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Quality Payment Program (QPP) Basics

The Medicare Access and CHIP Reauthorization Act (MACRA), signed into law in April 2015, repealed the Sustainable Growth Rate (SGR) and instituted significant reforms to the Medicare physician payment system. MACRA created the Quality Payment Program, which consists of two payment pathways.

  • Merit-Based Incentive Payment System (MIPS)

    The Merit-based Incentive Payment System (MIPS) scores and adjusts Medicare Part B payments based on performance across four categories: Quality, Cost, Improvement Activities, and Promoting Interoperability.

    MIPS is the default payment system for all providers unless they meet the criteria for successful participation in an Advanced Alternative Payment Model (APM).

  • Alternative Payment Models (APMs)

    Alternative Payment Models (APMs) are a pathway designed to incentivize the adoption of payment models that move away from the Medicare fee-for-service system. For providers to qualify for a 1.88% incentive payment in payment year 2026, participants must be in an Advanced APM and meet a threshold of payments or patients. Qualifying participants (QPs) will receive a higher physician fee schedule conversion factor update than non-participants (0.75% vs 0.25%, respectively).

What is at Risk?

The Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) both require provider payments to be associated with performance metrics or value-based assessments.

MIPS uses an array of metrics to adjust payments, whereas financial risk and performance assessment under APMs depend on the model chosen. MIPS payment adjustments and the APM incentive are based on performance two years prior to the payment year that is, performance in 2024 will determine payments in 2026.

Financial Risk Associated with Performance Year 2024
MIPS +/- 9% of Medicare Part B Payments in 2026
Advanced APMs Financial Risk Associated with the APM model. Potential 1.88% incentive payment in 2026 for Qualifying Participants


The Merit-based Incentive Payment System (MIPS)

MIPS combines performance across four categories to give a score on a 0-100 point scale. The score is then used to calculate a payment adjustment.

The weighting for each of the four MIPS categories – Quality, Cost, Promoting Interoperability, and Improvement Activities – in 2024 are below. Note that hospitalists’ weighting typically differs from the average MIPS clinician due to an exemption from Promoting Interoperability.


The Quality category replaces the PQRS and requires providers to report on quality measures. Scoring in this category will be based on performance on those measures providers choose to report.

In 2024, providers will be required to report on at least six quality measures, one of which is an outcome measure. For hospitalists, the quality category will be 55% of their MIPS score in 2021. Most hospitalists will not have enough quality measures to report and will be subject to a validation process to ensure there are no other measures available to them.

Promoting Interoperability:

Promoting Interoperability is centered around the use of Certified Electronic Health Record Technology (CEHRT). Hospitalists are typically exempt from Promoting Interoperability if they meet the definition of “hospital-based,” which would shift the category weight to the Quality category. “Hospital-based” is defined as providers who bill 75% or more of Medicare Part B services in Place of Service 19 (off-campus outpatient hospital), 21 (inpatient), 22 (hospital outpatient) and 23 (ER).

Hospitalists who practice significantly (>25% of services) in settings such as skilled nursing facilities (SNFs) will still be subject to this category. SHM recommends these providers apply for hardship exceptions if they are unable to meet the category requirements.

Improvement Activities:

The Improvement Activities category is based upon providers completing a range of activities designed to improve or expand provided care. CMS created an Improvement Activities inventory, with more than 100 activities assigned weights of high (20 points) or medium (10 points). Providers need to attest to 40 points worth of activities during the performance year.


The Cost category comprises cost and efficiency measures, such as the Total Per Capita Costs and Medicare Spending Per Beneficiary measures, and Episode-based Cost Measures. Scoring in this category is based on performance in CMS-calculated cost measures.

Facility-based Measurement

Facility-based Measurement

Beginning with Performance Year 2019, CMS has a reporting option for facility-based providers. This option allows providers to receive a score in their Quality and Cost categories based on their hospital’s performance in the Hospital Value-Based Purchasing (HVBP) Program. CMS automatically calculates a score for all providers and groups that qualify. No need to report on quality measures unless you want to.

Who qualifies? Individual providers who bill more than 75% of their Medicare Part B services in Place of Service 21 (inpatient), 22 (hospital outpatient), and 23 (ER); bill at least 1 service in POS 21 or 23; and work in a hospital that receives a HVBP score. Groups qualify if 75% of their individual providers meet the above definition (are considered facility-based).

How it Works 


Alternative Payment Models (APMs)

The APM pathway is designed to incentivize the adoption of payment models that move away from the Medicare fee-for-service system. To be considered an “Advanced APM” for this pathway, the model must include an element of upside and downside financial risk, involve quality measures, and utilize Certified Electronic Health Record Technology (CEHRT).

Meeting the thresholds for Qualifying Participant (QP) in an approved Advanced APM exempts providers from participating in the MIPS and makes them eligible for a 1.88% incentive payment and higher conversion factor update to Medicare payments. In 2024, the thresholds for QP are at least 75% of Medicare Part B Payments or see at least 50% of Medicare patients through the Advanced APM entity or meeting at least 75% of payments from all payers (with at least 25% from Medicare).



What Can I Do?

Stay Informed with SHM

Understanding the ins and outs of the policies will help hospitalists choose the best path forward for themselves and for their groups. The MIPS and APMs will be updated and refined through the regulatory rulemaking process each year.

Read SHM's 2024 Hospitalists and the Quality Payment Program Resource

Stay informed through SHM's Grassroots Network and check back as policies develop for the most up-to-date information on MACRA. Subscribe to the Grassroots Network now.


Prepare yourself and your group for the MIPS and APMs. 2024 performance will be used to determine payments in 2026.

To determine if you are eligible for the 2024 reporting year, use the MIPS Participation Lookup Tool by inputting your NPI. 

Have questions? Contact SHM's Policy & Advocacy staff.


By sharing your experiences with other hospitalists and with SHM, you can help your colleagues overcome reporting and performance issues and help SHM advocate for better policies for hospitalists.