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Understanding MIPS 2018: The Cost Category


Breaking Down the 2018 MIPS Cost Category

Wondering how the MIPS Cost category works? What performance measures are included? How will The Centers for Medicare and Medicaid Services (CMS) assign the performance score? I’ll help answer these questions and share how Modernizing Medicine can assist you and your practice when it comes to MIPS in 2018 and beyond.

The reimbursement system has shifted from one that rewards volume, to one that rewards value to help drive better quality for the patient at a lower cost. According to the 2018 QPP final rule starting with the 2018 MIPS reporting year, CMS will assign a performance score to the Cost category.

Based on the “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models”:

Understanding the Cost is an integral part in Value-based Medicine and providing the MIPS eligible clinicians with information regarding the Cost will help them provide the appropriate care and improve outcomes (Quality Payment Program 2017 P77162).

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Some Background on Value-based Medicine

The Medicare Access and Chip Reauthorization Act (MACRA) of 2015 repealed the Sustainable Growth Rate (SGR) and replaced it with the Quality Payment Program (QPP). Under the QPP, eligible clinicians (EC) participating in Medicare have two reporting options: The Merit Based Incentive Program (MIPS) or The Advanced Alternative Payment Models (APMs). This post will focus on the MIPS option.


Focusing on MIPS

MIPS includes four categories:

  • Quality
  • Improvement Activities (IA)
  • Promoting Interoperability (previously known as Advancing Care Information)  
  • Cost

During the 2017 transition year, only three categories Quality, IA & Advancing Care Information (now called Promoting Interoperability) counted towards the final MIPS score. However, during the 2018 performance year the Cost category will be weighted at 10 percent of the total MIPS score.

In developing the Cost category measures, CMS relied on standards and measures from previous programs. One program included was the Value-based Payment Modifier program (VM) and its standards and measures which cover:

  • Measure reliability
  • Patient attribution
  • Risk adjustment, and
  • Payment standardization.

However, it’s important to note a major difference between the Cost category in MIPS and VM. According to the 2017 Quality Payment Final Rule:

CMS proposed to attribute measures at the TIN/NPI level for those submitting as individuals rather than at the TIN level used for the VM. While this would not make a difference for those in solo practice, it would present a significant change for those that practice in groups and participate in MIPS as individuals. In MIPS, those that elect to participate as groups must be assessed for all performance categories as groups. Conversely, those that elect to participate in MIPS as individual clinicians will be measured on all four performance categories as an individual. With the exception of solo practitioners (defined for the VM as a single TIN with one EC identified by an NPI billing under the TIN), the VM evaluates performance at the aggregate group level. For example, a surgeon in a multi-specialty group who elects to participate in MIPS as an individual would receive feedback on the cost measures attributed to him or her individually as opposed to that of the entire group (2017 QPP Final Rule P77165).

Another difference from the VM is related to the definition of primary care services. According to the 2017 QPP proposed rule (P 28199):

VM defines primary care services by the following HCPCS/CPT codes: 99201 through 99215, 99304 through 99340, 99341 through 99350, the welcome to Medicare visit (G0402) and the annual wellness visits (G0438 and G0439).

In the 2017 QPP final rule, CMS added the transitional care management (CPT codes 99495 and 99496) codes, chronic care management code (CPT code 99490) and complex chronic care management codes (99487, 99489) to the list of primary care services that will be used to determine attribution for the total per capita cost measure (P 53646).

What Measures are Included in the MIPS Cost Category?

The table below includes the two measures in the Cost category for the 2018 performance year. To find additional information, visit CMS.gov here and look under ‘Cost Measures.’

MIPS Cost Category Summarized

With all the information and documents on the 2018 MIPS Cost Category, I wanted to provide some key points based on resources from the CMS.

  • The Cost data will be derived from Medicare administrative claims and no additional reporting is required. For that reason, no EC can receive a zero for any cost measure. (Source: 2018 QPP Final Rule)
  • There are two measures in the 2018 performance year: Medicare Spending per Beneficiary and the Total per Capita Cost. (Source: 2018 QPP Final Rule)
  • The Cost performance category score is equal to the average of the two Cost measures. (Source: QPP Year 2 Final Rule Fact Sheet)
  • If a MIPS EC has only one measure scored, that score will be the Cost performance category score. (Source: QPP Year 2 Final Rule Fact Sheet
  • If a MIPS EC is not attributed any cost measure, the Cost category score would not be calculated and CMS will reweight the Cost performance category to the Quality performance category. (Source: CMS Cost Performance Category Fact Sheet
  • CMS will award up to 1 percentage point as improvement scoring in the MIPS Cost category. The improvement scoring is based on statistically significant changes at the measure level. (Source: QPP Year 2 Final Rule Fact Sheet
  • The image below illustrates how to calculate the cost performance category score. (Source: Cost Performance Category Fact Sheet)

MIPS Cost Equation

What Do You Need to Submit Your MIPS Cost Category Data?

