As CMS Expands ACOs, Nursing Homes Push for More Aligned Model as 90% Are Left Out

Why It Matters

Including nursing homes in ACOs could lower Medicare spending while delivering higher‑quality, coordinated care to frail residents.

Key Takeaways

• Over 90% of skilled nursing facilities not in ACOs.
• Only <10% of SNFs currently participate in ACO programs.
• CMS’s LEAD model may be adapted for long‑term care.
• Tailored ACO could lower costs and improve resident outcomes.
• Administrative complexity blocks SNF participation in existing ACOs.

Pulse Analysis

The Centers for Medicare & Medicaid Services (CMS) has accelerated the rollout of new accountable care organization (ACO) models as part of its broader shift toward value‑based reimbursement. While the initiative promises greater coordination and shared financial risk, the design of current ACOs primarily targets community‑based providers, leaving skilled nursing facilities (SNFs) on the periphery. Data from the American Health Care Association shows that more than 90 % of SNFs are not participating, and less than one‑tenth have managed to join any existing ACO. Complex enrollment rules and attribution formulas that favor acute‑care settings are the chief barriers.

Industry advocates, led by AHCA/NCAL, argue that a long‑term‑care‑specific ACO—or a dedicated track within the forthcoming Long‑Term Enhanced ACO Design (LEAD)—could unlock significant savings. By aligning attribution, eligibility, and quality metrics with the realities of nursing‑home care—such as maintaining resident function, satisfaction, and reducing avoidable hospitalizations—providers would face incentives that reflect true cost of care. Early pilots suggest that tailored risk‑adjusted payments can improve outcomes while curbing unnecessary utilization, offering a compelling business case for CMS to refine its model before the 2027 phase‑out of ACO REACH.

The ripple effect of integrating SNFs into value‑based frameworks extends beyond individual facilities. Medicare’s long‑standing fee‑for‑service structure is gradually giving way to payment mechanisms that reward quality and efficiency, a transition that could generate billions in taxpayer savings if high‑risk, high‑need populations are managed effectively. For investors and operators, a clear, streamlined pathway into ACO participation reduces administrative overhead and creates predictable revenue streams tied to performance. As CMS continues to test, expand, or retire models, a nursing‑home‑focused ACO track appears increasingly essential for achieving its twin goals of better outcomes and cost containment.