ACOs at Scale

More than half of all Traditional Medicare beneficiaries now receive care coordinated through an accountable care organization. The 14.3 million beneficiaries attributed to ACOs as of January 2026 represent the largest ACO footprint since the Medicare Shared Savings Program launched in 2012. This is not incremental growth. It is a structural shift in how fee-for-service Medicare organizes care delivery.

The participation surge reflects multiple overlapping developments: steady MSSP expansion to 511 ACOs, the launch of ACO PC Flex as a primary care entry pathway, ACO REACH continuity under the new administration, and the announcement of the LEAD model as the decade-long successor to REACH beginning in 2027. For providers evaluating their strategic position, the question is no longer whether to participate in accountable care but which pathway to pursue and at what speed.

The MSSP Landscape

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The Medicare Shared Savings Program remains the backbone of Medicare accountable care. For performance year 2026, CMS approved 134 applications, including 72 new ACOs and 62 renewing or reentering participants. Total MSSP participation reached 511 ACOs, up from 476 in 2025. These organizations collectively include more than 700,000 providers serving 12.6 million Traditional Medicare beneficiaries.

The 12.3 percent year-over-year growth in attributed beneficiaries represents the largest population ever served by the program. The growth trajectory has been consistent since 2021, reversing the contraction that followed the Pathways to Success restructuring in 2018. The combination of improved benchmark methodology, advanced investment payments for underserved areas, and regulatory flexibility during the pandemic stabilized participation and created conditions for expansion.

Geographic distribution remains uneven. ACO coverage is dense in regions with established health system infrastructure and value-based care experience. Gaps persist in rural areas, smaller metropolitan markets, and regions where fee-for-service practice patterns are culturally entrenched. The advanced investment payment program has partially addressed this by providing upfront capital to ACOs forming in underserved markets, but rural and safety-net provider participation continues to lag urban and suburban counterparts.

Performance year 2024 results demonstrated that the program is generating meaningful savings. MSSP ACOs earned $4.1 billion in shared savings, the highest amount since the program began. Net savings to Medicare reached $2.4 billion after accounting for shared savings payments and losses owed. Seventy-five percent of participating ACOs earned shared savings, representing 80 percent of attributed beneficiaries. Only 16 ACOs owed shared losses, totaling $20.3 million.

The distribution of savings performance has implications for strategic planning. Physician-led, low-revenue ACOs generated $319 in net per capita savings, compared to $180 for hospital-led, high-revenue ACOs. ACOs composed predominantly of primary care clinicians outperformed those with fewer primary care providers. Two-sided risk ACOs in Level E and ENHANCED tracks generated more than two-thirds of all savings. These patterns suggest that organizational structure, risk track selection, and primary care orientation are significant predictors of financial success.

ACO PC Flex

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The ACO Primary Care Flex model launched in January 2025 as a five-year voluntary model testing prospective primary care payment within MSSP. For performance year 2026, 23 ACOs participate in PC Flex, serving approximately 360,000 Traditional Medicare beneficiaries.

PC Flex represents a targeted entry pathway for organizations that were not ready for full shared savings risk but wanted to participate in accountable care with enhanced primary care funding. The model provides a one-time advance shared savings payment of $250,000 and monthly prospective primary care payments that replace fee-for-service reimbursement for most primary care services. The design allows ACOs to invest in team-based care, care coordination infrastructure, and proactive outreach without waiting for retrospective shared savings reconciliation.

Eligibility is restricted to low-revenue ACOs, defined as those whose Medicare Parts A and B fee-for-service revenue from ACO participants is less than 35 percent of total Medicare expenditures for assigned beneficiaries. This effectively targets physician-led organizations rather than hospital-anchored systems. Twenty-one of the 23 PC Flex ACOs in 2026 elected ENHANCED track participation, indicating that the model attracted organizations confident in their ability to manage downside risk despite being new to prospective primary care payment.

The model’s five-year duration through 2029 provides participating ACOs with a runway to develop capabilities that could position them for LEAD model participation when applications open in 2027. For smaller practices, FQHCs, rural health clinics, and independent physician groups, PC Flex creates an accessible on-ramp to accountable care that previous models did not provide.

ACO REACH

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ACO REACH continues in 2026 with 74 participating ACOs covering 1.7 million Traditional Medicare beneficiaries. The model includes 125,909 providers and organizations, with 614 federally qualified health centers, rural health clinics, and critical access hospitals participating. This safety-net participation reflects the model’s design emphasis on reaching underserved populations.

The model offers two risk-sharing tracks. The Global track provides full capitation with retrospective reconciliation, allowing ACOs to receive up to 100 percent of savings while being liable for up to 100 percent of losses. The Professional track provides primary care capitation with shared savings on total cost, capping both savings and losses at 50 percent. The track structure allows organizations to select risk profiles appropriate to their experience and financial capacity.

CMS updated ACO REACH’s financial methodology in 2025 to ensure future cost savings. These changes are projected to decrease the model’s net spending for 2026 and improve outcomes for participants. The methodology adjustments reflect CMS’s ongoing attention to ensuring that CMMI models generate certifiable savings rather than increasing net federal spending.

ACO REACH concludes at the end of 2026. Participants must decide whether to transition to the LEAD model launching in 2027, join MSSP, or exit accountable care entirely. The National Association of ACOs has called for extending REACH through 2027 to allow adequate planning time, but CMS has not indicated that an extension is forthcoming. Current participants should be modeling their performance under LEAD’s benchmark methodology and assessing whether their patient populations and care delivery capabilities translate effectively to the new model’s requirements.

