LEAD and ASM

Accountable care organizations have been the most durable structural reform in Medicare since the ACA created them in 2010. By Performance Year 2024, 476 MSSP ACOs served 11.2 million beneficiaries, generated $2.4 billion in net Medicare savings, and paid out $4.1 billion in shared savings to participating providers. Two-thirds of those ACOs now carry downside risk. Another 103 ACOs operated under ACO REACH, covering roughly 2.5 million additional beneficiaries. Taken together, more than half of all Original Medicare FFS beneficiaries are now attributed to an ACO.

That trajectory has been strong in aggregate but uneven in composition. ACOs have been disproportionately built by large health systems, multispecialty groups, and well-capitalized enablement companies. Small practices, rural providers, independent physicians, Community Health Centers, and specialists have largely remained on the periphery. CMMI’s two newest models, LEAD and ASM, are designed to change that composition from opposite directions. LEAD opens the ACO pathway to providers who have been unable or unwilling to enter it. ASM compels specialists into value-based accountability whether they volunteer or not.

LEAD: The Decade-Long ACO Runway

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The Long-term Enhanced ACO Design model, announced December 18, 2025, is the successor to ACO REACH and the most structurally ambitious ACO model CMMI has launched. It is voluntary, runs from January 1, 2027 through December 31, 2036, and offers a 10-year performance period that is the longest CMS has ever tested in any model category. Applications open in March 2026.

The 10-year horizon is the model’s defining structural feature. Prior CMMI ACO models operated on three- to five-year performance periods with rebasing at the start of each new agreement. Rebasing has been one of the most persistent complaints from ACO participants: an ACO that generates savings in years one through three sees its benchmark adjusted downward in the next agreement period, effectively punishing it for prior success. The MSSP’s Accountable Care Prospective Trend methodology, introduced in agreement periods starting in 2024, was designed to address this by blending historical spending with regional trends, but the correction has been incomplete. LEAD’s decade-long window promises a different dynamic. An ACO entering in 2027 can plan its care delivery infrastructure, staffing, technology investments, and specialist partnerships against a predictable financial framework through 2036. That planning horizon is long enough to build a primary care transformation strategy, see it through initial losses, and capture savings on the back end.

The model’s target participant pool is explicitly broader than ACO REACH’s. CMS anticipates that LEAD participants will include current ACO REACH organizations transitioning from the concluding model, but also smaller and independent practices, rural providers, FQHCs, Rural Health Clinics, and organizations that have never participated in an ACO. The barrier-reduction mechanisms are structural. Lower alignment minimums will be available for providers new to ACO participation, including rural providers. Enhanced cash flow payments will provide upfront capital. Rural add-on payments, not subject to reconciliation, will subsidize infrastructure development. Improved benchmarking and risk adjustment are intended to make the model financially viable for ACOs serving high-cost, high-complexity populations rather than only for those whose patient panels are healthier than regional averages.

Risk tracks. LEAD offers two voluntary risk-sharing options. Under global risk, ACOs assume 100 percent of savings or losses for aligned beneficiaries. Under professional risk, ACOs assume 50 percent. The choice of track determines the ACO’s financial exposure and its potential upside. Global risk carries higher stakes but enables the ACO to capture the full surplus from care redesign. Professional risk provides a shallower entry point for organizations less certain of their ability to manage total cost of care. Both tracks use prospective, capitated, population-based payments designed to support team-based care and downstream value-based arrangements.

The high-needs population focus. LEAD places particular emphasis on beneficiaries with complex needs. Dually eligible individuals, homebound and home-limited patients, and beneficiaries with multiple chronic conditions are explicitly identified as priority populations. The model includes more accurate risk adjustment for these populations to prevent the benchmark erosion that occurs when high-cost patients are inadequately risk-adjusted. This focus is not incidental. It directly addresses one of the persistent criticisms of MSSP: that the program’s benchmarking methodology has rewarded ACOs that attract relatively healthy populations while penalizing those that serve the sickest and most socially complex beneficiaries. If LEAD’s risk adjustment and benchmarking reforms deliver on their stated intent, they will create a financial environment in which serving a dual eligible population or a homebound panel is not a structural disadvantage.

