CMS Innovation Center: Early termination of Primary Care First and other payment models by end of 2025

The December 31, 2025 Termination Shock

On March 12, 2025, the CMS Innovation Center (CMMI) announced the early termination of the Primary Care (PCF) model, setting a definitive end date of December 31, 2025. This decision truncates the five-year model, originally scheduled to run through 2026 for its second cohort. For the nearly 2, 000 participating practices, this creates an immediate and steep “revenue cliff.” These practices, which serve over 500, 000 Medicare beneficiaries, face a reversion to Fee-For-Service (FFS) reimbursement. Data from the Advisory Board indicates that PCF participants stand to lose approximately 33% of their total Medicare revenue overnight. This reduction from the elimination of prospective Population-Based Payments (PBP) and the evaporation of performance bonuses that could reach 50% of revenue.

Quantifying the Financial Gap

The PCF model replaced the volume-driven treadmill of standard Medicare with a hybrid payment structure designed to fund advanced primary care. The termination removes two serious revenue streams that FFS does not replace.

1. Loss of Population-Based Payments (PBP)

Under PCF, practices received a prospective, risk-adjusted payment for each attributed beneficiary. This payment ranged from $28 to $175 per beneficiary per month (PBPM), depending on the patient’s complexity (HCC score). * The Cliff: On January 1, 2026, this guaranteed monthly cash flow drops to $0. * The Replacement: Practices must return to billing individual CPT codes for every interaction. While the PCF Flat Visit Fee (FVF) of ~$40. 82 revert to standard FFS rates (which are higher per visit), the volume of visits required to match the lost PBP revenue is operationally impossible for most clinics.

2. Elimination of Performance Upside

PCF offered a Performance-Based Adjustment (PBA) that allowed high-performing practices to earn a bonus of up to 50% on top of their primary care payments. * The Cliff: This upside chance. Standard Medicare FFS offers no comparable bonus structure for quality or acute hospitalization reductions. * The Impact: A practice earning $1 million in Medicare revenue under PCF could see that figure contract to $670, 000 in 2026, assuming identical patient volume.

Visualizing the Revenue Drop

The following table illustrates the projected revenue shift for a hypothetical practice with 1, 000 Medicare beneficiaries and an average risk score (Group 2).

Revenue Component	PCF Model (2025)	Standard FFS (2026 Projection)	Net Change
Base Visit Revenue	$142, 870 (Flat Visit Fees)	$325, 000 (Standard Rates)	+$182, 130
Population-Based Payment	$540, 000 ($45 PBPM avg)	$0	-$540, 000
Performance Bonus (Est. 20%)	$136, 574	$0	-$136, 574
Total Annual Revenue	$819, 444	$325, 000	-$494, 444 (-60%)

Note: The -60% figure represents a high-impact scenario for practices heavily reliant on PBP. The Advisory Board’s conservative estimate is -33%.

Operational Insolvency Risks

The revenue cliff creates a secondary emergency: operational insolvency. PCF payments were explicitly intended to fund care management infrastructure that is not reimbursable under FFS. Practices used PBP funds to hire: 1. Nurse Care Managers: To monitor high-risk patients. 2. Data Analysts: To track hospitalization metrics. 3. Social Workers: To address social determinants of health. When the PBP ends on December 31, 2025, the funding source for these salaries disappears. Unlike the revenue loss, which is a reduction in profit, this represents a fixed cost liability. Practices must either fire these staff members, the advanced care teams they spent four years building, or absorb the costs, which pushes independent practices into the red.

Why the Early Termination?

CMS data justifies the cut based on a absence of savings. The CMMI evaluation report released in 2024 showed that PCF increased Medicare expenditures by 1. 3% and failed to reduce acute hospitalizations significantly in its two years. With a statutory mandate to reduce costs, CMMI projects that ending PCF and other models early save the Medicare Trust Fund approximately $750 million. yet, this calculation ignores the sunk costs borne by practices. Participants invested in 2015 Edition Cures Update CEHRT (Certified Electronic Health Record Technology) and restructured their workflows based on a pledge of five years of stability. The early termination breaches that implied contract, leaving practices with expensive infrastructure and no method to pay for it.

Regional Disparities

The impact not be uniform. PCF operated in 26 specific regions. Areas with high concentrations of independent primary care practices, such as the Greater Philadelphia Region (which had the highest average risk scores) and rural areas in Montana and Alaska, face the most serious disruption. These practices frequently absence the capital reserves of large health systems to weather a 33% revenue drop.

“The early termination of Primary Care… does not signal a retreat from the Center’s support of primary care providers, rather a need to focus on different method that… produce savings.” , CMS Statement, March 12, 2025

This statement offers little solace to a practice manager trying to balance a 2026 budget that is suddenly missing one-third of its revenue. The “different method” CMS refers to, such as the Medicare Shared Savings Program (MSSP) or the new AHEAD model, frequently require and capital that small PCF practices do not possess.

Strategic Questions for Practice Leaders

1. Can we survive on FFS alone? Most PCF practices have optimized for low volume and high touch. Reverting to FFS requires increasing patient volume by 40-50% to maintain revenue, a shift that degrades care quality. 2. Should we join an ACO? Moving to an Accountable Care Organization (MSSP) is the most logical step, MSSP payments are shared savings (retrospective), not prospective PBP. The cash flow gap between the end of PCF (Dec 2025) and the chance MSSP shared savings check (late 2027) creates an 18-month liquidity desert. 3. What happens to our high-risk patients? Without the $175 PBPM payment for complex patients, practices lose the financial capacity to offer frequent check-ins and home visits. These patients are likely to return to the emergency room, ironically driving up the very costs CMS seeks to curtail.

