Quality Risk Under the LEAD Model
LEAD (the Long-term Enhanced ACO Design) Model is the Centers for Medicare & Medicaid Innovation Center’s newest accountable care organization (ACO) focused model. Set to launch following when ACO REACH (Realizing Equity, Access, and Community Health) sunsets at the end of 2026, LEAD ties quality performance directly to benchmark dollars through a withhold, with 3% of the benchmark withheld upfront and only earned back through quality results. In practical terms, quality becomes a revenue protection lever.
For organizations operating on thin margins while taking downside risk, this scenario changes the financial equation. It introduces near-term cash flow pressure and adds uncertainty to expected value because earn-back has to be managed and forecasted rather than assumed.
For REACH ACOs, the withhold concept is familiar. For Medicare Shared Savings Program (MSSP) ACOs considering the move to LEAD, however, it’s a meaningful shift: quality moves from a reporting and compliance exercise to a factor that directly affects cash flow and net economics and must be managed like any other risk lever.
If You’re in REACH Versus MSSP, What Changes (and What Doesn’t)?
For REACH participants, the LEAD model introduces a familiar philosophy. The construct of quality dollars being withheld from the benchmark already exists for REACH organizations, and LEAD builds on that foundation.
REACH’s quality framework is a pay for performance mechanism around claims-based measures and a CAHPS survey. LEAD keeps that approach, but it also does the following:
- Introduces a digital measurement lane through two electronic clinical quality measures (eCQMs)
- Reduces the quality withhold relative to payment year (PY) 2026 (from 5% to 3%)
- Adds a more explicit programmatic operating requirement (PQP) tied to earning dollars back
Those changes increase cross-functional dependency (i.e., eCQMs) and raise governance expectations (i.e., PQP), surfacing a common REACH operating gap in which quality is measured and owned in one lane but improved through workflows controlled elsewhere.
For MSSP participants considering LEAD, the shift is more material. The components won’t feel foreign. PY 2025 measure set already has a quality mix that includes claims-based measures + CAHPS + CQM/eCQMs. What changes under LEAD is the financial lever. LEAD takes that existing quality activity and converts it into an earn-back mechanism -benchmark dollars are withheld at the start of the year and only recovered based on performance. The implication is that quality can’t live primarily as a scoring/reporting process. It has to be managed like an in-year financial risk variable, with probability-weighted earn-back forecasting, tighter operational cadence, and clear cross-functional accountability.
If you’re in ACO REACH today
- Familiar financial construct: Quality dollars are already tied to benchmark withhold.
- Similar core framework: LEAD largely carries forward the REACH backbone-4 claims-based measures + 1 CAHPS.
- What you need to build: Readiness for the added clinical quality lane (eCQMs now, evolving toward dQM/FHIR-based execution).
If you’re in MSSP and considering LEAD
- Primary shift is the lever: Quality becomes upfront benchmark dollars at risk, not just a scoring/reporting cycle.
- Higher in-year expectations: More pressure on timeliness, governance, and operating cadence- because earn-back can’t be rescued after year-end.
The Quality Withhold: Shifting Incentives toward Consistency, Not Heroics
A withhold converts quality from potential upside into a form of at-risk revenue. That changes the financial conversation in three important ways:
- Expected value modeling: You can’t model quality as a threshold check; it now functions as a downward adjustment to expected benchmark dollars unless earned back.
- Timing: Many investments (care management, analytics, vendor support) are paid upfront and the financial return may not arrive until reconciliation.
- Volatility: Inconsistent quality capture increases unpredictability in earn-back, which can compound downside exposure.
For ACOs evaluating LEAD entry, the question becomes: Do we have the infrastructure to earn back what’s being withheld- reliably?
Operational Readiness Matters More Than Ever
A withhold structure amplifies the cost of operational immaturity. The organizations most exposed are the ones that are unable to see quality performance until it’s too late to act.
ACOs should assess readiness across two lanes: (1) The claims-based backbone and CAHPS (Consumer Assessment of Healthcare Providers & Systems), and (2) the eCQMs build.
Lane 1.- Claims-based + CAHPS (execution and cadence):
- Performance stability: Are metrics stable year over year,- and can analytics separate real performance change from attribution, specs, and data capture noise?
- Actionable analytics: How quickly can you identify rising-risk members and close gaps before claims lag makes it too late?
- CAHPS as operations: Are access, continuity, and responsiveness managed year-round and not just during survey season?
Lane 2. -eCQM readiness (infrastructure, validation, and workflow):
- eCQM/dQM (data quality management) path: Do you have an eCQM strategy that can shortly transition to dQM/FHIR data flows so quality earn-back risk does not come on high operational cost?
- Data readiness: Do you have the required structured clinical data elements and mapped consistently across electronic health record (EHR) sources and available via US Core Data for Interoperability (USCDI)-aligned, certified Application Programming Interface (API) ((g)(10)) endpoints?
- Population confidence: Can you reproduce eligible populations reliably (patient matching, attribution logic, encounter completeness)?
- Measure execution pipeline: Do you have an engine/process to run eCQMs routinely with version control, traceability, and repeatability?
- Quality assurance (QA) + evidence: Can you explain why a member is included/excluded and pass a “show your work” test with auditors and clinicians?
- Closing loop operations: Do eCQM gap lists drive clinical workflow or live in a reporting lane?
