The Medicare Shared Savings Program (MSSP) is one of the most significant reforms in U.S. healthcare payment policy, shifting the system away from traditional fee-for-service reimbursement toward value-based care.
Created in 2010 under the Affordable Care Act with an establishment deadline of January 1, 2012, the MSSP encourages healthcare providers to coordinate care, improve quality, and reduce unnecessary spending, primarily through the implementation of Accountable Care Organizations (ACOs).
At its core, the MSSP is built on a simple but transformative idea: providers should be rewarded not for the volume of services they deliver, but for the value of care they provide. Under the program, physicians and hospitals voluntarily form ACOs and take responsibility for the overall cost and quality of care for Medicare beneficiaries.
The Centers for Medicare & Medicaid Services (CMS) website shows there are over 500 ACOs participating in the MSSP.
In 2021, CMS set a goal of having all Original Medicare beneficiaries and most Medicaid beneficiaries aligned with ACOs by 2030. A recent publication on CMS’ website details an ACO growth of almost 5% from January 2025 to January 2026.
An ACO functions as a coordinated network of providers that collectively manage patient care. Instead of operating independently, providers within an ACO share data, align treatment plans, and emphasize preventive care.
This coordinated approach is intended to reduce duplication of services, prevent medical errors, and improve patient outcomes. In exchange, ACOs are financially incentivized through the MSSP.
The “shared savings” aspect of the program is what distinguishes it from traditional payment models. Each ACO is given a benchmark, an estimate of what Medicare expects to spend on its assigned patient population. They are based on historical data and risk adjustment.
If the ACO succeeds in delivering care at a lower cost while still meeting quality performance standards set by CMS, it shares in the savings generated for Medicare. If it fails, it may share in the losses.
Quality measurement is another critical component. ACOs are evaluated across multiple domains, including patient experience, care coordination, preventive health, and management of chronic conditions. These quality metrics ensure that cost reductions do not come at the expense of patient care.
In 2024, the Medicare Shared Savings Program (MSSP) continued to generate strong results. ACOs produced about $2.5 billion in net savings for Medicare and received roughly $4 billion in shared savings payments. This comes from a portion of gross savings.
About three-quarters of participating ACOs earned bonuses, and quality of care remained strong, with improvements in areas like blood pressure control, diabetes management, and preventive screenings.
The relationship between MSSP and ACOs is therefore inseparable. The MSSP provides the financial and regulatory framework, while ACOs serve as the operational mechanism through which care transformation occurs.
Without ACOs, the MSSP would lack a structure for implementing coordinated, value-based care; without the MSSP, ACOs would lack the financial incentives that make such coordination sustainable.
The MSSP represents a fundamental shift in how healthcare is financed and delivered. By tying payments to both cost efficiency and quality outcomes, and by using ACOs as the primary vehicle for coordination, the MSSP is reshaping the structure of care delivery.
As the program continues to evolve, its influence is likely to expand further, reinforcing a larger transition toward value-based care.
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References
“ACOs: Five Tips for the Medicare Shared Savings Program.” McGuireWoods, 2013.
Congress. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010). U.S. Government Publishing Office, https://www.govinfo.gov/content/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf
Hagland, Mark. “CMS Announces Record Savings, ACO Payouts in Medicare Shared Savings Program.” Healthcare Innovation, 2024.
“Medicare Shared Savings Program.” Centers for Medicare & Medicaid Services (CMS), 2025.
“Medicare Shared Savings Program (MSSP).” Clinii, 2025.
“Pioneer Accountable Care Organization Model Fact Sheet.” CMS, 2011.
“Use of Preventive Care Services and Hospitalization Among Medicare Beneficiaries in ACOs.” PubMed Central (PMC), 2022.
