What is the Medicare Shared Savings Program (MSSP)?

Medicare Shared Savings Program (MSSP)

Provide high-quality, coordinated care to improve outcomes and reduce costs. That’s the primary goal of the Medicare Shared Savings Program (MSSP). The MSSP is an alternative payment model in which eligible providers, hospitals, and suppliers are rewarded for achieving better health for individuals, improving population health, and lowering growth in healthcare expenditures.

Coming together to effect change

In the MSSP, teamwork is paramount. To participate, providers must be part of an Accountable Care Organization (ACO), a patient-centered network that shares financial and medical responsibilities with the goal of improving patient care while limiting unnecessary spending. The MSSP requires ACOs to promote evidence-based medicine, engage beneficiaries, report internally on quality and cost metrics, and provide coordinated care across and among primary care physicians, specialists, and acute and post-acute providers. In the ACO, everyone works together to streamline processes, reduce duplication, and improve quality—and everyone shares in the financial savings as well as potential risks that ensue.

The MSSP has grown steadily since it began in 2012 when only 220 ACOs existed. Currently, 561 MSSP ACOs provide care to 10.5 million beneficiaries nationwide, according to the Centers for Medicare & Medicaid Services (CMS). This growth is due, in part, to an increased awareness of the revenue-generating opportunities inherent in ACOs as well as a desire to avoid financial penalties under the Merit-based Incentive Payment System (MIPS). Physicians who participate in an advanced Alternative Payment Model such as a Next Generation ACO and meet certain parameters are exempt from MIPS reporting. A Next Generation ACO is similar to a traditional ACO; however, participants assume a higher level of financial risk. To be eligible for incentive payments under MIPS, physicians must receive 25% of their Medicare Part B payments or see 20% of their patients through the advanced APM.

Financial risk and the MSSP

To understand truly understand the role of ACOs in the MSSP, one must understand the concept of financial risk. It’s the idea that ACOs in the MSSP can—and should—take on some degree of responsibility for lowering costs (i.e., ensuring that actual expenditures don’t exceed updated historical benchmark data). When they don’t accomplish this goal, they may be penalized. However, when they do, they’re rewarded.

The MSSP provides participants with the following four ACO options, each of which requires an ACO to assume a different level of risk:

  • Track 1—These ACOs assume no downside financial risk, meaning there’s no financial penalty to the ACO if it doesn’t lower costs. It can only benefit from the shared savings that are generated. Track 1 is often viewed as a stepping stone to help the ACO ‘test the waters’ and initiate best practices and integration necessary to achieve and sustain lower costs. Savings are limited to a maximum of 50% each year.
  • Track 1+—These ACOs assume limited downside risk while preparing for the more intensive Tracks 2 and 3. ACOs can join the Track 1+ Model as part of the 2018, 2019, and 2020 MSSP application cycles. Savings are limited to a maximum of 50% annually. Downside risk will vary depending on the ACO’s composition. In 2018-2020, losses under the Track 1+ model are capped at either eight percent of ACO participant Medicare Part A and Part B fee-for-service revenue or at four percent of the ACO’s updated historical benchmark.
  • Track 2—These ACOs must repay Medicare for exceeding anticipated costs. However, when shared savings are generating, they receive a larger portion of those savings as compared to their Track 1 and Track 1+ counterparts. Savings are capped at 60% annually, and the shared loss rate may not be less than 40% or exceed 60%.
  • Track 3—These ACOs take on the greatest amount of risk, but may also share in the greatest portion of savings if successful. Savings are capped at 75%, and the shared loss rate may not be less than 40% or exceed 75%.

Currently, the one-sided risk option (i.e., Track 1) is the most popular with 82% of ACOs falling into this category, according to CMS. Ten percent of ACOs are in the Track 1+ model, one percent is in the Track 2 model, and seven percent are in the Track 3 model.

Having options makes it easier for organizations with varied levels of experience, including small physician practices, to enter into an ACO under the MSSP. ACO formation requires a minimum of 5,000 covered lives; however, small practices can often convene to form an ACO.

Quality and the MSSP

To be eligible for any shared savings that are generated, ACOs must also meet the established quality performance standards for 31 quality measures (29 individual measures and one composite that includes two individual component measures). These MSSP quality measures span the following four quality domains:

  • Patient/caregiver experience
  • Care coordination/patient safety
  • Preventive health
  • At-risk population

Meeting these MSSP quality standards requires an ongoing commitment to patient-centered care with a focus on proactive health maintenance.

The MSSP from the beneficiary’s perspective

Medicare beneficiaries can continue to choose any provider who accepts Medicare—even if that provider is not part of the ACO. However, beneficiaries benefit from seeing providers in the ACO network because these providers all have a vested interest in providing coordinated, high-quality care.

Important considerations in the MSSP

There are several other important concepts to consider when joining an ACO as part of the MSSP.

The article, What is an Accountable Care Organization (ACO), provides great insights into some overlying concerns with ACOs today.

“Since the inception of ACOs in 2012, many are reaching the limit of their no-risk contracts and are considering whether they want to continue with the Medicare and Medicaid Services (CMS) Shared Savings Program. The pressure to now take on more financial risk is more than many ACOs are prepared to accept. Especially with inadequate information and uncertainty about how patient demographics are chosen to enable organizations to be successful in meeting their goals. This concern is shared by 71% of the ACOs according to a survey released by the National Association of Accountable Care Organizations which indicated that additional financial risks would prompt them to leave the program.

Despite these challenges, some early adaptors plan to continue to stay on for fear of losing the progress they’ve made in the provision of patient care and continue to hope that CMS will consider making changes regarding forced financial risks that many ACOs are not prepared to accept.”

Beyond the industry’s focus on the current state of ACOs are the underlying considerations regarding risk adjustment, cost, and more.

First, there’s the concept of risk adjustment. Providers participating in an ACO must ensure that their data accurately portrays patient severity and risk. This requires a concerted effort to capture hierarchical condition categories (HCC) to raise the benchmark against which they’re compared in future years. Medicare uses HCCs to predict future costs based on patient severity and risk. If an ACO doesn’t capture all HCCs, it may appear as though costs don’t align with severity. In other words, the ACO’s actual costs will be higher than the anticipated ones. Without complete and accurate HCC capture, ACOs may not be able to stay below the MSSP benchmark even when cost reduction efforts have been maximized.

Another consideration is that joining or forming an ACO may require significant costs. MSSP ACOs that include separately recognized legal entities must establish a new legal entity for the combined participants. Each ACO must also create a governing body that represents providers, suppliers, and beneficiaries. An ACO is also responsible for routine self-assessment, including monitoring the care that Medicare patients receive and continually improving processes and outcomes. In addition, there could be costs associated with health information technology integration necessary to streamline clinical care.

As the industry continues to shift toward value-based payment models, the MSSP will likely continue to remain in the spotlight. By rewarding providers to improve outcomes and lower costs, the MSSP will gain even more traction.


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