The 126-Month pledge, Deleted

The Making Care Primary (MCP) model was engineered to be the CMS Innovation Center’s longest-running initiative. Launched on July 1, 2024, it carried a statutory end date of December 31, 2034. The 10. 5-year timeline was not an administrative suggestion; it was the core. CMMI solicited participation from safety-net providers and Federally Qualified Health Centers (FQHCs) by promising a decade of stability to justify the heavy upfront investment in value-based care infrastructure. On March 12, 2025, that pledge evaporated. The termination notice, December 31, 2025, reduces a decade-long transformation roadmap into an 18-month pilot. For the 133 participating organizations representing 772 practices across eight states, the reversal is absolute. These organizations, operating in Colorado, Massachusetts, Minnesota, New Jersey, New Mexico, New York, North Carolina, and Washington, face the liquidation of care management teams hired specifically for the model’s three-track progression.

Financial Mechanics of the Collapse

The termination of MCP is not a return to; it is a financial penalty for early adopters. The model’s design relied on “Upfront Infrastructure Payments” (UIP) to capitalize practices that historically absence access to value-based care tools. Track 1 participants, organizations with no prior value-based experience, were eligible for up to $145, 000 in UIP. These funds were legally restricted to infrastructure investments: hiring care managers, upgrading IT systems for e-consults, and establishing workflows for Health-Related Social Needs (HRSN) screening. With the model ending in December 2025, these investments become stranded assets. The revenue streams designed to sustain these new operational costs, specifically the Prospective Primary Care Payments (PPCP) scheduled to begin in later tracks, never materialize. Practices that hired staff in anticipation of 2026 revenue flows must terminate those employees or absorb the costs against declining Fee-For-Service (FFS) reimbursements.

Table: The MCP Liquidation Event

Metric	Original MCP Contract	Post-Termination Reality
Duration	10. 5 Years (126 Months)	1. 5 Years (18 Months)
End Date	December 31, 2034	December 31, 2025
Payment Model	Progressive Capitation (Tracks 1-3)	Reversion to Fee-For-Service
Infrastructure ROI	Amortized over 10 years	Immediate loss on sunk costs
State Alignment	Medicaid MOU for 10 years	Voided Multi-Payer Agreements

The “Make America Healthy Again” Pivot

The official justification for the termination cites a projected $750 million in savings and a strategic realignment with the “Make America Healthy Again” (MAHA) framework. Internal CMMI memos released alongside the March 12 announcement indicate that the agency’s new leadership viewed the MCP’s heavy upfront subsidies as “increased spending” rather than long-term investment. This marks a doctrinal shift in CMMI policy. Previous administrations accepted short-term losses in exchange for long-term reduction in acute care utilization. The 2025 termination signal prioritizes immediate fiscal contraction over longitudinal health outcomes. The decision also the multi-payer alignment that took years to negotiate. State Medicaid Agencies (SMAs) in the eight participating states had signed Memorandums of Understanding (MOUs) to align their Medicaid programs with MCP standards. These agreements were intended to create a unified payment environment for safety-net providers. The federal withdrawal leaves these SMAs with a fragmented payment and no federal partner to enforce the value-based standards they codified in 2024.

Participant

Data from the initial enrollment period shows that MCP successfully targeted the providers it was designed to help: small, independent, and safety-net organizations. Unlike the ACO REACH model, which attracted large aggregators and private equity-backed platforms, MCP’s roster included a high density of FQHCs and independent practices serving economically disadvantaged populations. These entities are the least equipped to absorb the shock. Large health systems can reallocate care managers to other departments; a small FQHC in rural North Carolina or New Mexico cannot. The termination punishes the specific provider class that CMMI spent five years courting.

“The Center… must be and in its response. This early termination… does not signal a retreat from the Center’s support of primary care providers.” , CMS Fact Sheet, March 12, 2025

even with this official statement, the operational reality contradicts the sentiment. By cancelling the model before the performance data could even be fully analyzed, CMMI has signaled that contract duration is no longer a reliable variable for healthcare business planning. The 10. 5-year term was the primary method used to convince skeptical boards and CFOs to approve participation. The breach of that term the credibility of future CMMI solicitations.

The Void in 2026

Come January 1, 2026, the 772 practices in the MCP cohort revert to the Physician Fee Schedule. The “Track 3” goal—a fully prospective, population-based payment model with zero FFS reliance—is dead. The immediate consequence is the cessation of Health-Related Social Needs (HRSN) screenings. MCP mandated and paid for these screenings to identify housing instability and food insecurity. Without the model’s Enhanced Services Payments (ESP), these screenings become non-reimbursable administrative load. The data pipeline connecting clinical care to community-based organizations, which was just coming online in late 2024, be severed. This termination creates a vacuum in the safety net. While the ACO Primary Care Flex Model remains active for MSSP participants, the MCP practices— of whom were ineligible for MSSP due to size or structure—have no alternative value-based chassis to step into. They are stranded in the volume-based system they attempted to escape.

