LEAD Model Updates
On July 14, 2026, CMS released the PY 2027 LEAD Alignment and Financial Methodology Paper and a companion Policy Update summarizing proposed Medicare Shared Savings Program (SSP) changes in the CY 2027 Physician Fee Schedule (PFS) proposed rule and their implications for LEAD. This is the largest guidance release since the RFA: it changes several policies outright, finalizes open parameters, and fills most remaining methodology gaps. Content across the site has been updated and is marked with a coral UPDATED 7/14/26 badge. SSP items that are proposals (not final policy) are marked PROPOSED.
New Policy
Professional Risk Option savings rate raised from 50% to 60%
The Corridor 1 shared savings rate for the Professional Risk Option increases from 50% to 60%. The shared loss rate remains 50%, making Corridor 1 asymmetric. Corridors 2 through 4 are unchanged. This takes effect in PY 2027 regardless of whether the parallel SSP proposal (BASIC Level E, 50% to 60%) is finalized. Selected applicants will receive a window to change their Risk Option election before PY 2027; CMS will publish the deadline and process separately. (Methodology Paper §1.3, §5.4.2; Policy Update 7/14/26)
New Policy
SNF primary care codes excluded from claims-based alignment
Professional, FQHC, or RHC services billed under CPT 99304 to 99318 are excluded as qualifying PQEM claims when a SNF facility claim in CMS claims files reflects dates of service that overlap the professional service. The RFA contained no SNF exclusion, and no comparable exclusion exists in ACO REACH. This mirrors the MSSP treatment of nursing facility E/M codes during Part A skilled stays and reduces alignable PQEM charges for practices with substantial SNF rounding activity. (Methodology Paper §2.3.2)
New Policy
High Needs risk score growth cap set at a symmetric 4%
The RFA left the High Needs cap at 3 to 8%, to be announced. The methodology paper sets it at a symmetric 4% for at least PY 2027 and PY 2028, alongside the symmetric 3% cap for A&D and ESRD. BY3 remains the static reference year for at least the first two Performance Years. A single cap applies per beneficiary category with claims-aligned and voluntarily aligned beneficiaries combined, and the BY3 High Needs reference average includes only beneficiaries who were High Needs in BY3. CMS may adjust or remove the cap as part of the AI-inferred risk adjustment transition beginning PY 2029. (Methodology Paper §3.5.2)
New Policy
ACPT is now set annually, not fixed for the agreement period
The RFA described the ACPT as a fixed projected growth rate determined at the beginning of the Agreement Period. The methodology paper states ACPT values will be updated and announced annually before each Performance Year, based on the most recent OACT modified USPCC projections (separate ESRD and non-ESRD values; the non-ESRD ACPT applies to both A&D and High Needs). An annually reset ACPT materially reduces cumulative forecasting error risk relative to a ten-year fixed trend. The guardrail schedule (+0.3/-0.2 percentage points in PY 2027, widening to +1.5/-1.0 by PY 2031) is unchanged. (Methodology Paper §3.5.1; Policy Update 7/14/26)
New Policy
Prior Savings Adjustment: new 40%/30% predecessor continuity test
A predecessor REACH or SSP ACO may contribute to the Prior Savings Adjustment only if at least 40% of the LEAD ACO’s Participant TINs participated in that predecessor ACO (tested in BY3). If multiple predecessors qualify, CMS uses a beneficiary-weighted average of their per-beneficiary savings. For BY1 and BY2, a lower 30% threshold applies; if not met, that year’s savings are set to $0 and CMS will not substitute a different predecessor. The adjustment is a single ACO-level PBPM amount with the cap applied through beneficiary-category-weighted sub-population cap amounts. (Methodology Paper §3.4.4)
Correction
Prior Savings Adjustment: loss years ARE included in the 3-year average
The methodology paper’s worked example computes the 3-year average as a simple average including a negative year ($50, -$10, $70 averages to $36.67 PBPM). This supersedes the May 5 office hours interpretation, previously reflected on this site, that years without savings are set to $0. A loss year now reduces the average. Eligibility still requires a positive 3-year average. Savings are measured gross, before the REACH Global discount or the CMS share under REACH Professional and SSP tracks. (Methodology Paper §3.4.4, Table 3.4.3.7)
