MSSP (Medicare Shared Savings Program) ACOs (accountable care organizations) should annually assess during Q2–Q3 the favorability of their current agreement period and ensure that they are optimally positioned going into the next performance year.

Background

Achieving savings in MSSP can be simplified into two key drivers: benchmark period position and performance year experience (see Figure 1). Performance year experience is a common focal point for ACOs and their participants that can be influenced through medical management initiatives and improved risk score coding practices. However, rebasing allows ACOs the opportunity to potentially increase their benchmark (via the benchmark period position) to achieve higher savings.

During Phase 1 of each performance year’s application cycle, MSSP ACOs have the option to “rebase.”¹ In this paper, rebasing refers to when an MSSP ACO exits the five-year agreement period early and immediately enters a new agreement period (i.e., early renewal). Rebasing allows an ACO to make a number of changes that could materially impact its financial performance, including (but not limited to):

1. Shifting the benchmark period forward to the most recent three years
2. Taking advantage of recent program changes that apply only to new agreement periods^2,3
3. Electing a new MSR (minimum savings rate)/MLR (minimum loss rate) for ACOs in two-sided tracks⁴
4. Moving to ENHANCED if currently in a BASIC track

Rebasing examples

Since rebasing has no impact on performance year (PY) experience,⁵ the decision to rebase often comes down to the levers that maximize the benchmark. The decision to rebase is made in the middle of what would become the next agreement period’s third benchmark year (BY3), meaning that some (but not all) information about the rebased historical benchmark is known. The key question for ACOs to ask is: Will the current benchmark period or rebased benchmark period result in a higher benchmark? We routinely help ACOs answer this question using ResDAC’s Research Identifiable Files (i.e., 100% of Medicare FFS claims data) and Milliman’s ACO Builder® product suite.⁶

Figure 2 below is a simplified summary of real providers’ historical experience grouped into a hypothetical ACO with the following characteristics:

• Retrospective assignment.
• First agreement period with benchmark years 2019–2021.
• ACO is considering rebasing to a 2022–2024 benchmark period (i.e., the ACO would be conducting this analysis in 2024 during the PY2025 application cycle).

While 2025+ experience would be unknown at the time of this analysis, placing both the original agreement period benchmark and rebased agreement period benchmark on a 2024 basis shows that the original benchmark is in fact higher than the rebased benchmark and supports maintaining the original agreement period (i.e., not rebasing in PY2025). To get the original agreement period’s historical benchmark on a 2024 basis, we apply the known regional trend from 2021–2024 as a simplifying assumption (instead of the blended national/regional trend). This ACO has generally improved in efficiency over time, so the original benchmark period results in a higher benchmark.

Figure 3 below shows another situation in which it would not be favorable for an ACO in its first agreement period with benchmark years 2019–2021 to rebase to a second agreement period with benchmark years 2022–2024. The ACO’s efficiency is worsening throughout the original benchmark period, peaking in BY3 (which has the most weight in an ACO’s first agreement period) and producing a higher benchmark.

However, there are many factors to consider when making the decision to rebase. For example, if this ACO were instead in its second agreement period in 2019–2021, then rebasing to a 2022–2024 benchmark period would be favorable and would produce a higher benchmark (see Figure 4).

In Figure 4, the original benchmark period would now give more weight to the relatively more efficient BY1–BY2 years (i.e., instead of having 10%/30% weight in those years, it would have 33%/33%), which lowers the benchmark. Additionally, since the original BY3 is inefficient, there would be a negative adjustment in the historical benchmark period (as opposed to the positive regional adjustment for the efficient BY3 in the rebased benchmark period).

As can be seen in Figures 2 through 4, the benchmark calculation is complicated and depends on several factors (many of which were outside the scope of the examples shown above). We recommend that ACOs model their own experience under both the original benchmark period and the rebased benchmark period when making the decision to renew early.

What changes when rebasing?

When an ACO chooses to rebase, the benchmark period comprises the three years immediately preceding the new agreement period.⁷ Additionally, the benchmark year weights and regional adjustment weights are updated in a subsequent agreement period (see Figure 5).

Another change when rebasing is that the risk ratio cap of 3% is reset. An ACO might choose to rebase if they have hit the 3% cap in their current agreement period. Being at the cap may create a situation where ACOs are responsible for higher-risk beneficiaries without receiving an associated benchmark increase, or it could disincentivize ACOs from additional coding improvements. In these situations, it may benefit an ACO to reset the BY3 normalized risk score to be able to fully realize risk score improvement in future performance years.

There are also several recent MSSP program changes impacting the benchmark methodology that only apply to ACOs in new agreement periods beginning in PY2024 or later. These include:

• Accountable Care Prospective Trend (ACPT)
• A prospective trend factor based on U.S. per capita cost (USPCC) incorporated in the benchmark trend at 1/3 weight.
• Set at the start of an ACO’s agreement period and remains unchanged.⁸
• If an ACO started a new agreement period in 2024, it may consider rebasing early to avoid a potential benchmark insufficiency due to the low ACPT relative to 2023–24 actual trends.⁹ This is particularly applicable for agreement periods beginning in 2024, and a worthwhile consideration for future agreement periods.
• Prior savings adjustment
• Historical benchmark adjustment for prior attained savings (applied if greater than regional adjustment).
• Elimination of any aggregate negative regional adjustment
• Regional benchmark assignment methodology
• Expenditures used in the regional benchmark adjustment will be based on the ACO’s selected assignment methodology (including prospective). This is a change from earlier agreement periods in which ACOs under prospective assignment were compared to regional expenditures calculated using retrospective assignment.
• Regional risk score growth cap
• A 3% risk score growth cap will be applied in the calculation of the risk-adjusted regional expenditures used in the benchmark trend.

