Effect on Risk Adjustment
The new Long-term Enhanced Accountable Care Organization Design Model (LEAD) will launch January 1, 2027, and will replace the current ACO REACH Model. These new standards of care will appeal to a wider range of healthcare providers as well as those new to Accountable Care Organizations (ACOs). The overall goal of LEAD is long-term, sustainable benchmarking, which should in turn lead to sustainable savings for the participants.
The new model will run for 10 years and focuses on cementing the transition from volume-based care to value-based care. Here, both the payer and provider share the financial risk and rewards for patient outcomes and encourage cost efficiency, higher care standards, and safeguards against unpredictable, high medical bills. Since the performance period is 10 years, with no rebasing during that time, this gives participating organizations an established timeframe of stable pricing with a more predictable financial model and encourages ACOs to deliver quality, preventative care and to invest in care delivery improvements, adjust their approaches, and ultimately realize the returns on those investments.
LEAD modernizes risk adjustment by implementing more accurate, specialized benchmarking directed towards better support for rural and dual-eligible populations as well as patients with complex medical, behavioral, and social issues requiring intensive care. LEAD supports all ACOs to provide comprehensive care for high-needs patients by incentivizing providers through expanded, flexible, and targeted benefits.
LEAD is looking to promote coordinated, proactive, preventative care through tools, such as CARA (CMS-Administered Risk Arrangements). CARA is optional and enables Accountable Care Organizations and specialists to establish episode-based risk arrangements (e.g., fall prevention initiatives) that account for the elevated costs associated with specialty care. CARA is doing so by providing both the data and payment infrastructure ACOs need to negotiate clear accountability with the specialists they partner with.
Value-Based Care (VBC)
By encouraging voluntary participation, LEAD is trying to increase value-based care to smaller, independent practices as well as community health centers, who in the past have not elected to be a part of an Accountable Care Organization due to costs. The new model is changing this by ensuring that new ACOs, particularly those that have not yet prioritized cost reduction and care improvement, are not disadvantaged by the benchmarking methodology and have adequate resources to invest in enhancing quality of care and efficiency. In this new model, reimbursements are tied to performance metrics, the outcomes of patient health, and care quality instead of quantity of services provided.
The LEAD Model recognizes the importance of specialists and supports team-based care. Allowing ACOs to collaborate with specialists helps reduce gaps in care continuity while fostering new opportunities for primary care providers and specialists to work more closely in delivering high-quality, coordinated care to patients which hopefully leads to improved patient outcomes and less trips to the hospital.
LEAD focuses on increasing provider participation by offering capitated payments in hopes for long-term, sustainable improvements in the quality of patient care. These payment models are intended to provide greater flexibility while generating upfront funding that ACOs can leverage to develop and grow their care programs. With more predictable benchmark pricing, providers will have more freedom and be able to spend more time supporting their patients’ health concerns, especially high-needs patients, keeping their patients healthier and helping to reduce future health care costs.
Medicaid’s Integration Into LEAD
CMS notes the LEAD Model will look to create incentives (where there are currently none) for Medicaid providers to coordinate care and improve outcomes for dually eligible beneficiaries in traditional Medicare. CMS will select two states (both a fee-for-service Medicaid state and a managed care state) that are interested in partnering to develop a framework for ACO-Medicaid partnership arrangements. This initial planning phase will run from March 2026 through December 2027. The framework will assist in defining how ACOs and Medicaid organizations can work together to share data and coordinate care to improve outcomes, including preventing avoidable hospitalizations and engaging patients in their communities. Once the planning period is successfully completed, ACOs in the two selected states will have the opportunity to enter partnership arrangements with Medicaid organizations.
CMS additionally states, “LEAD Medicare and Medicaid integration will also include a new form of alignment, Medicaid based alignment. Under this mechanism, if a beneficiary is receiving Medicaid benefits from a Medicaid organization partnered with a LEAD ACO and is not already aligned to another ACO, they will be aligned to the Medicaid organization’s partner ACO. This alignment mechanism intends to connect dual eligible beneficiaries to a source of accountable integrated care if they do not have one already.”
Outcome Affects & Chronic Care Management of ACO Patients
Positive outcomes are on the horizon for chronic care management patients under the new LEAD model. LEAD will allow for better transparency and greater flexibility between patients and providers between their visits. The 10-year structure, 2027 through 2036, will also allow for sustained, rather than short-term, investments in patient health and care management.
In addition, new benefit enhancements (BEs) will be included in LEAD, Medical Nutrition Therapy being a significant one. CMS notes, “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.” This will support the management of chronic diseases and promote a healthier lifestyle for beneficiaries.
There will also be new Beneficiary Engagement Incentives (BEIs) offered through LEAD. BEIs are direct rewards/incentives from the ACO to the beneficiary, aimed at encouraging patients to participate in their care and manage chronic conditions. According to CMS, the Chronic Disease Prevention Reward, for example, will enable ACOs to offer healthy food products to support beneficiaries’ health, while beneficiaries participate in healthy living activities such as exercise, and participate in evidence-based programs that support the prevention and management of chronic diseases.
Will we see a shift in HCC models to accommodate for the new programs?
CMS is currently operating under the HCC V28 model for 2026, which the LEAD Model is also scheduled to use, beginning on January 1, 2027. It is expected to introduce additional changes, particularly to better address the needs of dual-eligible individuals, high-needs patients, and homebound populations. In addition, CARA will introduce episode-based risk arrangements between ACOs and specialists. This model will likely require more detailed mapping and coordination for specialized, high-cost, and complex conditions as it unfolds, so there will likely be either modifications to V28 or an updated V29 HCC model.
