How Much Will MIPS Impact Physician Compensation?

The Merit-based Incentive Payment System (MIPS) is a new incentive program for physicians who care for Medicare patients. MIPS is specifically focused on physicians who do not participate in an ACO or another alternative payment model program. (A different incentive model has been introduced for those physicians.) Solo practitioners and small groups are included in the MIPS program.

Starting in 2019, the amount a physician is reimbursed for seeing Medicare patients will be adjusted either up or down based on his or her performance under MIPS.

Numerous factors will impact MIPS adjustments - so precise calculations of the potential impact are impossible. However, to get an idea of how much physician compensation (and not just Medicare reimbursement) will change because of MIPS, we compiled Medicare payment data and crunched some numbers. We included in our analysis a 50% practice expense margin estimate, understanding that expense margins vary among different practices and may be impacted by adjustments to reimbursement.

The results give us a basic understanding of what the potential impact of MIPS is on pre-tax compensation for private practice physicians with average-sized Medicare panels.

Based on the data and assumptions presented in the infographic below, we estimate that MIPS will increase or decrease a physician's compensation by $2,100 to $6,500 in 2019. The potential impact will grow each year, reaching $5,100 to $15,600 by 2022.

Importantly, some specialties see more Medicare beneficiaries than others and derive more practice revenue from Medicare than others. Our analysis focuses on six specific specialties (family practice, internal medicine, gastroenterology, general surgery, orthopedic surgery, and cardiology); other specialties may be impacted more or less than these six specialties.

Also to note, the analysis doesn't attempt to quantify the total upside potential or downside risk associated with MIPS. For example, there may be additional incentive dollars for physicians achieving exceptional scores on MIPS criteria. The ranges do not consider what happens to physician compensation if an exceptional performance bonus is earned. The analysis also doesn't consider any costs associated with MIPS, which may have a significant impact on physician compensation.

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