Every ACO executive who has watched their MSSP benchmark reset upward after a strong savings year understands the structural unfairness of rebasing. You reduce costs. CMS updates your benchmark to reflect those lower costs. Your next-year savings shrink. You reduce costs again. The benchmark rises again. The incentive to improve is perpetually consumed by the improvement itself. LEAD eliminates this entirely. That single structural change is worth understanding in detail.
How Rebasing Has Worked, and What It Cost High Performers
MSSP baselines use rolling historical expenditure data. Strong performers see their benchmarks tighten over time as their own improved cost performance gets folded back into the calculation.
This ratchet effect penalizes consistent cost reduction. ACOs face diminishing shared savings returns the better they perform year over year. The result: many organizations with strong performance histories concluded that MSSP's long-term economics didn't justify the downside risk commitment. A CMS analysis of MSSP performance published in 2025 showed a substantial share of ACOs not earning shared savings in recent performance years, with the benchmark methodology identified as a contributing structural factor.
How LEAD's Benchmark Is Set
LEAD uses a fundamentally different approach.
Historical baseline: Three calendar years of spending data (CY2024, CY2025, CY2026) set the starting point.
Fixed for the duration: That baseline is locked for the entire 10-year model. It is never recalculated from observed spending. However the ACO performs in years two, five, or nine: the benchmark's historical foundation doesn't move.
Annual trending: Each year, the baseline is trended forward using national growth rates, regional growth rates, and the Accountable Care Prospective Trend (ACPT), CMS' forward-looking projection of what spending would have been absent ACO intervention.
The benchmark discount: Global Risk ACOs carry a small discount of approximately 1.75 to 3% on their benchmark in exchange for accepting 100% of savings and losses. Professional Risk ACOs at 50% do not carry this discount.
The key point: only the trend factor moves. The underlying historical expenditure never changes.
The Savings Wedge
This is the central financial innovation of the 10-year model.
In year one, an ACO reduces costs below the benchmark and earns shared savings on that gap.
In year three, the ACO's actual spending has remained disciplined. The benchmark has continued trending upward, driven by the ACPT and regional growth factors. But the ACO's costs haven't followed national trends at the same rate, because the ACO has been managing them actively. The gap widens.
By year six, a well-managed ACO is sitting on a materially larger spread between its actual spending and a still-compounding benchmark than it was at model entry. Savings grow: not because costs continue falling dramatically, but because the benchmark keeps rising while actual spending stays controlled.
This is the structural opposite of MSSP's rebasing cycle. Every year you perform, the next year becomes more favorable. Under MSSP, every year you perform, the next year becomes harder.
CMS refers to this dynamic as the savings wedge. It's the reason a 10-year performance period isn't just a longer version of MSSP. The duration is what allows the wedge to compound.
First-Dollar Savings: Why the MSR Removal Matters
MSSP requires ACOs to hit a Minimum Savings Rate before any shared savings are earned. The threshold varies by ACO size and track, but the effect is consistent: organizations that generated real savings just below the threshold received nothing for that performance year.
LEAD eliminates this. Savings begin the moment actual costs fall below the benchmark: first dollar, no threshold.
For smaller ACOs that consistently generated savings just below the MSSP MSR cutoff, this is a direct correction. Combined with the PCC upfront capitation option available to Global Risk ACOs, LEAD is deliberately designed to make the economics work for organizations that found MSSP's structure unrewarding even when their care management was effective.
Loss Corridors: Real Risk, Structured to Prevent Catastrophe
Two-sided risk is real under LEAD. The model is not designed to be loss-free, and any characterization of it as such would be misleading.
Under Global Risk, ACOs share 50% of losses up to 10% of benchmark. Beyond 20% of benchmark in losses, the ACO's share drops to 5%.
The corridor structure is designed so that a genuinely bad year produces significant but not catastrophic financial consequences. Combined with no-rebasing and first-dollar savings, LEAD's risk design is more ACO-favorable than any prior model CMS has built, but organizations entering the Global track should model the loss scenarios, not just the savings scenarios.
The Mid-Model Transition to Rate-Book Benchmarks
LEAD transitions to standardized, rate-book-based benchmarks in the second half of the performance period, estimated roughly around PY2032, though the precise timing and methodology are not yet finalized.
Under rate-book methodology, CMS sets standardized expected expenditures based on beneficiary demographics and conditions, rather than each ACO's historical spending. The purpose: as costs converge across higher- and lower-spending ACOs over the 10-year period, a uniform rate-book baseline becomes more equitable than divergent historical baselines.
The practical implication is asymmetric. Organizations entering LEAD with above-average historical costs may benefit from rate-book convergence: their benchmark improves relative to their actual spending. Organizations entering with below-average historical costs should model the transition carefully. Their benchmark may compress relative to what the historical baseline would have produced.
Details of the transition methodology are not yet final. This is an area worth monitoring and an explicit reason actuarial modeling now, in 2026, before performance begins, is more valuable than waiting until PY2027.
MSSP vs. LEAD: Key Benchmark Dimensions
| Dimension | MSSP | LEAD |
|---|
| Benchmark baseline | Rolling historical; rebases periodically | Fixed (CY2024–2026); trended forward, never recalculated |
| Minimum savings rate | Yes, required before earnings begin | No, first-dollar savings |
| Long-term performance incentive | Decreases (better performance tightens benchmark) | Increases (savings wedge compounds) |
| Risk share | Varies by track | Global: 100% / Professional: 50% |
| Loss protection | Varies | Structured corridors; 50% share up to 10%, declining to 5% beyond 20% |
| Benchmark evolution | Rebased periodically | Transitions to rate-book in second half of 10-year model |
The Honest Position
The no-rebasing structure doesn't make LEAD risk-free. Ten years is a long time, and the ACPT assumption is a real uncertainty that actuarial teams should stress-test, particularly for organizations in markets where historical cost trends have diverged from national averages. The mid-model rate-book transition adds another variable that requires forward-looking modeling, not retrospective assumption.
But for organizations that have been grinding through MSSP and watching their benchmark consume their savings, LEAD's design reflects a genuine rethinking of the incentive structure. For those organizations, particularly the ones that performed consistently but were systematically underrewarded, the savings wedge is not theoretical. It is the financial case for the 10-year commitment.
Adventist HealthCare documented $1.8M in MSSP savings, a 16.4% reduction in total expected cost of care for MSSP patients, and 15.8% fewer readmissions working with Innovaccer on population health and care management performance. That kind of result, applied to a no-rebasing model that compounds rather than resets, is what the savings wedge is designed to produce at scale.
The question for organizations entering LEAD isn't whether the savings wedge is real. It's whether your population health infrastructure is calibrated to the benchmark methodology well enough to capture it. That starts with unified clinical and claims data, accurate HCC capture, and a platform that tracks quality and financial performance across LEAD's specific program rules from day one.
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