive a bonus, but the exact percentage depends on available funding and how many clinicians qualify. Because the program is budget-neutral, the size of positive adjustments fluctuates each year. In years when many clinicians score well, the bonus pool gets spread thinner. Clinicians who don’t submit any data at all automatically receive the maximum penalty.