Editor's Note: In the initial rules governing the Medicare Shared Savings Program (MSSP) released in 2011, the Centers for Medicare and Medicaid Services (CMS) stated that it intended for MSSP to create a platform for multipayer, value-based purchasing. Once accountable care organizations (ACO) gained experience with value-based purchasing through the MSSP, they would look to contract with commercial insurers, employer plans, and even, potentially, state Medicaid agencies. Despite the initial excitement over the prospect of using MSSP ACOs across multiple payers, CMS's own rules and guidance have limited providers' ability to use a single ACO structure to contract with multiple payers. In a new article for Executive Insight, summarized below, Manatt Health describes the provisions in the MSSP rules and guidance that restrict ACOs' ability to engage in multipayer contacting. Click here to read the full article.

All Providers in an ACO Must Agree to Participate in the MSSP

The MSSP rules require that all providers in the ACO agree to participate in the MSSP, leading many ACOs to create separate corporate entities for the MSSP contracting. If even a single provider intends to opt out of the MSSP, the ACO must create a new corporate entity and re-contract with the participating providers.

Further, even providers who are willing to participate in the MSSP may not be able to do so, since participating providers must be enrolled in Medicare. Specialists such as pediatricians and obstetricians would have few if any Medicare patients so would not be able to enroll in Medicare. Therefore, providers looking to form an ACO to contract with Medicare and Medicaid would likely need to create two separate corporate entities with two separate sets of participating provider contracts.

ACOs Are Prohibited From Contracting Through Intermediaries

The MSSP guidance prohibits ACOs from contracting through intermediaries, such as independent practice associations (IPAs). Instead, the MSSP guidance requires that the ACO contract directly with each Tax Identification Number level (TIN-level) provider. Therefore, IPAs currently in value-based purchasing arrangements cannot contract directly with the ACO on behalf of its participating providers. Rather than leveraging existing participating provider contracts, ACOs must re-contract with providers directly.

Questions Around Permissible Structures Challenge Multipayer Models

The preamble to the revised rules released in 2015 states that the governing body of the ACO—not the parent entity—must retain responsibility for certain core functions, such as holding management accountable and determining distribution of shared savings, as well as appointing and removing members of the governing body. Traditionally, shareholders of for-profit corporations or members of nonprofit entities retain the right to appoint directors.

The CMS guidance not only runs counter to convention but also may limit the ability of MSSP ACOs to receive capital from participating providers. The right to appoint directors would be the primary way that providers investing in an ACO could exert control over its strategic direction. Because of the requirement that governing bodies appoint their own members, well-funded providers interested in providing capital may prefer to create a separate corporate entity in which to place their investment, leaving the MSSP ACO with the sole purpose of participating in the MSSP.


CMS's rules and guidance may inhibit the ability of MSSP ACOs to become multipayer platforms for value-based purchasing. Because of current requirements, MSSP ACOs have limited use in other contracting models and risk being limited-purpose vehicles on the periphery.