CMMI to Sunset Payment Models by End of Year: What the Tea Leaves May Signal
This post was written by Juliette Price, Chief Solutions Officer
In the first announcement from the Trump-Vance administration regarding value-based payment models out of CMMI, a number of models have been cut short and will sunset by year’s end. Read more about what we can interpret in these early tea leaves and what the impacts hold for both those participating in the models and the broader health ecosystem.
This week, CMS announced that it was closing four alternative payment models, considering resizing another, and axing two unreleased but forthcoming models, while also giving hints of what’s to come.
The Announcement
The CMS announcement came without much warning on March 12; Axios had the scoop just a few hours before CMS unveiled their formal press release outlining the changes. CMS issued two releases, one entitled Statement on CMS Innovation Center Aligning Portfolio with Statutory Obligation and another entitled CMS Innovation Center Announces Model Portfolio Changes to Better Protect Taxpayers and Help Americans Live Healthier Lives. Understanding both of them singularly and then how they fit together gives the best read on CMS’ intentions for value based payment models moving forward.
Statement on Aligning the Portfolio: In what is normal CMS behavior, the new team at CMMI has undertaken the task of reviewing the active models in CMMI’s portfolio. Historically, incoming administrations take the first few months to review the models and then propose changes. In general, they have allowed models that are live to continue until the program end date, even if they are not completely aligned with the incoming administration’s priorities, citing the need for providers to maintain continuity.
This first announcement states that their work focused on completing a “comprehensive and data-driven review of our model portfolio based on the clear statutory mandate given to the Center by Congress.” This specifically refers to CMMI’s statutory goals of reducing program spending while maintaining or improving quality of care.
The announcement mentions that by ending certain programs earlier than anticipated, CMS will find one-time savings of $750M. For context, it’s important to note that CMMI has an annual budget of $1B.
The last line of this release is the most revealing–that 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.” Again, this is normal CMMI behavior, and we’ve seen each incoming administration issue new strategic vision and guidance for CMMI as they take office. What’s left to see is how the core pillars mentioned here–preventing disease, empowering people with information, and driving choice–will take shape in the form of an alternative payment model. As some have pointed out, finding a financial model that truly pays for the power of prevention has been the white whale of every health care system over the last 100 years.
Statement on Model Changes: The second release discusses immediate changes to the CMMI portfolio. Specifically, the programs slated for closure are:
Maryland Total Cost of Care Model (originally slated to end in 2026)
Primary Care First (originally slated to end in 2026)
Making Care Primary (originally slated to end in 2034)
ESRD Treatment Choices (originally slated to end in 2027)
CMS also mentions that it is considering options to reduce the size of the Integrated Care for Kids model, which was also slated to terminate in 2026.
Additionally, two other models that had been in development but not yet implemented will be shuttered:
Medicare $2 drug list
Accelerated Clinical Evidence
What These Changes Might Mean: Reading the Tea Leaves
To start to find meaning, we need to first unpack what’s actually happening here.
For starters, let’s bucket the termination of the two primary care models - Primary Care First (PCF) and Making Care Primary (MCP).
PCF was a model for primary care providers where providers were given a Flat Visit Fee for in-person primary care visits (boosting the FFS rate for these visits) as well as a Population-Based Payment - a risk-adjusted prospective quarterly payment for each beneficiary that was subject to further adjustment based on practice-level quality performance. There was no opportunity for shared savings through PCF.
MCP was a model quite similar to PCF; participating practices were eligible for Prospective Primary Care Payments (capitating PCP care instead of FFS), Enhanced Services Payments (risk adjusted PBPM enhanced payments), and Performance Incentive Payments when quality and cost benchmarks were met. Similar to PCF, shared savings were not available to these participants.
MCP had just launched in Summer 2024, so not enough time has elapsed for any formal evaluation to conclude. We do, however, have two formal evaluations of PCF which found that participants received more Medicare reimbursement (due to the financing model) but found it had minimal impact on hospitalizations and total Medicare expenditures. Ironically, the PCF participants felt that the augmented payments weren’t enough for their practices.
Now, let’s turn to the Maryland Total Cost of Care Model (and the expiring Vermont Total Cost of Care Model). Both of these are state-based approaches to manage Total Cost of Care, primarily through hospital-based budgeting. Both Maryland and Vermont have applied and been accepted into AHEAD, a new CMMI program introduced in 2023. AHEAD is built off of the Maryland and Vermont total cost of care models, so it makes sense for CMMI to “close” these older programs as these states roll into the new AHEAD offering.
