United States: MSSP Final Rule Provides Modification To Shared Savings Financial Arrangement

This is the fifth post in Health Care Law Today's series on the final rule.

The final Medicare Shared Savings Program ("MSSP") rule released on June 4, 2015, contains a number of modifications to the financial arrangement contained in the existing regulations. The modifications are designed to encourage ACOs to participate or continue participating in the MSSP and to help ensure the sustainability of the MSSP. Critics had raised issues with a number of provisions of the MSSP that they believed would make participation in the MSSP undesirable over time, and the final rule addresses a number of these criticisms. While the long-term sustainability of the MSSP may still be a question, it appears that the modifications will lead to continued participation and growth in the MSSP for the next several years as the U.S. health care system moves increasingly to a payment system based on value.

Among the more significant changes to the financial model contained in the final rule are:

  • Participating ACOs may participate in a second 3-year agreement under Track 1, without taking any downside risk. This change is likely the most significant modification that will encourage continued participation in the MSSP. The decision to allow an additional term in Track 1 was driven in large part by CMS' conclusion that participating ACOs are risk adverse and many currently lack the infrastructure and readiness to manage and assume increased performance risk. CMS noted that only five ACOs have accepted downside risk in the MSSP to date.
  • Rules to address renewals of agreements previously terminated during their first Agreement Period. Under this modification an ACO whose agreement was terminated during the first three-year period and reapplies will be treated as being in its first agreement period if the termination was prior to the half-way point of the three-year period; if the termination was after the half-way point, its renewal will be treated as its second and final three-year period in Track 1.
  • The final rule describes how CMS will evaluate an ACO's proposed renewal. CMS will evaluate a proposed renewal based on the following factors:
    • whether the ACO satisfies criteria for operating under the selected risk model
    • the ACO's history of compliance with MSSP requirements
    • whether the ACO has shown it meets eligibility and other requirements of the MSSP
    • whether the ACO met quality performance standards during at least one of the first two years in the prior agreement period
    • whether a Track 2 ACO has repaid losses it generated
    • the results of a program integrity survey

No other financial criteria are included in the evaluation criteria.

  • The final rule maintains the ability of an ACO in Track 1 to share up to 50% of the payable savings. The proposed rule had suggested modifying and lowering the share of savings in which a Track 1 ACO could share, as a way to encourage movement to Track 2 where the ACO takes downside risk. CMS elected not to make such modification.
  • The final rule modifies the determination of Maximum Sharing Rate (MSR) and Maximum Loss Rate (MLR) for a Track 2 ACO in its second three-year agreement period. Under the final rule, a participating Track 2 ACO may elect one option for setting its MSR and MLR in a three-year renewal period from among the following:
    • remove the MSR/MLR completely (so the ACO shares in savings and losses from the first dollar)
    • select a symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0 percent
    • implement a MSR/MLR that varies based on the size of the ACO's assigned population established in the one-sided model

Once selected, an ACO must live by such option throughout its three-year Track 2 agreement period. CMS concluded that an ACO participating in Track 2 is in the best position to decide this aspect of its risk model and the modification affords such ACOs the flexibility to select a symmetrical MSR/MLR from the options CMS views as acceptable.

  • The final rule establishes a Track 3 option. CMS proposed a Track 3 model to encourage ACOs to take on increasing financial risk in order to motivate even greater improvements in care and to reduce barriers for ACOs to take more risk. The Track 3 model maintains the eligibility requirements, quality performance standards, data sharing requirements, monitoring rules and transparency requirements of Track 2. Track 3 differs from Track 2 in that it contains a prospective beneficiary assignment methodology, adopts the revised MSR/MLR options for an ACO that it has adopted for Track 2, and utilizes a different financial model than Track 2. The final rule for Track 3:
    • Utilizes a prospective beneficiary assignment. The prospective beneficiary assignment assigns beneficiaries initially using the same method for assignment as utilized for Track 1 and Track 2. But, once a beneficiary is assigned, he or she remains assigned to the Track 3 ACO throughout the three-year agreement period, with the sole exception that if a beneficiary is no longer eligible to be assigned to an ACO (e.g., he or she elects to participate in a Medicare Advantage plan) he/she will no longer be attributed to the ACO. This exclusion will be performed on a quarterly basis. As such, even if an assigned beneficiary receives a plurality of his or her services from another ACO, such beneficiary will remain assigned to the Track 3 ACO. Further, no additions are made to the beneficiaries assigned to the Track 3 ACO over the three-year term.
    • Utilizes the same method to calculating the historical cost benchmark as is utilized in Track 2.
    • Utilizes a two-sided risk option whereby an ACO shares up to 75% (depending on quality performance) of the recognized savings over the selected MSR and accepts risk for up to 75% (depending on quality performance) of losses above the selected MSR. The final rule adopts for Track 3 a payment limit of 20% for shared savings of the cost benchmark and a downside recoupment limit of 15% of the cost benchmark.
    • Utilizes the same MSR/MLR that the final rule has adopted for Track 2 ACOs described above, which gives an ACO the option to elect from a series of choices for a symmetrical MSR and MLR.
  • The final rule provides for different rebasing standards in the cost benchmark in subsequent agreement periods. The new cost benchmark rebasing utilizes the following factors:
    • weighting each historical benchmark year for an ACO equally
    • adapting the benchmark to reflect the average per capita amount of savings earned by the ACO in the first agreement period

CMS views the rebasing of the cost benchmark as important to ensure the MSSP continues to meet its goals over the long-run. Without modifications, basing the new benchmark solely on the ACO's historical costs would mean an ACO's success in reducing costs would lead to a reduced cost benchmark over time which will become increasingly difficult to meet. The modifications CMS has adopted in the final rule take steps to improve this issue. CMS also has indicated it will propose a further modification later on to blend the cost benchmark using not just an ACO's historic costs but also regional cost trends. CMS intends to issue this further rule in the next several months to be effective starting in 2017 or later.

The final rule's revisions to the financial model do make participation both in Track 1, where there is no downside risk, and the other Tracks, where there is downside risk, more attractive. For the short term, the MSSP will likely be utilized by ACOs to test their readiness for value-based reimbursement without taking downside risk. It remains to be seen whether the revisions will be sufficient to provide continued incentives and payments for ACOs to continue their participation over the longer term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Sheppard Mullin Richter & Hampton
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Sheppard Mullin Richter & Hampton
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions