Quick Answer

MIPS and value-based care are not interchangeable terms. MIPS (Merit-based Incentive Payment System) is a specific CMS reporting and payment adjustment program that applies to eligible Medicare Part B clinicians — including physical therapists, occupational therapists, and speech-language pathologists in private outpatient practice. Value-based care is a broader reimbursement philosophy that ties payment to patient outcomes and cost efficiency across all payers. Understanding both is essential for rehab therapy clinic owners navigating Medicare compliance and long-term practice sustainability in 2026.

Walk into a physical therapy clinic owner conference and ask how many people are "doing value-based care," and nearly every hand goes up. Ask how many can distinguish it from MIPS compliance, and most hands quietly come down.

The confusion is understandable. Both concepts live in the same conversation about payment reform, quality measurement, and the future of Medicare reimbursement. But conflating them leads to real consequences — missed compliance obligations, misallocated resources, and strategic blind spots that cost clinics money.

This guide draws on the CMS Quality Payment Program framework, the CMS Value-Based Care strategy, and the CY 2026 Medicare Physician Fee Schedule Final Rule to give outpatient PT, OT, and SLP clinics a clear, accurate picture of what each program actually requires — and what each one actually means for your bottom line.

By the end of this article, you will understand the structural difference between MIPS and value-based care, how each affects your clinic's Medicare reimbursement, where the two overlap, and what you should be doing differently in 2026 regardless of your practice size.

What Is MIPS in Rehab Therapy?

MIPS — the Merit-based Incentive Payment System — is a CMS-administered payment adjustment program created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). It was designed to replace three legacy quality reporting systems: the Physician Quality Reporting System (PQRS), the Value-Based Modifier (VM), and the Medicare Electronic Health Records Incentive Program (Meaningful Use).

Physical therapists, occupational therapists, and speech-language pathologists were added to the list of MIPS-eligible clinician types in 2019. For outpatient rehab clinics, this marked a significant shift: for the first time, therapy practice performance data was being used to directly adjust Medicare Part B reimbursements.

The core mechanic is straightforward. Over the course of a performance year (January 1 through December 31), eligible clinicians collect and report data across four categories. CMS scores that data on a 0–100 scale. That score determines a positive, neutral, or negative percentage adjustment applied to all Medicare Part B payments two years later.

The Four MIPS Performance Categories

Performance is measured across four weighted categories. For PT and OT clinics in 2026, the weights shift depending on practice size and PI eligibility status.

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Key Practical Points for PT Clinics

What MIPS Requires of Your Clinic

• Applies only to clinicians billing Medicare Part B via CMS-1500 (private practice setting)
• Eligibility is determined by exceeding all three CMS low-volume thresholds (more than $90,000 in Part B charges, more than 200 unique beneficiaries, more than 200 covered services)
• Performance year data is collected January 1 through December 31 and submitted to CMS by March 31 of the following year
• The 2026 performance threshold is set at 75 points — maintained at this level through 2028 per the CY 2026 Final Rule
• Scores below 75 points result in a negative payment adjustment. Scores above 75 result in a positive adjustment. Scores exactly at 75 produce a neutral adjustment
• The maximum negative adjustment for the 2026 performance year / 2028 payment year is -9%

Understanding MIPS as a compliance and payment adjustment mechanism — not a care delivery model — is the first step to avoiding the confusion that costs clinics both money and strategic clarity.

What Is Value-Based Care in Rehab?

Value-based care is not a program. It is not a CMS reporting requirement. It is a philosophy of reimbursement — one that ties payment to the quality and efficiency of care delivered rather than to the volume of services billed.

In the traditional fee-for-service model that has dominated American healthcare for decades, a clinic is paid for every unit of service it renders, regardless of whether the patient improved. A physical therapist who sees a patient 20 times for a knee replacement receives payment for all 20 visits whether the patient regained full function or not.

Value-based care inverts this logic. Under value-based models, reimbursement is — to varying degrees — contingent on measurable outcomes, cost efficiency, and demonstrated patient impact. The goals are: better health outcomes, lower total cost of care, and improved patient experience.

Value-Based Care Models in Rehab

• Bundled payments:A single payment covers all services for an episode of care (e.g., total knee replacement). The therapy clinic receives a portion of a fixed sum, not a fee per visit. Efficient, outcome-driven care is rewarded.
• Advanced Alternative Payment Models (APMs):CMS programs where clinicians take on financial risk in exchange for enhanced payment rates. Qualifying participants may be exempt from MIPS entirely.
• Accountable Care Organizations (ACOs):Networks of providers that share responsibility for the cost and quality of care for a defined patient population. Rehab clinics can participate as downstream providers.
• Commercial payer value-based contracts:Increasingly common arrangements with private insurers that tie reimbursement rates or bonuses to outcome metrics and utilization efficiency.
• Hospital and health system partnerships:Hospital systems moving toward risk-sharing models increasingly evaluate therapy partners based on their outcome data, readmission rates, and cost-per-episode performance.

Value-Based Mechanisms Relevant to Rehab Therapy

Value-Based Care Models in Rehab

• Bundled payments:A single payment covers all services for an episode of care (e.g., total knee replacement). The therapy clinic receives a portion of a fixed sum, not a fee per visit. Efficient, outcome-driven care is rewarded.
• Advanced Alternative Payment Models (APMs):CMS programs where clinicians take on financial risk in exchange for enhanced payment rates. Qualifying participants may be exempt from MIPS entirely.
• Accountable Care Organizations (ACOs): Networks of providers that share responsibility for the cost and quality of care for a defined patient population. Rehab clinics can participate as downstream providers.
• Commercial payer value-based contracts: Increasingly common arrangements with private insurers that tie reimbursement rates or bonuses to outcome metrics and utilization efficiency.
• Hospital and health system partnerships: Hospital systems moving toward risk-sharing models increasingly evaluate therapy partners based on their outcome data, readmission rates, and cost-per-episode performance.

Value-based care affects all payers — not just Medicare. A commercial insurer contract that rewards low readmission rates for post-surgical orthopedic patients is a value-based arrangement. A bundled payment program for hip fracture recovery is a value-based arrangement. Neither of these is MIPS.

Important Distinction

Value-based care is the direction the entire healthcare reimbursement system is moving. MIPS is one specific reporting mechanism that CMS created to push Medicare clinicians in that direction. They are related but structurally distinct.

MIPS vs Value-Based Care in Rehab: Key Differences

When clinic owners research MIPS vs value-based care in rehab, what they most often need is a clear structural comparison — not conceptual generalities. The table below defines the key distinctions across every dimension that matters for a therapy practice.

The clearest summary: MIPS is how CMS measures and adjusts your Medicare payments today. Value-based care is where all reimbursement — across every payer — is heading tomorrow. Treating them as equivalent means you may satisfy one while ignoring the other.

Why Therapy Clinics Confuse MIPS with Value-Based Care

The confusion between MIPS and value-based care is not random — it stems from three persistent misconceptions that are common among outpatient therapy clinic owners and administrators.

Misconception 1: "If I report MIPS, I'm doing value-based care."

MIPS reporting satisfies a CMS compliance obligation. It does not mean your clinic is practicing in a value-based care model. A clinic can score 85 points on MIPS while still operating on a pure fee-for-service model with no outcomes tracking beyond what CMS requires for scoring purposes. Compliance is not strategy.

True value-based care engagement means your reimbursement is structurally tied to patient outcomes — through bundled payments, ACO participation, or performance-based commercial contracts. MIPS creates the habit of data collection. It does not, by itself, create a value-based care practice.

Misconception 2: "Value-based care only applies to physicians."

This was approximately true in the early 2000s. It has not been true for several years. Orthopedic bundled payment programs explicitly include physical therapy as a downstream service. ACO participation agreements evaluate the efficiency of all care delivered within an episode, including post-acute rehab. Commercial payers that contract with rehab networks increasingly build outcome-based performance criteria into their arrangements.

Physical therapists, occupational therapists, and speech-language pathologists are active participants — often in pivotal roles — in value-based care delivery. The musculoskeletal cost burden is among the largest drivers of total healthcare expenditure, and therapy is central to managing it efficiently.

Misconception 3: "Small therapy clinics are exempt from both."

Small clinics below the CMS low-volume threshold are excluded from mandatory MIPS participation. They are not exempt from value-based care trends. A two-therapist outpatient orthopedic clinic that bills below the MIPS threshold still needs referrals from physicians, hospital systems, and orthopedic surgeons who are themselves operating in value-based environments. When those referral sources begin asking for outcomes data — and they are — being unable to provide it is a competitive disadvantage regardless of MIPS eligibility.

The Real Risk for Small Clinics

MIPS exemption does not create immunity from value-based care pressure. As payers and referral networks continue shifting toward outcome-based criteria, clinics without structured outcomes measurement will find themselves excluded from preferred provider networks — not because of compliance failures, but because they cannot produce the data that risk-bearing entities require from partners.

