What is Medicare Shared Savings Program (MSSP)? Definition, Formula, and Benchmark

The Medicare Shared Savings Program (MSSP) is the largest and most enduring Medicare alternative payment program, authorized permanently under Section 3022 of the Affordable Care Act and operational since 2012. As of 2025, MSSP covers roughly 10–11 million Medicare fee-for-service beneficiaries attributed to approximately 450 ACOs nationwide.

An MSSP ACO is a legal entity — commonly a physician-led LLC or hospital-physician joint venture — that enters into a three-to-five-year agreement with CMS. Medicare beneficiaries are attributed to the ACO based on plurality of primary care services. The ACO's expenditure benchmark is calculated from a blend of historical regional and ACO-specific spending, trended forward by a regional growth factor. At performance year reconciliation, CMS compares actual Medicare Part A and Part B expenditures against the benchmark. Savings below benchmark are shared with the ACO in proportion to the track's risk tier; losses above benchmark, in two-sided risk tracks, are shared in the opposite direction.

MSSP offers multiple participation tracks. BASIC (Levels A, B, C, D, E) is a graduated glidepath from upside-only through progressively higher two-sided risk, with Levels D–E qualifying as Advanced APMs. ENHANCED, the highest-risk track, offers up to 75% shared savings and 40–75% shared losses and qualifies as an Advanced APM from day one. All tracks require quality measure reporting across the MIPS-adjacent ACO-QPP measure set; quality scores gate the savings-sharing rate.

For RCM leaders, MSSP participation fundamentally changes revenue structure. Monthly revenue continues to flow through fee-for-service claims, but a retrospective annual reconciliation — typically received eight to ten months after performance-year close — delivers the shared-savings or shared-losses settlement. Proper accounting requires estimating and accruing the reconciliation throughout the performance year, and infrastructure for beneficiary attribution tracking, attribution-eligible claims tagging, and quality-measure reporting must be in place before the performance year begins.

Operational success in MSSP depends on three capabilities. First, accurate population stratification: identifying high-risk beneficiaries and deploying disease management, care coordination, and post-acute transition resources to them disproportionately. Second, reducing avoidable utilization — hospital admissions, ED visits, readmissions, and post-acute length of stay are the largest levers. Third, accurate risk adjustment: beneficiaries' RAF scores determine the expenditure benchmark, so under-coding HCCs in year 1 lowers benchmark and hurts year-2 reconciliation.

CMS regularly re-balances the program through notice-and-comment rulemaking. Recent significant updates include the 2023 ACO REACH transition (absorbing former Direct Contracting entities and creating a higher-risk alternative track), benchmark methodology refinements to address regional variation, and the phase-in of CMS-HCC v28 coding model (affecting risk score calculation and therefore benchmark accuracy). MSSP remains the default entry point for most provider organizations taking first steps toward population-based payment.