MSSP stands for the Medicare Shared Savings Program, the largest value-based care initiative in the United States. It’s a federal program run by the Centers for Medicare & Medicaid Services (CMS) that encourages doctors, hospitals, and other healthcare providers to team up as Accountable Care Organizations (ACOs) and coordinate care for people with Medicare. The core idea is simple: if these provider groups keep patients healthy while spending less than expected, they get to share in the money saved.
How the Program Works
Under MSSP, groups of healthcare providers voluntarily form an ACO and agree to be collectively responsible for the cost and quality of care delivered to a defined group of Medicare beneficiaries. CMS sets a spending benchmark for each ACO based on the historical costs of caring for its patient population. If the ACO’s actual spending comes in below that benchmark and the organization meets quality standards, it earns a portion of the difference as a performance payment. In other words, the ACO is rewarded for keeping people healthier and avoiding unnecessary spending rather than being paid more for doing more procedures.
Providers in an MSSP ACO still bill Medicare the traditional fee-for-service way. Patients still see the doctors they choose and aren’t restricted to a network. The financial reconciliation, where CMS calculates whether the ACO saved money or overspent, happens after the performance year ends.
How Patients Are Assigned to an ACO
Medicare beneficiaries don’t sign up for an ACO the way they’d enroll in a health plan. Instead, CMS assigns them based on where they get their primary care. If most of your primary care visits in the past year were with providers who belong to a particular ACO, you’re assigned to that organization. Beneficiaries can also voluntarily align with an ACO through their primary care provider.
There are two assignment methods. Under prospective assignment, CMS locks in the patient list at the start of the year based on recent claims data. Once assigned, a beneficiary stays with that ACO for the year even if they start seeing different doctors. Under the more common preliminary prospective assignment with retrospective reconciliation, CMS creates a starting list but updates it quarterly and then finalizes it at the end of the year based on where beneficiaries actually received care. This second method gives a more accurate picture but means the ACO’s patient population can shift throughout the year.
Either way, being assigned to an ACO doesn’t change your benefits or limit where you can go for care. You can see any Medicare-accepting provider.
Risk Tracks: Basic vs. Enhanced
Not all ACOs take on the same financial stakes. MSSP offers two tracks with different levels of risk and reward.
The Basic track has a “glide path” with five levels (A through E). At the early levels, it’s one-sided: the ACO can earn up to 40% of the savings it generates but owes nothing back to Medicare if it overspends. This lets newer ACOs test the model without the threat of financial losses. As the ACO progresses through higher levels, it moves into two-sided risk, where the savings rate rises to 50% but the organization also becomes responsible for a share of losses if spending exceeds the benchmark. Loss exposure increases at each level, starting at 2% of the ACO’s revenue at Level C and climbing to 8% at Level E.
The Enhanced track is the highest-risk, highest-reward option. ACOs can earn up to 75% of savings (capped at 20% of the benchmark), but they also face loss rates between 40% and 75%, depending on quality performance. Maximum losses can reach 15% of the benchmark. This track is designed for experienced organizations confident they can manage costs effectively.
How CMS Sets the Spending Benchmark
The benchmark is essentially a prediction of what Medicare would have spent on the ACO’s patients without the program. CMS builds it using three years of historical spending data for the ACO’s assigned population, then adjusts it forward to account for changes in the patient mix.
One key adjustment involves risk scores. If an ACO’s patients become sicker over time (or healthier), CMS adjusts the benchmark so the ACO isn’t penalized or rewarded just because its population changed. To prevent gaming, positive increases in risk scores are capped at the ACO’s demographic risk growth plus 3 percentage points. CMS also trims extremely high-cost cases by capping any individual beneficiary’s annual spending at the 99th percentile of national Medicare expenditures, which prevents a handful of catastrophic claims from distorting results.
At the end of the year, CMS compares the ACO’s actual per-person spending against the updated benchmark. The ACO must beat the benchmark by at least a minimum savings rate to qualify for shared savings. For one-sided ACOs, that threshold uses a sliding scale based on how many beneficiaries they serve: smaller ACOs need to clear a higher percentage because their spending is more variable.
Quality Requirements
Saving money alone isn’t enough. ACOs must also meet quality performance standards to earn shared savings. This prevents organizations from cutting costs by skimping on care.
Starting in 2025, ACOs report quality data through a measure set called APP Plus. The measures focus on outcomes that matter to patients, including hospital readmission rates and admission rates for people with multiple chronic conditions. For 2026, ACOs must score at or above the 40th percentile on quality measures to meet the standard. In the Enhanced track, quality scores also directly affect the loss-sharing rate: better quality means a lower percentage of losses the ACO must repay.
Program Size and Results
MSSP has grown into a massive piece of the Medicare landscape. In 2024, 476 ACOs participated, collectively responsible for 10.3 million Medicare beneficiaries. That’s roughly one in six people on traditional Medicare receiving care through an MSSP accountable care organization.
The 2024 results were the program’s strongest to date. Seventy-five percent of ACOs earned performance payments, representing 80% of all assigned beneficiaries. Those ACOs earned a combined $4.1 billion in shared savings payments, while Medicare itself saved $2.5 billion relative to benchmarks. That net savings figure represents the amount left over after paying ACOs their share, meaning the Medicare Trust Fund came out ahead.
What MSSP Means for Patients
If you’re on Medicare, you may already be part of an MSSP ACO without realizing it. Your doctors, your coverage, and your out-of-pocket costs don’t change. What does change is happening behind the scenes: your providers have a financial incentive to coordinate your care, avoid duplicating tests, manage chronic conditions proactively, and keep you out of the hospital when possible.
In practice, this can look like your primary care office following up after a hospital discharge to make sure you understand your medications, or your providers sharing records electronically so you don’t repeat the same lab work at every visit. The program is designed so that the benefits of coordination flow to patients as better care, while the financial mechanics stay invisible to the person receiving treatment.