Demystifying the MIPS Cost Category: Strategies to Improve Your Score in 2025

Michael Sullivan
Jan 30
4 min read

The Cost category is one of the most misunderstood components of the Merit-based Incentive Payment System (MIPS), yet it accounts for a significant 30% of your final score in 2025. Unlike other categories, you don’t directly report data for the Cost category—CMS calculates it automatically using claims data. This can make it difficult to track and optimize your performance. However, with the right strategies, you can proactively manage your costs and improve your score. Here’s an in-depth look at how the Cost category works and actionable tips to succeed.

1. Understanding the Cost Category

The Cost category evaluates the efficiency and resource use of your care delivery. It measures how effectively you manage costs relative to your peers while still providing high-quality care.

How It’s Scored:

CMS uses claims data to evaluate the resources used for Medicare patients.
Performance is benchmarked against clinicians and groups with similar patient populations.

Types of Measures:

Medicare Spending Per Beneficiary (MSPB):
- Focuses on costs incurred during a hospital stay and 30 days post-discharge.
- Includes all services related to the hospital admission (e.g., lab tests, medications, post-discharge follow-ups).
Episode-Based Measures:
- Evaluates costs for specific clinical episodes of care (e.g., procedures, conditions).
- Common examples include:
  - Cardiac Care: Acute myocardial infarction (AMI), percutaneous coronary intervention (PCI).
  - Orthopedic Care: Hip and knee replacements.
  - Diabetes Care: Management and complications.
Total Per Capita Cost (TPCC):
- Assesses the total cost of care provided to Medicare patients over a year

2. Why Cost Is Challenging for Clinicians

The Cost category’s automatic calculation and lack of direct reporting can create challenges:

Lack of Visibility: Many clinicians don’t have real-time insight into how CMS evaluates their costs.
Complex Attribution: Costs are often attributed to the clinician or group with the most face-to-face encounters, which may not always align with responsibility for care.
Peer Comparisons: Benchmarks are determined based on national data, making it difficult to anticipate how your performance compares to others.

3. Strategies to Optimize Your Cost Score

While you can’t directly report Cost measures, proactive steps can help you control expenses and improve your performance.

A. Review Past Performance Feedback

CMS provides annual performance feedback reports outlining your Cost scores and areas for improvement. Use this data to:

Identify high-cost patients or services.
Compare your spending patterns to national benchmarks.

B. Focus on Care Coordination

Care coordination plays a crucial role in managing costs, especially for episode-based measures. Strategies include:

Streamline Transitions of Care:
- Ensure clear communication between primary care providers, specialists, and post-acute care facilities.
- Use care coordination tools in your EHR to track referrals and follow-ups.
Prevent Hospital Readmissions:
- Monitor high-risk patients closely after discharge.
- Provide clear instructions for medications, follow-up visits, and warning signs.

C. Use Evidence-Based Protocols

Standardizing care delivery through evidence-based guidelines can reduce unnecessary tests and procedures. For example:

Cardiac Care: Avoid unnecessary imaging for low-risk chest pain.
Orthopedic Care: Optimize preoperative evaluations to avoid duplicative tests.

D. Engage Patients in Chronic Disease Management

Patients with chronic conditions like diabetes or heart failure often drive high costs. Proactive management strategies include:

Providing self-management tools (e.g., apps to track blood sugar or weight).
Offering education on lifestyle changes to reduce complications.
Scheduling regular check-ins to address issues early.

E. Improve Coding Accuracy

Accurate and detailed coding ensures CMS has a clear picture of the complexity of your patients. Strategies include:

Conduct Regular Coding Audits: Identify and correct errors that could inflate costs.
Train Staff: Provide ongoing education on ICD-10 and CPT codes.
Capture Risk Adjustment Factors: Document all chronic conditions and comorbidities to reflect patient acuity accurately.

F. Leverage Technology

Your EHR and analytics tools can help identify cost drivers and areas for improvement:

Predictive Analytics: Use tools to identify high-risk patients who may require additional care.
Real-Time Monitoring: Track spending patterns for specific episodes or patient populations.

4. Common Pitfalls to Avoid in the Cost Category

To succeed in the Cost category, it’s essential to sidestep these common pitfalls:

Underestimating the Impact of Attribution: Ensure you’re aware of which patients and episodes are attributed to your practice.
Ignoring Post-Acute Costs: High spending on post-discharge care (e.g., rehab facilities, home health) can hurt your score.
Overutilization of Resources: Avoid unnecessary imaging, lab tests, or procedures, especially for low-risk patients.

5. Collaborating with a MIPS Consultant

Given the complexity of the Cost category, working with a MIPS consultant can provide significant advantages:

Performance Analysis: Consultants can interpret your CMS feedback reports and identify actionable improvements.
Custom Strategies: Tailored solutions for managing high-cost patients and optimizing care pathways.
Proactive Monitoring: Regular reviews of your claims data to anticipate potential issues before they impact your score.

The Cost category doesn’t have to be a black box. By focusing on care coordination, accurate coding, and evidence-based practices, you can manage costs effectively while maintaining high-quality care. A MIPS consultant can help you decode the complexities of Cost scoring, identify improvement opportunities, and maximize your MIPS performance. Ready to take control of your Cost score? Contact us today to learn how we can support your success in 2025! 803-205-2544

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