How MIPS Fits Into the Broader Value-Based Care Movement

MIPS was never designed to be the endpoint of payment reform. CMS designed it as a transitional mechanism — a structured forcing function to get clinicians measuring quality and cost before the reimbursement system fully shifts to risk-sharing models.

The trajectory is explicit in the QPP framework. CMS has continued expanding MIPS Value Pathways (MVPs), which bundle related measures into clinically coherent sets — including the Musculoskeletal Care MVP (M1370) specifically designed for physical therapists. The 2026 Final Rule maintains the traditional MIPS framework while simultaneously signaling that the long-term direction is toward Advanced APMs, where clinicians take on financial risk in exchange for exemption from MIPS and enhanced payment rates.

Why Strong MIPS Performance Is Actually VBC Preparation

A clinic that builds the infrastructure to score 85 points on MIPS — structured outcome documentation at intake and discharge, clean CPT coding, real-time quality measure monitoring, and a care coordination protocol — has, incidentally, built the data foundation required to enter bundled payment arrangements and commercial value-based contracts.

The MIPS-to-VBC Infrastructure Bridge

• Structured outcome measurement at intake and discharge → required for episode-based payment analytics
• Accurate CPT coding aligned with documented care → required for cost-per-episode benchmarking
• Care coordination documentation with referring physicians → required for ACO and bundled payment participation
• Quality benchmark performance data → used in payer negotiations and hospital partnership discussions
• Data completeness habits built through MIPS → directly transferable to commercial payer reporting requirements

The clinics that treat MIPS as a pure compliance burden — doing the minimum to avoid penalties — are missing a compounding benefit. Every year of strong MIPS performance is a year of data asset accumulation that strengthens your position in every value-based conversation you will have with payers and referral partners over the next decade.

Financial Impact: What This Means for Your Rehab Clinic in 2026

The financial stakes in both MIPS and value-based care are real and quantifiable. Consider the following scenarios based on CMS payment adjustment mechanics and realistic outpatient rehab revenue profiles.

The MIPS penalty is immediate and calculable. The value-based care revenue risk is slower and structural — but larger in aggregate. A clinic that loses a hospital referral relationship because it cannot demonstrate outcomes performance may lose far more than $36,000 per year. Referral-dependent revenue is often the largest single revenue stream for outpatient rehab practices.

What Strong Performance Looks Like Financially

• MIPS score above 75 points: neutral adjustment (no penalty), with positive adjustment potential for scores above 75
• MIPS score of 85+ points: positive payment adjustment applied to 2028 Medicare reimbursements from the budget-neutral bonus pool
• Demonstrable outcomes data: stronger commercial contract negotiation position — even a 1–2% rate improvement on a $1M commercial revenue base is $10,000–$20,000 annually
• ACO or bundled payment participation with strong performance: shared savings distributions that can represent meaningful revenue additions for qualifying clinics

Are All Therapy Clinics Required to Participate?

The answer differs depending on whether you are asking about MIPS or value-based care participation.

MIPS Participation: It Depends on Your Medicare Volume

MIPS participation is mandatory for clinicians who exceed all three CMS low-volume thresholds during the determination periods for a given performance year. All three criteria must be exceeded — falling below any one of them excludes the clinician from mandatory participation:

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Clinics billing via UB-04 in institutional settings — hospital outpatient departments, skilled nursing facilities — are generally excluded from MIPS eligibility regardless of volume. MIPS applies to private practice billing via CMS-1500.

Clinics below the threshold may still choose to participate voluntarily through the opt-in mechanism, which allows them to receive a positive payment adjustment if their score exceeds the performance threshold. There is no penalty for voluntary participation.

Group reporting is available for practices with multiple eligible clinicians under one Tax Identification Number (TIN). Group reporting pools data across all eligible clinicians — which can smooth variability in individual scores but requires the submission to include data for all eligible clinicians under the TIN.

Clinicians participating in qualifying Advanced APMs may receive QP (Qualifying Participant) status, which exempts them from MIPS entirely and qualifies them for the APM incentive payment.

The most reliable way to confirm your specific eligibility status is the CMS QPP Participation Status Tool at qpp.cms.gov. Eligibility should be verified at the start of every performance year — it can change as your Medicare volume, provider count, or billing structure changes.

Value-Based Care: No Exemption by Size or Medicare Volume

There is no CMS exemption from value-based care. There are no thresholds. The shift in how payers — all payers — structure contracts, referral relationships, and performance expectations is a market development, not a regulatory program with eligibility criteria. Every therapy clinic operating in 2026 is affected by it to some degree.

