What Is an ACO? MSSP, ACO REACH and LEAD Explained for 2026–2027

By Jay Chowdappa, MD, co-founder and CEO, Zynix AI · Updated November 10, 2026

Key takeaways

An accountable care organization (ACO) is a group of doctors, hospitals and other clinicians that takes shared responsibility for the total cost and quality of care for a defined Medicare population. If the group spends less than a risk-adjusted benchmark and meets quality standards, it keeps part of the savings; in two-sided tracks it also repays part of any losses.

• The Medicare Shared Savings Program (MSSP) is the permanent ACO program: 511 ACOs and 12.6 million assigned beneficiaries as of January 1, 2026.
• ACO REACH is a CMS Innovation Center model that runs through performance year 2026 and then ends.
• LEAD, a 10-year voluntary model, succeeds ACO REACH on January 1, 2027.
• Starting in 2027, the BASIC track's Level E shares 60% of savings instead of 50% for new agreement periods.

What an ACO is, in one paragraph

CMS describes ACOs as groups of doctors, hospitals and other health care professionals that work together to give patients coordinated, high-quality care, improve outcomes and manage costs. The important word is accountable. Fee-for-service pays for each visit and procedure. An ACO is still paid fee-for-service claim by claim (unless it elects a capitation option), but at the end of the year CMS compares what its patients actually cost against a benchmark. Spend less than the benchmark while meeting quality standards, and the ACO earns a share of the difference.

Patients do not enroll in an ACO and keep their full Medicare choice of doctors. They are assigned (or aligned) to an ACO based on where they receive most of their primary care, or by choosing a primary clinician in the ACO.

How an ACO earns shared savings

Every Medicare ACO arrangement follows the same basic loop:

1. Assignment. CMS identifies the beneficiaries the ACO is accountable for, mainly from primary care claims.
2. Benchmark. CMS sets an expected spending level for that population from historical spending, adjusted for risk and trend. Risk adjustment uses CMS-HCC risk scores, which is why diagnosis documentation matters to ACOs (see our guide to how RAF scores work).
3. Performance year. The ACO's clinicians keep billing Medicare normally. The ACO's job is to reduce avoidable spending: preventable admissions and readmissions, avoidable emergency visits, unmanaged chronic disease.
4. Reconciliation. CMS compares actual spending with the benchmark and applies the quality score. Savings beyond the minimum savings rate are shared; in two-sided arrangements, losses are shared too.

In the MSSP, an ACO needs at least 5,000 assigned beneficiaries, and agreement periods that start in 2020 or later last five years (42 CFR 425.110 and 425.200). For a deeper look at benchmarks and minimum savings rates, read how ACOs actually make money.

MSSP vs ACO REACH vs LEAD at a glance

The three programs share the same idea but differ in permanence, risk and payment options.

Sources: CMS MSSP 2026 Fast Facts; 42 CFR part 425; CMS ACO REACH and LEAD model pages; CY 2027 Physician Fee Schedule final rule. Details as of November 10, 2026.

The Medicare Shared Savings Program in 2026

The MSSP is the largest Medicare ACO program and the one most physician-led ACOs start in. As of January 1, 2026, CMS counts 511 participating ACOs with 12.6 million assigned beneficiaries. Most ACOs now carry downside risk: 296 ACOs (58%) are in the ENHANCED track, 82 (16%) in BASIC Level E and 121 (24%) in the one-sided BASIC Levels A and B. For performance year 2024, MSSP ACOs earned $4.1 billion in shared savings.

What changes in 2027

The CY 2027 Physician Fee Schedule final rule, published in the Federal Register on November 9, 2026, makes several MSSP changes effective January 1, 2027. The two most relevant to strategy:

• Higher reward for BASIC Level E. The shared savings rate under Level E rises from 50% to 60% for ACOs in agreement periods beginning on or after January 1, 2027.
• Prepaid shared savings is being discontinued. CMS declined to keep or redesign the option.

The rule also revises assignment rules, quality reporting, benchmark adjustments and the experienced-ACO test. Because some of these changes landed after the 2027 application deadline, CMS is giving ACOs applying for a January 1, 2027 start a time-limited chance to switch between BASIC and ENHANCED.

ACO REACH: the model ending in 2026

ACO REACH (Realizing Equity, Access, and Community Health) is a CMS Innovation Center model for Original Medicare. Its first performance year began January 1, 2023, and it runs four performance years, through 2026.

REACH differs from the MSSP in two ways that matter to operators:

• More risk. ACOs choose Professional (50% of savings or losses) or Global (100% of savings or losses).
• Capitation. A Primary Care Capitation Payment, a risk-adjusted monthly payment for primary care services, is available under both options; a Total Care Capitation Payment for all covered services is available only under Global.

REACH also recognizes three ACO types: Standard, New Entrant and High Needs Population ACOs.

LEAD: what replaces ACO REACH in 2027

LEAD (Long-term Enhanced ACO Design) is the Innovation Center's newest ACO model and, in CMS's words, a successor to ACO REACH. It runs from January 1, 2027 through December 31, 2036, which CMS notes is the longest performance period it has tested. LEAD keeps two voluntary risk options (Global, up to 100% of savings and losses, and Professional, up to 50%), offers flexible capitated population-based payments for team-based care, and promises improved benchmarking, including more accurate risk adjustment for high-needs patients. Where LEAD stands after its application window is covered in our post on the LEAD model before 2027.

Which ACO path fits which organization

There is no single right answer; the choice depends on risk tolerance, capital and how much care management capacity you already have.

