From MSSP ACOs to Employer Value: Translating Value-Based Principles to Self-Insured Plans

Am J Manag Care. 2025;31(Spec. No. 15):e6-e8. https://doi.org/10.37765/ajmc.2025.89858

Value-based care (VBC) models, notably the Medicare Shared Savings Program (MSSP), have demonstrated potential for success when stakeholders are aligned and incentivized with cost and quality goals. To illustrate the point, in 2024, the program produced more than $6.5 billion in gross savings, with the 476 participating accountable care organizations (ACOs) earning $4.1 billion in shared savings payments.¹ Even with the success of savings within VBC, adoption within the employer-sponsored insurance market, particularly among self-insured entities, remains limited. Barriers include misaligned financial incentives, fragmented data across vendors, and operational complexity.

Background

The US employer-sponsored health insurance market is characterized by a proliferation of point solutions: specialized vendors offering programs for specific conditions, such as diabetes, musculoskeletal disorders, or behavioral health. Although it is intended to address care gaps not addressed by third-party administrators (TPAs) or pharmacy benefit managers (PBMs), this fragmented approach creates significant challenges. Employers and their plan members face a disjointed experience, whereas plan sponsors struggle to measure the aggregate return on investment across multiple, often overlapping, vendor contracts. Most of these solutions operate on a fee-for-service (FFS) or per-employee per-month (PEPM) payment model, which incentivizes enrollment and activity rather than measurable health outcomes or total cost of care (TCOC) reduction. Other incentives, such as rebates, cloud the true motivation of these solutions.

This incentive misalignment stands in contrast to proven VBC models, including the MSSP. Translating this accountability model to the fragmented commercial market requires a fundamental shift in contracting strategy away from paying for disparate activities and toward paying for unified, performance-based results.

From Point Solutions to Performance Contracts

The primary economic problem with the point solution ecosystem is its lack of integration and accountability for TCOC. An employer may contract with separate vendors for diabetes management, physical therapy, and mental health support. Each vendor operates within its own silo, with payment models that are not tied to the overall health and cost trajectory of the member. This fragmentation can lead to duplicative services, conflicting care plans, and an inability to attribute outcomes to any single intervention.

The transition to a performance-based model consolidates this accountability. Instead of silos of individual point solutions, performance-based models allow employers to align point solutions to a common goal under a unified incentive structure. This structure replaces disconnected PEPM fees with at-risk arrangements, where financial rewards are explicitly tied to achieving predefined cost and quality targets. This shift aligns provider and vendor incentives with the employer’s goal: improving workforce health while managing TCOC.

Conceptual Framework for Performance-Based Contracting

Adapting the MSSP’s integrated accountability requires a framework that can be applied to commercial provider and vendor contracts.

Know your target: A financial target, or TCOC benchmark, is established using the employer’s historical claims data, adjusted for population risk, and trended forward. This creates a credible and fair goal against which to measure financial performance.

Quality as a gate and multiplier: Employers can use negotiated leading indicator activities, similar to the MSSP quality measures. This can act as a performance gate and multiplier for shared savings, distinguishing which solutions are working.

Incentive design: Contracts must incorporate financial risk and reward. This can range from upside-only shared savings to more advanced models such as bundled payments for episodes of care or partial capitation. These models shift the financial risk for outcomes to the provider or vendor partner.

Application to Self-Insured Employers

For self-insured employers, this framework translates into specific contractual and operational designs.

Shared savings/withholds: The provider partner is paid a base rate (eg, FFS), but a portion of payments may be withheld. The withhold and additional shared savings are paid out only if cost and quality targets are met.

PEPM with outcomes guarantees: A population-based care management fee is provided, but a significant portion is tied to outcomes.

Episodic bundles: A single, prospective payment is made for an entire episode of care (eg, joint replacement, maternity care), covering all related services. This incentivizes coordination and efficiency within the episode.

Vendor consolidation: Ideally, a lead entity (eg, TPA, PBM, clinically integrated network) can be contracted to manage or subcontract other necessary point solutions, creating a single point of accountability for the employer.

Make the Individual Member a Part of the Solution

Efforts to reduce health care costs and drive better outcomes are most effective when members are actively included as partners in the process. Their engagement is critical not only in adhering to recommended care but also in making informed choices about where and how they receive services. Without clear incentives, members will continue to seek the best care at the highest price.

Alignment is a two-way street of understanding the member’s needs and desires along with those of the plan or employer. Aligning member engagement strategies with long-term health goals ensures that cost reduction does not come at the expense of their well-being or patient experience. Programs that foster shared decision-making, close preventive care gaps, and encourage sustained management of chronic conditions help build trust and accountability. There are already proven methods to get this alignment, including health savings account plans, price transparency tools, sponsored medical tourism, free supplies, and incentivizing care management through premium reduction.

Case Example of Alignment Through Health Endeavors

The operational complexity of managing performance-based contracts necessitates an enabling technology and services layer. Platforms such as Health Endeavors provide the neutral, data-driven infrastructure required to execute these models. Their function is not to deliver care but to make at-risk contracting feasible, transparent, and auditable. By utilizing Health Endeavors’ solutions and tools, their clients and partners were able to outperform the rest of the market with more than $463 million in shared savings and more than $261 million in distributions.²

Good care management helps to keep members aligned with their care team and out of high-cost emergency care settings. Unfortunately, the focus of care management has generally been limited to high-risk, sick care, and, due to labor and economic restraints, has been limited beyond that initial scope. Health Endeavors has launched an artificial intelligence–driven virtual care manager that augments and scales the work of the existing care team and care managers. Through this engagement, members will become healthier, and care teams can have a precision focus on who needs intervention and why, leading to better overall outcomes and increased savings.

Relying on fragmented, fee-based point solutions often undermines accountability and leads to a disjointed member experience, where improvements in one area may be offset by gaps elsewhere. Consolidating these efforts into performance-based contracts rooted in accountability ensures that responsibility for both cost and quality is clearly defined. Designing for integrated, long-term value avoids the pitfall of chasing short-term financial gains at the expense of meaningful, sustained improvements in population health. This approach empowers employers and their partners to focus on whole-person care, fostering better member engagement and delivering more consistent, positive health outcomes.

Author Information

Mr Derrick is the chief branding officer at Health Endeavors, based in Farmington, Utah.

REFERENCES

1. Medicare Shared Savings Program accountable care organizations updated performance year 2024 financial and quality results. CMS. September 29, 2025. Accessed November 17, 2025. https://www.cms.gov/files/document/fact-sheet-ssp-py24-financial-quality-results.pdf
2. Health Endeavors. Accessed November 17, 2025. https://healthendeavors.com/