A quick moment on ESRD Treatment Choices and Integrated Care for Kids (ICK)–both of these are specialty-based or specialty population models, and both had very limited uptake, so it’s also not surprising that the Center is moving to do away with these models. The second evaluation report from ICK seems to imply that the APM portion of the model was moving incredibly slowly if at all. The evaluation of the ESRD model seems to show no impact on Medicare spending and no increase in at-home dialysis use.
A Word About Meeting “Statutory Requirements”: A Bar Set Too High?
Current evaluations of these models aside, there is a gnawing problem that is eating away at CMMI. As described by former CMMI Director Liz Fowler herself at the 2024 HSG Innovations in Value Based Care Conference, there is a huge design flaw emerging in how CMMI must meet its statutory obligation of scoring APM models as “reducing program spend.” When that language was originally crafted and as CMMI got off the ground, it was easy to compare providers/patients in APM models with those not in models, since there were so few models and small levels of participation. Today, we find ourselves in a different world: 50+% of Medicare lives are no longer in Traditional Medicare but rather Medicare Advantage, and the rest of M-FFS lives are now by and large in some form of CMMI model, or being served by providers in these models even if patients themselves are not aligned. This makes the work of doing comparison extremely difficult. Fowler, herself an original author of these statutory obligations, discussed that changes are likely going to be needed for the evaluation framework to be useful in truly understanding if these models “work” against the backdrop of reducing costs.
What Wasn’t Said In All This:
Everyone is keen to see where the new administration will take ACO REACH, CMMI’s full-risk model, where primary care providers take up to 100% of upside/downside risk for their patients, against total cost of care, not just against primary care utilization. It is no surprise that ACO REACH was not mentioned in this update from CMMI. Summer 2025 is around the corner, when CMMI will need to outline their plan for either the end of ACO REACH or its successor (remember that ACO REACH is simply the successor to DCE). I anticipate seeing CMMI roll out a successor program to ACO REACH, with potentially major changes from how the APM functions today.
Also: it ain’t over ‘till it's over. Simply because other APMs were not mentioned in this announcement does not mean that anyone should consider their existence “safe.” The incoming administration said as much in its release, noting “other active models can meet the Center’s statutory mandate—either as is or with future modification—and therefore will continue moving forward.”
Here’s Where I See the Real Fight Coming
Ultimately, CMMI is exercising the right its new tenants have to clean house; no one is arguing with that. Some (myself included) will say good riddance to PCF and MCP–models requiring an extraordinary amount of low value work (think documentation, reporting, meeting arbitrary philosophical goals of the program) to unlock extremely low-dollar investments into primary care providers. We at HSG helped several clients model their opportunity in MCP, and every time the ROI was simply not there. Internally, we joked about MCP being value based care for kindergarteners (no offense to the 5-year-olds reading this at home).
So here’s the fight I see brewing–how can an entity support both full-risk primary care models like ACO REACH and programs like AHEAD, where the full-risk total cost of care and hence potential shared savings are locked up by hospital systems that are the cost drivers in most health care ecosystems? It feels like CMMI is at war with itself–perhaps head versus heart–with no clear resolution in sight.
What’s Next?
With that, we’re off to the races under the new Trump-Vance administration. CMMI does stand by the publication of the remaining evaluation reports from the models they have chosen to close, so we’ll be watching for that, as there’s so much to learn from what didn’t go right.
Next, we’ll wait and see what CMMI puts out as its strategic vision for the Center as well as interpretations of what that could mean for future APMs.
We anticipate more model changes to come, now that they’ve decided which ones to terminate. We also expect at least 1-2 new models to emerge by the end of the year, on top of the announcement of what will become of ACO REACH.
How Providers Can Prepare:
First, if there’s anything this shows us, it's that providers ought to have a Plan A for their move into value based care, but also a Plan B and C, and probably D, E, and F. Having a comprehensive, multi-year, multi-business line roadmap to value based care success will reduce the anxiety around changes to programs like these. It’s also so important that your value based roadmap conform to your needs as a provider, not just to the model-du-jour that may sound exciting but is a bad fit for your organization.
And finally–staying calm during the chaos is never a bad piece of advice. There’s always a lot of energy and momentum around administration changes, and this is no different. Staying calm and knowing you have a solid strategy will let you sleep soundly at night.
Curious how to feel empowered about your value based strategy and sleep soundly at night? Reach out to us at HSG - we’re experts at helping providers navigate this sea change.
About the Authors: Juliette Price is the Chief Solutions Officer. Connect with her on LinkedIn.
