Where CMS is taking value-based care next and what it means for healthcare organizations

After nearly two decades of incremental progress, the value-based care shift is starting to look real. Last year, the Centers for Medicare and Medicaid Services (CMS) reported 53% of people with traditional fee-for-service (FFS) Medicare are now in an accountable care relationship.

But that milestone comes with caveats. Many participating providers remain insulated from meaningful downside risk. At the same time, CMS is reshaping its model portfolio—expanding some programs, retiring others, and redesigning others in between. Outside Medicare, reimbursement is still largely anchored in FFS payment.

Value-based care has become less a destination than an enduring experiment defined by iteration, where legacy payment structures coexist with newer models linking reimbursement to cost, quality, and outcomes.

CMS’s latest model updates mark another phase in that evolution, with implications that extend across providers, pharma, medtech, and health tech. What follows is a closer look at the models being tested in the year ahead.

Changes to CMS Innovation Center models in 2025 & 2026

Fig. 1 - Selected changes to CMS Innovation Center models in 2025–2026, by status. Source: Centers for Medicare & Medicaid Services (CMS) Innovation Center model announcements and fact sheets.

The changes are best understood in the context of CMS’s broader model portfolio. The table above summarizes the current landscape heading into 2026. However, the most consequential shifts are concentrated in a smaller set of models across three core categories: episode-based bundles, chronic condition–focused outcome payments, and population-based ACO structures.

CMS makes surgical care episodes mandatory at scale

TEAM Model

For more than a decade, CMS has experimented with episode-based payment models. The new Transforming Episode Accountability Model (TEAM) represents a significant expansion of mandatory episode-based payment. Starting in 2026, roughly 750 hospitals across 188 selected markets are required to participate in bundled payment arrangements for five high-cost surgical procedures:

• Coronary artery bypass graft (CABG)
• Major bowel procedures
• Lower extremity joint replacement
• Surgical hip/femur fracture treatment
• Spinal fusion

For each episode, hospitals will be held accountable for the total cost and quality of care from the initial procedure through 30 days post-discharge, extending financial responsibility beyond the hospital stay to include post-acute care, outpatient follow-up, and recovery at home.

To ease the transition, TEAM will include a one-year glide path in 2026 featuring upside-only risk. Downside risk will start in 2027, at which point up to 20% of episode reimbursement will be linked to performance against CMS-set target prices. These targets are based on regional benchmarks and risk-adjusted across beneficiary and hospital characteristics.

CJR-X Model

In parallel, CMS is proposing expansion of the CJR-X model, an extension of the long-standing Comprehensive Care for Joint Replacement (CJR) framework. While the original model focused on hip and knee replacements, it demonstrated episode-based payments could reduce post-acute spending without compromising quality across a 90-day window spanning from surgery through recovery.

The proposed expansion broadens this scope by adding ankle replacements and increasing geographic participation, with CJR-X becoming mandatory for most hospitals starting October 1, 2027. Hospitals participating in TEAM would be excluded from CJR-X during their participation period; upon completion of TEAM, eligible hospitals would transition into CJR-X participation.

Because data from early CJR evaluations shows shifting patients from high-cost skilled nursing facilities (SNF) toward home-based recovery can reduce spending without compromising quality, providers are likely to see more aggressive management of discharge dispositions and a tightening of preferred provider networks.

Together, these models reflect a broader move toward mandatory participation as CMS seeks to drive system-wide impact across hospital markets. The next evolution of value-based care moves even further upstream, from managing episodes of care to managing chronic disease itself.

CMS chronic care pilot could be a boon for health tech

The Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) model represents CMS’s attempt to address a long-standing gap in Medicare: how to reimburse continuous, technology-enabled chronic care that does not fit neatly into FFS billing.

Launching on July 1, 2026 as a voluntary 10-year model with approximately 150 participating organizations—including provider groups and digitally enabled care delivery companies like Headspace Health, Noom, and Teladoc Health—ACCESS brings a broader set of organizations into Medicare participation. Most selected participants have not traditionally served Medicare beneficiaries and are required to enroll as Medicare Part B providers or suppliers to take part.

The model provides participating organizations with recurring payments for managing Medicare beneficiaries’ chronic conditions, with a portion of reimbursement linked to measurable clinical outcomes. It’s structured around four clinical tracks:

• Early cardio-kidney-metabolic (eCKM) conditions
• Cardio-kidney-metabolic (CKM) disease
• Musculoskeletal (MSK) conditions
• Behavioral health (BH) conditions

These categories collectively cover a significant portion of chronic disease burden in the Medicare population.

Unlike traditional models that pay for encounters, ACCESS pays for condition management over time. Care delivery is explicitly designed to extend beyond the clinic visit, incorporating telehealth, asynchronous communication, remote monitoring, behavioral coaching, and FDA-authorized digital health tools.

