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CMS last week announced that four Medicare payment models will be shut down by the end of 2025, earlier than originally scheduled — continuing a trend of healthcare spending cuts in the federal government.
CMS ends 4 payment models early
Last week, CMS announced that four experimental payment models within the Center for Medicare and Medicaid Innovation (CMMI) will be ending at the end of 2025, earlier than originally scheduled:
- The Primary Care First model, which was designed to improve advanced primary care, particularly for patients who do not routinely see primary care providers (Original end date: 2026)
- The Making Care Primary model, which was designed to improve coordination and care management between primary care providers, specialists, and community resources (Original end date: 2034)
- The ESRD Treatment Choices model, which aimed to improve home dialysis uptake and the kidney transplant process while reducing spending (Original end date: 2027)
- The Maryland Total Cost of Care model, which made the state fully responsible for Medicare costs and built on its all-payer rate-setting system (Original end date: 2026)
"As is the nature of innovation, not every model will work, and the center must be efficient and effective in its response," CMS said. The agency also noted that changes will help generate almost $750 million in savings, though it did not elaborate on where these savings will come from.
In addition to ending these models, CMS said it is considering ways to scale back the Integrated Care for Kids (InCK) model in Medicaid and CHIP. The InCK model was designed to help providers identify children with complex health needs and create targeted treatment programs and interventions for them. The model is scheduled to run through 2026.
CMS will also no longer implement the Medicare $2 Drug List and Accelerating Clinical Evidence models, which were designed to limit drug spending. The models were originally created from a Biden-era executive order that was later revoked by President Donald Trump.
"The Innovation Center [CMMI] plans to announce a new strategy based on guiding principles to make Americans healthier by preventing disease through evidence-based practices, empowering people with information to make better decisions, and driving choice and competition," the agency said.
Although it's not clear what new models CMMI plans to introduce, Timothy Prinz, a director on the strategy and growth team at Optum Advisory*, noted that primary care will likely continue to be a priority for the agency and that a new primary care value-based care model could be forthcoming.
RELATED resources
- Insights from the 2026 CMS Advance Notice
- 2026 CMS Advance Notice Executive Summary
- Your guide to CMS' 14 value-based payment models
- How federal cost control tactics promote an enduring hybrid payment environment
- CMS' TEAM payment model is here. How should hospitals prepare?
- Transforming Episode Accountability Model (TEAM)
"Primary care remains a foundational component of the center's strategy," CMS said. "The early termination of Primary Care First and Making Care Primary does not signal a retreat from the center's support of primary care providers, but rather a need to focus on different approaches that are consistent with the CMS innovation center's statutory mandate and produce savings."
A larger trend in healthcare cuts
According to Healthcare Finance, the termination of CMMI payment models is part of ongoing efforts in the federal government to reduce government funding and programs, including in healthcare.
Last month, the House of Representatives passed a budget resolution that called for the House Energy and Commerce Committee, which oversee both Medicaid and Medicare, to cut $880 billion from the federal budget. Although the budget resolution does not specifically mention Medicaid, it is unlikely the budget target will be met without reducing funding for the program.
The Trump administration has also laid off thousands of probationary employees across various agencies at HHS, including CDC, CMS, FDA, and NIH. So far, over 5,000 probationary employees across several federal health agencies have been laid off.
Aside from these terminations, HHS recently sent the majority of its 80,000 employees voluntary buyouts to resign from their jobs and receive as much as $25,000 in payments. Previously, HHS Secretary Robert F. Kennedy Jr. suggested plans to cut staff at the agency, including immediately clearing out 600 NIH employees.
Federal health agencies have also implemented new policies to help curb spending. For example, NIH recently announced a new policy capping the indirect cost payment rate for new and existing grants at 15% — a change that could reduce indirect funding payments by as much as $3.3 billion.
In response, several states, as well as healthcare organizations, hospitals, and universities, have filed lawsuits against NIH, arguing that the agency does not have the authority to implement such a policy and that the cuts could harm patients' health.
*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.
(Early, Modern Healthcare, 3/12; Tong, Fierce Healthcare, 3/12; Goldman, Axios, 3/12; Olsen, Healthcare Dive, 3/13; Lagasse, Healthcare Finance, 3/13)
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