Confused by CMS's LEAD, TEAM, and ACO models? Circle Health breaks down every value-based care model nursing home operators need to act on in 2026.
The Centers for Medicare & Medicaid Services (CMS) is pushing harder than ever toward value-based care - and the pressure is landing squarely on nursing home operators. Between the Long-Term Enhanced ACO Design (LEAD), the Transforming Episode Accountability Model (TEAM), shadow bundles, MSSP threshold changes, and the nationwide CJR expansion, keeping up can feel impossible.
But here's the reality: 70% of Medicare fee-for-service spending is not currently being managed by an ACO. In 2023 alone, unmanaged Medicare FFS beneficiaries living in nursing homes incurred approximately $18.9 billion in spending - compared to just $6.1 billion for beneficiaries managed under an ACO. That $12.8 billion gap isn't just a policy problem. It's a signal of where the system is heading - and where the opportunity lies for providers who get ahead of it.
Key Takeaways at a Glance:
- LEAD and TEAM are the two models every nursing home operator must understand in 2026
- LEAD offers a decade-long framework with no rebasing, better cash flow, and flexible beneficiary alignment
- TEAM's hospital downside risk kicks in January 1, 2027 - post-acute referral dynamics will shift dramatically
- 70% of Medicare FFS spending remains unmanaged by ACOs - the opportunity window is wide open
- Circle Health provides AI-powered care management programs built for this exact transition
At Circle Health, we help physician groups, ACOs, health systems, and care facilities navigate exactly these shifts through AI-powered care management programs built for value-based environments. This article breaks down what matters most right now and what your organization should be doing about it.
Key Terms Decoded
Before diving in, here's your quick-reference guide to the acronyms you'll encounter:
LEAD - Long-Term Enhanced ACO Design. A new, decade-long ACO model with a direct pathway for nursing home participation and significantly improved financial terms over its predecessors.
TEAM - Transforming Episode Accountability Model. A mandatory CMS program for hospitals centered on five high-volume surgical procedures, with nursing homes directly impacted as the primary post-acute destination.
ACO - Accountable Care Organization. A network of providers that collectively takes on financial risk and rewards tied to patient outcomes and spending efficiency.
MSSP - Medicare Shared Savings Program. The foundational ACO program under traditional Medicare is now with updated alignment thresholds favorable to nursing home operators.
REACH - Realizing Equity, Access, and Community Health. The predecessor ACO model focused on high-needs and complex care populations, whose lessons directly shaped LEAD's design.
CJR - Comprehensive Care for Joint Replacement. A bundled payment model has now expanded nationally, making every lower-extremity joint replacement in the U.S. subject to a value-based payment arrangement.
Shadow Bundles - Episode-based risk arrangements that ACOs can administer internally within their existing accountable care structure - a quiet but important mechanism for future bundled payment expansion.
CMS Value-Based Care Models: At-a-Glance Summary
The table below summarizes all key CMS models relevant to nursing home operators - covering eligibility, required actions, incentives, and accountability structures.
1. LEAD: The Most Direct Opportunity for Nursing Home Operators
The Long-Term Enhanced ACO Design (LEAD) model is set to last a decade - and that longevity is by design. CMS is signaling that this isn't a pilot or a test. It's a framework built to last, giving providers the runway to invest meaningfully in care transformation without fear that the model will be discontinued before they see a return.
LEAD draws on the High-Needs REACH model, which demonstrated how ACO-style constructs could manage long-term care nursing facility residents, assisted living facility residents, and complex care individuals in the home. The difference is that LEAD takes those lessons and pairs them with substantially better financial mechanics.
Why LEAD Matters - At a Glance:
- Decade-long model stability - plan and invest with confidence
- No rebasing - strong performance is rewarded, not penalized
- Advanced payment options - cash flow relief for smaller, high-spending ACOs
- Concurrent risk adjustment - complex patients stay in the program even as their condition changes
- MSSP threshold lowered from 5,000 to 800 lives for high-needs beneficiaries
- Monthly voluntary alignment - grow your ACO population organically mid-year
No Rebasing: A Game-Changer for High Performers
One of the most significant structural improvements in LEAD is the elimination of rebasing. In historic models, if your facility drove down costs and improved outcomes, CMS would lower your future performance benchmark - essentially punishing efficiency. LEAD incorporates revised financial benchmarking with no rebasing, so strong performance builds on itself rather than working against you.