According to the 2018 QPP final rule:

CMS will assess performance in the cost category based on administrative claims data for Medicare patients only if the physician meets the case minimum of attributed patients for a measure. (P 77166)

Thus, as noted above, and provided the physician meets the case minimum as described in the rule, CMS will calculate the cost from claims every time a provider submits a claim. If an EC doesn’t meet the applicable rule requirements, they will not be assessed under the Cost category.

How is CMS Going to Assign the Points Scored for the 2018 MIPS Cost Category Performance?

According to The Cost Performance Fact Sheet, CMS will:

  • Assign 1 to 10 points to each measure.
  • Compare your performance to other MIPS ECs and groups during the performance period, not on a past year.

CMS maintained the same scoring methodology from 2017 to 2018. In the 2017 QPP final rule, CMS broke down the scoring methodology for the Cost category:

Points will be assigned through calculating the decile breaks based on measure performance period and assign one to ten achievement points for each measure based on which benchmark decile range the provider’s performance on the measure is between (lower costs represent better performance). In other words, providers in the top decile would have the lowest cost of care. This methodology is consistent with the methodology used for the Quality Performance category.

The table below represents an example of a calculated Cost category score from CMS. 

The Cost performance category = (14.6/20) which equals 73 percent. The Cost performance category is worth 10 points so 73 percent multiplied by 10 points equals 7.3 achievement points toward the final MIPS score.

For reference, the TPCC and MSPB measure are defined in a previously noted chart.

How can Modernizing Medicine Help you When it Comes to MIPS 2018?

Modernizing Medicine’s MIPS intelligence platform* is similar to the technology that led to our PQRS success rates. EMA™’s built in MIPS solution helps track estimated Composite Scores and has robust analytics and benchmarking reports to help ease data submission.

Additionally, we have a dedicated team of MIPS Advisors who provide coaching to medical practices to help their practice achieve success under MIPS and value-based care.

Interested in learning more?

*Information relating to our EHR certification, including certain costs and limitations, can be found at www.modmed.com/costs-and-limitations.

Centers for Medicare & Medicaid Services. Quality Payment Program Resource Library. https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/Resource-library.html. Published February 6, 2018. Accessed April 2, 2018.

Centers for Medicare & Medicaid Services. Cost Performance Category Fact Sheet. https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/2018-Cost-Performance-Category-Fact-Sheet.pdf. Accessed April 2, 2018.

Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. CY 2017 Quality Payment Program Final Rule https://www.federalregister.gov/documents/2016/11/04/2016-25240/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm. Published November 4, 2016. Accessed April 2, 2018.

Centers for Medicare & Medicaid Services. Medicare Program; CY 2018 Updates to the Quality Payment Program; and Quality Payment Program: Extreme and Uncontrollable Circumstance Policy for the Transition Year.CY 2018 Quality Payment Program Final Rule.https://www.federalregister.gov/documents/2017/11/16/2017-24067/medicare-program-cy-2018-updates-to-the-quality-payment-program-and-quality-payment-program-extreme. Published November 16, 2017. Accessed April 2, 2018.

Centers for Medicare & Medicaid Services. QPP Year 2 Final Rule Fact Sheet. https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/QPP-Year-2-Final-Rule-Fact-Sheet.pdf. Accessed April 2, 2018.

Centers for Medicare & Medicaid Services. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. https://www.federalregister.gov/documents/2016/05/09/2016-10032/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm Accessed May 20, 2018.

Hayder Hussein, MPH, CPHQ, CMHP

Hayder Hussein, MPH, CPHQ, CMHP

Associate Product Owner

Hayder Hussein joined Modernizing Medicine in November 2017 as an Associate Product Owner working on the compliance team. Hayder is a healthcare professional and works closely with the development team to assist with regulatory and product compliance.

Time is on our side, is it on yours?












Our demo will show you how you could save valuable time with each patient. Every. Single. Day.

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