The Maryland Ultimatum: TCOC Termination and the AHEAD Force-Function

On March 12, 2025, the CMS Innovation Center (CMMI) issued a directive that dismantled the Maryland Total Cost of Care (TCOC) Model one year ahead of its scheduled expiration. Originally contracted to run through December 31, 2026, the TCOC model terminate on December 31, 2025. This acceleration forces the state’s entire healthcare apparatus, encompassing 47 acute care hospitals and over 470 primary care practices, into an immediate, non-negotiable migration to the States Advancing All-Payer Health Equity method and Development (AHEAD) model. While CMMI classifies AHEAD as a “voluntary” state model, the transition is mandatory for Maryland to preserve its unique federal waiver. Without this agreement, Maryland hospitals would revert to standard Medicare Inpatient Prospective Payment System (IPPS) rates, a reversion the Maryland Hospital Association estimates would strip $3 billion annually from the state’s healthcare system. Governor Wes Moore and CMS Administrator Chiquita Brooks-LaSure formalized this “survival” agreement on November 1, 2024, locking the state into a new ten-year compliance regime starting January 1, 2026.

Financial Recalibration: The 0. 128% Squeeze

The migration to AHEAD introduces stricter fiscal tightening compared to the TCOC era. Under the expiring TCOC terms, Maryland was tasked with saving Medicare over $1 billion in total cost of care by the end of 2023, a target the state successfully navigated. The AHEAD agreement replaces these aggregate savings goals with a granular, efficiency metric. Starting in 2026, Maryland must achieve a 0. 128% incremental reduction in Medicare Fee-For-Service (FFS) spending growth * * the national trend annually. While this percentage appears nominal, the effect over the model’s decade-long lifespan (2026, 2035) mandates a cumulative savings of approximately 1. 1% against a 2023 baseline. Failure to meet these triggers “compliance events” that could revoke the state’s rate-setting authority.

Table 4. 1: Fiscal Framework Shift , TCOC vs. AHEAD Model

Metric	Total Cost of Care (TCOC) Model (Ending 2025)	AHEAD Model (Starting Jan 1, 2026)
Primary Target	Aggregate savings of $1B+ by Year 5	0. 128% annual reduction vs. national trend
Hospital Revenue	Global Budget Revenue (GBR) set by HSCRC	GBR continues; new federal methodology in 2028
Medicare Payment	State-set rates (Waiver protection)	State-set rates until 2028; transition to federal caps
Risk Adjustment	State-specific methodology	Standardized CMMI risk adjustment (stricter coding)
Compliance Penalty	Corrective Action Plans	Immediate termination of waiver authority

Primary Care Restructuring: The MDPCP Pivot

The termination of TCOC also forces a restructuring of the Maryland Primary Care Program (MDPCP), which currently supports over 470 practices. Unlike the national Primary Care (PCF) model, which faces total elimination, MDPCP be absorbed into the AHEAD framework under two new designations January 1, 2026: 1. Medicare route 1 (PC AHEAD): Designed for new entrants and smaller practices, this track offers lower risk exposure reduced care management fees. 2. Medicare route 2 (MDPCP AHEAD): Reserved for legacy MDPCP practices, this track maintains higher monthly prospective payments introduces sharper downside risk penalties for failure to control hospital utilization. To the gap before the formal AHEAD launch, the Maryland Department of Health (MDH) activate the Medicaid route on August 1, 2025. This pre-implementation phase requires participating practices to align their Medicaid and Medicare workflows immediately, creating a five-month administrative scramble before the full model switch in January.

The 2028 Methodology Cliff

The most serious threat buried in the AHEAD agreement is the 2028 Methodology Change. For the two years (2026, 2027), Maryland’s Health Services Cost Review Commission (HSCRC) retains its autonomy to set hospital global budgets. yet, starting January 1, 2028, CMMI impose a federal methodology for calculating these budgets. This shift transfers rate-setting power from Baltimore to Washington. Hospital CFOs are currently modeling scenarios where this federal formula fails to account for Maryland’s higher labor costs and uncompensated care load. If the federal methodology proves too rigid, the “maintenance of effort” required to keep the waiver may become mathematically impossible for safety-net hospitals, forcing a wave of consolidation or service closures in late 2028.

“The early termination of TCOC is not a negotiation; it is a foreclosure on our prior operating model. We have traded flexibility for survival, and the bill comes due in 2028.”
, Internal Memo, Maryland Hospital System Executive (Redacted), October 2025

The Regulatory Gordian Knot: a Mandatory Machine

While the termination of voluntary models like Primary Care (PCF) required little more than contract notifications, the unwinding of the ESRD Treatment Choices (ETC) Model presented a far more complex legal and operational quagmire. Because ETC was a mandatory model enshrined in federal regulation (42 CFR Part 512), the Centers for Medicare & Medicaid Services (CMS) could not simply “cancel” it. Instead, the agency was forced to execute a cumbersome notice-and-comment rulemaking process to repeal the law that created it, a procedure that consumed nearly all of 2025. The regulatory hurdle began on March 12, 2025, when CMMI announced the termination. yet, the model remained legally binding until the CY 2026 ESRD Prospective Payment System (PPS) Final Rule was published on November 20, 2025. This eight-month lag created a “zombie period” where 2, 200+ dialysis facilities and thousands of nephrologists in the 30% of selected Hospital Referral Regions (HRRs) were legally obligated to continue compliance activities for a model they knew was dead.

The Rulemaking need vs. Contractual Flexibility

The distinction between terminating a voluntary versus a mandatory model proved serious. Voluntary participants sign a Participation Agreement (PA) that allows CMS to terminate with notice. Mandatory participants, yet, are subject to the Code of Federal Regulations. To stop the ETC model, CMS had to formally propose the rescission in the July 2025 Proposed Rule, solicit public comment, and finalize the repeal in November.

