Here is the oldest complaint in value-based care, and every ACO executive has made it: you get punished for winning.
Save money against your benchmark, and the benchmark rebases downward. Next cycle you compete against your own best performance. Do it again and the target moves again. The organizations that transformed care most aggressively ended up with the least room left to earn. The industry calls it the ratchet, and it has quietly undermined every accountable care model CMS has built.
The Long-term Enhanced ACO Design (LEAD) Model is CMS’s answer.
LEAD runs for ten years with no traditional rebasing. It is the longest performance period the CMS Innovation Center has ever tested. An ACO that invests in care transformation in 2027 gets a decade to earn against that investment without the target sliding underneath it.
That single design decision is the story. Everything else in the model follows from it.
This guide covers what LEAD is, the benchmarking methodology that defines it, the two risk options, the prospective payment menu including a genuinely new capitation type, alignment rules and minimum thresholds, what changes from ACO REACH, quality measurement, the new benefit enhancements, and what different kinds of organizations should be doing now.
What is the LEAD Model?
The Long-term Enhanced ACO Design Model is a voluntary, ten-year Medicare accountable care model from the CMS Innovation Center, running January 1, 2027 through December 31, 2036. It is the successor to ACO REACH, which concludes at the end of 2026.
LEAD operates under Section 1115A authority and falls within CMS’s accountable care model category. As of CMS’s most recent page update, the model is in the Announced stage with participants not yet published.
| Full name | Long-term Enhanced ACO Design |
| Performance period | January 1, 2027 to December 31, 2036 |
| Length | 10 years, the longest CMS has tested |
| Predecessor | ACO REACH (ends December 31, 2026) |
| Participation | Voluntary |
| Risk options | Global Risk and Professional Risk |
| Rebasing | No traditional rebasing during the period |
| Quality at risk | 3% of benchmark |
| Authority | Section 1115A of the Social Security Act |
The Problem CMS Is Trying to Solve
CMS is explicit about the diagnosis: many providers have never joined an ACO, or joined and dropped out, because of financial and administrative obstacles.
Earlier accountable care models were not built for smaller, more rural, or independent practices, or for organizations serving high-needs patients. The capital requirements, the alignment minimums, the cash flow timing, and the benchmark mechanics all favored large, well-resourced, already-efficient systems.
LEAD’s stated aims are to widen the door: bring in more small, rural, and independent providers and Community Health Centers, strengthen prevention and care coordination for patients with high needs, and give patients a more active role in their own care.
CMS anticipates LEAD participants will include current ACO REACH participants and other ACOs, Medicare fee-for-service providers who have never been in an ACO, and organizations serving underserved populations including those with high proportions of dually eligible individuals, federally qualified health centers, and rural health clinics.
The Ten-Year Benchmark: LEAD’s Defining Feature
LEAD’s benchmarking methodology builds on both ACO REACH and the Shared Savings Program. Five components matter.
No Traditional Rebasing
The ten-year performance period runs without traditional rebasing, which CMS frames directly as giving ACOs time to invest in care transformation and see returns over the long term.
This changes the investment math fundamentally. A care management build, a data infrastructure project, or a clinical hiring plan that takes three years to pay back is nearly impossible to justify against a benchmark that resets before the payback lands. Over a decade, it becomes a straightforward business case.
Annual Updates With Guardrails
Benchmarks update annually using a blend of a prospective trend factor plus observed national and regional spending, with guardrails applied to the prospective trend factor to mitigate large forecasting misses.
The design goal is stated plainly: more predictable year-to-year benchmark growth, while leaving room for efficient ACOs to beat the trend and generate durable savings.
A Realistic Starting Point for High-Spending Organizations
This provision deserves attention because it reverses a long-standing barrier.
ACOs whose aligned beneficiaries have higher historical Medicare costs than other beneficiaries in the same region are not immediately measured against a benchmark that incorporates regional spending. Instead, high-spending ACOs get a benchmark based purely on their own aligned beneficiaries’ historical spending, plus additional payment support.
Under models that blend in regional spending from day one, an organization serving a high-cost population starts underwater and often never surfaces. LEAD gives those organizations a viable pathway to improve efficiency over time rather than an impossible starting line.
Credit for Prior Performance
The inverse case is also handled. ACOs whose aligned beneficiaries have lower historical spending than their regional peers are eligible for a positive regional efficiency adjustment.