Correction
Prior Savings Adjustment proration formula stated definitively
The RFA’s prose and example were internally inconsistent on the proration factor. The paper resolves it: the factor equals average base-period beneficiary months divided by current Performance Year beneficiary months, capped at 100%. Example: 100,000 average base-year months and 200,000 PY months yields a 50% proration factor. (Methodology Paper §3.4.4)
New Policy
Regional Efficiency Adjustment excludes new, higher-spending TINs
If a lower-spending ACO includes a TIN that is both higher spending and new to Medicare ACO models (no SSP or REACH participation in the two years before the ACO’s first LEAD PY), that TIN’s historical experience is excluded from the REA calculation. Excluded TINs remain in the benchmark and aligned population, but their beneficiaries receive a $0 REA and are excluded from the benchmark adjustment cap calculation. The TIN-level spending test uses the same three-year weighted blend methodology, with the region defined by the TIN’s aligned-beneficiary-weighted county average. CMS framed this as LEAD’s counterpart to the SSP’s proposed growth adjustment, which LEAD will not adopt. (Methodology Paper §3.4.3; Policy Update 7/14/26)
New Policy
65% of skin substitute spending carved out of BY1 and BY2
CMS will exclude 65% of skin substitute expenditures from Historical Baseline Expenditures for CY 2024 and CY 2025 (only 35% of identified skin substitute spend is retained). Rationale: the CY 2026 PFS final rule payment changes are expected to cut Medicare skin substitute spending by roughly 90%, making base-period levels unrepresentative; 65% approximates what SSP truncation removed in CY 2025, promoting cross-program consistency. This carveout is separate from SAHS policy. Stop-loss reference calculations apply stricter exclusions: 100% of SAHS-designated and skin substitute code expenditures for CY 2023 through CY 2025 are removed from reference year expenditures, attachment points, charges, and payouts. (Methodology Paper §3.2.1, §5.3)
Clarification
SAHS exclusions specified at the code level for BY1 and BY2
100% of expenditures for designated SAHS codes are excluded from Historical Baseline Expenditures and from national and regional expenditure calculations: HCPCS A4353 and A5057 for CY 2024; HCPCS A4352, A4353, A6197, L0486, L1852, and L3916 for CY 2025, consistent with designations under 42 CFR 425.670 and 425.672. (Methodology Paper §3.2.1)
Significant
CY 2026 as Base Year 3: completion factors, seasonality, and a six-report schedule
Because CY 2026 data will be incomplete when PY 2027 benchmarks are first calculated, the December 2026 Preliminary Benchmark Report uses January to September 2026 claims paid through October 2026 with three estimation layers: a claims completion factor, a Q4 seasonality adjustment, and an alignment completion factor (all derived from the LEAD National Reference Population in CY 2024 and CY 2025). Six benchmark reports run from December 2026 through February 2028; the May 2027 Q1 report is the first with full-year CY 2026 claims and three months of run-out. From 2028 forward, no completion factors are needed. (Methodology Paper §3.2.3, Table 3.2.1)
Significant
Preliminary and final spending designations, with a one-time PY 2027 election right
ACOs receive a preliminary higher-/lower-spending designation in December 2026 and a final designation in May 2027. If the designation flips between the two, the ACO may elect which designation to use for PY 2027. From PY 2028 forward, final designations arrive in Q4 of the prior year. The designation drives the discount rate, REA eligibility, and the 1.5% Administrative Add-On, so ACOs near the boundary should model both. (Methodology Paper §3.2.3, §3.4.2)
New Policy
Voluntary alignment benchmarks: 500-beneficiary minimum and High Needs BY3-only