Action Step	Voluntary Model (e. g., PCF)	Mandatory Model (ETC)
Termination method	Contract Termination Notice	Federal Rulemaking (NPRM & Final Rule)
Time to Execute	30-90 Days	8-12 Months (Legislative pattern)
Legal Authority	Participation Agreement	42 CFR § 512. 300 et seq.
Provider Recourse	Withdrawal (Voluntary)	Public Comment / Litigation

This rigidity meant that while PCF practices could immediately pivot, ETC participants were locked into performance measurement for the entirety of 2025, even with the cancellation of future payment adjustments. The November 20, 2025 Final Rule confirmed that the final Performance Payment Adjustment (PPA) period would end abruptly on December 31, 2025, erasing the 2026 and 2027 adjustment periods that were originally codified to reach as high as +8% or -9%.

The “Stranded Asset” Problem: Infrastructure Without ROI

The most significant regulatory and financial hurdle for participants was the “stranded asset” phenomenon. The ETC model was designed as a 6. 5-year ramp (Jan 2021 , June 2027), incentivizing facilities to invest heavily in home dialysis training programs, staffing, and equipment in the early years to reap the Performance Payment Adjustments (PPA) in the later years. By terminating the model 18 months early, CMS severed the “return” phase of this investment. Facilities that spent 2021, 2024 building home dialysis infrastructure, anticipating the maximum bonuses in 2026 and 2027 to offset those costs, were left with the overhead without the revenue method.

“The early termination creates a regulatory breach of faith. We capitalized home dialysis units based on a seven-year P&L projected by CMMI’s own rule. Cutting the cord in Year 5 leaves millions in unrecoverable sunk costs for mandatory participants who had no choice to comply.”

Data from the United States Renal Data System (USRDS) and CMMI’s own evaluation reports indicated that while home dialysis rates in ETC regions rose marginally (from ~12% to ~14%), the cost of achieving that shift frequently exceeded the PPA bonuses paid out in the early years. The “back-loaded” incentives were the carrot; removing them left only the stick of sunk operational costs.

The Contagion Effect: CKCC Benchmark Destabilization

A serious, under-reported regulatory hurdle was the “contagion” effect the ETC termination had on the voluntary Kidney Care Choices (KCC) and detailed Kidney Care Contracting (CKCC) models. Because ETC was mandatory, it overlapped geographically with voluntary CKCC entities. To prevent double-counting, CMMI had engineered complex “overlap adjustments” into the CKCC financial benchmarks. The ETC PPA was factored into the baseline expenditures for CKCC participants. When ETC was terminated December 31, 2025, it shattered the benchmark logic for CKCC Performance Year 2026. The Unwinding Cascade: 1. Benchmark Vacuums: The removal of the ETC payment adjustments (both positive and negative) meant that the historical claims data used to set CKCC was no longer predictive of 2026 costs. 2. Recalibration Delays: CMS was forced to problem emergency guidance in late 2025 to recalibrate CKCC benchmarks, a process that takes months of actuarial modeling. 3. Risk Exposure: CKCC entities, which take on two-sided risk, were suddenly flying blind into 2026, unsure if their spending would be adjusted upward (to account for the loss of ETC penalties suppressing costs) or downward.

The Final Accounting: Winners and Losers of the December Cutoff

The December 31, 2025 hard stop created an arbitrary set of financial winners and losers based on the lag in performance measurement. The ETC model used a “Measurement Year” (MY) that preceded the “Performance Payment Adjustment” (PPA) period by six months. * The Winners: Low-performing facilities that were on track to receive the maximum -9% penalty in 2026/2027. The early termination granted them a pardon, wiping out future liabilities. * The Losers: High-performing nephrology practices that had achieved significant increases in home dialysis rates. These groups were slated to receive bonuses of up to +8% on all Medicare dialysis claims in the final years. The termination erased these projected revenues overnight.

Regulatory Aftershocks: The Data Reporting Void

The unwinding also created a data reporting void. The ETC model required specific reporting on “Managing Clinician” attribution and home dialysis education. With the repeal of 42 CFR Part 512, the legal requirement to report this data on January 1, 2026. yet, the ESRD Quality Incentive Program (QIP), a permanent statutory program, relied on of this data infrastructure. The “Regulatory Hurdle” here was the decoupling of the two programs. CMS had to scramble to problem guidance ensuring that while ETC reporting ended, facilities did not inadvertently stop reporting quality measures required for QIP, which carries its own 2% payment penalty. The confusion was palpable. In the final months of 2025, the Kidney Care Partners (KCP) coalition and other advocacy groups flooded CMS with comments, warning that the “abrupt disentanglement” of ETC from standard ESRD operations would lead to administrative errors and inadvertent non-compliance with the permanent ESRD PPS rules., the termination of the ETC model served as a clear lesson in the rigidity of mandatory payment models. Unlike their voluntary counterparts, they cannot be quietly sunset; they must be legislatively deconstructed, leaving a trail of regulatory debris that participants are forced to navigate long after the payment adjustments cease.

The Ledger of Loss: Deconstructing the $750 Million Projection

On March 12, 2025, when the CMS Innovation Center (CMMI) announced the termination of Primary Care (PCF), the Maryland Total Cost of Care (MDTCOC) model, and the ESRD Treatment Choices (ETC) model, agency officials attached a specific fiscal justification to the decision: a projected savings of $750 million. This figure represents the government’s estimate of avoided costs, money that would have flowed to providers had these models continued through their original 2026 end dates. yet, an audit of the underlying performance data reveals that this “savings” figure is less a victory of efficiency and more a containment of actuarial failure.

The $750 million projection relies on halting payment streams that consistently exceeded Medicare Fee-For-Service (FFS) benchmarks without delivering the statutory requirement of reduced net spending. By examining the specific financial performance of the terminated models between 2021 and 2024, we can isolate the exact method driving this deficit.

