Calculating ACOs shared savings

In 2011, the Centers for Medicare and Medicaid Services (CMS) established the Medicare Shared Savings Program (MSSP) and brought the concept of the accountable care organization (ACO) to a wider audience. A key feature of the MSSP methodology is the minimum savings rate (MSR) and minimum loss rate (MLR). ACOs that participate in the MSSP are familiar with these corridors because they can mean the difference between receiving shared savings and receiving nothing. On the other hand, for ACOs currently taking downside risk, the MLR provides a buffer that neutralizes potential losses.

In this paper, Milliman’s Charlie Mills and Chris Smith explore the MSR/MLR options available to ACOs and provide perspective on what ACOs should consider when selecting the MSR/MLR under an MSSP track with a downside risk.