Circle Health Insight: Facilities that invest in Chronic Care Management (CCM) and proactive care coordination now will be the ones with the strongest outcome baselines when LEAD benchmarking begins - and no rebasing means that advantage compounds over time.
Solving the Cash Flow Problem
Historically, providers have had to wait a long time for savings to make it into their bank accounts. LEAD addresses this through prospective payment mechanisms that create a glide path for new participants - making it far more viable for nursing homes that operate on tight margins to participate without a cash flow crisis in the early years.
What this means operationally:
- Smaller ACOs and high-spending facilities can access advanced payments before the performance year ends
- Cash flow predictability makes budgeting for care management infrastructure far more feasible
- The financial barrier to entry - historically the biggest deterrent for nursing home ACO participation - is substantially reduced
This is particularly relevant for facilities that Circle Health partners with through its care management services model, where upfront cost barriers are a real concern. Our zero-upfront-cost approach to launching care management programs mirrors exactly the kind of financial accessibility that LEAD is trying to build into the Medicare model itself.
Concurrent Risk Adjustment: Keeping Complex Patients In
A persistent frustration with the REACH model was that beneficiaries whose health deteriorated significantly could be dropped from the ACO mid-year, removing them from coordinated care precisely when they needed it most. LEAD incorporates concurrent risk adjustment that accommodates changes in patient condition without risking a drop from the model during the performance year. For nursing homes managing high-acuity populations, this is meaningful protection.
Why This Matters: The sickest patients - those with multiple chronic conditions, post-surgical complications, or rapid functional decline - are exactly the population that generates the highest Medicare costs. Keeping them inside a coordinated ACO structure throughout their entire care episode, not just when they're stable, is where the real savings and outcome improvements happen.
Flexible, Organic Beneficiary Growth
LEAD allows operators to add claims alignment at the beginning or middle of a performance year - a new option for such a model - as well as monthly voluntary alignment, similar to an I-SNP enrollment function. For organizations actively recruiting physician partners or expanding referral networks, this means you can grow your aligned population continuously throughout the year, not just at annual enrollment windows.
MSSP alignment minimums have also been lowered significantly - from 5,000 lives to just 800 for high-needs beneficiaries - and functional frailty has been incorporated as a qualifying criterion. This opens LEAD participation to far more nursing home operators than previous models allowed.
Operators who benefit most from this change:
- Facilities in growth mode, adding physician partners throughout the year
- Smaller nursing homes previously locked out by the 5,000-life minimum
- Providers serving high-frailty populations who now qualify under the updated criteria
- Organizations transitioning from REACH or other prior ACO arrangements
Application Timing: Act Now
The first LEAD application period closed in mid-May 2026. CMS has said there will be subsequent application timeframes, but has been noncommittal on timing, criteria, and cohort size. The window will come - and it will likely move fast. Organizations that begin building their care coordination infrastructure, ACO partnerships, and physician alignment networks today will be positioned to apply immediately when it opens.
Circle Health's care management platform is designed to support exactly this kind of readiness - providing the data infrastructure, care manager capacity, and outcome tracking that CMS will be looking for in LEAD applicants.
2. TEAM: The Hospital Model That Will Reshape Post-Acute Referrals
The Transforming Episode Accountability Model (TEAM) is a mandatory program for hospitals focused on five surgical scenarios. Hospitals bear the financial risk - but the downstream implications fall heavily on post-acute providers, including nursing homes.
The Five TEAM Surgical Episodes to Know:
- Lower extremity joint replacement (LEJR)
- Surgical hip fracture treatment
- Spinal fusion
- Coronary artery bypass graft (CABG)
- Major bowel procedure
Key Insight: If your facility regularly receives patients following any of these procedures, you are already inside the TEAM model's financial orbit - whether or not you've formally engaged with it.
2027: The Year the Stakes Change
In 2026, hospitals are subject to upside-only risk under TEAM. That changes on January 1, 2027, when hospitals face downside financial risk. When a hospital stands to lose money on a bad post-acute outcome, the calculus around referral partners changes entirely. Nursing homes that have already established themselves as high-quality, data-driven partners will find themselves at the top of referral lists. Those who haven't will be at risk of being quietly deprioritized.
