In Short
The Situation: The Center for Medicare and Medicaid Services ("CMS") has announced significant changes to its value-based payment model portfolio projected to save $750 million as part of a shift in the agency's refocused strategy toward reducing costs.
The Result: Four payment models (including one model related to kidney care and two models related to primary care) will be terminated by the end of 2025 in advance of their initially scheduled termination dates.
Looking Ahead: CMS has stated that it remains committed to testing new value-based models that can reduce overall Medicare spend while encouraging choice and competition. Despite the announced changes, CMS has signaled an ongoing commitment to both kidney care reform and supporting primary care providers.
On March 12, 2025, the CMS Innovation Center announced changes to its value-based payment model portfolio that it has projected to save approximately $750 million. Notably, four models were selected for early termination by the end of 2025:
Maryland Total Cost of Care
Maryland Total Cost of Care is a state-specific model, initially scheduled to run from 2019–2026, that tests the effects of global budgets and care redesign on total cost and quality of care for Maryland residents.
A three-year CMS progress report on the model indicated that although hospitals saw positive outcomes, including lower total Medicare spend and decreases in both emergency and overall admissions, a significant increase in non-hospital spending under the model led to a drastic decrease in overall savings.
CMS advised that it still plans to move the state into the AHEAD model in 2026, which expands some but not all of the total cost of care principles used in the previous model to three new states. The CEO of the Maryland State Medical Society, known as MedChi, commented that the end of the Total Cost of Care model was not unexpected and will not delay timelines for transition to AHEAD, although the state expects changes to the new model's implementation under a new administration.
Primary Care First
Primary Care First is a national model, initially scheduled to run from 2021–2026, that tests the effects of a combination of capitation and flat-fee payments on primary care practices. CMS performance reporting on the model two years into its run indicated that Medicare expenditures had risen under the model with no measurable reduction in acute hospitalizations. The report identified barriers reported by lower-performing cohorts in the model, including staffing shortages and patient reluctance to engage in care delivery changes, especially care management.
Making Care Primary
Making Care Primary is a national model, initially scheduled to run from 2024–2034, that tests similar theories as the Primary Care First Model while offering pure capitation payment plans to providers. Notable as the only terminated model recent enough to have not yet undergone performance reporting, the savings the model may have offered are unclear.
Despite the termination of two primary care focused models, the CMS press release emphasizes that primary care remains a foundational component of agency strategy. Many Accountable Care Organization ("ACO") models remain untouched, including ACO REACH (set to sunset in 2026) and the newly launched ACO PC Flex model (scheduled to run from 2025-2029). CMS recently announced that the proportion of Medicare beneficiaries in accountable care relationships with primary care providers grew past the 50% threshold in 2024, signifying the ACO programs' momentum.
ESRD Treatment Choices
ESRD Treatment Choices is a national model initially scheduled to run from 2021–2027. The model aims to incentivize use of home dialysis and increase kidney transplant rates based on changes in end-stage renal disease facility and managing clinician reimbursement rates. The model was approved through formal rulemaking, and thus its termination is subject to the same process.
Early CMS reporting showed no significant changes to cost savings, home dialysis usage, or hospitalization rates. A more recent CMS report showed that less than half of overall participants received positive payment adjustments as a result of their participation.
Despite the model's impending cancellation, no reductions were announced for other models targeting similar kidney care reform goals. These include the ongoing voluntary Kidney Care Choices Model and the recently finalized mandatory IOTA Model, which are expected to remain active until 2026 and 2031, respectively.
Early terminations of experimental payment models are not entirely without precedent. CMS announced an early end to a value-based payment model as recently as December 2024, citing years of reports showing excess costs that could not be addressed through policy adjustments. The experimental nature of Innovation Center models means that most do not expand beyond their initially allotted time span. In fact, of the 54 models advanced by the CMS Innovation Center in its first decade, only four were extended past their initial termination dates.
Nonetheless, the recent announcement signals a significant strategic shift for CMS, which announced in a separate statement on the same day that the move is the first step in further changes to come as it attempts to align with its statutory goals of reducing spending without sacrificing quality of care. The agency's new strategy will focus on disease prevention and driving choice and competition. Value-based model participants across the industry will need to closely monitor evolutions in CMS strategy over the coming months.
Two Key Takeaways
- The changes in the model portfolio are reported to be the first step toward a larger strategic shift seeking cost savings while increasing competition and beneficiary choice, with a new focus on disease prevention.
- CMS has signaled that the changes do not indicate a retreat from support of longstanding agency goals such as primary care and kidney care reform.