Strategic Takeaway: Compliance vs Competitive Advantage

The most useful way to frame the relationship between MIPS and value-based care for a therapy clinic owner is this:

MIPS is a compliance requirement with a financial penalty for failure. Value-based care is a competitive positioning opportunity with a financial reward for excellence.

A clinic that treats both as burdens will do the minimum for MIPS and ignore value-based trends entirely — surviving in the short term but eroding its market position steadily. A clinic that treats MIPS as the floor and value-based care as the ceiling builds a fundamentally stronger practice.

What Smart Rehab Clinics Are Doing in 2026

• Implementing structured, standardized outcome measurement at intake and discharge for every patient — not just Medicare beneficiaries
• Reviewing CMS performance feedback reports annually to understand benchmark performance before selecting quality measures
• Auditing CPT coding workflows to ensure documented care aligns with billed services — reducing cost category exposure
• Building a written care coordination protocol that documents communication with referring physicians and supports both MIPS improvement activity credit and referral relationship maintenance
• Tracking functional outcomes data in a format that can be exported and shared with hospital partners, payers, and ACO administrators
• Exploring the MSK MVP (M1370) as a simpler, clinically coherent alternative to traditional MIPS reporting for eligible PT clinics

None of these activities require a large practice. A two-therapist clinic can implement structured outcome measurement. A solo practitioner can build a care coordination protocol. The barrier to good data infrastructure in rehab therapy is not size — it is prioritization and the right workflow tools.

The clinics that will be best positioned for the value-based contracts, bundled payment opportunities, and hospital partnerships of 2028 and beyond are the ones building that infrastructure now — not waiting until the market forces their hand.

FAQs

Is MIPS the same as value-based care?

No. MIPS is a specific CMS reporting and payment adjustment program under the Quality Payment Program. Value-based care is a broader reimbursement philosophy that ties payment to outcomes and cost efficiency across all payers. MIPS is one mechanism within the larger value-based care movement — satisfying MIPS does not mean your clinic is operating in a value-based care model.

Do PT clinics have to report MIPS?

Physical therapists must report MIPS if they exceed all three CMS low-volume thresholds: more than $90,000 in Medicare Part B allowed charges, more than 200 unique Medicare beneficiaries, and more than 200 covered professional services in a year. Clinics below any one of these thresholds are excluded from mandatory participation but may opt in voluntarily.

Does value-based care affect small rehab clinics?

Yes. Even clinics that fall below MIPS thresholds are affected by value-based care trends. Commercial payers, hospital systems, and ACOs increasingly use outcome data and cost efficiency to determine referral relationships and contract terms, regardless of Medicare volume. A clinic cannot opt out of the market shift in reimbursement philosophy.

Can you participate in value-based care without MIPS?

Yes. Clinics can engage with value-based care models through commercial payer contracts, bundled payment arrangements, and ACO partnerships without being MIPS-eligible. Value-based care applies to all payers, while MIPS is specific to Medicare Part B billing. The two systems are related but structurally independent.

Is MIPS going away?

Not immediately. CMS has stabilized the MIPS performance threshold at 75 points through 2028 and is actively expanding MIPS Value Pathways. However, CMS has explicitly signaled its long-term intent to transition toward Advanced APMs, which would reduce reliance on traditional MIPS reporting. Clinics should plan for MIPS compliance through at least 2028 while building the outcome infrastructure needed for APM participation.

What is the MIPS performance threshold for 2026?

CMS finalized the MIPS performance threshold at 75 points for the 2026 performance year, with this level maintained through the 2028 performance year per the CY 2026 Medicare Physician Fee Schedule Final Rule. Clinicians scoring below 75 points face a negative payment adjustment on 2028 Medicare Part B reimbursements, with a maximum penalty of -9%.

MIPS vs Value-Based Care: The Bottom Line for Rehab Clinics

MIPS and value-based care are not the same — and treating them as interchangeable is a mistake that costs clinics both compliance standing and strategic positioning.

MIPS is mandatory if you are eligible. The 2026 performance year is live. The threshold is 75 points. The maximum penalty is -9%. Non-reporting carries the full penalty automatically. The submission deadline is March 31, 2027.

Value-based care is the direction of reimbursement. Every payer — Medicare, Medicaid, and commercial — is moving toward outcome-linked payment structures. The clinics building data infrastructure today are the ones that will negotiate from strength in 2028 and beyond.

The practical implication: data infrastructure determines performance in both. Structured outcome measurement, accurate billing, care coordination documentation, and quality measure monitoring are not administrative burdens — they are the foundation of a defensible, competitive outpatient rehab practice in the current payment environment.

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