Take the LEAD: CMS Launches 10-Year ACO Model to Increase Provider Participation
The Centers for Medicare & Medicaid Services ("CMS") unveiled the Long-term Enhanced Accountable Care Organization ("ACO") Design ("LEAD") model, which aims to expand provider participation, increase beneficiary involvement in preventive care, and modernize financial benchmarking for long-term stability.
CMS recently announced the LEAD model, set to succeed the ACO REACH model, which concludes December 31, 2026. LEAD incorporates new policies intended to level the playing field among provider types and attract more beneficiaries, including those needing complex care, to participate. ACOs can apply to LEAD by responding to a Request for Applications beginning March 2026.
Key Features
- Duration: January 1, 2027 – December 31, 2036
- Eligible Participants: Current REACH ACOs, other Medicare ACOs, Medicare fee-for-service providers new to ACOs, and providers serving underserved populations.
- Benchmarking: Benchmarks initially based only on historical costs and never rebased. Benchmarks will be updated using a blend of actual national and regional spending trends and a prospective growth factor with guardrails.
- Payment: Flexible payment options including monthly upfront and capitated payments, with 50% or 100% risk-sharing of savings or losses relative to benchmark.
- CMS-Administered Risk Arrangement ("CARA"): CARA empowers ACOs to negotiate episode-based target prices directly with specialists, who then share in savings or losses depending on whether actual costs are below or exceed the target price.
- High-Need Patients: High-need patients will be treated as a distinct population type with their own benchmark and trend factor. ACOs with greater than 40% of beneficiaries considered high-need patients qualify for a lower minimum beneficiary count to participate.
- Benefit Enhancement and Engagement Incentives: (i) Part B Cost-Sharing: ACOs may agree with participants and preferred providers to cover some or all of beneficiary cost-sharing for designated Part B services; (ii) Part D Premium Buy-Down: Starting no later than 2029, ACOs may subsidize some or all of beneficiaries' Part D premiums; and (iii) Chronic Disease Prevention Reward: ACOs may offer healthy food to beneficiaries engaging in healthy living activities and participating in evidence-based disease management programs.
Note: CMS has stated that it "may determine that the Anti-Kickback Statute safe harbor for CMS-sponsored model patient incentives is available to protect these patient incentives." - Medicaid Integration: CMS will select two states to partner with to define how ACOs and Medicaid organizations can work together to share data, coordinate care, and share in savings to improve outcomes.
Insights by Jones Day should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request permission to reprint or reuse any of our Insights, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. This Insight is not intended to create, and neither publication nor receipt of it constitutes, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.
