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Accountable Care Organizations knowledge hub

Get everything you need to know about Accountable Care Organizations, including how to determine if you’re ACO-ready.

Medicare Shared Savings Program

According to the Centers for Medicare & Medicaid Services (CMS), the Medicare Shared Savings Program (MSSP) aims to encourage coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce unnecessary costs. To become part of the program, eligible providers, hospitals and suppliers can create or participate in an Accountable Care Organization (ACO).

To improve outcomes and increase the value of care, the Medicare Shared Savings Program:

  • Promotes accountability for the care of Medicare FFS beneficiaries
  • Requires coordinated care for all services provided under Medicare FFS
  • Encourages investments in infrastructure and redesigned care processes

Like other ACO models, the Medicare Shared Savings Program rewards ACOs that lower growth in health care costs while meeting performance standards on the quality of care. Provider participation in the program is purely voluntary, and Medicare patients can seek treatment from any provider they wish.

Who can participate?

As previously mentioned in Section 1, the Medicare Shared Savings Program Fact Sheet explains that the following providers and suppliers of Medicare-covered services can participate in an MSSP ACO:

ACO professionals (i.e., physicians, physician assistants, nurse practitioners or clinical nurse specialists) 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; and, other Medicare providers and suppliers as determined by the Secretary.

Clinical and administrative requirements

To participate in the Medicare Shared Savings Program, an ACO must serve at least 5,000 Medicare beneficiaries, and must include enough primary care ACO professionals to serve the Medicare FFS beneficiaries assigned to the ACO.

In addition, the program requires that ACOs:

  • Promote evidence-based medicine
  • Promote beneficiary engagement
  • Report internally on quality and cost metrics
  • Provide coordinated care across and among primary care physicians, specialists and acute and post-acute providers

Performance and quality measures

Medicare Shared Savings Program ACOs must use quality performance measures, as well as a methodology for linking quality and financial performance with the goal of delivering coordinated and patient-centered care.

Quality measures should emphasize continuous improvement around three aspects of care: better care for individuals, better health for populations and lower growth in expenditures.

The CMS finalized 33 measures used to measure clinical quality in each Medicare Shared Savings Program ACO. These measures come from four domains:

  1. Patient/caregiver experience
  2. Preventive health
  3. Care coordination/patient safety
  4. At-risk populations

These are predominately nationally-recognized measures (e.g. approved by the National Quality Forum) and/or aligned with measures used in other CMS programs. To encourage providers to participate in the Medicare Shared Savings Program, the CMS set the quality performance standard for the first year to reporting only; paying for performance is phased in over subsequent years.

Shared savings options

To make it easier for organizations with varied levels of experience to enter into accountable care, a Medicare Shared Savings Program ACO can choose between two program tracks.

The first track allows an ACO in the program to operate on a shared savings only arrangement, in which there are no penalties if savings aren’t realized. This might be more suitable for smaller ACOs and those with minimal experience accepting downside risk. These groups would be limited to a maximum of 50% of savings each year, and this one-sided risk option is only available during the ACO’s first 3-year contract.1

The second track allows an MSSP ACO to share in both savings and losses for the duration of the agreement, in return for a higher share of any savings it generates. These groups could earn up to a maximum of 60% of savings. Losses must be more than 2% of the benchmark to be considered. Maximum loss-sharing limits are 5%, 7.5% and 10% of the benchmark over each of the first three years of the contract.2

Legal considerations and governance

If your organization decides to pursue participation in the Medicare Shared Savings Program, and your organization already has a legal structure allowing it to perform all the required ACO functions, you are not required to form a new legal structure. However, Medicare Shared Savings Program ACOs composed of separately recognized legal entities must establish a new legal entity for the combined participants.

In addition, each ACO must establish a governing body representing providers of services, suppliers and Medicare beneficiaries. Each MSSP ACO is responsible for routine self-assessment, monitoring and reporting of the care it delivers, and for continually improving the care delivered to their Medicare beneficiaries.

1 American College of Physicians. (November 15, 2011.) Detailed Summary – Medicare Shared Savings/Accountable Care Organization (ACO) Program. Available at

2 Ibid.

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