What is the MSSP (Medicare Shared Savings Program)?
The Medicare Shared Savings Program (MSSP) is the largest value-based care model run by the Centers for Medicare & Medicaid Services (CMS). It allows groups of healthcare providers, known as Accountable Care Organizations (ACOs), to work together to deliver high-quality, cost-efficient care for Medicare beneficiaries.
Under MSSP, participating ACOs are evaluated on quality performance measures and spending benchmarks. If they succeed in delivering better care at lower costs, they can share in the savings generated for Medicare. Some ACOs also accept downside risk, meaning they may owe money back to CMS if spending is higher than expected.
MSSP is a key example of an Alternative Payment Model (APM) under the Quality Payment Program (QPP) and is central to CMS’s efforts to shift from fee-for-service to value-based reimbursement.
Key Components of the Medicare Shared Savings Program
The Medicare Shared Savings Program (MSSP) is built around three main elements: participation tracks, financial risk arrangements, and quality performance measures. These components determine how an Accountable Care Organization (ACO) is structured within the program, how it shares in savings or losses, and how it is evaluated for delivering high-value care.
1. Participation Tracks
MSSP offers different tracks to give ACOs flexibility in how they participate.
- The Basic Track allows new or smaller ACOs to start with lower financial risk, using a “glide path” that gradually increases accountability over five years.
- The Enhanced Track offers higher financial risk but also greater potential rewards, designed for more experienced ACOs ready to take on full responsibility for cost and quality performance.
This structure helps organizations ease into value-based care, with the option to move into more advanced models over time.
2. Risk Arrangements
MSSP requires ACOs to share in Medicare’s financial outcomes.
- In one-sided risk arrangements, ACOs share in any savings they generate but do not face penalties if spending is higher than expected.
- In two-sided risk arrangements, ACOs share in both savings and potential losses, meaning they could owe CMS money if they fail to meet cost benchmarks.
By offering both models, MSSP encourages participation while still driving the shift toward accountability for cost and quality.
3. Quality Performance Measures
MSSP ACOs are also scored on a set of quality domains to ensure that cost savings do not come at the expense of patient care. CMS evaluates:
- Patient and Caregiver Experience (e.g., satisfaction surveys)
- Care Coordination and Patient Safety (e.g., reducing avoidable hospital admissions)
- Preventive Health (e.g., screenings, immunizations)
- Management of At-Risk Populations (e.g., chronic condition management)
These measures ensure that ACOs are not only lowering costs but also improving outcomes and supporting population health.
How the Medicare Shared Savings Program Works in Practice
The Medicare Shared Savings Program (MSSP) follows a performance cycle that determines whether participating Accountable Care Organizations (ACOs) earn shared savings, face losses, or break even.
Step 1 — ACO Formation and Application
Groups of providers and organizations form an Accountable Care Organization (ACO) and apply to participate in MSSP. CMS reviews applications to ensure that the ACO meets eligibility requirements, such as governance structure, patient assignment, and use of data systems.
Step 2 — Care Delivery Under MSSP Rules
During the performance year, ACOs manage care for their assigned Medicare beneficiaries. The focus is on:
- Improving care coordination across providers
- Managing chronic conditions more effectively
- Enhancing preventive care and patient safety
- Reducing unnecessary hospitalizations and costs
Step 3 — CMS Evaluation
At the end of the year, CMS evaluates each ACO based on:
- Spending benchmarks compared to historical and regional costs
- Quality performance measures across experience, safety, prevention, and population management
Step 4 — Financial Settlement
- If the ACO spends less than its benchmark and meets quality requirements, it earns a share of the savings.
- If the ACO exceeds its benchmark (in two-sided risk tracks), it must repay CMS for part of the losses.
- In one-sided risk tracks, the ACO shares in savings but does not owe money if costs are higher than expected.
Step 5 — Continuous Improvement and Renewal
ACOs can continue participation year over year, moving from lower-risk to higher-risk tracks as they gain experience and capacity to manage cost and quality.
The MSSP and Their Impact on Billing and Reimbursement
The Medicare Shared Savings Program (MSSP) directly affects how Accountable Care Organizations (ACOs) are reimbursed for managing Medicare patients. Payments are tied to the ACO’s ability to deliver high-quality care while keeping costs below benchmarks set by CMS.
Shared Savings
- ACOs that reduce Medicare spending below their benchmark while meeting quality standards earn a percentage of the savings back from CMS.
- Savings are distributed among participating providers in the ACO, often based on internal agreements.
Shared Losses
- ACOs in two-sided risk models must repay CMS if costs exceed benchmarks.
- This creates a financial incentive for providers to avoid unnecessary spending and invest in care coordination and prevention.
Impact on Medicare Part B Payments
- MSSP participation is separate from MIPS, but it fulfills QPP requirements by placing providers under the APM track.
- Clinicians in MSSP ACOs may be eligible for MIPS APM scoring or, if the ACO qualifies as an Advanced APM, for a 5% Medicare incentive payment and MIPS exemption.
Why MSSP Matters in Billing and Reimbursement
- MSSP ties provider reimbursement directly to value-based care principles:
- Higher quality + lower costs = financial rewards
- Poor performance = potential repayment
This makes MSSP one of CMS’s most influential tools for reshaping Medicare reimbursement and driving the shift away from fee-for-service.
Frequently Asked Questions about MSSP
1. What is the Medicare Shared Savings Program (MSSP)?
MSSP is a value-based care program from CMS that allows groups of providers, called Accountable Care Organizations (ACOs), to share in savings when they deliver high-quality, cost-efficient care for Medicare patients.
2. How does MSSP work?
ACOs in MSSP are assigned a group of Medicare beneficiaries. They work to coordinate care, improve outcomes, and reduce unnecessary spending. At the end of each performance year, CMS compares their results against cost and quality benchmarks. Based on performance, ACOs may earn shared savings or, in higher-risk tracks, repay CMS for shared losses.
3. What are MSSP tracks?
MSSP offers two main participation tracks:
- Basic Track: Starts with one-sided risk (shared savings only) and gradually moves toward two-sided risk (shared savings and losses) over five years.
- Enhanced Track: Offers higher risk and higher potential rewards, modeled after the Next Generation ACO program.
4. How do ACOs earn savings under MSSP?
To qualify for shared savings, an ACO must:
- Spend less than its benchmark for the year, and
- Meet required quality performance standards across domains such as patient experience, care coordination, preventive health, and chronic disease management.
5. What’s the difference between MSSP and Next Generation ACOs?
The Next Generation ACO model was a CMS demonstration project that tested higher-risk, higher-reward payment structures. Many of its features were incorporated into MSSP’s Enhanced Track when Next Gen ACOs were phased out. Today, MSSP remains the primary permanent ACO program under Medicare.
6. Who can participate in MSSP?
Eligible participants include groups of doctors, hospitals, and other healthcare providers that form an ACO. The ACO must meet CMS requirements for governance, legal structure, and the ability to manage assigned Medicare beneficiaries.