CMS Administered Risk Arrangements (CARAs). LEAD introduces a new mechanism for ACO-specialist collaboration. CARAs are episode-based risk arrangements between ACOs and their specialists, facilitated and administered by CMS. Rather than requiring ACOs to negotiate individual contracts with downstream specialists, a process that has proven administratively burdensome and legally complex in prior models, CMS will provide a standardized framework, direct payment to both ACOs and specialists, and episode-level data sharing. CARAs represent CMMI’s recognition that total cost of care accountability cannot succeed if primary care ACOs have no mechanism for influencing the spending patterns of the specialists their patients see. The CARA framework is the connective tissue between LEAD and ASM: ACOs manage population health, specialists manage episode quality, and CMS administers the financial link between them.

Beneficiary engagement incentives. LEAD creates new incentives for beneficiaries to seek care from providers within the ACO. These include Part B cost-sharing support and, beginning in 2029, a Part D premium buy-down for aligned beneficiaries. A separate Substance Access Beneficiary Engagement Incentive, also being made available to ACO REACH participants in 2026, allows ACOs to consult with beneficiaries about hemp-derived products in states where they are legal. LEAD also incorporates prevention and healthy living supports, including expanded access to medical nutrition therapy and chronic disease prevention rewards, reflecting the MAHA agenda’s influence on CMMI model design.

The Medicare-Medicaid integration opportunity. LEAD includes a planning framework for ACOs interested in serving dual eligible populations across both programs. Milliman’s analysis identifies LEAD as a potential pathway for states that participated in the now-concluded Financial Alignment Initiative, including Washington and Vermont, to re-engage with Medicare FFS cost accountability for their dual eligible residents. The model’s emphasis on FQHC and RHC participation, combined with its high-needs population focus and improved dual eligible risk adjustment, creates an integration pathway that earlier CMMI ACO models did not offer. Two states will enter a planning period to develop shared data and care coordination frameworks with Medicaid organizations. If that planning succeeds, ACOs in those states can partner with Medicaid entities on integrated care delivery for dual eligibles.

ASM: Mandatory Risk Arrives for Specialists

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The Ambulatory Specialty Model is the complement to LEAD, and the contrast in design philosophy could not be sharper. Where LEAD is voluntary, 10 years long, and designed to attract new participants through financial incentives, ASM is mandatory, five years long, and designed to compel specialists into value-based accountability through regulatory force.

CMS proposed ASM in the CY 2026 Physician Fee Schedule proposed rule on July 10, 2025, and finalized it in the October 31, 2025 final rule. The model runs from January 1, 2027 through December 31, 2031. Participation is mandatory for specialists who commonly treat Original Medicare beneficiaries for heart failure or low back pain in outpatient settings within selected geographic areas. CMS selected approximately 40 percent of Core-Based Statistical Areas for participation, stratified into six cohorts based on episode volume and cost patterns. Every eligible specialist practicing within a selected CBSA who meets the episode threshold of at least 20 attributed episodes must participate. There is no opt-out.

Why heart failure and low back pain. CMS selected these two conditions because they represent approximately six percent of total annual Original Medicare spending while remaining largely outside the value-based payment structures that have reshaped primary care. Heart failure generates high emergency department utilization, avoidable hospitalizations, and readmissions. Low back pain generates high volumes of imaging, injections, and surgical interventions with wide geographic variation in practice patterns and contested evidence for many common procedures. Both conditions are managed predominantly in ambulatory specialty settings, cardiologists for heart failure and orthopedic surgeons, neurosurgeons, anesthesiologists, pain management specialists, and physiatrists for low back pain, where fee-for-service incentives have historically rewarded volume over outcomes.

