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Why was my MIPS bonus only 1.88% and not 4%?

Many providers who invested time, effort and money in maximizing their MIPS score for 2017 were disappointed to discover that their 2019 claims included a maximum bonus of 1.88% instead of the widely-advertised positive 4% bonus.  What is going on?

MIPS incentive written dollar sign

The reason for the low incentive amount is that CMS chose to ease physicians into the program by setting the 2017 rules so that it was easy to score well and hard to fail.  The advertised 4% incentive bonus assumes that an equal number of physicians were penalized 4%.  This MIPS incentive is revenue-neutral; money taken away from poor-performing physicians is transferred to the high-performing ones.  Since 95% of physicians were easily able to beat the very modest “performance threshold” of 3 points, only 5% of physicians were penalized.  Since these 5% of low performers didn’t account for much money, the maximum bonus was much less than half of the targeted 4%.  [Those who carefully read the rules anticipated this outcome.  The actual positive incentive amount is 4x%, where “x” is an adjustment factor to adjust the bonus so that the program is revenue neutral.]

There are actually two separate bonus payments.  The first is the revenue-neutral mechanism detailed above. That bonus was only about 0.1%.  The second is a $50,000,000 pot of money that is distributed to “exceptional performers”, that is, those who scored above 70 points in 2017.  Virtually all of the 1.88% bonus came from this exceptional performer bonus.

To summarize, the reason for the low bonus was that CMS designated 2017 as a “transition” year and intentionally relaxed the rules to minimize penalties, with the result that bonuses were reduced in this revenue neutral program.  The only bonuses were from the $50M distributed to “exceptional performers.”

Congress apparently liked the idea of a transition period, so the in the rarely advertised Bipartisan Budget Act of 2018 they extended this MIPS transition period from the single year 2017 to a 5 year period between 2017 – 2021.  This directed the administration to only gradually tighten the MIPS rules to give physicians plenty of time to learn MIPS.  The Act also excluded many physicians from the program, exempting any provider who bills less than $90,000 in Medicare.  The net out is that it will not be until 2022 that the maximum bonuses will equal the expected amounts.  When the transition period is over in 2022, the law requires that HHS set the rules so that an equal amount of physicians are penalized and bonused.  When that year arrives, 50% of eligible physicians will be wacked with penalties, up to 9%, and the top performers will earn incentives of up to 9%.

As we write this in 2019, we are in year 3 of the 5 year transition period.  The main MIPS incentive program calls for maximum penalties of 7% with incentives of 7x% (here is that “x” again!).  The performance threshold is now 30 out of 100.  Those who score close to zero will get the full 7% penalty.  For physicians whose only goal this year is to avoid penalties, it is still relatively easy and inexpensive to achieve the minimum 30 points.  This means that once again, relatively few providers will be penalized.  Eagle’s educated estimate is that for the 2019 performance year, maximum earned bonuses will be in the 2.0% to 3.0% range. (These are to be paid in 2021.)  We are unaware of any official CMS estimate.

Providers who either drop out of the MIPS game because of disappointing early returns, or who wait too long to get seriously involved may get a nasty surprise in 2024 when they discover that they are in the low-performing half with penalties up to 9% (based on their 2022 performance). They may further discover it difficult to climb out, as they will be competing with their peers who have been honing their game for 5 years.

By law, starting in 2022, HHS must establish rules so that penalties equal bonuses.  Physician lobbying groups such as the American Medical Group Association are pressing that these bonus opportunities be maintained so that physicians can increase their income.  The intent of the MACRA law was that in exchange for repealing the hated “Sustainable Growth Rate”  (established in the Balanced Budget Act of 1997), the Medicare Physician Fee Schedule would not be increased, and that physicians would EARN any increases in reimbursement by demonstrating the value of their services, either through the MIPS program or an Alternative Payment Model such as an ACO.  Inflation will inevitably increase the costs of operating a practice, so the way forward for physicians who want to make ends meet is to participate in one of these programs.



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