Payment is partially linked to outcomes. Improvements in blood pressure, glycemic control, functional status, or validated patient-reported outcomes determine reimbursement levels. CMS plans to publish risk-adjusted performance data to inform beneficiary choice among participating organizations.

Importantly, ACCESS also formalizes integration with primary care. Participating organizations are expected to coordinate with referring clinicians, supported by structured referral pathways and co-management payments.

Earlier this year, several major insurers, including Blue Shield of California, CVS Health, Humana, UnitedHealthcare, and Cigna, pledged to adopt an outcomes-based payment structure aligned to the ACCESS model, signaling its potential emergence as a blueprint for chronic care reimbursement across the broader payor landscape.

ACOs are stabilizing into longer-duration population health frameworks

The Long-term Enhanced ACO Design (LEAD) Model builds on CMS’s accountable care strategy following ACO REACH. Set to begin in 2027, it’s a 10-year voluntary model intended to provide greater stability for participating organizations and reduce the cycle of frequent redesign seen in earlier ACO programs.

The model retains a two-sided risk structure but formalizes two participation pathways:

• Global Risk: 100% shared savings and losses
• Professional Risk: 50% shared savings and losses with limited downside exposure

A central aim of LEAD is to widen participation beyond large health systems, with a particular focus on smaller, rural, and independent practices. CMS has also revised benchmarking and risk adjustment to better reflect the realities of caring for complex patients, including dual-eligible beneficiaries and individuals with significant functional limitations or home-based care needs.

At the same time, the model strengthens incentives for beneficiary engagement and gives providers more flexibility in delivering preventive care. It also points to continued efforts to align Medicare and Medicaid financing in select states, particularly for dual-eligible populations, where care has long been split across fragmented programs.

Compared to earlier ACO models, LEAD shifts toward longer-term participation, with more stable benchmarking and a longer performance horizon aimed at encouraging sustained investment in care delivery rather than short-term entry and exit cycles.

Implications across the healthcare ecosystem

These new and improved models could reshape how risk and reimbursement flow through the healthcare system, raising distinct implications across providers, life sciences, digital health, and payors.

• Hospitals and physicians: Providers are increasingly operating across overlapping payment structures—ACOs, episode-based bundles, and condition-level models—forcing a shift from single-contract optimization to managing a portfolio of risk. The advantage moves to organizations with the infrastructure to manage total cost of care across settings, including inpatient, outpatient, and post-acute care. It also increases pressure to manage downstream utilization, particularly post-acute care placement, referral networks, and site-of-care decisions, as payment becomes more tightly linked to total episode or condition costs.
• Biopharma: Drug and therapy value is increasingly being evaluated in terms of total system cost impact, not just clinical efficacy. As providers assume more financial risk, prescribing decisions could be more directly influenced by downstream outcomes such as hospitalizations, complications, adherence, and avoidable utilization. The implication is a shift toward outcomes-anchored commercialization, where therapies that demonstrate reductions in total cost of care or improvements in longitudinal outcomes are more likely to be favored in prescribing and coverage decisions.
• Medtech: In surgical bundle models, devices are increasingly judged on their performance across the entire episode of care, not just during the procedure itself, factoring in complications, length of stay, discharge setting, and readmissions. That shift could further favor procurement decisions that prioritize technologies demonstrating reductions in total episode cost, not just procedural performance alone. It also raises the evidentiary bar for adoption, particularly for higher-cost devices, as hospital margins become more tightly linked to performance against CMS benchmarks.
• Digital health: The CMS ACCESS model creates a direct reimbursement channel for tech-enabled chronic care delivery, formalizing payment for services that have historically struggled to gain traction. For vendors, this shifts revenue away from episodic reimbursement and employer contracts toward more predictable, Medicare-linked payments tied to ongoing care delivery. The model’s 10-year horizon and public reporting requirements also provide a level of durability and visibility that shorter-cycle innovation models have lacked. Just as importantly, the performance threshold rises. Vendors will be measured on clinical outcomes, not just engagement or utilization. Those able to demonstrate population-level impact are more likely to secure durable reimbursement and deeper integration into care delivery, while others risk being squeezed out as reimbursement consolidates around proven performers.
• Insurers: CMS continues to anchor the direction of value-based care, but commercial adoption remains uneven and market-dependent. Rather than a unified shift, the system is evolving into a multi-speed environment where Medicare leads structural design and commercial payors selectively adopt components. This creates both alignment pressure and fragmentation risk across markets.

Build for the trajectory, not just the moment

The CMS target of 100% of Medicare in financial risk arrangements by 2030 was set before the current administration and reflects a long-standing institutional direction that has survived multiple policy cycles. The models will continue to change. The underlying trajectory has not.

For healthcare organizations, the question is less about whether to participate in value-based care than how to build capabilities that hold up as models are layered, revised, and replaced over time. In an environment defined by iteration rather than endpoint, durability comes from operating across frameworks.

To see how Definitive Healthcare data can help surface the signals behind value-based care performance and reveal where opportunity and risk are emerging, register for a demo today.