What hospitals will be evaluating in post-acute partners starting in 2027:
- 30-day readmission rates by procedure type
- Functional outcome improvement scores
- Average length of stay efficiency
- Infection and complication rates
- Care coordination, responsiveness, and communication quality
- Data-sharing and EHR integration capability
Circle Health's Remote Patient Monitoring (RPM) and Transitional Care Management (TCM) programs are specifically designed to reduce readmissions and smooth the hospital-to-post-acute transition - the exact metrics hospitals will be optimizing for under TEAM's downside risk structure.
The CJR Expansion: Every Joint Replacement Is Now Value-Based
CMS has expanded the Comprehensive Care for Joint Replacement (CJR) model - meaning every lower-extremity joint replacement in the country is now under a value-based payment arrangement. This is unprecedented in the history of value-based care in the U.S.
The practical implication: orthopedic post-acute volume - historically a strong revenue driver for skilled nursing facilities - is now tied to coordinated, outcome-based performance. Facilities with robust chronic care management and transition protocols will capture more of this volume. Those without them will see referrals migrate toward better-coordinated competitors.
Action steps for nursing homes receiving joint replacement patients:
- Benchmark your 30- and 90-day readmission rates against CMS national averages
- Establish structured communication protocols with referring hospitals
- Implement post-discharge follow-up programs within 48 hours of return to the facility
- Enroll eligible patients in TCM programs to reduce readmission risk
- Build a data-sharing relationship with hospital discharge teams
Shadow Bundles: The Coming Wave
MSSP and REACH ACOs have been collecting data on 29 inpatient, three outpatient, and two multi-setting clinical episodes of care spanning cardiac, pulmonary, gastrointestinal, spine, bone and joint, kidney, infectious disease, and neurology conditions. This data collection isn't academic - it's the infrastructure for the next generation of bundled payment programs.
Nursing home operators should audit their patient populations now. Which of these 34 episode types are most prevalent in your facility? Where are your outcomes strongest? Where are the gaps? Understanding your own episode profile is the first step to navigating what's coming - and to positioning your facility as a preferred partner for ACOs that will begin administering shadow bundles.
3. What's Next: Dual Eligible Models and Complex Care
More ACO models from the CMS Innovation Center are expected - possibly including a framework resembling the Program of All-Inclusive Care for the Elderly (PACE). Dual-eligible models and complex care models are anticipated to intersect significantly with nursing home operators.
A consistent thread through all of these models is the goal of creating parity between Medicare fee-for-service and Medicare Advantage - including beneficiary engagement incentives, Part B cost-sharing waivers, and other MA-coded features. In practical terms, this means the financial and structural advantages that MA plans have long held over traditional FFS are being steadily replicated in the ACO and bundled payment space.
The populations most likely to be targeted in upcoming CMS models:
- Dual-eligible beneficiaries (Medicare + Medicaid)
- Individuals with three or more chronic conditions
- High-utilization patients with frequent ED visits or hospitalizations
- Residents in long-term care facilities with complex behavioral health needs
- Post-acute patients with no established primary care relationship
Circle Health Insight: Behavioral Health Integration (BHI) is no longer a nice-to-have for nursing home operators - it's a strategic asset. BHI addresses the mental health comorbidities that drive disproportionate cost and utilization in nursing home populations, and it's a factor increasingly being incorporated into ACO risk models and dual eligible program design.
For nursing home operators who have focused primarily on traditional Medicare, this is the clearest signal that the environment is changing permanently - not cyclically.
4. How Circle Health Supports Your Value-Based Transition
The models above share a common requirement: the ability to manage populations proactively, coordinate care across settings, and demonstrate outcomes with data. That's exactly what Circle Health is built to deliver.
For ACO alignment and LEAD readiness: Circle's Chronic Care Management (CCM) program provides continuous, coordinated support for patients with chronic conditions - generating the care touchpoints and outcome data that ACO participation requires. Our Advanced Primary Care Management (APCM) program goes further, supporting the complex, high-needs populations that LEAD is designed to serve.
