The Quality Payment Program (QPP) is a mandatory federal initiative established by the Centers for Medicare & Medicaid Services (CMS) to fundamentally change how Medicare pays its providers. Created under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the QPP transitioned reimbursement away from the traditional fee-for-service model, which rewarded volume. The objective is to reward the quality and value of care delivered, incentivizing better patient outcomes and more efficient healthcare spending.
Eligibility and Participation Requirements
The QPP applies to healthcare professionals who bill Medicare Part B, collectively referred to as “Eligible Clinicians” (ECs). This group includes physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists. Specific exclusion criteria allow some providers to be exempt from mandatory reporting.
Exemption is primarily determined by the Low-Volume Threshold, based on three metrics related to Medicare Part B services. A clinician is excluded if they meet one or more of these criteria: billing $90,000 or less in Medicare Part B allowed charges, caring for 200 or fewer Medicare Part B patients, or furnishing 200 or fewer covered professional services. Clinicians newly enrolled in Medicare or those participating significantly in an Advanced Alternative Payment Model are also excluded from the primary reporting track.
The Merit-Based Incentive Payment System
The Merit-Based Incentive Payment System (MIPS) is the primary participation track under the QPP, consolidating and replacing three previous Medicare quality incentive programs. MIPS evaluates a clinician’s performance across four distinct categories, which are combined to calculate a single Final Score out of 100 points. This composite score determines whether the clinician receives a positive, negative, or neutral adjustment to their Medicare Part B payments two years later.
The largest components of the score are the Quality and Cost categories, each typically weighted at 30% of the total score. The Quality category requires providers to report measures that track health outcomes, patient safety, and effective clinical care. Conversely, the Cost category measures the total resources used to care for a patient. This data is automatically calculated by CMS using administrative claims, meaning providers do not submit this data directly.
The remaining 40% of the score is divided between the Improvement Activities and Promoting Interoperability categories. Improvement Activities accounts for 15% and rewards participation in activities focusing on care coordination, patient engagement, and access to care. The Promoting Interoperability category is weighted at 25% and assesses the effective use of certified electronic health record (EHR) technology for electronic information exchange and patient data access. The final MIPS score determines the payment adjustment, which can be as high as 9% in either direction.
Advanced Alternative Payment Models
The second QPP track is for clinicians who participate in Advanced Alternative Payment Models (Advanced APMs). An APM is a payment approach that offers incentives for delivering high-quality, cost-efficient care, moving beyond the traditional fee-for-service structure. Advanced APMs are a subset of these models, requiring participants to take on significant financial risk for patient costs and outcomes.
To qualify as an Advanced APM, the model must require the use of certified EHR technology and base payments on quality measures comparable to those used in MIPS. The financial risk requirement means the participating entity must bear more than a “nominal” amount of risk if actual healthcare expenditures exceed expected costs. Clinicians considered Qualifying Participants (QPs) in an Advanced APM are automatically exempt from MIPS reporting requirements.
In exchange for assuming this greater financial risk and accountability, QPs in Advanced APMs are eligible for a lump-sum incentive payment on their Medicare Part B payments. This pathway rewards providers who are willing to lead innovative care delivery models, such as certain Accountable Care Organizations (ACOs) or bundled payment models. Participation often necessitates significant changes to practice operations and infrastructure.
Impact on Healthcare Quality and Costs
The ultimate goal of the Quality Payment Program is to improve the health of Medicare beneficiaries and lower overall costs to the system. By linking payment adjustments to performance on quality measures, the program encourages providers to prioritize preventative services and effective chronic disease management. This financial incentive structure is intended to drive continuous practice improvement focused on patient outcomes rather than simply the volume of services provided.
The QPP encourages more coordinated care by rewarding activities that promote patient communication and data sharing. Better coordination across different settings, such as primary care and specialists, helps reduce medical errors and prevent unnecessary hospital readmissions. Over the long term, these systemic changes are designed to slow the growth of overall healthcare expenditures by delivering higher-value care to Medicare beneficiaries.