MIPS 2018 Payment Adjustment: Calculations and Implications

It’s submission time for MIPS 2018, a good time to review the bonus opportunities, exception criteria, performance thresholds and how all these will impact the payment adjustments in (in 2020) for 2018 performance year. Although the primary determinant of payment adjustment would be the MIPS score, the calculation of payment adjustment is not straightforward due to the comparative and competitive nature of the MIPS program.

MIPS 2018 submission closes on April 2, 2019 at 8pm ET.

The MACRA 2018 Final Rule for year-two of Quality Payment Program was released recently. Let us reiterate the eligibility criteria, go through some new bonus opportunities, exception criteria, and take a look at how the changes in Performance Thresholds impact the payment adjustments in 2020 based on performance in 2018.

MIPS is unique because:

  • It's pay-for-performance, not pay-for reporting. Under MIPS, performance matters and is assigned a score. 

  • Payment adjustment is not a set amount. It is determined by the MIPS score and is applied as a percentage of clinicians’ allowed Medicare Part-B charges. So the reward and penalty will not be identical for everyone with the same score. Higher scores will earn a higher bonus (positive adjustment) percentage. Read: MIPS Score Hierarchy for Payment Adjustment Calculation

  • It’s comparative. Earning a particular score doesn’t guarantee you certain bonus. It would be a fair distribution of the available monies among everyone who lands up in that score segment.

  • Maximum reward and penalty percentages will increase every year. It is +/- 5% for 2018, which goes up to +/- 7% for 2019 performance year, and +/- 9% for the 2020 performance year onwards.

  • The eligibility, performance category weight distribution, and performance thresholds will move every year. As evident from the 2019 QPP final rule, requirements will get tougher and thresholds will move higher.

With that in mind, let’s take a look at the positive and negative payment adjustments for Payment Year 2020 based on the scores in Performance Year 2018.

2018 Payment Adjustment Calculation

Based on your MIPS Score (CPS), you will earn either a positive payment adjustment or a negative payment adjustment. The Performance Threshold for earning neutral payment adjustment has been increased from to 15 points in 2018, whereas the Additional Performance Threshold will stay at 70 points. Although the numbers have changed, the basic logic of payment adjustment calculation, remains the same. So MIPS participants can earn two types of payment adjustments:

1.      Budget Neutral Payment Adjustment (MIPS Score 15.01 - 100) – All the money collected as penalties (negative payment adjustments) will be given out as positive payment adjustment. (-5% to +5% of your allowed Medicare Part-B charges) - See the Payment Adjustment Graph below

2.      Exceptional Performance Payment Adjustment (MIPS Score 70 - 100) –  $500 Million annual budget will be utilized for additional positive payment adjustment, on top of the budget-neutral payment adjustment, that exceptional performers can earn. (up to 10% of your Medicare Part-B Billings)

Read: How MIPS Calculators Work?



Base Payment Adjustment Range:  +/-  5%

For MIPS Score 0 to 3.75 Points: Full penalty of -5% is applicable. According to the MACRA final rule, full penalty determined for the performance year applies if the score is at or below ¼th of the Performance Threshold for that year (15 x ¼ = 3.75). This is the only number that can be claimed with certainty.

For MIPS Score 3.76 – 14.99 Points: Negative payment adjustment gradually decreasing on a linear sliding scale from -5% to < 0% will apply

For MIPS Score of 15 Points: Payment adjustment of 0%

For MIPS Score 15.01 – 69.99 Points: Providers will receive the budget-neutral component of positive payment adjustment which is scaled from 0% to 5% (scaled to provide maximum adjustment at MIPS score of 100). A scaling factor (up to a max of 3) will be used to equitably distribute every single cent of the penalties collected. It means that there is a potential to earn a up to 15% (5% x 3 = 15) in budget neutral component of positive adjustment, provided there is enough money collected as penalties.

For MIPS Score 70 – 100 Points: Budget-Neutral + Exceptional Performance Payment Adjustment The providers whose score lie in this range will not only earn the budget-neutral payment adjustment, but will also earn an additional exceptional performance positive payment adjustment. This bonus will be given out from $500 million annual budget starting at +0.5% for MIPS score of 70, up to a max of +10% for a MIPS score of 100. Another scaling factor will be utilized to ensure a fair distribution of the monies, i.e. more money for a higher score and stay within the annual budget of $500 million.

Monetary Implications

CMS estimates the median performance to go up to 70s for 2018 performance year. This increase in average score is likely to reduce the percentage of payment adjustment that was available for a similar score for 2017 performance year. Thus, the final payment adjustment for 2018 would definitely be less than 5%.

Still you will benefit from being well prepared for MIPS as very soon it will mean much more than just the payment adjustment. Note that CMS has added an Opt-In option for 2019 to enable exempt eligible clinicians to participate and become eligible for payment adjustment (estimated to be in the range of 4% or more).

Reputation and Other Implications

MIPS score is poised to become every eligible healthcare provider’s REPORT CARD very soon. The preview period for 2017 MIPS performance year just ended on Jan 7, 2019 and the performance results can be expected to be published on Physician Compare website soon. Similar to the PQRS program, the performance on the quality measures reported by each TIN would be available for viewing too. In addition to the data available for viewing on Physician Compare, there will be some unpublished data available for download and used by physician ranking websites such as Healthgrades. In the longer run, higher score would afford clinicians higher bargaining power in multiple situations. For instance:

  • For mergers, acquisitions, and sale of practices 

  • For clinician recruitment

  • For negotiating fee with healthcare insurance companies or to be on their preferred provider list

  • As a decision making tool for provider selection - If one needed healthcare services, they can make their decision based on the provider’s MIPS score.


Still not convinced on importance of MIPS? Consider this. All other factors being similar, if you had to pick one healthcare provider for yourself or your family, whom would you pick - Someone who has a score of 100 or someone who has a score of 3?

Video by CMS: How patients are using Physician Compare

Although you can’t control what percentage you would earn in positive payment adjustments, you can definitely take charge of your MIPS Score and be proactive about it. MyMipsScore can help you estimate the financial impact on your organization, help you maximize the payment adjustment, and submit MIPS data to CMS.

MIPS 2018 submission closes on April 2, 2019 at 8pm ET.