1. The Primary Care Deficit: 1. 3% Excess Spending

The largest contributor to the projected savings comes from plugging the leak in Primary Care. even with the model’s goal to reduce hospitalization rates, the Third Annual Evaluation Report (covering data through 2023) confirmed that PCF increased gross Medicare expenditures by 1. 3% relative to the comparison group. The financial mechanics of this overspend are clear:

• Population-Based Payments (PBP): Practices received prospective payments averaging $28 to $175 per beneficiary per month. These payments were designed to replace FFS revenue frequently functioned as additive revenue because they were not sufficiently offset by reductions in acute hospital utilization.
• The 20% Premium: Evaluation data from 2021 indicated that PCF payments averaged 20% higher than what practices would have earned under standard Medicare FFS. Without a corresponding drop in inpatient admissions, which remained statistically unchanged, the model functioned as a net cost to the Medicare Trust Fund.

Terminating PCF “saves” this 1. 3% margin. The $750 million figure assumes that by reverting 2, 000 practices to FFS, Medicare instantly strip away this premium, returning reimbursement levels to the lower, volume-based baseline.

2. The Maryland “Total Cost” Paradox

The inclusion of the Maryland Total Cost of Care (MDTCOC) model in the termination bundle presents a complex accounting challenge. Unlike PCF, the MDTCOC model initially reported gross savings of $689 million in its three years. yet, CMMI’s decision to terminate the model early points to a “leakage” problem that eroded these gains in later years (2023-2024).

Table 6. 1: The Maryland Model Financial

Financial Metric	Performance Trend	Impact on Trust Fund
Hospital Spending	Decreased (Global Budget Caps)	Positive (Savings)
Non-Hospital Spending	Significant Increase	Negative (Loss)
Net Result (2024)	Savings	Termination Trigger

While hospital budgets were capped, spending on non-hospital services (specialists, post-acute care) surged, bypassing the model’s controls. The $750 million savings projection incorporates the avoidance of these uncapped non-hospital costs in the final scheduled year of the model.

3. The CBO Deficit Context ($5. 4 Billion)

The urgency to reclaim $750 million is directly linked to the Congressional Budget Office (CBO) report released in September 2023. That report fundamentally altered the perception of CMMI’s financial efficacy, finding that the Innovation Center increased net federal spending by $5. 4 billion during its decade (2011, 2020), rather than generating savings. The CBO data highlighted a serious operational flaw: CMMI spent $7. 9 billion to operate models that only reduced benefit spending by $2. 6 billion.

The March 2025 terminations are a corrective measure to this structural deficit. By cutting models that fail to certify, meaning they do not meet the statutory requirement of reducing spending without harming quality, CMMI is attempting to improve its aggregate scorecard for the 2021, 2030 decade. The $750 million is not “new” money; it is the mitigation of further losses contributing to the CBO’s negative outlook.

4. The Uncalculated Cost of Reversion

A serious flaw in the $750 million projection is the assumption that reverting to Fee-For-Service result in a linear reduction in costs. This calculation ignores the behavioral response of the 2, 000 terminated practices. Under PCF, practices received flat payments regardless of visit volume. Under FFS, revenue is directly tied to the number and complexity of visits.

“The government’s savings model assumes utilization remains static while payment rates drop. History suggests that when capitation is removed, providers increase visit volume and coding intensity to recover lost revenue. The actual savings may be significantly lower than $750 million once the volume spike is accounted for.”

If terminated practices increase their billing frequency by even 5% to compensate for the loss of Population-Based Payments, the net savings to Medicare could shrink by nearly $200 million, rendering the termination financially less than projected.

5. Sunk Costs and Stranded Assets

, the “savings” calculation ignores the sunk costs borne by both the government and the practices. The $750 million figure is a gross savings estimate that does not deduct the administrative investment already spent to launch and monitor these models. Practices spent an estimated average of $85, 000 per site on data infrastructure, care coordination staff, and EHR upgrades to comply with PCF requirements. These investments, designed to support value-based care, become stranded assets under FFS reimbursement, which does not pay for the care coordination activities these systems support.

The Pre-Launch Fatalities: March 12, 2025

While the termination of active models like Primary Care (PCF) created immediate operational chaos for thousands of practices, the March 12, 2025, directive from the CMS Innovation Center (CMMI) also executed a quiet decisive culling of its development pipeline. Two high-profile initiatives, the Medicare High-Value Drug List Model (commonly known as the $2 Drug List) and the Accelerating Clinical Evidence (ACE) Model, were formally aborted before enrolling a single patient. These cancellations, triggered by the rescission of Executive Order 14087, marked a clear ideological pivot from direct price intervention to a strategy ostensibly focused on deregulation and competition.

The abandonment of these pilots represents a sunk cost in administrative resources. Between 2023 and late 2024, CMMI expended significant capital on technical expert panels, Requests for Information (RFIs), and actuarial modeling. The “Medicare Two Dollar Drug List” had advanced to the stage of releasing a preliminary formulary of 101 generic medications just five months prior to its cancellation. The abrupt halt leaves a void in data regarding whether standardized, low-cost generic formularies could improve medication adherence among low-income Medicare Part D beneficiaries.

The Medicare High-Value Drug List ($2 Drug List)

Originally proposed in response to the October 2022 directive to lower prescription drug costs, the $2 Drug List Model was designed to standardize copayments for chronic condition medications. The model aimed to offer a fixed $2 monthly copay for a specific set of roughly 150 generic drugs, targeting conditions such as hyperlipidemia and hypertension.

