The Merit-based Incentive Payment System (MIPS) is a framework established by the Centers for Medicare and Medicaid Services (CMS) to evaluate the quality and efficiency of care delivered by Medicare providers. This program consolidates several previous reporting initiatives into a single system that assesses performance across multiple categories. A provider’s success is ultimately distilled into a MIPS Composite Score, which ranges from 0 to 100 points. This final score directly determines whether a provider receives a positive, neutral, or negative adjustment to their Medicare Part B payments two years after the performance period.
Defining the Performance Threshold
A good MIPS score is defined by the minimum threshold required to avoid a financial penalty on Medicare reimbursements. This benchmark is formally known as the Performance Threshold, and for the 2024 performance year, it remains set at 75 points. A MIPS Composite Score below this 75-point mark results in a negative payment adjustment applied to all Medicare Part B claims. For the 2024 reporting year, a score between 0 and 74.99 points translates into a negative adjustment of up to nine percent on 2026 payments.
Achieving a final score exactly equal to 75 points results in a neutral payment adjustment. This means the provider avoids the penalty, and their Medicare reimbursement rate remains unchanged. Any score exceeding the 75-point threshold automatically qualifies the provider for a positive payment adjustment, calculated on a linear sliding scale where higher scores earn progressively larger financial incentives.
The MIPS program is designed to be budget-neutral, meaning the total amount paid out in positive adjustments must be balanced by the total collected from negative adjustments. The actual percentage of the positive adjustment is subject to a scaling factor applied to ensure the total pool of positive adjustments does not exceed the funds generated by the penalties. While the law allows for a maximum nine percent positive adjustment, the budget neutrality factor often reduces the final percentage applied to payments.
The Four Pillars of Score Calculation
The MIPS Composite Score is calculated from performance across four distinct categories, often referred to as pillars: Quality, Cost, Improvement Activities (IA), and Promoting Interoperability (PI). These categories assess different aspects of clinical practice. Each category is weighted to contribute a specific percentage toward the final 100-point score. For the 2024 performance period, the standard weights are 30% for Quality, 30% for Cost, 15% for Improvement Activities, and 25% for Promoting Interoperability.
A high MIPS score is achieved by strategically maximizing points across these four categories. The final score is the sum of the weighted scores from each pillar, allowing for compensatory scoring where superior performance in one area can offset a lower score in another. For example, a provider with a low Cost score could still achieve the 75-point threshold by earning near-perfect scores in the other categories. Weights may be reallocated for certain provider types, such as those in small practices or hospital-based clinicians, who may have the Promoting Interoperability category automatically reweighted to zero percent.
Quality
This category measures the use of specific clinical processes and outcomes, requiring providers to report on a minimum of six measures for a full year.
Cost
The Cost category is based entirely on administrative claims data collected by CMS and measures the total cost of care for patients relative to national benchmarks.
Improvement Activities (IA)
IA focuses on clinical practice changes that enhance patient care, such as expanding access or engaging in care coordination. Providers must perform a combination of medium- or high-weighted activities for a continuous 90-day period.
Promoting Interoperability (PI)
PI assesses the use of certified electronic health record technology (CEHRT) for patient engagement and electronic data exchange. For the 2024 performance year, the minimum performance period for this category increased to 180 continuous days.
Achieving Exceptional Performance
A truly great MIPS score qualifies a provider for the Exceptional Performance Bonus. While the threshold to avoid a penalty is 75 points, the score required to enter the highest tier of performance is significantly higher. For the 2022 performance year, this exceptional threshold was set at 89 points.
Providers who achieve a MIPS Composite Score at or above this higher benchmark are eligible to receive an additional bonus payment. This bonus was funded from a separate, fixed pool of money established by the MACRA legislation. The Exceptional Performance Bonus was applied in addition to the standard positive payment adjustment earned by scoring above the Performance Threshold.
The 2022 performance year was the last period this specific separate bonus was available. Future high-performing providers will rely solely on the standard positive adjustment, though a perfect score of 100 points still yields the maximum possible positive adjustment.
Financial Impact of the Score
The MIPS Composite Score directly translates into a range of financial adjustments on a provider’s Medicare Part B claims. The maximum negative penalty is set at nine percent for the 2026 payment year, based on 2024 performance. Providers scoring between 0 and 74.99 points receive a negative adjustment on a sliding scale, with the lowest scores receiving the full nine percent reduction.
Scores above 75 points qualify for a standard positive adjustment that increases linearly. While the maximum positive adjustment is capped at nine percent by law, the budget neutrality factor often causes the actual percentage to be much lower. For example, a perfect 100-point score for the 2022 performance year resulted in a total positive payment adjustment of 8.25%. Performance in one calendar year, such as 2024, determines the payment adjustment applied two years later, in the 2026 payment year.