What Is the LEAD Model?
The Centers for Medicare and Medicaid Services (CMS) has issued a formal request for applications for its Long-Term Enhanced ACO Design — widely known as the LEAD model. CMS released the request on March 31. This move builds directly on the model’s December 2025 announcement. Now, accountable care organizations (ACOs) across the country must decide whether to apply.
The LEAD model represents a bold shift in how CMS approaches value-based care. Furthermore, it introduces several features that current ACO programs do not offer. As a result, many ACO leaders are paying close attention.
How Long Will the Performance Period Run?
The LEAD model’s performance period will span a full ten years — from January 1, 2027, to December 31, 2036. This makes it the longest performance period CMS has ever tested in any innovation model. Consequently, ACOs that join will commit to a decade-long journey of accountability and quality improvement.
Such a long timeline signals CMS’s intent to measure sustainable change. Short-term models often fail to capture the true impact of care transformation. Therefore, LEAD aims to give ACOs the stability and time they need to deliver lasting results.
Understanding LEAD’s Risk-Sharing Options
LEAD gives ACOs meaningful choices in how they share risk with CMS. Under the first option, ACOs can keep up to 100% of savings if their spending falls below the benchmark. However, they also bear 100% responsibility if spending exceeds it. This is a high-reward, high-risk path.
The second option is more balanced. ACOs may keep up to half the savings while taking on responsibility for up to half the losses. This path suits organizations that want shared risk without full financial exposure.
Both options push ACOs to manage costs actively and efficiently. In turn, this design encourages stronger care coordination and smarter resource use.
Five Key Things ACOs Must Know
1. Benchmarks Stay Fixed
Benchmarks will not be rebased throughout the ten-year period. This means CMS will not update them based on more recent spending history. Consequently, ACOs that reduce costs early will benefit from a stable reference point over time.
2. A Three-Way Blended Update Factor
LEAD uses a three-way blended update factor. This combines national growth, regional growth, and prospective accountable care trends. Moreover, after five years, a regional, ratebook-based benchmark gradually replaces the existing expenditure-based benchmarks.
3. AI-Driven Risk Adjustment Is Coming
In 2028, LEAD will begin testing an AI-inferred risk adjustment model. Then, starting in performance year 2031, AI-only risk scores will apply fully to aged and disabled populations. This marks a significant step toward technology-driven accuracy in risk assessment.
4. Capitation Is Mandatory
Unlike many current models, LEAD requires mandatory capitation — ACOs receive a set payment rather than payment per claim. Additionally, CMS allows ACOs to extend this capitation mechanism to specialists. Notably, this feature is currently available only in Medicare Advantage, not original Medicare. LEAD thus breaks new ground for traditional Medicare.
5. Hemp Products for Qualifying Patients
Under the Substance Access Beneficiary Engagement Incentive, ACOs can provide qualifying patients with eligible hemp products. This is an innovative step toward broader patient engagement tools within a federal care model.
Why the LEAD Model Matters for Value-Based Care
The LEAD model is not simply a new payment program. Rather, it signals where CMS believes the future of healthcare delivery is heading. By locking in a decade-long performance window, requiring capitation, and introducing AI-based risk scoring, CMS is pushing ACOs to think and operate differently.
Additionally, the fixed benchmark structure rewards early movers. ACOs that act decisively now — both in applying and in building care management capabilities — stand to gain the most. For healthcare leaders focused on value-based transformation, LEAD is a program worth examining closely.
Applications are now open. ACO leaders should review the CMS request for applications and assess their organization’s readiness before the deadline.