An ACO already in an agreement period with a start date in PY2023 or earlier would need to exit and start a new agreement period (i.e., rebase) in order to take advantage of these MSSP program changes. Note that these changes may be favorable or unfavorable depending on the ACO, its experience, and the time period, so the impact of these changes needs to be evaluated when deciding whether to rebase.

Other considerations

Outside of the considerations mentioned previously, there are still others that ACOs should take into account when deciding to rebase:

1. Administrative overhead
1. Some ACOs contract with participants based on the track that they are participating in, so rebasing during an agreement period may require additional negotiations.
2. ACOs that rebase will need to be prepared to get a new repayment mechanism in place.
3. There may be other administrative costs associated with terminating and renewing an MSSP agreement period with CMS.
2. Application timeline
1. ACOs that rebase early need to indicate this by Phase 1 of the application window.
2. ACOs generally should decide by the “Respond to Phase 1 RFI-2” deadline¹⁰ whether to change that election (i.e., continue in the current agreement period).
1. These additional months give ACOs a crucial opportunity to learn more about (and perform analysis on) the new benchmark period if they do rebase early.
2. With Milliman’s ACO Builder®, ACOs have access to recent experience that can help them make a good estimate of what the new historical benchmark would look like under early renewal.
3. Variability and risk appetite
1. There is more uncertainty in financial projections for a rebased benchmark period, due to the timing of when such an analysis is done (i.e., during the rebased BY3).
2. Continuing in an agreement period introduces fewer unknowns when it comes to projecting your benchmark, whereas the rebased BY3 is not yet complete by the time an ACO finalizes the decision to renew early.

Conclusion

There are multiple considerations that ACOs must account for, both financial and operational, when weighing whether or not to rebase. While we have provided a couple of case studies and considerations for rebasing, we recommend that ACOs use accurate, complete data and model multiple scenarios to decide whether rebasing is right for their specific population’s experience. ACOs that continually evaluate the historical benchmark throughout the agreement period will be better-positioned to improve performance in MSSP in future agreement periods. With access to 100% of Medicare FFS claims data and Milliman’s ACO Builder®, we are uniquely positioned to help ACOs with these critical decisions. Please reach out to your Milliman consultant with any questions.

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¹ For PY2026, Phase 1 will open on May 29, 2025, and close on June 12, 2025. Retrieved March 11, 2025, from https://www.cms.gov/files/document/key-application-dates-and-deadlines-2026.pdf.

² Champagne, N., Gusland, C., & Smith, C. (2022, December 1). A summary of the impactful MSSP rule changes in the 2023 Medicare Physician Fee Schedule update. Milliman, Inc. Retrieved March 11, 2025, from www.milliman.com/en/insight/impactful-mssp-rule-changes-2023-mpfs.

³ Smith, C., Champagne, N., & Gusland, C. (2023, July 27). Early thoughts on proposed Medicare Physician Fee Schedule changes. Milliman, Inc. Retrieved March 11, 2025, from www.milliman.com/en/insight/early-thoughts-on-proposed-mpfs-changes-cms-mssp.

⁴ Birkeland, E., Shaikh, T., & Smith, C. (2024, February 1). MSSP minimum savings/(loss) rates: A double-edged sword. Milliman, Inc. Retrieved March 11, 2025, from www.milliman.com/en/insight/mssp-minimum-savings-loss-rates-msr-mlr.

⁵ It is assumed that care coordination, utilization management, and other ACO initiatives are implemented whether or not the ACO rebases. As such, this analysis solely focuses on which agreement period produces a more favorable benchmark.

⁶ Milliman ACO Builder. Retrieved March 11, 2025, from www.milliman.com/en/Products/Milliman-ACO-Builder.

⁷ For example, an ACO with a current agreement period beginning in 2024 that rebases in 2026 will move its benchmark period from 2021–2023 to 2023–2025.

⁸ CMS has stated that they will retain the ability to update the ACPT “if unforeseen circumstances occur during the ACO’s agreement period.” For more information, see here: www.milliman.com/en/insight/predictability-accuracy-mssp-benchmarks-acpt.

⁹ Shellabarger, S., Kuklinski, B., & Champagne, N. (2025, February 3). Predictability vs. accuracy in MSSP benchmarks. Milliman, Inc. Retrieved March 11, 2025, from www.milliman.com/en/insight/predictability-accuracy-mssp-benchmarks-acpt.

¹⁰ For PY2026, this window will open on August 27, 2025, and close on September 8, 2025. Retrieved March 11, 2025, from https://www.cms.gov/files/document/key-application-dates-and-deadlines-2026.pdf.