The LEAD Model

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The Long-term Enhanced ACO Design model, announced in December 2025, will launch January 1, 2027, as the successor to ACO REACH. Applications will be accepted beginning in March 2026. The model will run for ten years through December 31, 2036, the longest performance period CMS has ever tested.

LEAD’s defining structural feature is benchmark stability. The ten-year performance period removes the frequent rebasing that previous models imposed, allowing participating ACOs to develop sustainable care delivery infrastructure without having their benchmarks ratcheted down as punishment for success. Organizations can plan long-term investments knowing that efficiency gains will not be immediately absorbed into lower future benchmarks.

The model offers two voluntary risk-sharing tracks. Global Risk participants can receive up to 100 percent of savings while being liable for up to 100 percent of losses. Professional Risk participants face 50 percent exposure on both savings and losses. Both tracks feature flexible, capitated population-based payments designed to support team-based care and enable downstream value-based arrangements.

LEAD explicitly addresses barriers that kept smaller, rural, and independent practices out of previous ACO models. Improved benchmarking methodology provides add-on payments for rural providers. Risk adjustment has been enhanced for high-needs patients, creating incentives for providers to develop capabilities for complex populations rather than avoiding them. The CMS Administered Risk Arrangements initiative allows ACOs to establish episode-based risk arrangements with specialists through a standardized contracting framework and CMS-administered payments, reducing the implementation complexity that deterred smaller organizations from specialist integration.

The model includes new benefit enhancements and beneficiary engagement incentives. By 2029, ACOs may partially or fully offset beneficiaries’ Part D premiums for a performance year, creating a tangible benefit that could influence beneficiary care-seeking behavior. The design reflects CMS’s recognition that beneficiary engagement is a limiting factor in ACO effectiveness.

The dual eligible integration component deserves attention. During a planning phase from March 2026 through December 2027, CMS will identify two states to partner on developing frameworks for ACO-Medicaid partnership arrangements. The framework will define how ACOs and Medicaid organizations share data and coordinate care for dually eligible beneficiaries in Original Medicare. For organizations serving significant dual eligible populations, LEAD may provide the integration pathway that previous models did not offer.

The Mandatory Participation Signal

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CMMI has stated repeatedly that the direction of policy travel is toward mandatory participation in accountable care. The signals are consistent across the terminated models, the surviving models, and the new model announcements.

The March 2025 model terminations eliminated four models, three of which were voluntary. The Biden administration’s VBID termination in December 2024 removed the only CMMI model operating inside Medicare Advantage. The surviving CMMI portfolio is heavily weighted toward mandatory or regional designs: WISeR is mandatory in six states, TEAM is mandatory in 188 metropolitan areas, and AHEAD operates through state-level agreements that create effective mandates for participating hospitals.

The CY 2026 Physician Fee Schedule final rule includes provisions intended to accelerate ACO transition to two-sided risk. CMS finalized requirements that ACOs move from upside-only participation to downside risk more quickly than previous rules allowed. The policy signal is clear: CMS wants organizations that participate in accountable care to accept financial accountability for both savings and losses.

What this means for providers not currently in an ACO is that the window for voluntary entry is narrowing. Organizations that build accountable care capabilities now, while participation remains voluntary, will be better positioned than those forced into mandatory participation without the infrastructure, data systems, or care coordination workforce that success requires.

For organizations already in MSSP, the strategic question is whether to advance along the risk ladder. ACOs in BASIC track should be evaluating ENHANCED participation. The performance data showing that two-sided risk ACOs generate substantially higher savings suggests that the capability development required for downside risk also drives the care delivery improvements that produce savings. Moving to higher risk tracks voluntarily, before it is required, allows organizations to learn and iterate while exit remains an option.

The ACO-to-Payvider Trajectory

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For high-performing ACOs with demonstrated shared savings track records, scale, and regional market position, the forward strategic pathway extends beyond accountable care participation. Adding a plan license converts an ACO into a payvider.

The infrastructure overlap is substantial. An ACO that has built population health management systems, risk stratification capabilities, care coordination workforce, and performance under downside risk has already developed much of what plan operations require. The conversion adds actuarial capacity, state insurance licensing, network adequacy compliance, and CMS plan application requirements, but the clinical and operational foundation is already in place.

The MSSP to plan ownership to AHEAD participation pathway is a concrete strategic progression. An ACO that achieves consistent shared savings demonstrates the cost management capability that underlies plan-level profitability. A payvider that operates in an AHEAD state can layer hospital global budget accountability onto the integrated plan-delivery structure. Each step builds on the capabilities developed in the previous stage.

ACO leadership should be evaluating this pathway now, not as an abstract future possibility but as a strategic option with specific prerequisites and decision points. The scale threshold for viable plan ownership, the performance threshold for readiness, the capital requirements, and the regulatory timeline all can be assessed against the organization’s current position. The payvider advantages under encounter-based risk adjustment, rate compression, and dual eligible integration are structural features of the policy environment that favor conversion for organizations with the prerequisites to pursue it.

Related Reading

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MCR-01_07 LEAD and ASM: New Pathways for ACOs and Specialists MCR-00_02 Original Medicare as Policy Choice MCR-12_03 The ACO Accountability Ratchet: MSSP Performance, ACO REACH, and the Savings Distribution