And critically for anyone already in a model: ACOs that generated savings in ACO REACH or the Shared Savings Program may receive either a regional efficiency adjustment or a prior savings adjustment, whichever is higher. Both reflect the ACO’s own risk profile.
If you have been doing this work and generating savings, that history follows you into LEAD rather than being erased.
The Regional Rate Book Endgame
Over the ten years, as spending levels converge within a region, LEAD is designed to move toward a more standardized regional rate book, reducing reliance on historical spending and promoting greater equity across participants.
Read the five components together and the arc is clear: start organizations where they actually are, give them a decade of stable targets, credit past performance, and converge toward regional rates once the gaps have closed.
Risk Options: Global vs. Professional
LEAD offers two voluntary risk-sharing arrangements.
| Global Risk | Professional Risk | |
|---|---|---|
| Savings | Up to 100% | Up to 50% |
| Losses | Up to 100% | Up to 50% |
| Capitation options | PCC or Total Care Capitation | PCC required |
| Fit | Organizations with capital, experience, and a specialty network | Organizations building toward full risk |
Both are measured relative to the ACO’s established performance year benchmark.
Prospective Payment Options
This is where LEAD is most operationally different from its predecessors, and where the cash flow story lives. LEAD provides monthly prospective payments to support enhanced care investments.
Primary Care Capitation
Primary Care Capitation (PCC) is a monthly capitated payment for primary care services delivered by the ACO’s Participant and Preferred Providers. It has two components:
- Base PCC covers the cost of delivering primary care to aligned beneficiaries.
- Enhanced PCC (EPCC) provides upfront cash flow to invest in infrastructure, staffing, workflow changes, and other improvements. EPCC must be paid back to CMS in full at the end of the performance year.
Think of EPCC as a working capital facility rather than revenue. It solves the timing problem that kills undercapitalized ACOs, but it comes back.
ACOs in the Professional Risk Option are required to select PCC. ACOs in Global Risk choose between PCC and Total Care Capitation.
Total Care Capitation
Total Care Capitation (TCC) is available only in the Global Risk Option and covers all Medicare Parts A and B services delivered by the ACO’s Participant and Preferred Providers, including both primary and specialty care.
Non-Primary Care Capitation: The New One
NPCC is a new payment option in LEAD and worth understanding carefully.
ACOs that select PCC may also select Non-Primary Care Capitation, a monthly capitated payment covering non-primary care services provided by enrolled Participant and Preferred Providers, such as specialists and post-acute care facilities.
The distinguishing feature: NPCC is a true capitated payment and is not reconciled against fee-for-service billing. That makes it structurally different from the Advanced Payment Option below, and it gives ACOs a real instrument for building risk-bearing relationships with specialists without waiting on FFS reconciliation.
Advanced Payment Option
APO is also optional for ACOs electing PCC. It provides an upfront monthly payment for non-primary care services from enrolled Participant and Preferred Providers, but APO is reconciled against actual fee-for-service billing throughout the performance year.
APO is cash flow timing. NPCC is risk transfer. Choosing between them is a strategic decision, not an administrative one.
Add-On Capitation Payments
ACOs with higher-than-average spending compared to their region are eligible for an additional capitated payment calculated as a percent of the ACO’s benchmark.
Two features make this significant:
- It is not reconciled at the end of the performance year.
- It is not included in performance year expenditures when calculating shared savings or losses.
This is an upfront benchmark adjustment intended to fund investment in primary care and other services that will let the ACO reduce Medicare expenditures over time. For a high-cost organization, it is real, unrecovered capital.
CMS also describes a separate non-reconciled add-on payment for rural health care providers, specifically to help build the infrastructure needed to operate as an ACO. For organizations also tracking Rural Health Transformation Program funds, these are two distinct capital sources aimed at overlapping problems.
Who Can Participate: Alignment and Minimums
How Beneficiaries Are Aligned
LEAD ACOs receive beneficiary alignment two ways:
- Claims-based alignment, using beneficiaries’ claims history and utilization patterns
- Voluntary alignment, where beneficiaries actively choose an ACO by naming a provider affiliated with it as their primary provider or other source of care. Voluntary alignment can happen in a care setting or in the patient’s home when a pre-existing relationship with an affiliated provider exists.