How ASM works. Unlike LEAD’s total cost of care framework, ASM operates through the MIPS Value Pathways structure, adapted for mandatory participation with two-sided risk. Each participant is assessed across four performance categories: quality, cost, improvement activities, and promoting interoperability. The composite performance score is measured against a threshold, and CMS applies a payment adjustment, positive, neutral, or negative, to future Medicare Part B claims. The adjustment range is up to plus or minus nine percent. There is no glide path to downside risk, no introductory period of upside-only participation. From the first performance year, every selected specialist faces the possibility of a nine percent reduction in all Part B payments.

The payment adjustment applies to all of a participant’s Part B services, not only the heart failure or low back pain episodes that triggered their selection. A cardiologist selected for ASM based on heart failure episodes will see the payment adjustment applied across their entire Part B portfolio. This design choice is deliberate: CMS intends ASM to influence practice-wide behavior, not condition-specific coding strategies.

The CMS retained share. ASM is not budget-neutral. CMS will retain a portion of Part B reimbursement from the model, starting at 1.35 percent of physician payments for relevant episodes in the first year and rising to 1.80 percent by the fifth year. This retained share is not redistributed to high performers. It accrues to CMS as direct Medicare savings. Forvis Mazars’s analysis observed that this design effectively guarantees CMS a savings return from the model regardless of participant performance outcomes, a feature that distinguishes ASM from budget-neutral programs like MIPS and positions it as a savings-generating instrument from inception.

Specialty society response. The American College of Surgeons opposed ASM’s implementation in its September 2025 comment letter, arguing that the model’s incentive structure prioritizes cost reduction over team-based, patient-centered care. The ACS criticized the use of the MIPS quality measurement framework, the narrow cost measure methodology, and the application of payment adjustments to all Part B services rather than only episode-related claims. The American College of Cardiology raised concerns about the feasibility of the quality measures and the administrative burden of mandatory Collaborative Care Arrangements. The AMA, by contrast, acknowledged ASM’s intent to bring specialists into value-based payment while noting that the model’s design requires robust care coordination infrastructure that many small and independent specialty practices lack.

The Relationship Between LEAD and ASM

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LEAD and ASM are designed to interlock. CMS has stated that ASM-selected participants may continue to participate in other Innovation Center models and ACOs, including MSSP and LEAD. The CARA mechanism within LEAD creates a structured framework for ACO-specialist episode-based risk arrangements. An ACO participating in LEAD could establish a CARA with a cardiologist who is simultaneously an ASM participant for heart failure. In that scenario, the specialist faces two overlapping accountability structures: ASM’s individual performance measurement against a regional peer benchmark, and the CARA’s shared episode-based financial arrangement with the ACO.

This dual accountability is the administration’s theory of value-based care applied to specialty medicine. Primary care ACOs manage population health. Specialists manage episode quality. CMS administers both the population-level framework (LEAD) and the episode-level framework (ASM) and connects them through CARAs. The theory assumes that specialists who face personal financial accountability for episode quality under ASM will also be motivated to collaborate with ACOs under LEAD’s CARA framework, creating a reinforcing dynamic in which population health management and episode management converge.

The theory’s vulnerability is administrative complexity. A specialist in a selected CBSA will simultaneously be an ASM participant with mandatory performance reporting, a potential CARA partner for one or more LEAD ACOs, and a MIPS-eligible clinician (though ASM participants are exempted from MIPS for applicable performance years). Managing these overlapping obligations requires data infrastructure, care coordination capacity, and administrative bandwidth that many small and independent specialty practices do not have. The same independent practitioners that CMS says it wants to bring into value-based care through LEAD and ASM are the ones least equipped to manage the reporting, coordination, and compliance requirements that both models impose.

