Medicare Shared Savings Program (MSSP)

Learn more about how independent physicians are affected by the program

The Affordable Care Act (ACA) established the Medicare Shared Savings Program (MSSP) to facilitate coordination and cooperation among healthcare providers, in order to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce unnecessary costs. Eligible healthcare providers who wish to participate in the Shared Savings Program must first create or participate in an Accountable Care Organization (ACO).

Accountable Care Organizations

An Accountable Care Organization is comprised of a group of doctors or other healthcare providers, who voluntarily work together with Medicare to provide service to Medicare Fee-For-Service beneficiaries. It is not a Medicare Advantage plan or an HMO. Instead, an ACO has the opportunity to share in savings that are earned while providing care to FFS beneficiaries; the Shared Savings Program will reward ACOs that lower growth in expenditures while meeting performance standards on quality of care and putting patients first. In this way, the Centers for Medicaid & Medicaid Services (CMS) aims to incentivize health care providers to work together to treat an individual patient across different care settings, such as doctor’s offices, hospitals, and long-term care facilities

ACO Eligibility Requirements

In order for a healthcare provider to be an ACO, it must belong to one of the following groups:

  • ACO professionals (i.e. physicians and certain non-physician practitioners) in group practice arrangements
  • Networks of individual practices of ACO professionals
  • Partnerships or joint venture arrangements between hospitals and ACO professionals
  • Hospitals employing ACO professionals
  • Other Medicare providers and suppliers

Additionally, the healthcare provider must serve at least 5,000 assigned Medicare Fee-For-Service beneficiaries, establish a governing body that represents ACO participants and Medicare beneficiaries, and assume responsibility for routine self-assessment, monitoring, and reporting of the care that it delivers.

Shared Savings Options

An ACO can choose between the following tracks:

  • Track 1: shared savings only arrangement. The ACO will not be penalized if savings are not realized. However, the disadvantage of this track is that the ACO will be limited to sharing in a maximum of 50% of savings each year. In addition, Track 1 is only available as an option during the ACO’s first 3-year contract.
  • Track 2: sharing in both savings and losses. The ACO may choose from a menu of options in selecting its minimum savings rate (MSR) and minimum loss rate (MLR); these are the thresholds that an ACO’s expenditures must meet or exceed in order for the ACO to be eligible to share in savings or be accountable for losses, respectively.
  • Track 3: performance-based risk option. Beneficiaries will be prospectively assigned to the ACO by Medicare. Therefore, this track offers a higher sharing rate than Tracks 1 and 2

Note that any ACO qualifies as an Alternative Payment Model (APM) under MACRA. However, only ACOs in Shared Savings Tracks 2 and 3 qualify as Advanced Alternative Payment Models (AAPM) that are eligible for the 5% bonus.

ACO Quality Measures and Performance Scoring

To determine whether an ACO qualifies for shared savings, the ACO will be evaluated on thirty-four individual measures of quality performance. These measures span four quality domains: Patient Experience of Care, Care Coordination/Patient Safety, Preventative Health, and At-Risk Population. Medicare will collect reports about the above measures through a web interface that is designed for clinical quality measure reporting, as well as patient experience-of-care surveys. In addition, CMS claims and administrative data will be used to calculate other measures.

Each ACO is responsible for selecting and paying for a CMS-certified vendor to administer the patient survey and report the results. Once the ACO has satisfactorily demonstrated that it has met Medicare’s quality performance standard for that year, the ACO is eligible to share in any savings that were created.

Payment for Performance

Throughout an ACO’s first agreement period, performance assessments will be gradually phased in. During the first year, the ACO need only demonstrate complete and accurate reporting for all quality measures. In the following years of the first agreement period, performance assessments will be phased in, and the ACO must continue to report all measures completely and accurately. During subsequent agreement periods, ACOs must continue to report all measures completely and accurately, and will continue to be assessed on performance.

The CMS establishes performance benchmarks using national Fee-For-Service data. In order for an ACO to receive payment for performance, the ACO must perform above the 30th percentile of the performance benchmark. The ACO will then receive points on a sliding scale according to its level of performance. Points from each domain are weighted equally, and the scores are averaged to determine the ACO’s overall quality performance score and sharing rate. The ACO will also be considered for a quality improvement reward: ACOs may earn up to four additional points per domain for improving quality performance.

ACO Performance Statistics

Below are some statistics that may be helpful in deciding whether joining the Shared Savings Program would be advantageous for your organization:

  • In 2015, 119 ACOs (less than a third of the 392 participating organizations) in the Medicare Shared Savings Program were able to share in savings. 83 other ACOs beat their benchmarks, but not by enough to receive shared savings.
  • In 2015, 31% of all ACOs succeeded in generating savings above the CMS minimum standard, an increase over 28% in 2014 and 26% in 2013. According to the CMS, ACOs are more likely to qualify for shared savings as they gain experience with the Medicare Shared Savings Program.
  • The majority of shared savings in the Medicare Shared Savings Program were found to be highly concentrated among the 86 most successful ACOs, according to a 2014 Health Affairs analysis. The researchers also found that CMS had been consistently raising benchmarks, and judged this strategy to be unsustainable.
  • In 2014, 54% of ACOs were practice networks, 31% were group practices, 38% were hospitals/professional partnerships, 31% were hospitals employing doctors, 14% were federally qualified health centers, 15% were rural health clinics, and 13% were critical access hospitals.