Benchmarking

Benchmarking Methodology

The Performance Year Benchmark is the ACO’s expected per-beneficiary per-month (PBPM) expenditure, against which actual spending is compared to determine shared savings or losses. LEAD calculates separate PBPM benchmarks for three beneficiary categories: Aged & Disabled (A&D), End-Stage Renal Disease (ESRD), and High Needs. Benchmarks are also calculated separately for claims-aligned and voluntarily aligned beneficiaries. (RFA §VIII)

Step 1: Historical Baseline Expenditures (RFA §VIII.A)

CMS calculates the ACO’s historical baseline using a three-year period comprising the three most recent calendar years before the ACO’s first performance year. For PY 2027, these are CY 2024, CY 2025, and CY 2026.

Critical: No Rebasing. The baseline period remains static for the duration of an ACO’s participation in the model. This is the most consequential single policy in LEAD. In MSSP, benchmarks are rebased every 5 years, incorporating prior savings into the new baseline (the “ratchet effect”). In ACO REACH, base years were static but for only 6 years. LEAD extends this to 10 years, the longest CMS has committed to a single baseline. (RFA §VIII.A)

For claims-aligned beneficiaries, CMS retroactively applies the claims-based alignment algorithm to the ACO’s current Participant TIN List for each base year. This means the baseline is recalculated each performance year to reflect changes in the TIN list, even though the base years themselves don’t change. (RFA §VIII.A)

Note: If the Participant TIN list used for baseline calculation does not change, the historical claims-aligned baseline for those calendar years does not change either; updates come from re-running alignment against the same fixed base-year claims with an updated TIN list.

For voluntarily aligned beneficiaries, the benchmark is based on historical spending of beneficiaries who are voluntarily aligned in the current PY, capped at no more than ±10% of the claims-aligned benchmark. This cap is new in LEAD and is designed to prevent selection arbitrage. (RFA §VIII.A)

Base year weighting:

ACO Type	BY1 Weight	BY2 Weight	BY3 Weight
Renewing ACOs	1/3	1/3	1/3
Newly Entering ACOs	10%	30%	60%

(RFA §VIII.A)

Step 2: ACO-Specific Benchmark Adjustments (RFA §VIII.B)

After calculating the baseline, CMS applies ACO-specific adjustments:

Regional Efficiency Adjustment: Available only to Global Risk ACOs with baseline spending below regional FFS averages (“lower-spending ACOs”). The adjustment equals 50% of the risk-adjusted difference between regional and ACO historical spending. Higher-spending ACOs do NOT receive a negative adjustment; this is a one-directional benefit. (RFA §VIII.B)

Prior Savings Adjustment: Available to Renewing ACOs in either risk option. Calculated as 50% of the prorated average per-capita savings across the 3 calendar years immediately preceding LEAD. (RFA §VIII.B)

Adjustment hierarchy: If an ACO qualifies for both a Regional Efficiency Adjustment and a Prior Savings Adjustment (PSA), it receives the higher of the two, not the sum. (RFA §VIII.B)

Overall cap: 3% of risk-standardized USPCC for ACOs with >40% of Participant TINs from a recent MSSP ACO; 5% for all other ACOs. (RFA §VIII.B)

Adjustment	Eligibility	Calculation
Regional Efficiency Adjustment	Global Risk ACOs with baseline spending below regional FFS averages	50% of risk-adjusted gap between regional and ACO historical spending
Prior Savings Adjustment	Renewing ACOs (either risk option)	50% of prorated average per-capita savings across 3 years preceding LEAD
1.5% Administrative Add-On	Higher-spending ACOs (any risk option)	1.5% of benchmark, paid monthly. Not included in PY expenditures. Not repayable.

If an ACO qualifies for both a Regional Efficiency Adjustment and a Prior Savings Adjustment, it receives the higher of the two (not the sum). The Administrative Add-On is separate and additive. See the Capitation page for full details on the Add-On. (RFA §VIII.B, §X.A.5)

Step 3: Trending Benchmarks to the Performance Year (RFA §VIII.C)

LEAD introduces a three-way blended update factor:

• Two-thirds: Two-way blend of national and regional FFS growth rates (per MSSP methodology at 42 CFR § 425.652).
• One-third: Accountable Care Prospective Trend (ACPT), a fixed projected growth rate set at the start of the agreement period using CMS Office of the Actuary projections.

The ACPT is subject to guardrails that widen over time:

Performance Year	Upper Guardrail	Lower Guardrail
PY 2027 (Year 1)	+0.3%	−0.2%
PY 2028 (Year 2)	+0.6%	−0.4%
PY 2029 (Year 3)	+0.9%	−0.6%
PY 2030 (Year 4)	+1.2%	−0.8%
PY 2031+ (Year 5+)	+1.5%	−1.0%

(RFA §VIII.C)

Step 4: Risk Adjustment (RFA §VIII.D)

After trending, CMS applies risk adjustment by beneficiary category. See the Risk Adjustment page for full detail.

Step 5: Benchmark Discount and Quality Withhold (RFA §VIII.E)

For Global Risk ACOs, a benchmark discount rate reduces the benchmark before settlement:

Year	Higher-Spending ACOs	Lower-Spending ACOs
PY 2027	1.75%	3.0%
PY 2028	2.0%	3.0%
PY 2029	2.25%	3.0%
PY 2030	2.5%	3.0%
PY 2031	2.75%	3.0%
PY 2032–2036	3.0%	3.0%

No benchmark discount applies to Professional Risk ACOs. ACO REACH applied 3.5% (PY2025) and 4.0% (PY2026) flat for all Global ACOs. (RFA §VIII.E)

A 3% quality withhold applies to all ACOs (reduced from 5% in ACO REACH). See the Quality page for how quality scoring determines earn-back. (RFA §VIII.E)

Regional Rate Book Transition (RFA §VIII.G)

After year 5, CMS will phase in a regional rate book-based benchmark. The transition pace varies by region based on: (1) proportion of beneficiaries aligned to ACOs, (2) cumulative savings generated, and (3) proportion of higher-spending ACOs. The rate book will fully replace historical-expenditure-based benchmarks by the end of the model.