CMS models and policy
LEAD replaces ACO REACH on January 1, 2027, with 10-year benchmarks, CARA for specialists and a 1.5% administrative add-on. Here is what changes and how to prepare.
By Zynix AI · Apr 13, 2026 · 10 min read
Note, September 2026: applications for performance year 2027 closed on May 17, 2026.
On December 18, 2025, the CMS Innovation Center announced the LEAD Model (Long-term Enhanced ACO Design), the direct successor to ACO REACH. With ACO REACH ending on December 31, 2026, and LEAD launching on January 1, 2027, this is not a distant policy shift. For ACOs in REACH, in MSSP, or evaluating risk-based models for the first time, the window to act was measured in weeks, not quarters.
Key takeaways
LEAD = Long-term Enhanced ACO Design. It replaces ACO REACH effective January 1, 2027.
A 10-year performance period with no benchmark rebasing, the longest commitment CMS has offered ACOs.
Application deadline: May 17, 2026, for performance year 2027.
A 1.5% administrative add-on for higher-spending ACOs, not subject to reconciliation or repayment.
CARA for specialist integration through episode-level risk arrangements.
Part D premium buy-down available by 2029 as a beneficiary engagement tool.
A Medicaid integration pilot for dually eligible beneficiaries, starting March 2026.
ACO REACH launched in 2023 as the replacement for the Global and Professional Direct Contracting (GPDC) model. REACH added guardrails around beneficiary protections and health equity, but it had structural limits. Benchmark rebasing created uncertainty for ACOs that invested in long-term care management: reduce costs one year and the benchmark would reset, erasing the financial benefit of that investment.
Congressional scrutiny of third-party convener arrangements intensified through 2025. MedPAC recommended consolidating direct contracting under tighter oversight, and advocacy groups pushed for stronger beneficiary notification requirements. CMS responded with LEAD, a model that changes the economics of accountable care.
LEAD compared with ACO REACH
Dimension
ACO REACH
LEAD Model
Duration
4 years (2023–2026)
10 years (2027–2036)
Benchmark rebasing
Reset periodically, which penalizes efficient ACOs
No rebasing for the full 10-year period
Risk tracks
Global (100%) and Professional (50%)
The same: Global (100%) and Professional (50%)
Infrastructure support
Limited
1.5% admin add-on, not reconciled
Specialist integration
Preferred provider arrangements
CARA: episode-level risk arrangements
Beneficiary engagement
Limited tools
Part D buy-down, nutrition therapy, rewards
Medicaid coordination
Medicare only
Two-state dual-eligible pilot
This is the most consequential design change. Under REACH, ACOs that reduced costs saw their benchmarks reset, which punished success. LEAD removes rebasing. The savings wedge compounds: every year you reduce costs, the gap between your benchmark and actual spend widens. That changes the calculation for investing in care management, analytics and outreach. For the first time, ACOs can make five-year technology investments knowing the financial framework won’t shift beneath them.
Higher-spending ACOs receive a 1.5% capitated administrative payment that is explicitly not subject to reconciliation or repayment. It works as startup capital for organizations spending above regional averages, which need to invest more to bend their cost curves. For organizations evaluating ACO participation for the first time, it lowers the risk of the initial investment.
The CMS Administered Risk Arrangements (CARA) system introduces episode-level data sharing with specialists, standardized contracting templates and CMS-administered payments. It is the most serious attempt so far to bring specialists into the accountability framework. Falls prevention is the first use case, with broader specialty episodes expected to follow. For ACOs, it is a new lever on total cost of care beyond primary care.
Starting in 2029, ACOs can use shared savings to reduce Part D premiums for their attributed beneficiaries. It gives patients a tangible reason to stay with their ACO and links ACO performance to member experience in a way earlier models did not.
LEAD offers four capitation pathways: primary care capitation, non-primary care capitation, total care capitation and add-on capitation. ACOs can take risk in steps, starting with primary care and expanding as capabilities mature. It is a deliberate on-ramp for organizations new to capitated arrangements.
A two-state pilot (March 2026 through December 2027) tests coordinated care for dually eligible beneficiaries. For ACOs with large dual-eligible populations, it could provide a framework for the costliest, most complex patients in their panel, who often fall through the gaps between Medicare and Medicaid.
The application deadline was May 17, 2026, and implementation runs from September to December 2026. The preparation list still applies to any ACO planning for LEAD:
Assess financial readiness. Model total cost of care against regional benchmarks. Without rebasing, the starting benchmark sets the financial trajectory for a decade.
Build SDOH data infrastructure. Equity and social determinant data factor into quality scoring. Systematic Z-code collection and community-level SDOH integration are no longer optional.
Invest in outreach that scales. Narrower benchmarks mean every missed care gap, unscheduled AWV and failed TCM contact reduces shared savings. Over ten years, manual inefficiency compounds.
Evaluate specialist partnerships. CARA creates new ways to engage specialists. Identify high-impact specialty episodes (orthopedics, cardiology, falls prevention) and start those conversations early.
Prepare governance for transparency. If you work with third-party conveners or MSOs, expect CMS to scrutinize fee structures and financial arrangements. Clean governance now prevents compliance risk later.
The 10-year, no-rebasing structure changes the technology investment case. Under REACH, a four-year horizon made large platform investments risky, because a benchmark might reset before the cost was recouped. Under LEAD, organizations that invest early can compound savings for a decade.
The platforms that matter are the ones that can:
Bring in and standardize claims, clinical, ADT, lab, pharmacy and SDOH data
Identify HCC, HEDIS and equity gaps across the whole attributed population
Run outreach agents that contact patients inside TCM windows, schedule AWVs and work gap lists, with clinical questions routed to the care team
Produce documentation of quality performance and equity work that stands up to review
Those capabilities will separate the ACOs that capture shared savings under LEAD from the ones that struggle to break even.
“LEAD’s 10-year no-rebasing structure is the most ACO-friendly financial design CMS has ever produced. But it only rewards organizations that invest in infrastructure now. The compounding benefit accrues to first movers, not to organizations that wait until 2028 to automate.”
Jay Chowdappa, MD, Co-founder and CEO, Zynix AI
Dec 18, 2025 CMS announces the LEAD Model
Mar 2026 Applications open, RFA released, Medicaid pilot begins
May 17, 2026 Application deadline for performance year 2027
Sep 2026 Implementation period for accepted ACOs (September to December 2026)
Dec 31, 2026 ACO REACH concludes
Jan 1, 2027 LEAD performance year 1 begins
2029 Part D premium buy-down becomes available
Dec 31, 2036 The LEAD Model concludes
LEAD is the most consequential CMS model design in a decade: ten years, no benchmark rebasing, infrastructure capital for new entrants, specialist integration through CARA and Part D retention tools. CMS is signaling that the future of Medicare belongs to accountable organizations that invest in long-term capabilities, not to benchmark arbitrage.
The ACOs that build outreach, equity infrastructure and gap closure at scale now will compound savings for a decade under LEAD.
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Find Zynix AI at the NAACOS Fall Conference (October 14–16, Washington, DC) to talk through LEAD readiness and see the workflows on sample data.