With the scheduled conclusion of the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) program looming at the end of 2026, a significant cloud of uncertainty had gathered over the 162,000 providers and 2.5 million beneficiaries participating in the initiative. In response to this impending vacuum and the mixed success of previous models, the Centers for Medicare & Medicaid Services (CMS) has unveiled its successor: the Long-term Enhanced ACO Design (ACO LEAD). This new value-based care model is not merely an extension of its predecessor but a strategic overhaul designed to rectify historical shortcomings. By creating a more stable, predictable, and inclusive framework, ACO LEAD represents a deliberate effort by federal regulators to address the core financial and administrative barriers that have historically limited provider participation and to significantly accelerate the adoption of accountable care arrangements within traditional Medicare.
A New Framework for Long-Term Stability
One of the most significant departures from past initiatives is the ACO LEAD model’s unprecedented 10-year performance period, the longest ever established by CMS for such a program. This long-term structure directly addresses a primary concern voiced by healthcare providers: the lack of predictability in shorter program cycles. This stability is further solidified by a fundamental change in financial benchmarking. Unlike previous models where benchmarks were frequently reset or “rebased,” creating a moving target for performance, ACO LEAD’s benchmarks will be set at the program’s outset and maintained for the entire decade. This landmark decision is designed to provide physician groups and health systems with the financial confidence necessary to make substantial, long-term investments in care coordination infrastructure, data analytics, and population health strategies, knowing that the goalposts will not shift unexpectedly. This approach fosters a more sustainable environment for innovation in care delivery.
To accommodate a diverse range of provider organizations with varying levels of experience and tolerance for financial risk, ACO LEAD retains a familiar yet refined two-track, voluntary risk-sharing structure. The first option, the Global Risk Track, is designed for experienced organizations ready to assume full accountability, allowing them to share in up to 100% of the savings they generate while also being liable for up to 100% of any losses. For those newer to value-based care or preferring a more conservative approach, the Professional Risk Track offers a more moderate path, with shared savings and losses capped at 50%. Complementing this structure, the model will continue to leverage flexible, prospective capitated payments. This mechanism provides ACOs with upfront funding, giving them greater autonomy and the working capital needed to proactively manage patient care and contract with other entities, such as specialists and community organizations, in innovative value-based arrangements.
Expanding Access and Prioritizing High-Needs Patients
A central pillar of the ACO LEAD model is its sharpened focus on improving care for the most vulnerable and medically complex patient populations. Regulators have signaled their intent to implement more accurate and sophisticated risk adjustment methodologies, a critical step toward ensuring providers are fairly compensated for caring for patients with extensive health needs. This aims to encourage the direct integration of these patients into the ACO framework rather than managing them separately. Moreover, the model specifically targets better care coordination for individuals who are dually eligible for both Medicare and Medicaid. To achieve this, CMS will launch an initial planning phase from March 2026 to December 2027, partnering with two selected states to develop a scalable framework that operationalizes effective partnerships between Medicare ACOs and state Medicaid programs, bridging a long-standing gap in care.
Recognizing that broad participation is essential for success, ACO LEAD incorporates several provisions designed to lower historical barriers to entry, particularly for providers in underserved areas. The model will introduce a special add-on payment to help rural healthcare organizations finance the necessary infrastructure investments required to form or join an ACO, addressing a key financial hurdle. In conjunction with this, both rural providers and other organizations new to accountable care will be permitted to form ACOs with fewer attributed patients than the standard requirement, making participation more feasible for smaller practices. The model also empowers participating provider groups to establish episode-based risk arrangements with specialists. This encourages deeper collaboration and integrated care pathways, moving beyond primary care to create a more comprehensive and coordinated approach to managing patient health across different medical disciplines.
Forging a New Path with Stakeholder Alignment
The unveiling of ACO LEAD was met with a broadly optimistic reception from stakeholders across the healthcare industry, signaling strong initial confidence in its design. Advocacy organizations like Accountable for Health and America’s Physician Groups lauded the model’s 10-year duration and predictable financial structure, viewing it as a clear indication that CMS had incorporated key lessons from its predecessors. Financial analysts echoed this sentiment, seeing the model as a “clear positive” that removed significant market uncertainty for value-based care companies. A pivotal and novel feature of the model was the introduction of direct incentives for Medicare beneficiaries. These benefits, including reduced cost-sharing for select outpatient services and an eventual option for patients to use shared savings to lower prescription drug premiums, created a powerful mechanism to drive patient engagement. This comprehensive approach, which aligned the goals of providers, patients, and regulators, provided a well-designed framework poised to finally unlock broader and more sustainable participation in value-based care.
