Bridging the Gap: Private Industry Opportunities in the Wake of CMS Innovation Center Program Discontinuations

Introduction

On March 12, 2025, the Centers for Medicare and Medicaid Services (CMS) Innovation Center announced significant changes to its model portfolio. In a move described as aligning with "statutory obligation and strategic goals," the Innovation Center declared the early termination of several healthcare payment and delivery models by December 31, 2025. This decision, estimated to save American taxpayers approximately $750 million, represents a substantial shift in the federal government's approach to healthcare innovation. The announcement signals not only fiscal reprioritization but also creates a considerable vacuum in critical healthcare delivery experiments that were designed to improve care quality while reducing costs.

The discontinued models—Maryland Total Cost of Care, Primary Care First, ESRD Treatment Choices, and Making Care Primary—along with the scaling back of Integrated Care for Kids and the abandonment of previously announced Medicare $2 Drug List and Accelerating Clinical Evidence initiatives, leave significant gaps in the healthcare innovation landscape. These programs were established to test novel approaches to healthcare delivery and payment, with the ultimate goal of identifying sustainable solutions that could be implemented nationwide. Their premature conclusion raises important questions about the future of healthcare innovation in the United States.

However, where the federal government steps back, private industry has a unique opportunity to step forward. The discontinuation of these CMS Innovation Center programs creates an opening for private enterprises to continue, adapt, and enhance the experimental work begun under these initiatives. This essay explores the landscape of opportunities for private industry to assume the mantle of healthcare innovation leadership, examining which companies are best positioned to partner with the federal government in creating the empirical foundation necessary for future healthcare policy decisions.

The void left by the CMS Innovation Center's portfolio restructuring presents a rare opportunity for private companies to demonstrate their capability to drive healthcare transformation while generating the critical data needed to support actuarially sound business cases for cost reduction. This essay will analyze the specific opportunities corresponding to each discontinued model, identify the private entities best equipped to seize these opportunities, and outline potential partnership frameworks between private industry and the federal government that could foster continued innovation in healthcare delivery and payment systems.

In the following sections, we will delve deeply into the characteristics and objectives of each discontinued program, assess the capabilities and positioning of various private sector players, and propose potential collaborative structures that could ensure the valuable work initiated by the CMS Innovation Center continues to advance, ultimately benefiting patients, providers, payers, and the healthcare system as a whole.

Understanding the Discontinued CMS Innovation Models

The CMS Innovation Center: Purpose and Statutory Mandate

Before examining the specific models being discontinued, it is essential to understand the purpose and statutory mandate of the CMS Innovation Center. Established under the Affordable Care Act in 2010, the Center for Medicare and Medicaid Innovation (CMMI) was created with the explicit purpose of testing innovative payment and service delivery models that could potentially reduce program expenditures while maintaining or improving the quality of care for beneficiaries of Medicare, Medicaid, and the Children's Health Insurance Program (CHIP).

The Innovation Center operates under a clear statutory mandate: to identify, test, and eventually scale successful models that demonstrate the ability to reduce healthcare costs without sacrificing quality. This dual focus on cost reduction and quality maintenance has shaped the Center's portfolio of experimental models. The recent announcement of model discontinuations indicates a reassessment of which experiments align with this core mandate, particularly with respect to demonstrable cost savings.

In its March 12, 2025 announcement, CMS emphasized its commitment to a "comprehensive and data-driven review" based on "the clear statutory mandate given to the Center by Congress." This language suggests a renewed focus on measurable cost reduction as a primary criterion for model continuation, with the stated goal of saving American taxpayers nearly $750 million through the early termination of selected models.

Maryland Total Cost of Care (2019-2026)

The Maryland Total Cost of Care (TCOC) Model represented one of the most ambitious state-level payment transformation initiatives in the country. Building upon the success of Maryland's All-Payer Model, which focused primarily on hospital services, the TCOC Model expanded cost containment efforts to encompass virtually all healthcare services provided to Maryland residents. The core aim of this model was to test whether state-level accountability for the total cost of care could successfully limit healthcare spending growth while improving quality and population health outcomes.

Key features of the Maryland TCOC Model included:

1. Global Hospital Budgets: Continuing the approach from the All-Payer Model, Maryland hospitals operated under global budgets that established fixed annual amounts for hospital services, creating strong incentives to reduce unnecessary utilization and complications.

2. Care Redesign Programs: The model incorporated initiatives that allowed hospitals to partner with non-hospital healthcare providers to improve care coordination, with opportunities to share in savings generated through improved efficiency.

3. Primary Care Program: The model included a specialized primary care component that provided resources and incentives for primary care providers to offer advanced care management services, particularly for high-need, high-cost patients.

4. Population Health Improvement: The model established specific goals for population health enhancement, including reductions in diabetes, opioid use, and other public health priorities.

The Maryland TCOC Model was distinctive for its comprehensive approach to healthcare transformation at the state level, creating a laboratory for testing whether coordinated, multi-level interventions could produce meaningful cost containment while advancing quality and population health goals. The model's early termination raises questions about the continuation of this unique state-wide experiment and the potential loss of valuable longitudinal data on the effects of global budgeting approaches.

Primary Care First (2021-2026)