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Update to the Medicare Shared Savings Program

Last year, the Centers for Medicare & Medicaid Services (CMS) updated the Medicare Shared Savings Program (MSSP). The MSSP, which was established under the Affordable Care Act, encourages providers of services and suppliers to create accountable care organizations (ACOs). If an ACO is successful in improving quality while reducing spending, it shares in the savings achieved. Last year's update makes some notable changes to the rules governing ACOs, which changes are designed to enhance continued participation in the MSSP.

A. Continued Participation in Track 1

Prior regulations required that those ACOs participating in Track 1, which share in savings but not losses, could do so for only three years. At the end of the initial three years, ACOs could continue in the program only if they entered a performance-based (two-sided) track that also puts the ACO at risk for losses.

However, the new rule allows an ACO to stay in Track 1 for an additional three year period, so long as the ACO has met the quality performance standard in at least one of the first two years of its initial three-year agreement period, and is otherwise in good standing. Additionally, ACOs that remain in Track 1 will continue to have the ability to share in up to 50% of the savings generated.

B. Updated Beneficiary Assignment

Prior regulations employed a methodology that assigned beneficiaries in two steps based on the plurality of primary care services furnished by (1) primary care physicians, and (2) specialist physicians, nurse practitioners, physician assistants, and clinical nurse specialists. The new rule removes certain specialty types, whose services are not likely to be indicative of primary care services.

C. Resetting Benchmarks

Financial benchmarks are used for determining shared savings and losses. Under the new rule, when resetting an ACO's benchmark to participate in savings at the start of its second or subsequent three-year agreement, CMS will weigh the ACO's historical performance in each year equally, as opposed to the old rule that gave the later years more weight. This will allow ACOs to continue to earn savings even if their latter years' performance was a significant improvement over their early years' performance.

D. Incentivizing Risk

CMS also implemented several modifications designed to incentivize performance-based risk, which include:

1. A new performance-based risk model (Track 3), which offers a higher sharing rate and level of risk (up to 75%) than Tracks 1 and 2, and assigns beneficiaries prospectively.

2. Allowing ACOs in Track 2 and Track 3 to choose from several options when establishing their minimum savings rate (MSR) and minimum loss rate (MLR), which are the expenditure thresholds that trigger the ACO's eligibility to share in savings or be accountable for losses.


March 23, 2016




Rosen, Barry F.


Health Care