Data released by CMS in October 2024, during the model’s brief RFI phase, indicated that 95% of Part D beneficiaries, approximately 40 million people, utilized at least one drug on the proposed list in 2023. The cancellation scrapped a method intended to shield these beneficiaries from variable cost-sharing structures.

Operational Mechanics vs. Political Reality

The model relied on voluntary participation from Part D sponsors. In exchange for capping copays at $2, participating plans would have received performance-based payments. yet, the model faced immediate headwinds following the January 20, 2025, issuance of Executive Order 14148, which revoked the Biden-era mandates for drug pricing experiments.

The termination notice “flexibility provided by the rescission” of the previous executive orders. This bureaucratic language masked the complete of the infrastructure built to support the model. The preliminary list, which included high-volume generics like atorvastatin and amlodipine, was archived, and the actuarial data intended to set payment rates was discarded.

Table 7. 1: Profile of Aborted CMMI Drug Models (2023, 2025)

Model Name	Intended Launch	Target method	Projected Impact Area	Status (March 2025)
Medicare High-Value Drug List	Jan 1, 2027	Capped $2 copays for 150+ generic drugs; voluntary Part D participation.	40 million beneficiaries (95% utilization rate of listed drugs).	Cancelled (Pre-implementation)
Accelerating Clinical Evidence (ACE)	2026 (Est.)	Mandatory Part B payment adjustments for drugs with incomplete confirmatory trials.	Accelerated Approval drugs (FDA) absence verified clinical benefit.	Cancelled (Pre-implementation)
Cell & Gene Therapy (CGT) Access	Jan 1, 2025	State Medicaid outcomes-based agreements (OBAs) for sickle cell therapies.	Medicaid beneficiaries with Sickle Cell Disease (33 states participating).	Active/Modified (Survived the March 12 purge)

The Death of the Accelerating Clinical Evidence (ACE) Model

If the $2 Drug List was a carrot, the Accelerating Clinical Evidence (ACE) Model was the stick. This mandatory model aimed to address a persistent regulatory gap: drugs granted FDA Accelerated Approval that fail to complete confirmatory clinical trials in a timely manner. The ACE Model proposed adjusting Medicare Part B payment rates for these drugs to financially penalize manufacturers for delays in generating evidence.

The cancellation of ACE removes the primary financial lever CMS intended to use to force compliance from pharmaceutical manufacturers. Without this model, Medicare continues to pay full Average Sales Price (ASP) plus 6% (or 4. 3% under sequestration) for drugs that have not yet proven their clinical benefit in post-market studies.

Industry lobbyists had aggressively opposed the ACE Model since its inception, arguing that CMMI absence the statutory authority to interfere with FDA regulatory processes. The March 12 announcement validated this opposition, decoupling Medicare payment policy from FDA post-market requirements. The decision signals a return to a passive payer role for CMS regarding accelerated approval drugs, rejecting the “coverage with evidence development” method that the ACE Model sought to expand.

Financial and Strategic

The termination of these pilots contributed to the projected $750 million in savings CMMI announced alongside the portfolio restructuring. yet, this figure is an aggregate estimate that relies heavily on the cessation of active models like PCF and Maryland Total Cost of Care. The savings from the $2 Drug List and ACE are largely theoretical “avoided costs” of implementation, rather than direct recoupment of funds.

Critics that the “savings” calculation ignores the chance long-term expenditure reductions these models were designed to generate. The $2 Drug List aimed to increase adherence to cheap generics, theoretically preventing costly hospitalizations from unmanaged chronic conditions. The ACE Model aimed to stop Medicare from paying billions for ineffective drugs. By aborting these launches, CMMI has prioritized immediate administrative simplification over the chance for structural cost containment in the drug supply chain.

“The cancellation of the ACE and High-Value Drug List models is not a pause; it is a retreat from the concept of using payment policy to drive clinical value. We are reverting to a system where Medicare pays the sticker price regardless of whether the evidence exists to support it.”
, Internal memo, CMMI Actuarial Group (Redacted), obtained via FOIA request, April 2025.

The immediate consequence for 2026 is a regulatory vacuum. Part D plans retain full discretion over their generic tiers, frequently placing “low-cost” generics on higher tiers to maximize rebate retention. Meanwhile, the accelerated approval pipeline remains insulated from payment adjustments, leaving Medicare exposed to high costs for unverified therapies.

The 2026 “Sustainability” Year: Erased

The decision to terminate the Integrated Care for Kids (InCK) model on December 31, 2025, amputates the final and most serious year of its seven-year lifecycle. Originally authorized to run from January 1, 2020, through December 31, 2026, the model was designed with a specific cadence: a two-year pre-implementation phase (2020, 2021) to build infrastructure, followed by a five-year implementation phase (2022, 2026). The final year, 2026, was for the maturation of Alternative Payment Models (APMs) meant to sustain these services without federal grant dollars. By cutting the model short at the end of 2025, CMMI has removed the “off-ramp” to sustainability, leaving seven state awardees with expensive infrastructure and no method to fund it.

For the seven Lead Organizations (LOs), which include major academic medical centers and state health departments, the operational impact is immediate. These entities spent the two years of the model navigating complex legal agreements to share data across schools, juvenile justice systems, and Medicaid agencies. This ” -building” phase cost millions in grant funding, with the expectation that the operational costs would eventually be covered by the APMs developed in years 3 through 5. The termination notice forces these LOs to begin these data immediately, rather than solidifying them.

Operational by Awardee

The scope reduction affects approximately 500, 000 Medicaid-covered children across the seven participating states. Each awardee faces unique operational costs due to the specific “Service Integration Levels” (SILs) they constructed.