ACOs then select one of two alignment approaches:
- Prospective alignment. Alignment is set before each performance year begins, with no updates during the year.
- Hybrid alignment. Alignment updates during the performance year. Voluntary alignment refreshes monthly. Claims-based alignment is set prospectively, but ACOs adding new Participant TINs mid-year get one mid-performance-year claims-based update for those TINs. Beneficiaries can only be added mid-year, never dropped.
Minimum Beneficiary Thresholds
The thresholds are tiered, and the tiering is the clearest evidence of CMS’s intent to widen participation.
| Participant type | Performance Year 1 minimum | Base Year requirement |
|---|---|---|
| Standard | 5,000 aligned beneficiaries | 3,000 aligned in at least one Base Year |
| Newly Entering ACOs | 1,000 beneficiaries | 600 claims-based in at least one Base Year |
| High Needs concentration (>40% of aligned beneficiaries meet High Needs criteria) | 800 beneficiaries | 500 claims-based in at least one Base Year |
CMS notes that minimums for Newly Entering ACOs and ACOs with large High Needs populations will grow slowly over the course of the model, so the lowered thresholds are an on-ramp rather than a permanent accommodation.
An 800-beneficiary floor for organizations specializing in complex care is a meaningful change. It recognizes what CMS states directly: organizations that specialize in caring for High Needs beneficiaries typically have smaller patient panels.
What Changes From ACO REACH
If you are in ACO REACH today, these are the structural differences that will reshape your strategy.
High Needs Becomes a Beneficiary Policy, Not an ACO Type
This is the biggest change, and it is easy to underestimate.
LEAD does not include a distinct High Needs ACO type. Instead, High Needs policies apply to all beneficiaries meeting the High Needs criteria, across all ACOs.
The consequences cut two ways:
- ACOs that do not specialize in complex care receive more accurate benchmarks and risk adjustment for the High Needs beneficiaries they do serve. Previously, serving those patients inside a standard ACO was financially unattractive.
- Organizations that specialize in complex populations can now serve their entire eligible Medicare fee-for-service population within LEAD, not only beneficiaries meeting High Needs criteria. The previous structure forced specialization at the organizational level.
Mechanically, the High Needs beneficiary category gets its own historical benchmark calculation with a separate trend factor and its own risk adjustment methodology. Concurrent risk adjustment, first implemented for High Needs beneficiaries in ACO REACH, applies to all High Needs beneficiaries in LEAD.
CMS’s reasoning is worth noting: High Needs individuals often experience more rapid changes in health status than the average Medicare beneficiary, and a concurrent methodology that incorporates diagnoses documented during the performance year reflects those shifts more accurately than a purely prospective approach. If your risk adjustment operation is built around prospective capture and annual HCC recapture cycles, concurrent methodology for part of your population is a different operating rhythm.
Side by Side
| ACO REACH | LEAD | |
|---|---|---|
| Period | Ends December 31, 2026 | 2027 to 2036, ten years |
| Rebasing | Periodic | No traditional rebasing |
| High Needs | Separate ACO type | Beneficiary-level policy across all ACOs |
| Risk options | Global and Professional | Global and Professional |
| Non-primary capitation | Advanced Payment Option | APO plus new, unreconciled NPCC |
| Specialist risk | Limited support | CARA episode-based arrangements |
| Medicaid | Not integrated | Two-state planning phase |
Quality Measurement
LEAD uses a deliberately small measure set, which CMS frames as reducing provider burden while keeping criteria clear and achievable.
The set comprises four claims-based measures, one patient experience measure, and two electronic clinical quality measures, with the eCQMs phased in across the first half of the model.
Measures CMS names include:
- All-cause unplanned admissions for older adults with multiple chronic conditions (claims-based)
- Days at home for patients with complex, chronic conditions (claims-based)
- Timely follow-up after acute events for certain chronic conditions (claims-based)
- Patient experience via the CAHPS survey
- Diabetes care, glycemic status assessment greater than 9% (eCQM), reporting optional for performance years 2027 and 2028
- Blood pressure control (eCQM), reporting optional for performance years 2027 and 2028
Three more mechanics matter:
- 3% of benchmark is at risk for quality, earned back based on performance. Payments are not withheld during the year. At financial settlement, only the portion not earned back is applied when calculating shared savings or losses. That is a materially friendlier cash flow posture than withholding.