For TEAM and episode-based readiness: Transitional Care Management (TCM) ensures smooth hospital-to-facility transitions - reducing the readmissions that will cost hospitals money under TEAM's 2027 downside structure. Remote Patient Monitoring (RPM) catches deterioration between visits, preventing the complications that drive episode costs upward.
For behavioral health and whole-person care: Behavioral Health Integration (BHI) addresses the mental health comorbidities that drive disproportionate cost and utilization in nursing home populations - a factor increasingly being incorporated into ACO risk models.
For operational capacity without overhead: Circle's Care Management Services provides licensed nurses and NCLEX-certified RNs as an extension of your team - no infrastructure investment, no staffing overhead. This is the model that allows facilities to participate in value-based care programs without waiting until they've built internal capacity from scratch.
Five Actions to Take Before the End of 2026
- Map your episode profile. Identify which of CMS's 34 tracked episode types are most common in your patient population, and assess your outcomes data for each.
- Initiate hospital conversations now. Find out which hospitals in your market are participating in TEAM. Introduce yourself before their 2027 downside risk makes the conversation urgent on their end.
- Build your ACO infrastructure. Whether that's joining an existing ACO, exploring LEAD participation, or strengthening your care coordination capabilities through Circle's platform, the work starts now.
- Invest in readmission reduction. TCM and RPM programs that reduce rehospitalizations aren't just quality investments - they're the currency of every value-based model CMS is building.
- Watch for the next LEAD window. CMS will open another application period. Prepare your documentation, your partnerships, and your outcome data so you can move the moment it opens.
Conclusion
The future of nursing home reimbursement is increasingly tied to value-based care. Programs like LEAD, TEAM, expanded ACO participation, and emerging bundled payment models are reshaping how providers are evaluated, reimbursed, and selected as care partners. Facilities that invest in care coordination, outcome tracking, readmission reduction, and chronic care management today will be better positioned to thrive as these models continue to expand.
Rather than viewing CMS's evolving programs as a compliance burden, nursing home operators should see them as an opportunity to strengthen patient outcomes, improve financial performance, and build stronger referral relationships. Organizations that prepare now will be best equipped to succeed in the next generation of Medicare reimbursement and value-based care.
The alphabet soup is real - but every acronym in it points in the same direction: coordinated, outcome-driven, proactively managed care. That's not a compliance challenge. It's a care delivery challenge - and it's one that Circle Health is purpose-built to help you meet.
Ready to explore how Circle Health can support your value-based care strategy? Request a demo today →
Frequently Asked Questions
Q1. What is the LEAD model, and how is it different from previous ACO programs?
The LEAD model is a new CMS ACO program designed for nursing homes, assisted living facilities, and complex care providers. Unlike previous models, it eliminates rebasing and uses concurrent risk adjustment, allowing organizations to retain high-risk patients and benefit from long-term financial stability over 10 years.
Q2. My facility doesn't participate in any ACO. Does TEAM still affect me?
Yes. Although TEAM applies directly to hospitals, its impact extends to post-acute providers. Hospitals will increasingly evaluate nursing homes based on outcomes, readmission rates, and care coordination when selecting post-acute partners.
Q3. What are shadow bundles, and should nursing homes be paying attention to them?
Shadow bundles are episode-based payment arrangements that ACOs can create using existing patient outcome data. Nursing homes serving cardiac, orthopedic, pulmonary, or neurological patients should monitor these developments and assess their own episode performance data.
Q4. How does Circle Health help nursing homes participate in value-based care models?
Circle Health provides CCM, RPM, TCM, BHI, and PCM programs, as well as nurse-led care management services. These solutions help facilities improve care coordination, generate outcome data, and prepare for value-based reimbursement models.
Q5. The first LEAD application window closed. Did we miss our chance?
No. CMS has indicated that additional LEAD application opportunities will be available. Facilities can use this time to strengthen physician partnerships, improve care coordination, and build the infrastructure needed for future applications.
Q6. What dual-eligible and complex care models should nursing homes watch for next?
CMS is expected to expand programs focused on dual-eligible beneficiaries and complex care populations. Future models may include PACE-like programs, Special Needs Plans, and new ACO structures designed for high-need patients.