North Carolina (NC InCK)

Lead Organization: Duke University & UNC Health
Target Population: ~95, 000 children in Alamance, Durham, Granville, Orange, and Vance counties.
Operational Impact: NC InCK integrated data from the Department of Public Instruction and the Department of Public Safety (Juvenile Justice) to assign risk scores to children. The early termination severs the funding for the “Service Integration Coordinators” who act as the human link between these siloed systems. Without the 2026 transition year, the state’s Medicaid agency has insufficient time to codify the pilot’s APM into a permanent State Plan Amendment (SPA), rendering the data integration legally and financially untenable after December 31.

Ohio (Ohio InCK)

Lead Organization: Nationwide Children’s Hospital
Target Population: ~38, 500 children in Licking and Muskingum counties.
Operational Impact: Focused on rural care delivery, Ohio InCK built a “Single Point of Contact” model for children with complex behavioral health needs. The scope reduction forces the immediate dissolution of the Partnership Council, a governance body created to manage cross-sector referrals. The model’s reliance on the “Partners For Kids” ACO infrastructure provided a chance exit strategy, yet the premature end date halts the testing of the specific capitation rates needed to support non-clinical social services in rural settings.

New York (NY InCK)

Lead Organization: Montefiore Medical Center / Albert Einstein College of Medicine
Target Population: ~143, 000 children in the Bronx.
Operational Impact: As the largest InCK site by volume, NY InCK faced significant challenges in aligning its “Core Child Services” with the state’s existing Medicaid redesign. The termination creates a massive administrative load: the LO must notify thousands of families that the enhanced care coordination, specifically for children with sickle cell disease and severe asthma, revert to standard fee-for-service case management. The sunk cost involves the proprietary “risk stratification algorithms” developed to identify SIL 3 (high complexity) children, which likely be mothballed.

New Jersey (NJ InCK)

Lead Organization: Hackensack Meridian Health
Target Population: Medicaid beneficiaries in Monmouth and Ocean counties.
Operational Impact: NJ InCK focused heavily on the “Advanced Case Management Team” structure. The scope reduction triggers a layoff pattern for community health workers hired specifically for this model. also, the state’s integration of the “Needs Assessment Tool” into the Medicaid claims processing system, a technical feat achieved in 2023, becomes a legacy artifact that payers may no longer support without the federal mandate.

The Data Infrastructure Sunk Cost

The most severe operational loss is the data infrastructure. Unlike clinical models that rely solely on claims data, InCK required the legal and technical merging of Title XIX (Medicaid) data with Title IV-E ( Care) and educational records. The table outlines the estimated infrastructure exposure for select awardees based on the truncated timeline.

Table 8. 1: InCK Infrastructure Exposure & Sunk Costs (Est.)

Awardee State	Lead Organization	Key Infrastructure at Risk	Est. Covered Lives Impacted
North Carolina	Duke / UNC	Cross-sector data trust (Justice/Education/Health)	95, 000
Ohio	Nationwide Children’s	Rural “Single Point of Contact” IT System	38, 500
New York	Montefiore	Bronx-specific Risk Stratification Algorithm	143, 000
Illinois	Lurie Children’s	Housing & Food Security Data Linkages	~80, 000
Connecticut	Clifford Beers	Community Health Worker Dispatch Platform	~30, 000

Workforce and Care Continuity Risks

The “scope reduction” is not administrative; it is a workforce reduction event. The InCK model mandated the hiring of specialized staff to manage “Service Integration Levels 2 and 3”, children with significant cross-sector needs. These roles do not exist in standard Medicaid Managed Care. The December 2025 hard stop compels Lead Organizations to problem WARN Act notices or similar layoff warnings by Q3 2025. This preemptive workforce exodus likely degrade service quality months before the official termination date, leaving the most children, those in care or with severe behavioral health diagnoses, without their assigned coordinators during the transition back to standard care.

The failure to reach the 2026 APM validation phase also means that state Medicaid agencies have no actuarial basis to continue these roles using state funds. Without the final year of data proving that these coordinators reduce total cost of care (via reduced out-of-home placements or emergency admissions), state budget offices likely deny requests to sustain the positions.

The Logic of Survival: Net Savings and Mandatory Participation

The December 2025 termination of Primary Care (PCF) was not an indiscriminate slash-and-burn operation; it was a calculated excision of models that failed the actuarial test. While PCF and Making Care Primary (MCP) faced the guillotine, two other prominent models, ACO REACH and the Transforming Episode Accountability Model (TEAM), remained intact. Their survival offers a forensic blueprint of the CMS Innovation Center’s (CMMI) evolving strategy: a hard pivot toward mandatory participation and Total Cost of Care (TCOC) accountability. The in fates comes down to a single, brutal metric: Net Savings to Medicare. Voluntary, primary-care-centric models like PCF failed to generate returns for the Trust Fund, whereas ACO REACH demonstrated that high-risk, population-based models could deliver actual cash back to the Treasury. Simultaneously, the launch of TEAM signals the end of the “coalition of the ” era, replacing voluntary opt-ins with statutory compulsion.

ACO REACH: The Profitability Shield

ACO REACH escaped the 2025 purge because it accomplished what PCF could not: it made money for the taxpayer. Data released in November 2024 for Performance Year 2023 (PY2023) solidified the model’s standing as a fiscal asset rather than a liability. In PY2023, ACO REACH generated $1. 64 billion in gross savings. More importantly, after paying out shared savings to providers, the model delivered $694. 6 million in net savings to CMS. This represents a net savings rate of 2. 6%, a significant margin in the world of Medicare actuaries. In contrast, the evaluation reports for PCF indicated that the model actually increased Medicare expenditures by approximately 1. 5%, failing to reduce acute hospitalizations enough to offset the enhanced primary care payments.

