What is the Medicare Shared Savings Program?

The Medicare Shared Savings Program (MSSP) wants everyone to benefit from lower healthcare costs. Read this blog to learn how the program works.
Clinical Value-Based Care

What is the Medicare Shared Savings Program (MSSP)?

The Medicare Shared Savings Program (MSSP) was designed to improve healthcare quality and lower costs by engaging medical practices, hospitals and other stakeholders to work together toward shared goals. By holding healthcare organizations accountable through the program, the Centers for Medicare & Medicaid Services (CMS) hopes to improve care for its 44 million beneficiaries.

MSSP Defined

The MSSP is open to qualifying Accountable Care Organizations (ACOs), which are groups of healthcare stakeholders that have reimbursement tied to quality and cost metrics. Under the MSSP, participating ACOs receive incentive payments for meeting certain benchmarks each year.

The MSSP is a type of Alternative Payment Model (APM) under CMS’ Quality Payment Program. It’s one of the largest national programs to follow a value-based care model, according to the Center on Budget and Policy Priorities. It requires hospitals, physicians and other ACO members to work together to enhance the quality, cost and experience of care.

The Evolution of MSSP

CMS launched the MSSP in 2012 as part of an effort to move the U.S. healthcare system from a fee-for-service model to value-based care. That shift means that instead of receiving reimbursement from payers for each service provided, healthcare providers receive payment based on performance measures, including shorter hospital stays, fewer readmissions and fewer emergency room visits.

The MSSP aligns closely with the Pioneer ACO Model, also launched by CMS in 2012. Pioneer ACO Model participants contracted with CMS to meet certain quality targets and assume risk for the treatment of a set population of Medicare beneficiaries. In return, participating provider groups received reimbursements for hitting specified goals.

The Pioneer ACO Model started with 32 members, but 10 dropped out by 2015. CMS ended the program in 2016.

CMS data showed that the Pioneer Model saved Medicare nearly $400 million over two years. CMS also reported that expenses for Medicare beneficiaries in the program were lower over the program’s first two years compared to fee-for-service beneficiaries. That positive data encouraged CMS to move forward with similar programs, including the MSSP.

Over the past seven years, participation in the MSSP has grown substantially. According to CMS data, in its first year, MSSP enrolled 220 ACO participants covering 3.2 million Medicare beneficiaries. By 2018, that number grew to 561 ACOs (out of 649 total) and 10.5 million Medicare beneficiaries. In 2013, CMS issued nearly $316 million in performance payments. By 2016, that number grew to more than $700 million.

To further increase Medicare savings, CMS overhauled the MSSP in 2018. The overall goal of the revised program, called Pathways to Success, is to reward providers willing to take on more risk by giving them more flexibility in delivering high-quality care. CMS finalized the rule authorizing the updated program on December 21, 2018.

How does the revised Medicare Shared Savings Program work?

If your organization is part of an ACO, it can participate in the MSSP. The MSSP encourages physicians, medical groups and other providers to join forces to form ACOs. Participating ACOs agree to be held accountable for assigned Medicare fee-for-service beneficiaries.

Participating ACOs must serve at least 5,000 Medicare beneficiaries and must include enough primary care professionals to serve those beneficiaries. Participating ACOs must also agree to the following terms:

• Promote evidence-based medicine

  • Promote beneficiary engagement by offering incentives to maintain good health
  • Develop a method for linking quality and financial performance and report regularly on both quality and cost
  • Provide coordinated care within the ACO

CMS measures quality using more than 30 measures. Most of those measures focus on providing better care for beneficiaries, improving population health and curbing the rise of healthcare costs.

To encourage more ACOs to participate in Pathways to Success, CMS condensed the available risk paths into the BASIC and ENHANCED program tracks. The basic terms include:

BASIC: This path starts with two years of upside-only risk. ACOs receive incentive payments when they exceed quality thresholds and spending falls below a minimum savings rate. If they don’t meet those goals, they are not penalized.

In years three through five, BASIC-track ACOs take on increasing levels of risk, and share in both savings and losses up to a cap.

After five years, BASIC-track ACOs can move to the ENHANCED track.

ENHANCED: Participating ACOs take on a higher level of risk for all five years of the MSSP agreement period.

Participating ACOs can enroll in the MSSP at any level of the BASIC track or start in the ENHANCED track.

What do beneficiaries need to know about the MSSP?

Medicare beneficiaries can choose any Medicare-enrolled provider they wish, regardless of MSSP participation. Hospitals and physicians that participate in the MSSP are motivated to provide quality, coordinated care without excessive cost. With that in mind, Medicare beneficiaries may benefit from choosing an MSSP-affiliated provider.

CMS requires healthcare providers to display a poster that acknowledges their participation in the MSSP. CMS also allows certain ACOs to offer incentives to beneficiaries—up to $20 for each qualifying primary care service the beneficiary receives—as an incentive for taking care of his or her health.

MSSP Pros and Cons

The National Association of ACOs (NAACOS) sees several positive outcomes of the MSSP’s Pathways to Success. Longer agreement periods promote stability and predictability. The new program also allows for more gradual increases in risk than the previous model.

NAACOS, as well as other healthcare leaders, also wonder how much ACOs will actually benefit from the revised program.

BASIC track ACOs take on downside risk after two years. For an ACO new to the program, the jump from upside-only to upside/downside risk can be daunting.

According to a report from actuarial services company Milliman, low-revenue ACOs such as physician groups will fare well under the new program because they have less risk exposure. However, ACOs with costs lower than regional benchmarks may struggle under the new program, the report stated.

Researchers also question whether the MSSP really lowers healthcare costs as promised. A study published in Annals of Internal Medicine found that clinicians with higher-than-average costs might actually achieve more savings and quality improvement by leaving their group. Using two models to compare costs and outcomes, the study authors found no improvements after adjusting for the clinicians’ exit.

As ACOs continue to evaluate the MSSP Pathways to Success program, some may decide to move on. Regardless, ACOs and other providers will continue to work toward controlling costs and improving outcomes to create healthier communities.


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