The MSSP-as-Mandatory Question

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LEAD’s voluntary structure and ASM’s mandatory structure together raise the question that has hovered over accountable care policy since CMS’s 2023 all-payer accountability goal: is CMS moving toward mandatory ACO participation for all Medicare FFS providers?

CMS has committed to having all Traditional Medicare beneficiaries in a care relationship with accountability for quality and total cost of care by 2030. As of 2025, roughly 53 percent of FFS beneficiaries are attributed to an ACO through MSSP or ACO REACH. LEAD is designed to expand that share by recruiting providers who have not previously participated. But voluntary recruitment has inherent limits. The providers who have not joined ACOs through 12 years of MSSP availability and multiple CMMI demonstration models have not joined for reasons, some financial, some philosophical, some structural, that voluntary incentives alone may not overcome.

ASM provides the template for what mandatory specialty accountability looks like. If CMS can mandate participation for cardiologists and orthopedic surgeons in selected geographies, the legal and administrative precedent exists to extend mandatory models to additional specialties, additional conditions, and eventually additional geographies. The 2026 PFS final rule codified ASM’s regulatory framework at 42 CFR part 512, establishing the legal architecture for CMMI mandatory models imposed through fee schedule rulemaking rather than through separate NPRM processes.

The logical endpoint of this trajectory is a Medicare FFS system in which every primary care provider is in an ACO (voluntarily through LEAD or MSSP, or eventually mandatorily) and every specialist is in a condition-specific value-based arrangement (mandatorily through ASM or its successors). That is not current policy. It is the direction the policy architecture points.

The House Ways and Means Committee’s April 2025 letter to CMMI Director Sutton explicitly encouraged models that generate certifiable savings and expand mandatory participation. ASM is the first model announced after that letter. LEAD, while voluntary, creates the long-term infrastructure for an ACO system that could be made mandatory through future rulemaking. The 10-year horizon is long enough to encompass two presidential transitions and multiple congressional cycles, providing the political runway for either gradual voluntary expansion or eventual mandatory conversion.

What Comes Next

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LEAD’s RFA is expected in March 2026, with the model launching January 1, 2027, the same day ACO REACH concludes. Current ACO REACH participants face a transition decision: join LEAD, return to MSSP, or exit accountable care entirely. For ACO REACH organizations with established infrastructure, the transition to LEAD is the most natural pathway, particularly for those serving high-needs populations whose risk adjustment and benchmarking may improve under LEAD’s reformed methodology. For organizations that have never participated in an ACO, LEAD’s lower alignment minimums, rural add-on payments, and enhanced cash flow create a lower barrier to entry than any prior model, but the operational requirements of population-based payments and total cost of care accountability remain substantial.

ASM’s preliminary participant list was released in February 2026, with final eligibility determinations based on 2025 claims data expected around summer 2026. Selected specialists have approximately six months from final notification to prepare for a model that will adjust up to nine percent of their total Part B revenue based on performance. For practices that have never operated under value-based payment, that preparation window is short. Establishing Collaborative Care Arrangements with primary care providers, implementing certified EHR technology for data exchange, and redesigning care pathways for heart failure and low back pain all require investment that must occur before the first performance year begins.

The combined launch of LEAD and ASM on January 1, 2027 will constitute the most significant simultaneous expansion of Medicare value-based payment accountability since the ACA created MSSP. For the first time, both primary care and specialty care in Original Medicare will operate under CMMI models with financial consequences for performance. Whether that dual accountability structure generates the coordination improvements and cost reductions CMS projects, or whether it generates administrative burden and provider attrition that undermines its own goals, will determine whether the CMMI portfolio’s most consequential experiment succeeds.

Related Reading

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MCR-05_03 ACOs at Scale: The 2025-2026 Participation Surge and What It Signals MCR-05_06 Specialty Care Transformation: The ASM and What It Means for Specialists MCR-09_03 Dual Eligible Integration: The FIDE/HIDE/AIP Landscape in 2025 to 2027