How will CMS align a Medicare beneficiary to a LEAD ACO?
LEAD ACOs will receive beneficiary alignment in two ways:
- The first will be claims-based alignment, which aligns Medicare beneficiaries to ACOs based on their claim's history and utilization patterns.
- The second will be voluntary alignment, where Medicare beneficiaries can actively choose to align to an ACO by choosing a provider affiliated with that ACO as their primary provider or other source of care. Voluntary alignment can occur in a health care setting, or in a patient’s home when there is a pre-existing relationship with a provider affiliated with the ACO.
Additionally, ACOs will select one of two alignment approaches:
- With prospective alignment, beneficiary alignment is conducted before the start of each performance year. No alignment updates take place during the performance year.
- With hybrid alignment, ACOs can update their alignment during the performance year. Voluntary alignment will be updated monthly. Claims-based alignment will be set prospectively, but for ACOs that have new Participant TINs during the performance year, claims-based alignment will be updated once, mid-performance year, for the newly added Participant TINs. Eligible beneficiaries can only be added mid-year; they cannot be dropped.
What is the minimum number of beneficiaries an ACO must have aligned to participate in LEAD?
To participate in LEAD, ACOs must have 5,000 aligned beneficiaries in Performance Year 1, with 3,000 beneficiaries claims-based aligned in at least one of the Base Years. If an ACO has a high proportion of High Needs beneficiaries (defined as more than 40% of their aligned beneficiaries meeting the High Needs Eligibility criteria), the ACO will be permitted to participate at lowered alignment minimums of 800 in Performance Year 1, with at least 500 beneficiaries claims-based aligned in one of the Base Years. For Newly Entering ACOs, the ACO must have 1,000 beneficiaries in Performance Year 1, with 600 beneficiaries claims-based aligned in at least one of the Base Years. Alignment minimums for Newly Entering and ACOs with a large proportion of High Needs beneficiaries will slowly grow over the course of the model. More details will be included in the Request for Applications.
Does LEAD offer any prospective payments? If so, what are the options?
LEAD will provide ACOs with monthly prospective payments to support enhanced care investments and greater flexibility to deliver patient-centered care. LEAD includes:
- Primary Care Capitation (PCC): Monthly capitated payments for primary care services delivered by the ACO’s Participant and Preferred Providers. PCC includes both the Base PCC, which covers the cost of delivering primary care services to aligned beneficiaries, and the Enhanced PCC (EPCC), which provides ACOs with upfront cashflow to invest in infrastructure, staffing and workflow changes, and other improvements to support ACOs’ performance. The EPCC must be paid back to CMS in full at the end of the Performance Year. ACOs enrolled in the Professional Risk Option are required to select PCC, while ACOs enrolled in the Global Risk Option can choose between PCC and Total Care Capitation (TCC).
- Total Care Capitation (TCC): For those in the Global Risk Option, LEAD will also offer the option of capitated payments for 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 (NPCC): ACOs that select PCC have the option of also selecting NPCC, which is a monthly capitated payment covering non-primary care services provided by enrolled Participant and Preferred Providers (e.g., specialists and post-acute care facilities). NPCC is a new payment option in LEAD and is a true capitated payment; unlike APO, NPCC is not reconciled based on fee-for-service (FFS) billing.
- Advanced Payment Option (APO): Also optional for ACOs that elect PCC, APO will be an upfront monthly payment for non-primary care services delivered by enrolled Participant and Preferred Providers that will be reconciled against actual FFS billing throughout the performance year.
- Add-On Capitation Payments: ACOs with higher-than-average spending compared to their region will be eligible for an additional capitated payment, calculated as percent of the ACO’s benchmark. This payment is designed as an upfront benchmark adjustment to encourage investments in primary care and other services that will enable eligible ACOs to reduce Medicare expenditures for LEAD-aligned beneficiaries over time. This payment will not be reconciled at the end of the Performance Year, and it will not be included in Performance Year expenditures when calculating shared savings/losses.
What is LEAD’s quality measurement strategy?
LEAD will offer ACOs clear, achievable criteria rooted in a small, targeted set of familiar quality measures to reduce provider burden. LEAD’s measure set includes four claims-based measures, one patient experience measure, and two electronic clinical quality measures (eCQMs) that will be phased in throughout the first half of the model to align with LEAD’s focus on prevention, with the first two year’s reporting being optional. CMS aims to minimize eCQM reporting burdens for ACOs by focusing on reporting for aligned Medicare beneficiaries.