What an ACO has to do well

Whichever program you choose, the economics come from the same handful of operating disciplines:

• Know who you are accountable for. Work the assignment list and claims data (for example CMS CCLF files) so care teams see attributed patients, not just scheduled ones. A CCLF opportunity analysis is a common first step.
• Follow up after every discharge. Transitional care management contacts and visits within the 30-day window are among the most controllable levers on readmissions; see TCM billing for 99495 and 99496.
• Complete annual wellness visits. AWVs are where care gaps, chronic conditions and care plans get updated for the year; see why AWVs are an ACO's first layer of care capacity.
• Document conditions accurately every year. Benchmarks are risk adjusted, so chronic conditions that are not reassessed and documented each year fall out of risk scores.
• Report quality completely. Shared savings depend on meeting the quality performance standard.

Common mistakes

• Treating the ACO as a contract rather than an operating model: savings come from follow-up work, not from the participation agreement.
• Running outreach from spreadsheets that are weeks old by the time a nurse calls.
• Leaving post-discharge calls to whoever has time that day, so the 2-business-day TCM window is missed.
• Ignoring the benchmark mechanics until reconciliation, when nothing can be changed.

How Zynix fits

Zynix AI is the AI operating layer for value-based care, built for ACOs, MSOs, IPAs and physician groups. It does not replace your ACO's clinical judgment or its participation decisions; it helps your team do the follow-up work the economics depend on.

• Population Intelligence brings claims (including CCLF), EHR, ADT, lab and pharmacy data into one view of your attributed patients.
• Predictive Risk flags readmission, mortality, disease progression and utilization risk, with the drivers shown; clinicians decide what to do.
• The Embedded Care Management Platform turns that into care plans for TCM, CCM and AWVs, with tasks, owners and escalation rules.
• AI Patient Engagement voice and text agents handle post-discharge outreach, AWV scheduling and reminders within the hours and rules your team sets, and route clinical questions to your care team.

As of September 2026, Zynix has onboarded 1M+ value-based care patients. To see how one ACO runs post-discharge and AWV outreach, read the Palm Beach ACO customer story, or start at Zynix for ACOs and MSOs.

Frequently asked questions

What does ACO stand for in healthcare?

ACO stands for accountable care organization: a group of doctors, hospitals and other clinicians that agrees to be accountable for the cost and quality of care for an assigned population. In Medicare, ACOs participate through the Medicare Shared Savings Program or a CMS Innovation Center model such as ACO REACH or, from 2027, LEAD.

Do patients lose their choice of doctors in an ACO?

No. In Original Medicare, beneficiaries assigned or aligned to an ACO keep their Medicare benefits and can still see any clinician who accepts Medicare. Assignment mainly reflects where a patient receives most primary care, or a primary clinician the patient chooses. An ACO is not a Medicare Advantage plan or an HMO.

What is the difference between MSSP and ACO REACH?

The MSSP is a permanent Medicare program with BASIC and ENHANCED tracks and sharing rates up to 75%. ACO REACH is a time-limited Innovation Center model with higher risk options (50% or 100% of savings and losses) and capitation payments. REACH runs through performance year 2026; LEAD succeeds it from January 1, 2027.

Is ACO REACH ending?

Yes. ACO REACH runs four performance years, 2023 through 2026. CMS describes the LEAD model as a successor to ACO REACH, set to launch after REACH concludes at the end of 2026. LEAD runs for ten years, from January 1, 2027 through December 31, 2036, with Professional and Global risk options.

How many beneficiaries does an MSSP ACO need?

An MSSP ACO must have at least 5,000 assigned beneficiaries, under 42 CFR 425.110. CMS checks this using historical assignment in the benchmark years when the ACO applies and again during the agreement period. An ACO whose assigned population falls below 5,000 during a performance year may be placed on a corrective action plan, and CMS can terminate the agreement.

How do ACOs make money?

ACOs earn a share of the savings when their assigned patients' actual Medicare spending comes in below a risk-adjusted benchmark by more than a minimum savings rate, and they meet the quality standard. In two-sided tracks they also repay a share of losses. Some models, such as ACO REACH and LEAD, add capitated payments.

Related reading

• How ACOs Actually Make Money: Shared Savings Mechanics and Where AI Moves the Needle
• The CMS LEAD Model RFA Window Has Closed: What ACOs Must Get Right Before 2027
• How To Scale ACO Operations With the Care Team You Already Have

Source notes

CMS: Accountable Care Organizations (ACOs). https://www.cms.gov/priorities/innovation/innovation-models/aco

CMS: Shared Savings Program Fast Facts, as of January 1, 2026. https://www.cms.gov/files/document/2026-shared-savings-program-fast-facts.pdf

eCFR: 42 CFR part 425 (Medicare Shared Savings Program), sections 425.110, 425.200, 425.605 and 425.610. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-425

Federal Register (November 9, 2026): CY 2027 Payment Policies Under the Physician Fee Schedule; Medicare Shared Savings Program Requirements, final rule. https://www.federalregister.gov/documents/2026/11/09/2026-22743/medicare-and-medicaid-programs-cy-2027-payment-policies-under-the-physician-fee-schedule-and-other

CMS (2016): Frequently Asked Questions about Billing the Physician Fee Schedule for Transitional Care Management Services. https://www.cms.gov/files/document/billing-faqs-transitional-care-management-2016.pdf

CMS Innovation Center: ACO REACH. https://www.cms.gov/priorities/innovation/innovation-models/aco-reach

CMS Innovation Center: LEAD (Long-term Enhanced ACO Design) Model. https://www.cms.gov/priorities/innovation/innovation-models/lead

About the author

Jay Chowdappa, MD is co-founder and CEO of Zynix AI. He is a physician, and ACOs led by him generated $300M+ in shared savings before he started Zynix AI to help care teams follow through on what their data already shows.