The U.S. Centers for Medicare & Medicaid Services (CMS) has launched a new Accountable Care Organization-focused (ACO) payment model demonstration. The Long-term Enhanced ACO Design (LEAD) model is designed to help improve care collaboration and outcomes, including at the end of life.
The new LEAD model replaces the ACO Realizing Equity, Access, and Community Health (REACH) demonstration, set to expire at the end of 2026. The LEAD model is aimed at improving care coordination among a broader mix of health care providers, including hospices.
LEAD is among the longest payment demonstrations ever to be tested, with a performance period of 10 years. The voluntary model will run from January 1, 2027, through December 31, 2036.
The new payment model could potentially create new incentives for hospices to engage with more providers upstream, particularly those caring for patients with complex needs, according to Katy Barnett, director of home care, hospice operations and policy at LeadingAge.
“This new demonstration is looking to support more high-needs patients with increased incentives and flexibilities for providers,” Barnett told Hospice News in an email. “This shift in focus is positive for hospice and palliative care providers. When we think of the palliative and hospice populations, many of those beneficiaries could be categorized as complex and chronic patients.”
The LEAD model is a flexible capitated payment system designed to incentivize downstream value-based care arrangements, which could benefit hospice and palliative care partnerships, Barnett stated.
The new model’s population-based capitation reimbursement creates opportunities to incentivize health care providers to coordinate care and be more proactive in the care delivered, she said. The capitation reimbursement also allows for other risk-based payment arrangements to be built into the LEAD model among a wide variety of aging service providers and organizations, Barnett added.
The LEAD model replaces ACO REACH, which was developed as part of The Center for Medicare & Medicaid Innovation’s redesigned strategy that included a renewed focus on health care equity. Unveiled in 2023, the model replaced the Global and Professional Direct Contracting (GPDC) system.
The LEAD is designed to improve benchmarking and to appeal to a broader mix of health care providers, such as those serving specialized patient populations and those new to ACOs, including smaller, independent or rural-based practices. Many of these types of health care providers have not historically participated in or have dropped out of ACO programs due to associated financial and administrative obstacles, CMS indicated in an announcement.
The LEAD model is designed to better address these barriers of participation by providing enhanced, flexible cash flow payments. The model is also intended to expand coverage of supportive tools that increase clinical capacity at the bedside and address patients’ specialized care needs.
The LEAD model’s three-fold aim includes:
- Increasing the scope of ACOs to include more small, rural and independent health care providers and Community Health Centers
- Enhancing evidence-based prevention and care coordination for more patients, including those with high-needs
- Empowering patient choice and encouraging patients to be more actively involved in their care
The new LEAD ACO model focuses on coordinated care for high‑needs patients such as those dually eligible for Medicare and Medicaid, and those who are homebound or home-limited, said Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home.
During LEAD’s initial planning phase from March 2026 through December 2027, CMS will identify two states interested in partnering with the agency to develop a framework for ACO-Medicaid partnership arrangements. The framework will help define how ACOs and Medicaid organizations could work together to share data and coordinate care to improve outcomes and patient engagement, according to CMS.
A unique feature of the new model is that CMS will assist participating LEAD ACOs in designing embedded risk payment arrangements with other health care providers. Dubbed as the CMS Administered Risk Arrangements (CARA), this component of LEAD enables episode-based risk arrangements between ACOs and their specialists and provider organizations.
The CARA component is intended to facilitate greater and stronger preferred provider relationships, according to Loeffler.
One of the main goals of the LEAD model is to improve care for high-needs patients, which involves building stronger care networks and partnerships between ACOs and hospice and palliative care providers, Loeffler indicated. Hospices can demonstrate their value proposition through the ability to support smoother care transitions, reduce unnecessary hospitalizations and help ensure patients receive the right care at the right time, she stated.
“Ultimately, LEAD may help make end-of-life care more coordinated, patient-centered and aligned with individual goals and preferences,” Loeffler told Hospice News in an email. “While hospices are not direct participants, they can establish preferred provider arrangements with participating ACOs, which may include shared savings or value‑based incentives.”
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