CMS Finalizes 2026 Updates to the Medicare Shared Savings Program

The Centers for Medicare & Medicaid Services (CMS) released the Final Rule for the Calendar Year (CY) 2026 Medicare Physician Fee Schedule, featuring significant updates to the Medicare Shared Savings Program (MSSP). These policies aim to fine-tune program operations, enhance beneficiary alignment, promote quality improvement, and reduce administrative burden while aligning the program more closely with CMS’s broader quality and financial policies.

ACO Participation: Shifting Toward Two-Sided Risk Models

A major shift in MSSP participation strategy is the reduction of time that newly formed ACOs can remain in a one-sided risk arrangement. CMS will cap participation in the BASIC track's one-sided model to a maximum of five years during the ACO's first agreement period, down from the current maximum of seven years across two agreement periods. This change applies to ACOs beginning new agreements on or after January 1, 2027. The goal is to encourage a faster transition to two-sided risk models that support value-based care.

Eligibility Flexibility: Minimum Beneficiary Threshold Updates

To broaden access while maintaining fiscal integrity, CMS has finalized new flexibility in how ACOs meet the requirement of having at least 5,000 assigned Medicare fee-for-service (FFS) beneficiaries. Beginning with agreement periods starting in 2027, ACOs will only need to meet the 5,000-beneficiary threshold in Benchmark Year 3. They may fall below this level in Benchmark Years 1 or 2; however, if their beneficiary count drops below 5,000 at any point during the agreement period, they must participate in the BASIC track and will be subject to corresponding limits on shared savings and shared losses. These safeguards are intended to maintain accountability while still expanding entry opportunities for smaller or developing ACOs.

Quality Performance: Health Equity Adjustments and Measure Updates

CMS is removing the health equity adjustment from ACO quality scores starting in the performance year 2026. Instead, CMS plans to rely on other mechanisms, such as the Complex Organization Adjustment and incentives for eCQM reporting, to recognize the challenges faced by safety-net providers.

Additionally, CMS is revising terminology related to the health equity adjustment in the regulations for performance years 2023 and 2025 and renaming the “health equity benchmark adjustment” as the “population adjustment” to better reflect its function, accounting for the proportion of an ACO’s population with dual eligibility or low-income subsidy status.

Medicare CQMs: Streamlining Patient Matching

To reduce administrative complexity, CMS has updated the definition of a “beneficiary eligible for Medicare CQMs” to better align with ACO assignment methodology. Beginning in 2025, eligible beneficiaries must have at least one primary care encounter during the performance year with an ACO provider who is a primary care physician, a specialist recognized under the ACO beneficiary assignment rules, or a qualified non-physician practitioner. This change is intended to create greater overlap with assignable beneficiaries and ease the patient-matching process. 

Starting in performance year 2025, the inclusion of nurse practitioners, physician assistants, and clinical nurse specialists in identifying assignable beneficiaries, combined with a requirement that Medicare CQM-eligible beneficiaries must have received primary care services, is expected to raise the alignment between Medicare CQM eligibility and ACO-assignable beneficiaries to about 85 percent for most ACOs.

The ACO will not have an obligation to report on beneficiaries without a PCS_Encounter field because those beneficiaries have not had a primary care service. The Medicare CQM quarterly list, starting no later than performance year 2025 Quarter 4, will be based on the finalized definition of a “beneficiary eligible for Medicare CQMs,” including removal of the PCS_Encounter field. This means that only beneficiaries that had at least one primary care service encounter during the List Period will be included in the Medicare CQM Quarterly List.

APP Plus Measure Set: Quality Measure Refinements

CMS has also made revisions to the Alternative Payment Model (APM) Performance Pathway (APP) Plus quality measure set including removal of Quality ID: 487 (Screening for Social Drivers of Health).

Table: APP Plus Quality Measure Set for Shared Savings Program ACOs

CAHPS Survey: Modernized Delivery

To increase patient response rates, CMS will transition the CAHPS for MIPS Survey to a web mail phone protocol, replacing the current mail-phone approach. This change takes effect in performance year 2027.

Cybersecurity and Extreme Circumstances

In a timely update, CMS has expanded its extreme and uncontrollable circumstances (EUC) policies to include cyberattacks such as ransomware or malware that impact ACOs at the legal entity level. ACOs affected in this way would be able to seek quality and financial reporting relief under the same provisions currently extended for natural disasters and public health emergencies starting in 2025.

Additional Administrative Updates

CMS also finalized a requirement that ACOs report certain mid-year changes to their participant or SNF affiliate lists, especially when entities experience a change of ownership (CHOW) resulting in a new TIN. This policy aims to maintain continuity in ACO operations despite backend organizational changes.

Revised Definitions and Monitoring Enhancements

The definition of primary care services used in beneficiary assignment is updated to reflect newer care management codes while removing SDOH risk assessment (G0136) from inclusion starting in 2026. CMS will also begin monitoring compliance with the alternative quality performance standard starting in 2026 and may take enforcement actions if ACOs fail to meet either the primary or alternative standards.

Next Steps

ACOs should begin preparing now for these finalized changes by reviewing their readiness for earlier transitions to two-sided risk, adjusting workflows for the updated beneficiary alignment and Medicare CQM eligibility rules, and planning for upcoming APP Plus measure and CAHPS survey updates. Organizations should also strengthen cybersecurity protocols and ensure processes are in place for timely mid-year participant list reporting. Early preparation will help ensure a smooth transition into the 2026 and 2027 performance years.