McDermott+ is pleased to bring you Regs & Eggs, a weekly Regulatory Affairs blog by Jeffrey Davis. Click here to subscribe to future blog posts.
September 11, 2025 – Ever since the Centers for Medicare & Medicaid Services (CMS) Innovation Center released its new strategy in May 2025, it has been busy terminating and modifying existing models and announcing new ones, including the Wasteful and Inappropriate Service Reduction (WISeR) Model and the proposed Ambulatory Specialty Model (ASM). These and other notable developments may provide hints for where the Innovation Center wants to move in the future. To help me dive into these updates, I’m bringing in my colleague Simeon Niles.
Let’s start on the regulatory front (this is a regulatory blog after all!) Last week, the Trump administration released the Spring 2025 Unified Agenda, a “menu” of regulations that the administration plans to release over the coming year. This is the first unified agenda released under this administration. On the list of regs was not one, but two, proposed rules with the generic title “Center for Medicare & Medicaid Innovation Payment Models,” with proposed release dates of October and November 2025.
It is unclear exactly what these two new rules will include. As a reminder, all CMS Innovation Center models that mandate participation (i.e., mandatory models) must go through rulemaking. This rulemaking can be separate or integrated into standing Medicare payment rules. Historically, the CMS Innovation Center has done both: drafted separate regulations to implement mandatory models and announced and implemented models through Medicare payment rules (such as ASM in the calendar year 2026 Physician Fee Schedule proposed rule).
Thus, through these two rules, the CMS Innovation Center could:
The CMS Innovation Center has already set into motion three mandatory models: the Increasing Organ Transplant Access Model, the Transforming Episode Accountability Model (commonly referred to as TEAM), and ASM. The CMS Innovation Center has also hinted that it plans to put out additional mandatory models, so these rules could announce new ones.
While the CMS Innovation Center giveth, it may taketh away as well. On March 12, 2025, the Innovation Center announced its intention to end the End-Stage Renal Disease (ESRD) Treatment Choices (ETC) Model as of December 31, 2025, and on June 30, 2025, CMS released the CY 2026 ESRD Prospective Payment System proposed rule, which proposes to end the model.
Last week, the CMS Innovation Center announced significant changes to the Achieving Healthcare Efficiency through Accountable Design (AHEAD) Model. The AHEAD model is a state-based model designed to control the total cost of care for a population of patients. Thus far, Maryland, Vermont, Connecticut, Hawaii, downstate New York (including the Bronx, Kings, Queens, Richmond, and Westchester counties), and Rhode Island are set to participate. Overarching changes to the model include:
This announcement signals a couple of key themes, including the Trump administration’s goal to use geographic accountability as a cost control lever. The Geo model was developed under the first Trump administration but was canceled in 2021 after stakeholders voiced concerns about the scope of the model, beneficiary choice, and how it would overlap with existing ACO models. Its revival under AHEAD underscores the administration’s willingness to revisit core features of the Geo Model.
The menu of policy options available to states to align with the CMS Innovation Center’s strategy (e.g., banning noncompete clauses, repealing any-willing-provider laws) also reveals how the Trump administration is looking to use Innovation Center models to encourage states to remove or reduce certain regulatory barriers to value-based care.
While not a CMS Innovation Center model, the national Medicare Shared Savings Program (MSSP) sets the tone for ACO initiatives that the Innovation Center is testing or plans to develop. A couple of weeks ago, CMS reported extremely positive results from performance year (PY) 2024. According to a CMS fact sheet, “Out of 476 ACOs, 75% of ACOs, representing 80% of the 10.3 million assigned beneficiaries, are earning performance payments totaling $4.1 billion, and Medicare saved $2.4 billion relative to benchmarks. PY 2024 had the highest share of ACOs receiving performance payments and the highest amount of savings for ACOs and Medicare since the inception of the Shared Savings Program.”
The Trump administration has made it clear that it wants to get even more savings from ACO initiatives such as the MSSP by pushing providers to assume downside financial risk for losses relative to a preestablished spending benchmark. In the calendar year 2026 Physician Fee Schedule proposed rule, for example, CMS proposed to reduce the length of time an ACO can participate in a one-sided risk track of the MSSP (meaning that an ACO is only eligible for savings and not liable for losses). Under the proposal, if certain ACOs want to stay in the MSSP after a maximum of five years, they would need to take on financial risk.
However, it is still unclear how the CMS Innovation Center plans to leverage the success of MSSP to provide top-performing ACOs the ability to take on even more downside financial risk. As we explored in a previous Regs & Eggs blog post, the Innovation Center’s ACO Realizing Equity, Access, and Community Health (REACH) Model provides a full risk option (where the ACO is able to receive 100% of savings or liable for 100% of losses). The ACO REACH Model is supposed to conclude at the end of 2026, and stakeholders have been advocating for its continuation or evolution. Some participants have formally asked CMS to develop a higher risk track within the MSSP to accommodate high-performing ACOs once the ACO REACH Model ends. CMS has not yet committed to a path forward.
The CMS Innovation Center may put forth models aimed at achieving another Trump administration priority: lowering the cost of prescription drugs. On April 15, 2025, President Trump issued an executive order directing the CMS Innovation Center to develop a mandatory payment model to improve Medicare’s ability to obtain high-cost prescription drugs and biological products not already included in the Medicare Drug Price Negotiation Program. Subsequently, the president issued his most-favored-nation drug pricing executive order and sent letters to manufacturers stating that if manufacturers “refuse to step up,” the federal government “will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.” These actions highlight the administration’s determination to reduce drug costs, and if necessary, through rulemaking.
While not related to reducing drug prices, it is notable that the Washington Post reported last month that the Trump administration was planning a “five-year experiment” where “state Medicaid programs and Medicare Part D insurance plans would be able to voluntarily choose to cover Ozempic, Wegovy, Mounjaro and Zepbound for patients for ‘weight management’ purposes.” Expanded coverage of GLP-1s was initially proposed under the Biden administration, but it is unclear whether the Trump administration plans to carry out this reported model. It is definitely on our radar, though!
The CMS Innovation Center has been keeping us in the health policy community busy, and we don’t expect the pace of activity to slow down at all in the foreseeable future!
Until next week, this is Jeffrey (and Simeon) saying, enjoy reading regs with your eggs.
For more information, please contact Jeffrey Davis. To subscribe to Regs & Eggs, please CLICK HERE.