If an ACO has fewer than 500 voluntarily aligned beneficiaries (across all categories) that can contribute BY3 historical expenditures, CMS will not build separate VA benchmarks and will apply the claims-aligned benchmarks to VA beneficiaries. For PY 2027, VA Historical Baseline Expenditures for the High Needs category use only BY3, and a beneficiary contributes (and counts toward the 500) only if they met High Needs criteria in BY3. The plus or minus 10% guardrail is applied to the Historical Benchmark after the three base years are blended but before the REA or PSA. (Methodology Paper §3.2.5)
Significant
Hybrid Alignment Benchmark Adjustment introduced for mid-year additions
Beneficiaries who align mid-year receive a seasonality-corrected benchmark: the benchmark is multiplied by the ratio of average PBPM in the aligned partial-year period to full-year average PBPM, using model-wide factors from the LEAD reference population in CY 2024 and CY 2025. Claims-based hybrid additions (effective April 1) use a Q2 to Q4 factor; voluntary additions use a factor keyed to the effective quarter. No category-specific factors apply for PY 2027. (Methodology Paper §3.5.3)
Clarification
High Needs status re-checked quarterly, applied retroactively
CMS reassesses High Needs eligibility for aligned beneficiaries quarterly on a rolling lookback. A beneficiary who newly qualifies is retroactively assigned to the High Needs category back to the beginning of the PY (or their hybrid alignment date). Once High Needs, a beneficiary remains High Needs for the duration of alignment. For hybrid-aligned beneficiaries, High Needs eligibility is evaluated at the time of alignment. (Methodology Paper §2.5)
New Policy
NPP, FQHC, and RHC specialty-care exclusion review process
CMS will provide each ACO a list of NPP NPIs and safety net provider CCNs billing under its Participant TINs. The ACO may identify NPPs, FQHCs, and RHCs that primarily furnish specialty care and request their exclusion from claims-based alignment and Primary Care Capitation. Approved exclusions apply prospectively. CMS data do not consistently identify NPP specialties or FQHC/RHC service mix, so this review is the mechanism to prevent specialty-dominant safety net providers from driving alignment. (Methodology Paper §2.3.1)
Clarification
Alignment minimums: base year must meet its minimum to enter the benchmark blend
The 10-year minimums table is unchanged, but two rules are new: for a base year to be included in the Historical Benchmark blend, the ACO must meet the applicable base year minimum in that specific year (the RFA required only one qualifying base year for eligibility), and ACOs may use one of their two alignment buffers in their first Performance Year. Applicable minimum standard determinations arrive in December 2026. (Methodology Paper §2.6)
Significant
Model overlap rules finalized; claims processing precedence table published
The RFA’s “likely” overlap rules are now definitive for PY 2027. Beneficiary overlap with LEAD is prohibited for: KCC, MSSP, ACO PC Flex, another LEAD ACO, and MDPCP. KCC, MSSP (prospective alignment only), and PC Flex take alignment precedence over LEAD. For claims processing under simultaneous participation: LEAD takes precedence over Primary Care AHEAD; EOM takes precedence over LEAD; GUIDE-reduced and LEAD-reduced codes must be on separate claims; no claims overlap is permitted with ACCESS or AHEAD Hospital Global Budgets. (Methodology Paper §2.7, Table 4.8.4)
Clarification
Two-way blend weight uses the Performance Year alignment share
Within the three-way blended trend factor, the weight on the national growth rate is calculated using the ACO’s share of aligned beneficiaries in its regional service area for the applicable Performance Year, rather than for BY3. (Methodology Paper §3.5.1)
Clarification
REA/PSA “higher of” rule not restated: verify before modeling
The RFA and the May 5 office hours stated that an ACO eligible for both the REA and the PSA receives the higher of the two. The July 14 methodology paper describes both adjustments in sequence without restating the higher-of rule. The site retains the higher-of rule as the most recent explicit guidance, with a note to confirm with the LEAD help desk before benchmark modeling for renewing, lower-spending Global ACOs.
