What is the Medicare Shared Savings Program (MSSP) and an ACO?

The MSSP is a value-based payment model run by Centers for Medicare & Medicaid Services (CMS) in which groups of providers—ACOs—take responsibility for the cost and quality of care for a defined population of Medicare fee-for-service beneficiaries. The idea: if you keep spending for that population below a benchmark (while meeting quality thresholds), you share in the savings.
An ACO is essentially a provider network (clinics, hospitals, physicians, etc.) that agrees to coordinate care, emphasise prevention, manage chronic illness proactively, and reduce avoidable costs (hospitalisations, duplicative testing, etc.). By doing so, the ACO positions itself to earn shared savings under MSSP.

Key benefits for the providers participating as an ACO:

• Potential shared-savings payments if cost and quality metrics are met.

• Alignment of incentives away from pure volume toward value.

• Opportunity to invest in care-management, technology, coordination efforts that can raise quality and lower cost.

• For Medicare beneficiaries, more coordinated care, fewer unnecessary interventions, better preventive care.

Why an ACO can help – the mechanics

Here are how ACOs systematically help capture value under MSSP:

1. Care coordination and prevention

An ACO focuses on breaking down silos among providers, keeping patients on track with preventive visits, managing chronic diseases (e.g., diabetes, heart failure) proactively, intervening early to avoid hospital readmissions. These efforts reduce expensive episodes, which helps lower the total cost of care.

2. Benchmark and shared savings alignment

CMS sets spending benchmarks (based on historical cost, risk adjustment, regional factors). If the ACO’s actual spending for the attributed beneficiaries is below the benchmark and quality thresholds are met, the ACO earns a portion of the savings. In effect, the ACO converts improved efficiency into reward.

3. Risk and reward models

In MSSP, ACOs can choose one-sided risk (shared savings only) or two‐sided risk (shared savings and shared losses) depending on their track. Taking responsibility for downside risk tends to yield higher shared‐savings rates but also more exposure if cost overruns occur.
By embracing this risk-reward structure, ACOs commit to accountability, which often triggers more investment in infrastructure (care management, analytics, patient engagement) and thereby better outcomes.

4. Infrastructure, analytics and investments

To succeed, an ACO often invests in data analytics (to identify high risk patients), care‐management programs (for transitions of care, post-acute coordination), patient engagement/education, telehealth, remote monitoring, and social-determinants-of-health strategies. These investments pay off by reducing costly events, improving quality, and enabling the ACO to capture savings.

5. Quality metrics and patient outcomes

It’s not purely cost reduction. CMS requires ACOs to meet quality thresholds to qualify for savings. Better outcomes (fewer readmissions, better preventive services, higher patient satisfaction) are both good for patients and instrumental for financial success. The combination of cost + quality elevates the ACO beyond mere cost-cutting.

What’s changed recently – regulatory & policy updates

While much of MSSP was developed earlier, under the Trump administration and afterwards significant policies were introduced/accelerated that affect ACOs and MSSP. Here are notable examples:

“Pathways to Success” and earlier Trump-era reforms

In 2018, CMS published a final rule known as “Pathways to Success” for MSSP, designed to require more ACOs to move into two-sided risk, shorten the period for upside-only, and increase accountability. PMC+3Managed Healthcare Executive+3McDermott++3
Key features:

• Newly entering ACOs could only stay in upside-only risk for at most two years before being required to move into risk of losses. CMS+1

• The rule encouraged more rapid transition to performance‐based risk rather than long periods of minimal accountability. McDermott++1
  This push was a hallmark of the Trump administration’s approach to MSSP: increasing risk for ACOs to better align incentives, and discourage “free-riding” on upside-only models.

More flexibility & beneficiary incentives

One blog summarises that under the Trump era there was movement toward giving ACOs more “waivers” and flexibilities (for example, reduced cost-sharing for high-value/preventive services, payments to caregivers for folks with cognitive/functional decline, bypassing certain coverage determinations) to support ACOs innovating. Baird Holm LLP
These changes help ACOs implement non-traditional care coordination strategies (e.g., home-based services, more flexibility in DME etc.).

Recent CMS rules (post-Trump but building on that era)

Though not strictly Trump-specific, recent regulation continues the trend toward greater accountability, data transparency and health equity. For example:

• A final rule (Nov 1, 2024) under the Physician Fee Schedule included changes to MSSP: moving toward digital quality measures (dQMs), ending the CMS Web Interface after the 2024 performance year, aligning with a universal foundation of quality metrics. MDinteractive

• CMS’s 2025 ACO initiatives: For performance year 2025, CMS approved 228 applications for MSSP (55 new ACOs, 173 renewals), increased participation of rural/safety-net providers (FQHCs, rural clinics, etc) by 16%. CMS
  These signals mean that the regulatory environment continues to evolve—incentivising ACOs to adopt advanced infrastructure, focus on equity, serve underserved populations, and align with quality/digital measurement.

