ATI Advisory Analyzes LEAD ACO Population Targets

The following is from ATI Advisory, a consultancy that helps public and private healthcare leaders solve complex challenges through objective research, deep expertise, and practical strategies that turn ideas into action.

The Long-term Enhanced ACO Design (LEAD) Model is built to reach the populations that accrue some of the highest costs in traditional Medicare. ATI analysis shows that total medical spending averaged $48,451 per person for nursing facility residents in 2023, compared with $12,058 for people living in private housing. More than two thirds (69.2 percent) of eligible long-term care (LTC) stay days were not aligned to an accountable care organization (ACO) in 2024. This gap represents about $19.5 billion in annual traditional Medicare spending for which no ACO was accountable on cost or quality.

LEAD gives Medicare Shared Savings Program (MSSP) ACOs and health systems with deep value-based care experience a way to serve High Needs beneficiaries on payment terms that align with their acuity and changing care needs. Its benchmarks, risk adjustment, and monthly capitation features respond to structural challenges that established organizations have encountered in other models, aiming to generate lower utilization and total cost of care for High Needs beneficiaries while improving outcomes.

Structural Barriers

Financial and administrative obstacles have kept many providers from intentionally incorporating High Needs beneficiaries into their broader ACO populations. For MSSP ACOs, several design features account for much of that gap.

MSSP benchmarks use prospective Hierarchical Condition Category (HCC) risk scores, with positive adjustment capped at 3 percent across the agreement period. When acuity rises among nursing facility residents or people with advancing frailty, the spending benchmark may not follow.

MSSP benchmarks are also rebased every five years, which may shorten the window for recovering investments in care models for complex populations and may create “ratchet” effects that continually lower benchmarks as ACOs lower costs. This makes it more difficult for ACOs to achieve long-term savings in MSSP. MSSP ACOs generally receive no up-front or capitated payments, meaning that care management and partnerships with post-acute and LTC providers must be funded in advance of savings that arrive only after reconciliation.

LEAD Model Features, Participant Tracks

LEAD is a voluntary total cost of care model and the successor to ACO REACH, which ends Dec. 31, 2026. LEAD is set to run from Jan. 1, 2027, through Dec. 31, 2036, the longest performance period yet for a CMS Innovation Center accountable care model. Participating ACOs choose how much financial risk to absorb. Under the Professional Risk track, they share up to 60 percent of savings (50 percent of losses). Under Global Risk they share up to 100 percent. LEAD has no separate High Needs track, so High Needs beneficiaries can be aligned to any participating LEAD ACO.

MSSP ACOs and experienced ACOs under LEAD require a first year minimum of 5,000 aligned beneficiaries unless at least 40 percent of the ACO’s beneficiaries qualify as High Needs, which qualifies the ACO for an 800-beneficiary minimum in their first year that tops out at 1,600 in later years. ACOs that have generated savings in MSSP or ACO REACH will have their benchmarks increased by whichever is larger: a regional efficiency adjustment or a prior savings adjustment. 

These features create new incentives and lower barriers to entry for existing MSSP ACOs considering adding a LEAD ACO to their value-based care portfolio to serve their High Needs beneficiary population.

Performance Data and Viability

While LEAD has no performance data yet, data from ACO REACH and MSSP ACOs specializing in LTC and senior living demonstrate the viability of value-based care for these populations.

High Needs ACOs in REACH increased their net savings rate from 4.3 percent in 2021 to 14.0 percent in 2024. Standard ACOs rose from 1.8 percent to 4.2 percent over the same period. Meanwhile, the gross savings rate for MSSP ACOs focused on long-term care was 18.6 percent in 2024, compared with a 4.6 percent gross savings rate for other MSSP ACOs.

LEAD’s 10-year term, risk-adjusted benchmarks, concurrent risk adjustment, and monthly capitation respond to the obstacles established ACOs have faced when serving High Needs beneficiaries. A future LEAD application cycle could offer a way for existing MSSP ACOs and health systems to bring these beneficiaries into accountable care sustainably.

The Opportunity Under LEAD

LEAD folds High Needs risk adjustment and benchmarking directly into ACO design rather than confining it to a separate track, a notable difference from ACO REACH. For MSSP ACOs and health systems that have faced headwinds in serving frail, dually eligible, or home-limited individuals, that shift removes a structural barrier. ACOs serving High Needs beneficiaries receive specific design accommodations, including a concurrent CMS-HCC risk adjustment model, rather than the prospective model used for other populations.

Participating ACOs also receive benefit enhancements built for this population, including concurrent hospice care and expanded capitated payment flexibility. These design features give MSSP ACOs and health systems tools they do not currently have under traditional MSSP rules. For organizations who have traditionally been unable to adequately serve High Needs populations under MSSP, LEAD is built to reward a focus on these beneficiaries.

ATI is helping new ACOs, as well as existing MSSP ACOs and health systems, weigh whether and how to form a new LEAD ACO focused on High Needs beneficiaries with complex care needs before an anticipated 2027 CMS application cycle.

For more information on this subject, contact ATI Advisory at www.atiadvisory.com.

Comments or questions on the article? Contact Patrick Connole at pconnole@parkplacelive.com.