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Factors Influencing 2018 Payment Adjustments 

Before delving deeper into payment adjustments, it is important to consider the direct and
indirect factors that will influence the payment adjustments in 2018.


The low volume threshold has been significantly raised to reduce the burden on small practices. Both parts of the threshold must be crossed for a clinician to be included in MIPS. That is, the eligible clinicians must bill more than $90,000 in Medicare Part B allowed charges AND provide care to more than 200 Medicare Part B beneficiaries. If an eligible clinician doesn’t meet both the criteria, s/he is exempt from MIPS. As a result, more clinicians would be exempt from MIPS. However, the $500 million earmarked for additional payment adjustment for exceptional performers (MIPS score of 70 or more) stays the same.  


 The Test Pace option will no longer be available in 2018 for MIPS reporting. Full year reporting (Jan 1, 2018 – Dec 31, 2018) will be required for Quality and Cost categories; whereas, any 90 continuous days of data within the calendar year 2018 can be reported for PI and IA categories. Eligible clinicians will need to take their 2017 performance and begin strategizing for 2018 right from the start of the year. 


As per 2018 MACRA Final Rule released in Novemebr 2017, Medicare Part B Drugs were to be included under MIPS payment adjustments.  

However, as per the Bipartisan Budget Act of 2018 (HR 1892) enacted on Feb 9, 2018, the charges for Medicare Part B drugs will NOT be included in the low volume threshold determination or the application of payment adjustment in 2020 for the performance in 2018. 

Payment Adjustment Components

The Performance Threshold for earning neutral payment adjustment has been increased to 15 points in 2018 from 3 points in 2017, whereas the Additional Performance Threshold will stay the same at 70 points. Although the numbers have changed, the basic logic of payment adjustment calculation including how the scaling factors would work to determine fair distribution stay the same and so do the two components of payment adjustment – the Budget-Neutral component and the Exceptional Performance component.

MIPS Score  15.01 - 100

Positive Adjustment up to 5%
Budget Neutral
  • MIPS is a budget neutral program. This means that the net positive adjustments will be based on net negative adjustments. There is no way to calculate your positive adjustment till after the end of submission period when CMS can determine how many providers ended up with negative payment adjustment.                                                    
  • Scaling Factor (SF1) - SF1 ensures a budget-neutral distribution of the positive payment adjustment for MIPS scores ranging between 15.01 and 100.           

MIPS Score   70 -100

Additional Positive Adjustment between 0.5% - 10%
Exceptional Performance Component
  • CMS has earmarked $500 million annually (2019 – 2024) for exceptional performers in addition to the budget-neutral part. Clinicians reaching the exceptional performance threshold (MIPS score of 70) become eligible for this additional positive payment adjustment. The adjustment percentage for a score will depend on how all the MIPS eligible clinicians perform, which will be determined by SF2). 
  • Scaling Factor (SF2) - SF2 will be used to ensure equitable distribution of $500 million between all the exceptional performers i.e., higher score will earn a higher payment adjustment. 

Thresholds for Calculating Payment Adjustments

PerformanceThresholds Explained

The budget-neutral component of the payment adjustment will range from maximum negative of -5% to maximum positive of +5%. 

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.

Negative payment adjustment gradually decreasing on a linear sliding scale from -5% to < 0% will apply

Payment adjustment of 0%

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.

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. This increase in average score would most likely reduce the percentage of payment adjustment that was available for a similar score for 2017 performance year. The estimated payment adjustment could be less than 5%. CMS will be in a position to give better estimates after the end of reporting period and calculation of MIPS scores for PY 2017. 

Reputation and Other Implications

Very soon, MIPS Score would mean much more than penalty avoidance and earning exceptional performance bonus. It would become every eligible healthcare provider’s REPORT CARD. According to CMS, MIPS scores for performance year 2017 will be published and made publicly available on the Physician Compare website by Fall 2018. Additionally, similar to the PQRS program, the performance on the quality measures reported by each TIN would be avaialbe for viewing too. These scores will most likely be used by other 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.

Although you can’t control what percentage you would earn for positive payment adjustments, you can definitely take charge of your MIPS Score and be proactive about it. 

How is MIPS Payment Adjustment Calculated?

Learn how MIPS calculators determine the payment adjustment