Proposed
G2211 would split into MOD1/MOD2, with LEAD participants eligible for the higher rate
The CY 2027 PFS proposed rule would transition HCPCS G2211 to two modifiers: MOD1 for clinicians not in a Medicare ACO and MOD2 for SSP or LEAD participants, with MOD2 paid at twice the MOD1 rate. If finalized as proposed, Participant Providers billing under LEAD Participant TINs would be eligible to bill MOD2. This is a proposal, open for a 60-day comment period (file code CMS-1848-P). (Policy Update 7/14/26)
Proposed
SSP proposes ACPT guardrails and an annual projection; LEAD keeps its own guardrails
The SSP proposes ACPT guardrails of no more than 1.5 percentage points above and 1.0 point below the national growth rate, and a move from a five-year to an annual ACPT projection. LEAD retains its own guardrail structure (measured against the two-way blend, widening annually) and will also set the ACPT annually. Separately, the SSP proposes a growth adjustment to the historical benchmark for recruiting inexperienced ACO professionals; LEAD will not adopt it, pointing instead to the 1.5% Administrative Add-On and the new REA exclusion for higher-spending TINs new to ACO models. (Policy Update 7/14/26)
April 15, 2026
LEAD RFA — First Revision
CMS released a revised version of the LEAD Model Request for Applications on April 15, 2026, clarifying nine areas of the original March 31, 2026 document. The revision does not change the model’s fundamental design but addresses methodological ambiguities and corrects errors in the original release. Pages 2–3 of the revised RFA list the changes.
Significant
Benchmark adjustment cap raised for higher-spending former MSSP ACOs
The original RFA capped benchmark adjustments at 3% of risk-standardized USPCC for all former MSSP ACOs. The revision limits the 3% cap to lower-spending former MSSP ACOs only. Higher-spending former MSSP ACOs now receive the standard 5% cap, and the “previous two years” MSSP participation window is now explicit.
Affects: Benchmarking
Clarification
Hybrid alignment lookback windows specified
The original RFA described Hybrid Alignment conceptually but did not specify the lookback windows. The revision confirms that the initial alignment run uses October 1–September 30 prior to the PY, and the mid-year refresh for new Participant TINs uses January 1–December 31 prior to the PY. The two runs use different 12-month windows.
Affects: Alignment
Clarification
Regional efficiency adjustment now uses Base Year 3 only
The original RFA compared an ACO’s baseline to regional spending “during the historical base years” (BY1–BY3 average). The revision clarifies that the comparator is Base Year 3 only. CMS also clarified that the calculation is performed separately for each beneficiary category (A&D, HN, ESRD), then combined into a single population-weighted adjustment.
Affects: Benchmarking
Correction
Efficiency adjustment capitation option removed
The original RFA’s benchmarking graphic footnote suggested that a portion of the Regional Efficiency or Prior Savings adjustments “may be converted to capitated payments.” This language has been removed entirely. CMS has apparently decided not to offer this conversion option. The benchmark adjustments remain as annual settlement adjustments only.
Affects: Benchmarking, Capitation
Correction
HN risk score cap graphic corrected to 3–8%
The original RFA’s benchmarking graphic footnote stated the High Needs risk score cap as 10%, inconsistent with the body text, which said 3–8%. The revision corrects the graphic footnote to 3–8%, aligning with the body text.
Affects: Risk Adjustment
Correction
High Performer Pool criteria updated and REACH references removed
The original quality scoring graphic contained erroneous references to “REACH ACOs” and omitted the Prevention and Quality Plan (PQP) from the High Performer Pool eligibility criteria. The revision removes the REACH references and confirms that an ACO receiving a CI/SEP score of zero can still qualify for the HPP if it receives the full PQP Reporting Adjustment.
Affects: Quality
Minor
Physical therapists added to RISE to Age in Place team
The RISE to Age in Place coordinated care team composition now includes physical therapists (PTs) alongside occupational therapists (OTs), registered nurses (RNs), and handypersons.
Affects: CARA