Specifically, LEAD’s quality measure set includes:
- 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: Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey (patient-reported)
- 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
Similar to ACO REACH, LEAD will include a Continuous Improvement/ Sustained Exceptional Performance (CI/SEP) component and a High Performers Pool to reward ACOs that attain statistically significant improvement year-over-year and high overall performance. ACOs will also be able to attain additional quality points by submitting a Prevention Quality Plan detailing a prevention intervention being implemented to enhance the wellbeing of aligned beneficiaries.
ACOs have 3% of their benchmark at risk for quality, which they can earn 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/Losses.
How will LEAD support providers who serve High Needs beneficiaries?
LEAD will not include a distinct High Needs type. Instead, under LEAD, High Needs policies will be applied to all beneficiaries who meet the High Needs criteria across all ACOs.
This beneficiary-level approach is intended to benefit all organization types. ACOs that do not specialize in complex care will receive more accurate benchmarks and risk adjustment for their High Needs patients. At the same time, organizations that focus on serving complex populations will be able to serve their entire eligible Medicare fee-for-service population within LEAD—not just beneficiaries who meet the High Needs criteria.
The High Needs beneficiary category will have its own historical benchmark calculation reflecting a separate trend factor, and risk adjustment methodology. Concurrent risk adjustment—first implemented for High Needs beneficiaries in ACO REACH—will be applied to all High Needs beneficiaries in LEAD. High Needs individuals often experience more rapid changes in health status than the average Medicare beneficiary. Compared to a purely prospective risk adjustment approach, a concurrent methodology that incorporates diagnoses documented during the performance year more accurately reflects shifts in health status for this population.
To support participation by organizations that disproportionately serve complex patients, LEAD will provide lower beneficiary alignment minimums for ACOs whose aligned population includes more than 40 percent High Needs beneficiaries, in recognition of the fact that organizations that specialize in High Needs care typically have smaller patient panels.
How is LEAD supporting Medicare-Medicaid integration for ACOs?
LEAD aims to support the integration of Medicare and Medicaid services for patients receiving Medicare benefits through Original Medicare. The goal is to create incentives for Medicare and Medicaid health care providers to coordinate care and improve outcomes for dually eligible beneficiaries in Original Medicare. During an initial planning phase from March 2026 through December 2027, CMS will identify two states that are interested in partnering to develop a framework for ACO-Medicaid partnership arrangements. This framework will help define how ACOs and Medicaid organizations can work together to share data and coordinate care to improve outcomes, including preventing avoidable hospitalizations and helping patients remain 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.
What are the key features of the LEAD benchmarking methodology?
LEAD’s benchmarking methodology builds on ACO REACH and the Shared Savings Program to create a pathway towards sustainable, long-term benchmarks and savings for different types of ACOs.
- Long-Term Benchmark Stability: LEAD offers a 10-year performance period with no traditional rebasing, giving ACOs time to invest in care transformation and see returns over the long term.
- Predictable, Accurate Annual Updates: Benchmarks will be updated using a blend of a prospective trend factor plus observed national and regional spending. Guardrails will be applied to the prospective trend factor to support accuracy and mitigate large forecasting misses. This approach aims to provide more predictable year-to-year benchmark growth while creating an opportunity for efficient ACOs to “beat” the trend and generate durable savings.
- A Realistic Starting Point for Higher-Spending Organizations: ACOs that begin with spending above their region are not required to immediately be measured against a benchmark that incorporates regional spending. All ACOs will have a benchmark based purely on their own historical spending, plus additional payment support, creating a viable pathway to improve efficiency over time.
- Recognition of Prior Performance: ACOs that begin with spending below their region will be eligible for a positive regional efficiency adjustment. ACOs that have already generated savings in ACO REACH or the Shared Savings Program may receive a regional efficiency adjustment or a prior savings adjustment, whichever is higher. Both of these adjustments will be adjusted to reflect the ACO’s own unique risk profiles.
- Transition toward a regional rate book: Over time, as ACO spending levels converge, LEAD is designed to move toward a more standardized regional rate book, reducing reliance on historical spending and promoting greater equity across participants.
Together, these features are intended to create more predictable, durable, and equitable benchmarks that reward long-term cost reduction and support sustained participation.
Will there be future application cycles?
LEAD expects there will be future opportunities to apply for the model, although details are not yet available. Participation parameters and expectations may change based on early model years. Those interested in participating in LEAD are strongly encouraged to apply in the first cohort.
How will LEAD support rural health care providers?
LEAD will support rural health care providers by:
- Offering an add-on payment that would not be reconciled to help them create necessary infrastructure to be in an ACO.
- Allowing lower beneficiary alignment minimums for ACOs with health care providers new to ACOs, including rural health care providers.
Including health care providers who treat dually eligible beneficiaries through a Medicaid integration component to the model.
