Medicare Shared Savings Program (MSSP)
Model Summary
1. Executive Summary and Strategic Context
The Medicare Shared Savings Program (MSSP) is the largest and most established value-based care program in the United States, with approximately 456 participating Accountable Care Organizations (ACOs) covering 11 million Medicare fee-for-service beneficiaries as of Performance Year 2024. Unlike CMMI Innovation Center models, MSSP is a permanent statutory program authorized under Section 3022 of the Affordable Care Act (42 U.S.C. 1395jjj), codified in 42 CFR Part 425.
MSSP enables groups of doctors, hospitals, and other healthcare providers to form ACOs that share financial accountability for the total cost and quality of care delivered to assigned Medicare FFS beneficiaries. In PY 2024, approximately 60% of ACOs earned shared savings, generating $1.8 billion in net Medicare savings with $980 million distributed to ACOs. The program operates on 5-year agreement periods with annual performance years (January-December).
1.1 Strategic Significance
MSSP is the backbone of CMS's value-based care strategy and the primary pathway for achieving the 2030 goal of all Medicare beneficiaries in accountable care relationships. With 94% of ACOs meeting quality performance standards, MSSP has demonstrated that large-scale value-based care is operationally viable. The program's evolution - from one-sided savings-only tracks to mandatory two-sided risk progression - reflects CMS's commitment to deepening financial accountability.
2. Program Architecture
2.1 Participation Tracks
| Track/Level | Risk Type | Savings Rate | Loss Rate | Eligibility |
|---|---|---|---|---|
| BASIC Level A | One-sided | Up to 40% | None | New/re-entering ACOs |
| BASIC Level B | One-sided | Up to 40% | None | New/re-entering ACOs |
| BASIC Level C | Two-sided | Up to 50% | 30% | Glide path progression |
| BASIC Level D | Two-sided | Up to 50% | 40% | Glide path progression |
| BASIC Level E | Two-sided | Up to 50% | 50% | Glide path progression |
| ENHANCED | Two-sided | Up to 75% | Up to 75% | Experienced ACOs |
2.2 Benchmark Methodology
Historical Benchmark: Based on ACO's prior 3 years of expenditures, weighted blend of ACO historical costs and regional costs.
Risk Adjustment: CMS-HCC model adjusts for beneficiary health status changes.
Trend Update: Annual national growth rate adjustments.
Regional Adjustment: Blends ACO historical spending with regional spending to reward efficiency.
2.3 Financial Reconciliation
Shared Savings: IF (Actual < Benchmark - MSR) AND Quality Met, THEN Savings = (Benchmark - Actual) x Sharing Rate.
Shared Losses: IF (Actual > Benchmark + MLR), THEN Losses = (Actual - Benchmark) x Loss Rate. Enhanced Track losses capped at 15% of benchmark for first 2 years.
2.4 Beneficiary Assignment
Preliminary Prospective (Default): Assigned at year start based on prior year primary care utilization; updated at reconciliation.
Prospective (Optional): Assigned at year start with no reconciliation update. Greater planning certainty.
Minimum: 5,000 assigned beneficiaries required.
3. Quality Performance Requirements (2026)
3.1 Quality Measure Set
ACOs report via APP Plus Measure Set including eCQMs/MIPS CQMs (4 measures), Medicare CQMs (claims-based), and CAHPS for MIPS Survey (patient experience).
3.2 Quality Performance Standard - Three Pathways
Pathway 1 (Primary): Health equity-adjusted quality score at or above 40th percentile across all MIPS Quality performance category scores.
Pathway 2 (Measure-Level): At least 10th percentile on 1+ of 3 outcome measures AND at least 40th percentile on 1+ of 5 remaining measures.
Pathway 3 (First-Year ACO): Meet MIPS data completeness, receive quality score, administer CAHPS survey.
3.3 Health Equity Adjustment
Quality scores adjusted for serving underserved populations. Rewards ACOs with high proportions of dual-eligible beneficiaries. Reduces penalties for complex, high-need patients. This is a significant 2026 enhancement recognizing that ACOs serving disadvantaged populations face inherently higher cost and quality challenges.