The key point is that LEAD’s phased eCQM ramp creates breathing room-but organizations that treat years 1–2 as “optional” often end up scrambling later. The advantage goes to teams that use the runway to build a durable measurement operating model.
Thus, LEAD quality performance needs to be managed like risk: modeled, monitored, and operationalized in-year-not just reported.
Risk Strategy Must Be Recalibrated
LEAD adds quality earn-back recapture risk. For organizations already taking downside risk, it adds another risk layer alongside:
- Utilization risk
- Coding risk
- Trend risk
- Now: quality recapture risk
As a result, actuarial and financial modeling should incorporate:
- Realistic quality attainment assumptions (not best-case)
- Earn-back probability ranges to reflect performance volatility
- Sensitivity testing under partial earn-back scenarios (e.g., 100%/66%/ 33%)
In some cases, the headline benchmark may look attractive, but the economics can shift materially once you apply the withhold and model earn-back as a probability-weighted recovery.
The Governance Question: Who Owns Quality Performance When Dollars Are Explicitly Withheld?
Under LEAD, quality isn’t a reporting requirement, but rather a withheld revenue that must be earned back. That shifts governance from an “Are we reporting?” to “Who owns earn-back, and how is it managed in-year?” mindset.
Governance needs to be revisited-clarifying ownership, aligning incentives, and building in-year visibility-because once reconciliation hits, earn-back is no longer something you can manage, only explain.
- Accountability: Who owns earn-back-clinical leadership, operations, or finance?
- Incentives: Is earn-back built into physician incentives and operational objectives, rather than treated as a year-end scorecard?
- Board visibility: Does the board understand the withhold exposure and review performance against earn-back forecasts and scenarios?
- Actionability: Can physicians access timely, drillable dashboards that drive action before claims lag locks in results?
Because dollars are withheld upfront, governance must cover both accountability for outcomes and control over the numbers. If quality stays siloed in a reporting function instead of embedded in enterprise risk management, LEAD will amplify the financial consequences. The operational fragmentation will translate into measurable financial loss.
The LEAD Quality Framework: A REACH-Based Core with a Clear Digital Trajectory
Under LEAD, quality is anchored in a focused set of measures-largely familiar to REACH and MSSP participants. Quality performance is assessed using the following:
✔ Four Claims-Based Measures from ACO REACH
Because the measures are claims-based, performance is driven by what the organization delivered and billed during the performance period.
- Once services have occurred (or didn’t occur) and claims are adjudicated, you can’t retroactively document your way into better performance.
- Results largely reflect what actually happens across the network-who gets admitted or readmitted, whether timely follow-up occurs, and how consistently care transitions and care coordination are executed.
- They have a tight intervention window. Retrospective by design, measurement confirms outcomes after they have already occurred. In-year monitoring is useful for situational awareness and forecasting, but meaningful performance improvement requires upstream, workflow-based interventions rather than late-cycle gap closing.
✔ CAHPS
Patient experience remains a core component. For mature ACOs, CAHPS tends to be relatively stable-but it can shift with attribution mix, access constraints, or operational disruptions. Organizations that treat CAHPS as an annual survey exercise rather than as an ongoing access and continuity strategy are more likely to see variability.
✔ Two New eCQMs (phased in)
The most notable change-particularly for ACOs coming from REACH-is the introduction of two eCQMs:
- Optional in Years 1 and 2
- Pay-for-reporting in Years 3 and 4
The runway is meaningful. Organizations that use early years to build a durable eCQM infrastructure- that can be transitioned into dQMs- will be better positioned than those that delay and try to sprint later. This eventuality is especially true for those that have yet to establish FHIR-aligned data flows, repeatable measure runs, and audit-ready “show your work” traceability.
Seven-Item LEAD Readiness Checklist:
- Can you model earn-back scenarios (100%/66%/33%) in the forecast?
- Do you see performance monthly (or more often)-not quarterly?
- Are the four claims-based measures stable year over year-with known operational drivers?
- Is CAHPS managed year-round (access + continuity), not just during “survey season?”
- Can you generate actionable gap lists that tie directly to care workflows?
- Do you have eCQM infrastructure: data mapping, patient matching, repeatable runs, and QA/traceability?
- Is quality owned in governance + incentives, not just by the reporting team?
Strategic Implications for ACOs and Provider Groups
The quality withhold will likely separate organizations into three categories:
🔹 Mature Risk Operators
Groups with strong analytics, physician alignment, and stable quality scores may experience this as manageable, even neutral.
🔹 Transitional Organizations
Groups still building infrastructure may face meaningful financial strain if quality recapture lags.
🔹 Opportunistic Participants
Some organizations may need to reconsider participation levels if they lack the capital or operational infrastructure to absorb withhold variability.
Final Thought: LEAD Rewards Discipline
The LEAD model reinforces a trend we’ve seen across value-based care:
Quality performance is no longer an upside lever. It is a core component of risk management.
For provider groups and ACOs, the question isn’t simply, “Can we manage total cost of care?” It’s, “Can we manage total cost of care and deliver on quality in order to earn back withheld revenue?”
Those are very different operational challenges.
Organizations that treat quality as a financial asset-not just a compliance exercise-will be best positioned under LEAD.
To discuss how Wakely can help your organization better manage quality, cash flow, and earn back more of your benchmark withhold, contact us for a consultation.
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