- A Continuous Improvement / Sustained Exceptional Performance (CI/SEP) component and a High Performers Pool, carried over from ACO REACH, reward ACOs achieving statistically significant year-over-year improvement and high overall performance.
- ACOs can earn additional quality points by submitting a Prevention Quality Plan describing a prevention intervention they are implementing.
Notice the shape of the measure set: unplanned admissions, days at home, timely follow-up, diabetes control, blood pressure. This is a chronic disease management scorecard. Organizations with mature chronic care management operations are already producing the behavior these measures reward.
Benefit Enhancements and Beneficiary Engagement Incentives
LEAD adds new Medicare waivers and patient incentives. Participation in any of them is optional, and acceptance into LEAD is not contingent on adopting any of them. ACOs that do adopt must submit an implementation plan to CMS for each, including how they will cover the cost.
New Benefit Enhancements
- Medical Nutrition Therapy expansion. CMS would expand the conditions for which beneficiaries can receive covered MNT beyond diabetes and renal disease, for beneficiaries in LEAD ACOs taking full risk. This opens nutrition therapy to other diet-sensitive chronic conditions.
- Part D Premium Buydown. Available by 2029, qualifying ACOs could partially or fully offset a beneficiary’s Part D premium for a given performance year, reducing cost-related barriers to accessing drugs.
New Beneficiary Engagement Incentives
- Chronic Disease Prevention Reward. ACOs can offer healthy food products as beneficiaries engage in healthy living activities and participate in evidence-based chronic disease programs.
- Substance Access BEI. ACOs and their providers may consult with aligned patients about the possible benefits of hemp products. This one carries specific conditions: it is funded entirely at the participant’s expense, CMS does not cover the cost, it is available only in states where the eligible hemp products are legal, and CMS will apply strict program integrity safeguards. The same BEI is being made available to ACO REACH participants in performance year 2026 and to the Enhancing Oncology Model starting in performance period 6.
CARA: Episode Risk With Specialists
The CMS Administered Risk Arrangements (CARA) initiative is a voluntary, modular digital data-sharing and payment component of total cost of care models, initially tested within LEAD among ACOs maintaining two-sided risk.
CARA exists to lower the barrier to ACOs building real financial and clinical relationships with Preferred Providers and downstream specialists without driving consolidation. That last phrase is doing deliberate work: CMS is offering an alternative to acquiring specialists in order to align them.
CARA works by:
- Sharing episode data with ACOs and the Preferred Providers they enter episode-based risk arrangements (EBRAs) with
- Providing common contracting frameworks, including export of episode information into contracting templates
- Allowing configurable episode design
- Making payment to ACOs and Preferred Providers based on their EBRAs
CARA will also feature an episode-based falls prevention program. CMS has signaled potential scaling to other total cost of care contexts based on demonstrated success and market uptake.
For specialty groups that have watched total cost of care models from the sidelines, CARA is the most concrete on-ramp CMS has built.
Medicaid Integration
LEAD includes an initial planning phase running March 2026 through December 2027, during which CMS will identify two states interested in developing a framework for ACO-Medicaid partnership arrangements.
The framework is meant to define how ACOs and Medicaid organizations share data and coordinate care for dually eligible beneficiaries in Original Medicare, including preventing avoidable hospitalizations and helping patients stay engaged in their communities. Pending successful completion of the planning period, ACOs in the selected states would have the opportunity to enter partnership arrangements with Medicaid organizations.
If you operate in a state that pursues this, it is a material strategic variable. Watch for which two states CMS selects.
What to Do Now
If You Are in ACO REACH
Your model ends December 31, 2026. LEAD begins the next day.
- Quantify your prior savings adjustment position. ACOs that generated savings in REACH or MSSP may receive a regional efficiency adjustment or a prior savings adjustment, whichever is higher. Know which applies to you and roughly what it is worth.
- Re-plan around the loss of the High Needs ACO type. If you run a High Needs REACH ACO, LEAD lets you serve your full eligible Medicare FFS population, which is an expansion opportunity and a different operating model.
- Reassess your risk option. Global versus Professional, and within Global, PCC versus TCC.
- Evaluate NPCC seriously. Unreconciled capitation for specialty and post-acute services is a new instrument and changes what specialist arrangements are possible.
If You Have Never Been in an ACO
CMS built the on-ramp for you specifically.
