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How does CMS determine the Cost metric for MIPS?

Updated: Jul 23, 2019

Have you ever wondered how Medicare comes up with the Cost Metrics that make up part of MIPS? What costs are they looking at? Where are they getting their numbers?


In 2019, there are 4 categories that determine MIPS:

Quality - 45%

Promoting Interoperability (formerly Meaningful Use) - 25%

Improvement Activities - 15%

Cost - 15%


The Cost metric has steadily increased from 0% in 2017 to 15% in 2019.


Do I have to do more paperwork?

No. All the Cost data is calculated from Medicare claims data, so it doesn’t require clinicians to submit any new information.


Does this apply to outpatient doctors also, or just surgeons?

There are three types of episodes that are evaluated in the Cost metrics:

Acute Inpatient Hospitalization (pneumonia, GI bleed)

Procedures (surgery)

Chronic Conditions (Chronic Heart Failure)


But Medicare patients have tons of doctors. Am I going to be stuck with the costs of their knee replacement while I was following them for heart failure?


No. CMS has made the system smart enough so that episodes can overlap in time and be attributed to different clinicians.


How does CMS determine what is included in a cost measure?


Decide on the CPT or DRG codes that “count” as an episode, which can be further refined such as by diagnosis code

Decide on the rules for attribution

Determine what services or costs are included in the episode that are “clinically related and reasonably within the clinician’s influence” (preop testing, medication side effects, readmissions or post acute care)

Risk adjustment - calculate costs of all eligible episodes for a clinician based on risk adjustment of similar patients. The observed to expected cost ratio is calculated (probably somewhere around 1) then multiplied by the national average cost

Apply exclusion criteria


Who decides all this stuff?

There are three main groups that provide input:


The Technical Expert Panel gives high level guidance about measure development generally


Clinical Subcommittees - These have a large number of clinicians on them from various professions and specialties. It’s not just doctors - there are usually Advanced Practice Providers as well as fields like nutrition and physical therapy represented. There’s a short application to get on the committee, and many specialty society groups will send a representative. They discuss the possible episodes and then vote on which episodes to recommend and then what to include within each episode.


Person and Family Committee- These are made up of Medicare beneficiaries and their families and caregivers. They recommend guiding principles for the Clinical Subcommittees for episode selection focused on what is important to patients and families (ie, they could recommend that a measure be very common or very severe). They also provide input about which services affect patients and families within a specific episode.


The Cost metric is unlikely to go away anytime soon, and may even increase from its current 15% allocation to MIPS in the future, so it’s important to understand how it’s determined and calculated.


The first MIPS Cost measures will be used for 2018, so you may start to be affected by this metric this year or next. Knowledge is power!


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