How a Startup or Smaller Provider Can Leverage an ACO Strategy

If you’re a provider group or healthcare startup (or consulting one), thinking about how to engage in MSSP/ACO world, here’s a practical perspective:

1. Choose your participation model wisely – If you are newer or lower-revenue, you might start in the BASIC track (one-sided risk) to build capabilities; later transition to two-sided risk when you have sufficient infrastructure, patient base, analytics, care-management. The earlier “Pathways to Success” rule means you’ll need a roadmap to move into risk.

2. Invest in data/technology/care management – The ability to identify high-risk patients, manage transitions of care, prevent hospitalisations, engage patients (especially chronically ill) is core. That means investing in analytics, EMR integration, telehealth/remote monitoring, and care‐management workflows.

3. Lean into quality metrics & equity – Given CMS’s increasing focus on underserved populations, health equity adjustment, digital metrics, working with rural/underserved providers can be a differentiator. Smaller or innovative ACOs can carve niche advantage by focusing on populations with higher complexity (and higher opportunity).

4. Leverage regulatory flexibilities – The earlier waivers and incentive flexibilities (for example preventive services cost-sharing, caregiver support) provide room for innovation. Use those to design care models that reduce cost and improve outcomes.

5. Plan for risk but manage it – Transitioning to two‐sided risk means you need financial modelling, reserves, stop-loss strategies. But the upside savings share grows more attractive in risk models. Under “Pathways to Success” this became more of an imminent requirement.

6. Align stakeholder incentives – Engage physicians, health systems, post-acute partners (SNFs, home health) in your network. Care coordination depends on tight collaboration and aligned incentives (shared goals, shared savings).

7. Track regulatory changes – The environment is dynamic. Even though many reform efforts began in the Trump era, they continue evolving. For example, new CMS rules around digital quality measures, health equity, advanced tracks. Staying ahead of regulation allows you to design your model in sync.

Example in Practice

Let’s sketch a hypothetical example:
A regional provider network (hospital + outpatient clinics + home health) decides to become an ACO under MSSP. They begin in a one‐sided risk BASIC track. They implement a care-management program for chronic heart failure and COPD, deploy remote monitoring (for home vitals, alerts), integrate social-determinants screening (food insecurity, transportation). They use analytics to identify the top 5 % high-utilisers and engage them proactively. They also partner with a local SNF to coordinate post‐acute care and reduce readmissions.
Over the performance year, they come in under their benchmark cost (thanks to fewer hospitalisations) and meet/exceed their quality metrics (hospital readmissions, preventive screening, patient satisfaction). They earn shared savings. Encouraged by results, in year two they plan for two-sided risk, expanding care‐management further and negotiating gain-sharing with the hospital and physician groups. They also monitor CMS’s digital quality measurement requirements and ensure they have the data infrastructure ready.
By doing so, they leverage the regulatory environment (including waivers and flexibilities) and align with the risk-reward model accelerated under the Pathways regime (which was instituted under the Trump administration) so they aren’t caught unprepared when they must transition into risk.

Why It Matters Now

Given the aging population, rising healthcare costs, and the continuing shift from volume to value, the MSSP/ACO model is increasingly central to Medicare’s strategy. For providers and startups, understanding how to engage effectively is important. The regulatory changes pushed during the Trump administration (and the subsequent follow-on rules) mean that the environment expects stronger accountability, more readiness for risk, greater use of data/technology, and increased focus on underserved populations.
In short: if you’re planning to participate (or consult) in the ACO/MSSP space, you must not only master the clinical and operational side (care coordination, analytics, patient engagement) but also keep pace with policy/regulation (risk models, benchmarking, quality measures, digital metrics).

Key Takeaways

• The MSSP offers a pathway for providers/ACO entities to benefit financially by lowering cost and improving quality for Medicare beneficiaries.

• An ACO helps by organising care, coordinating across settings, investing in infrastructure, and aligning incentives.

• Regulatory developments (notably the “Pathways to Success” overhaul under the Trump administration) have accelerated the expectation of two-sided risk, required more rapid transition to accountability, and provided certain flexibilities/waivers.

• The current environment emphasises digital quality measurement, health equity, participation of rural/underserved providers, and advanced infrastructure.

• For a provider or startup, success requires strategic planning: mission/vision for care model, technology/data architecture, partner alignment, and risk management.

• Staying abreast of regulatory change is essential because policy is evolving (even beyond the Trump era) and will continue to shape how ACOs operate and succeed.