- Newly Entering ACOs need 1,000 beneficiaries in PY1, not 5,000.
- Rural providers get a non-reconciled add-on payment explicitly for building the infrastructure to operate as an ACO.
- EPCC provides upfront cash flow, though remember it is repaid in full at year end.
- Start with the Request for Applications and the Application Checklist on the CMS LEAD page.
If You Serve Complex or Dually Eligible Populations
- The 800-beneficiary minimum applies if more than 40% of your aligned population meets High Needs criteria.
- Concurrent risk adjustment for High Needs beneficiaries changes your documentation rhythm from an annual capture cycle to continuous performance-year capture.
- Watch the Medicaid integration state selection.
On Timing
CMS has stated it expects future opportunities to apply, though details are not yet published and participation parameters may change based on early model years. A non-binding Letter of Interest process was offered for organizations interested in later cohorts.
Because application windows and cohort timing have moved, confirm current application status directly on the CMS LEAD Model page rather than relying on any secondary source, including this one.
Frequently Asked Questions
What is the LEAD Model? The Long-term Enhanced ACO Design Model is a voluntary ten-year Medicare accountable care model from the CMS Innovation Center, running January 1, 2027 through December 31, 2036. It succeeds ACO REACH and is built around long-term benchmark stability without traditional rebasing.
What does LEAD stand for? Long-term Enhanced ACO Design.
When does the LEAD Model start and end? January 1, 2027 through December 31, 2036. It is the longest performance period CMS has tested.
Is LEAD replacing ACO REACH? Yes. ACO REACH concludes December 31, 2026, and LEAD launches immediately after as its successor, building on both ACO REACH and the Shared Savings Program.
What are the LEAD Model risk options? Global Risk, with up to 100% of savings and liability for up to 100% of losses, and Professional Risk, with up to 50% of savings and up to 50% of losses. Both are measured against the ACO’s established performance year benchmark.
How many beneficiaries does an ACO need for LEAD? 5,000 aligned beneficiaries in Performance Year 1 for standard participants, 1,000 for Newly Entering ACOs, and 800 for ACOs where more than 40% of aligned beneficiaries meet High Needs criteria. Each tier also carries a Base Year requirement.
Does LEAD have a High Needs ACO type like ACO REACH? No. LEAD applies High Needs policies at the beneficiary level across all ACOs, including a separate historical benchmark calculation, separate trend factor, and concurrent risk adjustment for those beneficiaries.
What is NPCC in the LEAD Model? Non-Primary Care Capitation, a new monthly capitated payment covering non-primary care services from enrolled Participant and Preferred Providers such as specialists and post-acute facilities. Unlike the Advanced Payment Option, NPCC is a true capitated payment and is not reconciled against fee-for-service billing.
What is CARA? CMS Administered Risk Arrangements, a voluntary modular initiative being tested first within LEAD among two-sided-risk ACOs. It supports episode-based risk arrangements with specialists and downstream providers through shared episode data, common contracting frameworks, configurable episode design, and payment based on those arrangements.
How much of the benchmark is at risk for quality in LEAD? 3%, earned back based on performance. Payments are not withheld during the year, and only the unearned portion is applied at financial settlement.
Can rural providers and FQHCs participate in LEAD? Yes, and CMS designed specific supports for them, including a non-reconciled add-on payment for infrastructure, lower alignment minimums for organizations new to ACOs, and a Medicaid integration component. CMS explicitly anticipates participation from federally qualified health centers and rural health clinics.
The Bet CMS Is Making
Strip away the payment mechanics and LEAD is a wager: that the reason accountable care has underdelivered is not that providers lack the will, but that the terms were wrong.
Too short a horizon to justify real investment. Benchmarks that punished success. Alignment minimums that excluded the small and rural. Cash flow timing that only worked if you already had capital. A structure that forced organizations serving complex patients into a separate box.
LEAD addresses each of those directly. Ten years without rebasing. Credit for prior savings. Alignment floors as low as 800. Upfront capitation, some of it never reconciled. High Needs policy applied to every ACO rather than segregated into one.
Whether it works is an open question, and a ten-year model will take most of a decade to answer it. But the design reflects an unusually honest reading of why the previous attempts fell short, and for organizations that have been waiting for terms they could actually build a business on, this is the closest CMS has come.
