What’s Next for the Medicare Shared Savings Program?
CMS finalized rule with new caveats for MSSP
THE VBP Blog
December 5, 2024 – As we covered in our last blog, the Medicare Shared Savings Program (MSSP or Shared Savings Program) is making waves in the healthcare industry. A recent report shows that the program has led to significant cost savings and improved performance in 2023.
On the heels of this success, CMS has announced the 2025 Medicare Physician Fee Schedule Final Rule that has significant impact on the MSSP. But is it for the best? In this blog, we will look at the next steps for the Medicare Shared Savings Program, as well as the program’s benefits for patients, providers, and the broader healthcare system.
What’s Next for the MSSP – Prepaid Shared Savings
The future of the Shared Savings Program includes some developments that aim to enhance patient care. CMS just announced the Calendar Year (CY) 2025 Medicare Physician Fee Schedule Final Rule that includes several provisions related to the MSSP. Perhaps the biggest change is the inclusion of a new “prepaid shared savings” option. This option is for ACOs participating in Levels C-E of the BASIC track or the ENHANCED track with a consistent history of earning shared savings. It would allow them to receive a portion of shared savings upfront in quarterly payments, rather than only at year-end, to enable them to invest in services that directly benefit Medicare beneficiaries.
Under the proposed prepaid shared savings model, at least 50% of the prepaid funds must be allocated toward direct benefits for beneficiaries that are not otherwise payable in Traditional Medicare that are “evidence-based and medically appropriate for the beneficiary based on clinical and social risk factors.” This includes things like meals, transportation, and other essential services. These services address social determinants of health, which have a major impact on patient outcomes, particularly for vulnerable populations. ACOs can also spend up to 50% of the prepaid shared savings on staffing and healthcare infrastructure. This is designed to allow ACOs to invest in people and infrastructure that can improve access to care and care coordination for beneficiaries.
The prepaid shared savings option reflects CMS’s commitment to giving ACOs more flexibility in using savings to benefit patients directly. By investing in non-clinical services that impact health, this new payment structure could drive further innovation within the MSSP. However, we need to be sure that CMS maintains careful oversight to ensure that ACOs are using the prepaid funds as required in the final rule, and that those who fail to qualify for shared savings in a year, repay what they received.
CMS Establishes Health Equity Benchmark Adjustment
Another big change is that CMS also established a new Health Equity Benchmark Adjustment (HEBA). It is a third methodology of upwardly adjusting an ACO’s historical benchmark and is designed to incentivize ACOs that serve higher proportions of beneficiaries from underserved communities to enter into or remain in the Shared Savings Program. This aligns with CMS’ goal to expand access to care and improve health equity across the board.
Starting in 2025, an ACO’s historical benchmark will be adjusted using the highest of three values for which it is eligible, either a positive regional adjustment, a prior savings adjustment, or a HEBA. ACOs will be eligible for an adjustment to their historical benchmark based on the number of their assigned beneficiaries enrolled in the Medicare Part D low-income subsidy (LIS) or that are dually eligible for Medicare and Medicaid. This adjustment is intended to provide a stronger financial incentive for ACOs that focus on vulnerable populations, supporting them in achieving savings while maintaining or improving quality.
Inspired by the ACO REACH Model, HEBA allows for only upward adjustments, meaning ACOs won’t face a reduction in their benchmarks. To qualify, ACOs must have at least 15% of their beneficiaries enrolled in Medicare Part D LIS or be dually eligible.
Why the Medicare Shared Savings Program Matters – Benefits for Consumers, Providers, and the Healthcare System
The Shared Savings Program offers considerable benefits for consumers, healthcare providers, and the broader healthcare system. For consumers, MSSP promotes coordinated, high-quality care by encouraging ACOs to focus on preventive care, chronic disease management, and improved communication between providers. This emphasis on coordinated care reduces the likelihood of redundant tests, unnecessary treatments, and avoidable hospitalizations, resulting in a better overall patient experience and improved health outcomes. Consumers also benefit from a more streamlined approach to healthcare, where their primary care and specialist providers work together to ensure continuity and effective management of their health needs. Under the new prepaid shared savings option, ACOs will also have more funds to address non-medical health related social needs like transportation and meals. This can make a big impact for consumers, especially those receiving home health and home care services.
For healthcare providers, MSSP offers an opportunity to share in the financial savings generated by cost-effective, high-quality care. By meeting certain quality benchmarks and achieving savings, ACOs receive a portion of the savings. MSSP also promotes a collaborative environment where providers across different settings—primary care, specialty care, and hospitals—can work together to deliver integrated, patient-centered care. This model encourages providers to adopt innovative approaches to care and strengthens relationships across healthcare teams.
At a systemic level, MSSP helps address rising healthcare costs by reducing unnecessary spending and improving efficiency. The program’s success in generating billions in savings for Medicare demonstrates its potential to create a more sustainable healthcare system. By shifting from a fee-for-service model to a value-based approach, MSSP helps to balance cost control with high-quality care, making healthcare more affordable and effective. This shift supports a healthier population overall, which can lead to lower long-term healthcare spending and more resources available for public health initiatives.
Advocates Perspective
The Shared Savings Program has proven its value by improving healthcare quality and reducing costs. The program has led to Medicare beneficiaries receiving more comprehensive, efficient, and higher-quality healthcare. But CMS isn’t stopping there. There are more changes coming that can further benefit consumers. The recent addition of the prepaid shared savings option and the Health Equity Benchmark Adjustment (HEBA) can help to address social determinants of health, promote health equity, and expand access to care. However, while these changes have strong potential, there are still concerns. It is crucial that CMS maintains strict oversight to ensure ACOs use prepaid funds appropriately to benefit consumers, especially vulnerable populations and those with complex needs who need these services most. Additionally, it is important to ensure that financial incentives do not inadvertently compromise care quality or accessibility. As MSSP evolves, we will continue to monitor the program to ensure that consumer needs remain the top priority.
Onward!
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About the Author
Fady Sahhar brings over 30 years of senior management experience working with major multinational companies including Sara Lee, Mobil Oil, Tenneco Packaging, Pactiv, Progressive Insurance, Transitions Optical, PPG Industries and Essilor (France).
His corporate responsibilities included new product development, strategic planning, marketing management, and global sales. He has developed a number of global communications networks, launched products in over 45 countries, and managed a number of branded patented products.
About the Co-Author
Mandy Sahhar provides experience in digital marketing, event management, and business development. Her background has allowed her to get in on the ground floor of marketing efforts including website design, content marketing, and trade show planning. Through her modern approach, she focuses on bringing businesses into the new digital age of marketing through unique approaches and focused content creation. With a passion for communications, she can bring a fresh perspective to an ever-changing industry. Mandy has an MBA with a marketing concentration from Canisius College.