What is the CMS Administered Risk Arrangement (CARA) initiative?
The CARA initiative is a digital data-sharing and payment system designed as a voluntary, modular component of total cost of care (TCOC) models and programs that reduces implementation barriers for ACOs seeking to establish meaningful financial and clinical relationships with Preferred Providers, or downstream specialists and provider organizations. Initially tested within LEAD among ACOs that maintain two-sided risk, CARA’s flexible design enables potential scaling to other TCOC contexts based on demonstrated success and market uptake.
CARA creates a structured yet flexible framework to support ACO development of customized risk-sharing arrangements with Preferred Providers without driving consolidation. The initiative does this by: (1) sharing episode data with ACOs and the Preferred Providers with whom they enter into episode-based risk arrangements (EBRAs), (2) providing common contracting frameworks by enabling export of episode information into contracting templates, (3) allowing for configurable episode design, and (4) making payment to ACOs and Preferred Providers based on their EBRAs.
How is LEAD supporting Medicare-Medicaid integration for ACOs?
LEAD aims to support the integration of Medicare and Medicaid services for patients receiving Medicare benefits through Original Medicare. The goal is to create incentives (where none currently exist) for Medicare and Medicaid health care providers to coordinate care and improve outcomes for dually eligible beneficiaries in Original Medicare. During an initial planning phase from March 2026 through December 2027, CMS will identify two states that are interested in partnering to develop a framework for ACO-Medicaid partnership arrangements. This framework will help define how ACOs and Medicaid organizations can work together to share data and coordinate care to improve outcomes, including preventing avoidable hospitalizations and help patients remain 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.
How will the LEAD Model make Americans healthy again?
The LEAD Model will make Americans healthy again by strengthening primary care through prospective, capitated payments that support preventive and proactive care and by holding ACOs accountable for clinically meaningful quality measures focused on prevention and chronic disease management. As part of LEAD, ACOs would also have the flexibility and support needed to design prevention initiatives that address the needs of the population they serve (e.g., chronic disease management, falls prevention). In addition, the LEAD Model will also include Benefit Enhancements (or Medicare waivers) and Beneficiary Engagement Incentives that promote and support healthy living activities, such as healthy eating, physical activity, and stress management.
What new Benefit Enhancements (BEs) will be included in LEAD?
- Medical Nutrition Therapy: Through this Benefit Enhancement, CMS would expand the conditions for which beneficiaries may receive covered Medical Nutrition Therapy, beyond diabetes or renal disease, for Medicare beneficiaries in LEAD ACOs taking full risk. This Benefit Enhancement would expand coverage for Medical Nutrition Therapy among beneficiaries with other diet-sensitive conditions thus supporting the management of chronic diseases and promoting a healthier lifestyle among Medicare beneficiaries.
- Part D Premium Buydown: Through this Benefit Enhancement, CMS would allow qualifying ACOs to partially or fully offset a beneficiary’s Part D premium for a given model performance year by 2029. This Benefit Enhancement would reduce cost-related burdens associated with accessing Part D drugs while improving health outcomes.
What new Beneficiary Engagement Incentives (BEIs) will be offered through LEAD?
New BEIs available under the LEAD Model include:
- Chronic Disease Prevention Reward: This BEI would enable ACOs to offer healthy food products to support beneficiaries’ health as beneficiaries engage in healthy living activities (e.g., exercising) and participate in evidence-based programs that support the prevention and management of chronic diseases.
- Substance Access BEI: This BEI would enable ACOs and their health care providers to consult with their aligned patients about the possible benefits of hemp products, which would be at the ACO’s expense and only in states where such products are legal.
LEAD ACOs will have the choice of whether to implement any or all the BEs and BEIs offered under the model. Acceptance into LEAD is NOT contingent upon an ACO agreeing to implement any BE or BEI. LEAD ACOs that choose to implement BEs and/or BEIs must provide CMS with a proposed implementation plan for each BE or BEI it plans to offer, including how they will cover the cost of the services or products.
What is the Substance Access BEI and where is it available?
The Substance Access BEI gives model participants the option of consulting with their patients about the possible use of eligible hemp products. The implementation of this BEI and any related dispensing would be funded entirely at the participant’s expense; CMS would not cover the cost of such products. Further, CMS will have strict program integrity safeguards to ensure that these incentives do not result in program or patient abuse.
The Substance Access BEI is only available to participants in states where the eligible hemp products are considered legal.
The Substance Access BEI is also being made available to participants in the ACO REACH Model in performance year 2026 and the Enhancing Oncology Model starting in performance period 6. More information is available in the Substance Access BEI Frequently Asked Questions.
