What Are MIPS and MACRA? Definitions, Key Differences, and How They Affect Your Medicare Payments

MACRA Overview

MACRA—the Medicare Access and CHIP Reauthorization Act of 2015—transformed how Medicare pays clinicians. It created the Quality Payment Program, which moves reimbursement away from volume and toward value, tying dollars to quality, cost, and the use of Certified Electronic Health Record Technology.

Under the Quality Payment Program, you participate through one of two tracks: the Merit-Based Incentive Payment System (MIPS) or certain Alternative Payment Models (APMs). MIPS adjusts your Part B payments based on a composite performance score, while Advanced APMs reward clinicians who meet participation thresholds as Qualifying APM Participants and are therefore excluded from MIPS.

In short, MACRA is the law. The Quality Payment Program is the framework it created. MIPS and Advanced APMs are the two paths inside that framework, each influencing your Medicare Part B Payment Adjustments in different ways.

MIPS Performance Categories

MIPS evaluates clinicians across four performance categories that roll into a single MIPS Final Score. Category weights and specific measure requirements can change annually, but the core intent remains consistent: pay for better outcomes, smarter spending, and secure, connected care.

Quality

You report on evidence-based quality measures relevant to your specialty or practice. Think preventive care, chronic disease management, patient safety, and outcomes measures. Accurate, timely data submission and meeting data-completeness expectations are essential to earn full credit.

Cost

Cost is typically calculated by Medicare using claims, so no extra reporting is required. It reflects resource use for episodes and populations attributed to you. Conceptually, this category replaced and modernized the legacy Value-Based Payment Modifier by integrating spending accountability directly into your MIPS score.

Promoting Interoperability

This category focuses on secure information exchange and patient access using Certified Electronic Health Record Technology. Activities commonly include e-prescribing, health information exchange, providing patients electronic access to their data, and protecting patient health information.

Improvement Activities

You attest to activities that strengthen care coordination, patient engagement, and practice efficiency. Examples include care transitions, population health management, opioid stewardship, and expanding access. Selecting activities aligned with your operations makes the credit both achievable and meaningful.

MIPS Scoring and Payment Adjustments

Your performance across the four categories is converted into a 0–100 MIPS Final Score. CMS sets the performance threshold annually. Scores above the threshold earn positive Medicare Part B Payment Adjustments; scores at the threshold are neutral; scores below it receive negative adjustments.

How the score is built

Each category contributes points based on measure performance, participation, and (where applicable) data completeness. Certain special statuses—such as small practice, hospital-based, or non–patient facing—can modify requirements or reweight categories. The exact scoring policies are updated each year, so align your strategy with the current rules.

How adjustments are applied

MIPS is budget neutral overall, so positive adjustments are scaled in relation to negative adjustments across all participants. The adjustment applies to covered Medicare Part B professional services you bill two years after the performance year. That means your 2026 payments generally reflect your 2024 MIPS performance.

Practical takeaways

• Submit complete, accurate data to avoid avoidable penalties and to unlock upside potential.
• Use your EHR to capture Promoting Interoperability actions and support quality reporting.
• Monitor your cost drivers—referrals, post-acute utilization, and high-variation services.

Alternative Payment Models

Alternative Payment Models link payment to quality and cost at the program or entity level—examples include accountable care organizations, medical homes, and episode-based models. They promote coordinated, team-based care and accountability for outcomes and spending.

Advanced APMs and Qualifying APM Participants

Advanced APMs must require the use of Certified Electronic Health Record Technology, tie payments to quality measures, and assume more than a nominal level of financial risk. If you meet participation thresholds through an Advanced APM, you are a Qualifying APM Participant, are therefore excluded from MIPS, and may be eligible for separate incentives determined by law and annual CMS policy.

Partial QP and MIPS APM pathways

If you reach a Partial QP level, you can choose whether to participate in MIPS. Many clinicians in certain APMs are scored under the APM-specific MIPS scoring standard, which streamlines measures and aligns incentives across the APM entity. The key is to coordinate with your APM leadership so practice-level and entity-level strategies reinforce each other.

Impact on Medicare Payments

Your path—MIPS or Advanced APM—directly influences your Medicare Part B Payment Adjustments. Under MIPS, your Final Score determines whether payments go up, stay flat, or go down two years later. In Advanced APMs, meeting Qualifying APM Participant thresholds makes you MIPS-exempt and eligible for separate incentives and updates specified in statute and regulation.

Financial planning considerations

• Forecast the two-year lag: today’s performance shapes future revenue, so treat MIPS/APM work as a core business function.
• Focus on measures you can reliably influence, and validate coding and documentation to reflect true acuity and outcomes.
• Invest in analytics and workflows that connect quality, cost, and Promoting Interoperability requirements end to end.

Exemptions from MIPS

Not every clinician must participate in MIPS each year. Exemptions focus on fairness, administrative burden, and alignment with broader value-based models.

Common exemption categories

• Newly enrolled Medicare clinicians in their first year of Part B participation.
• Clinicians or groups that do not exceed the low-volume threshold for Medicare patients, services, or allowed charges.
• Qualifying APM Participants in Advanced APMs (MIPS-exempt by statute).

Special statuses and reweighting

Circumstances such as small practice designation, hospital-based status, or extreme and uncontrollable events can change how categories are weighted or reported. Hardship exceptions are also available for Promoting Interoperability when meeting requirements is not feasible.

Opt-in and voluntary reporting

If you meet certain low-volume elements but not all, you may be able to opt in to MIPS; once you opt in, you receive positive, neutral, or negative adjustments. Voluntary reporters can submit data without being subject to payment adjustments.

Transition from Previous Programs

Before MACRA, Medicare used separate programs—the Physician Quality Reporting System, Meaningful Use for clinicians, and the Value-Based Payment Modifier. MACRA consolidated them into the Quality Payment Program to reduce redundancy and align incentives.

• PQRS quality reporting evolved into the MIPS Quality category.
• Meaningful Use transitioned into MIPS Promoting Interoperability, centered on Certified Electronic Health Record Technology.
• The Value-Based Payment Modifier’s spending accountability is reflected in the MIPS Cost category.

For clinicians, the consolidation means a single, cohesive framework with clearer signals: measure what matters, share information securely, and manage cost alongside quality. Whether you remain in MIPS or progress into an Advanced APM, MACRA’s Quality Payment Program links performance to future Medicare Part B Payment Adjustments—making proactive planning essential.

FAQs

What is the difference between MIPS and MACRA?

MACRA is the 2015 law that established the Quality Payment Program. MIPS is one of the two tracks within that program. MACRA sets the rules of the road; MIPS applies those rules to individual and group performance for Medicare Part B Payment Adjustments. The other track is participation in certain Alternative Payment Models.

How does MIPS affect Medicare payments?

MIPS converts performance on Quality, Cost, Promoting Interoperability, and Improvement Activities into a 0–100 Final Score. CMS compares your score to an annual threshold and applies positive, neutral, or negative adjustments to your Part B professional services two years later. Strong performance can increase revenue; poor performance can reduce it.

Who is exempt from MIPS reporting?

Exemptions commonly include newly enrolled Medicare clinicians, clinicians or groups below the low-volume threshold, and Qualifying APM Participants in Advanced APMs. Some clinicians may also receive category reweighting or hardship exceptions based on special status or circumstances.

What are the benefits of participating in Alternative Payment Models?

APMs can streamline reporting, align teams around population health goals, and create opportunities for shared savings and performance bonuses. If you meet thresholds as a Qualifying APM Participant in an Advanced APM, you are exempt from MIPS and may receive separate incentives and updates established by statute and CMS policy.