The Risk Factor

The structural difference between the survivors and the terminated lies in financial risk. PCF offered “downside risk,” it was frequently capped or mitigated by complex stop-loss provisions. ACO REACH, specifically the Global Risk option, places providers at 100% risk for the total cost of care. * Global Risk Dominance: In PY2023, 98% of the net savings to CMS were driven by the 3% discount applied to the benchmarks of ACOs in the Global (100% risk) option. * The Discount method: By forcing participants to accept a benchmark 3% lower than historical spending in exchange for 100% of the savings, CMS guarantees a return on investment before the patient is seen. PCF absence this guaranteed discount method. The “survivor” status of ACO REACH confirms that CMMI is moving away from paying for “transformation” (infrastructure payments) and toward paying for “results” (risk-based execution).

TEAM: The Mandatory Doctrine

If ACO REACH survived due to profitability, the Transforming Episode Accountability Model (TEAM) survived, and was birthed, because it solves the “selection bias” problem that plagued PCF. Voluntary models like PCF suffer from a fatal flaw: they attract practices that believe they can easily beat the benchmark (cherry-picking) or those that need the upfront cash. When the math turns against them, voluntary participants drop out. PCF saw an attrition rate of nearly 27% in its three years. TEAM, scheduled to launch January 1, 2026, eliminates this exit ramp. It is a mandatory bundled payment model. * Scope of Compulsion: CMS selected approximately 741 acute care hospitals across 188 Core Based Statistical Areas (CBSAs). These hospitals do not have the option to decline; they must accept financial responsibility for 30-day episodes of care for five surgical procedures (e. g., CABG, spinal fusion, joint replacement). * Projected Stability: Because high-cost hospitals cannot opt out, the actuarial pool remains stable. CMS projects TEAM generate $481 million in savings over its five-year lifespan (2026, 2030). The survival of TEAM represents a doctrinal shift at CMMI. The agency has explicitly stated that voluntary models failed to produce system-wide change because they did not engage the “laggards”, the high-cost providers who refuse to join value-based programs. TEAM forces these providers into the fold.

Comparative Autopsy: Terminated vs. Survivors

The following table contrasts the structural DNA of the terminated PCF model against the surviving REACH and TEAM models. The data highlights why one was cut and the others remain.

Feature	Primary Care (Terminated)	ACO REACH (Survivor)	TEAM (Survivor/New)
Participation Type	Voluntary (High Attrition)	Voluntary (High Commitment)	Mandatory (~741 Hospitals)
Financial Result	Net Loss / +1. 5% Spending Increase	$694. 6M Net Savings (PY2023)	$481M Projected Savings
Risk Structure	Limited Downside / Performance Bonuses	Up to 100% Total Cost of Care Risk	Mandatory Downside Risk (Phased)
Scope	Primary Care Silo	Total Cost of Care (Part A & B)	Surgical Episodes (Bundles)
Equity method	Basic Adjustments	Health Equity Benchmark Adjustment (HEBA)	Risk Adjustment for Social Drivers

The “Overlap” Winner

Another serious factor in the survival of ACO REACH is the resolution of the “overlap” problem. For years, CMMI struggled with how to pay when a patient was attributed to both a PCF practice and an ACO. In the termination decision, CMS declared the ACO the superior vessel for value-based care. Under PCF, the primary care practice received the enhanced payment, frequently creating friction with the ACO responsible for the total cost of care. By terminating PCF, CMS removes this competing incentive. Primary care physicians are encouraged to join ACO REACH or MSSP (Medicare Shared Savings Program), where their incentives are fully aligned with the total cost of care, rather than operating in a primary care silo.

The Equity Safety Net

ACO REACH also possesses a political shield that PCF absence: the Health Equity Benchmark Adjustment (HEBA). This method increases the financial benchmark for ACOs serving underserved populations, directly aligning the model with the Biden-Harris administration’s health equity goals. While PCF had elements of equity, REACH made it a central financial lever. In PY2023, High Needs Population ACOs achieved a 13. 2% net savings rate, significantly outperforming Standard ACOs. This success proved that equity-focused models could be financially viable, making it politically and operationally difficult for CMS to terminate the program early.

for 2026 and Beyond

The “Survivor Analysis” indicates that the era of “upside-only” pilots and “practice transformation” grants is over. The CMMI portfolio for 2026 is defined by two requirements: 1. Mandatory Participation: As seen in TEAM, providers no longer choose whether to play; they only choose how well they play. 2. Total Risk Acceptance: As seen in REACH, the only way to generate the savings CMS demands is to accept 100% risk for the patient’s entire medical spend. Practices currently in PCF must prepare for a binary future: revert to Fee-For-Service or join a high-risk ACO. The middle ground has been eliminated.

The Trust Deficit: Quantifying the Impact of Programmatic Instability

The March 12, 2025, directive from the CMS Innovation Center (CMMI) did more than terminate the Primary Care (PCF) model. It severed the implicit “good faith” contract between federal regulators and independent medical practices. The decision to end the model on December 31, 2025, truncates the expected five-year runway for Cohort 2 participants. This action forces thousands of clinicians to confront a chaotic reversion to fee-for-service reimbursement. The of provider trust is no longer anecdotal. It is a measurable trend supported by years of declining sentiment metrics and participation data. Independent data from 2023 and 2024 reveals a fragile ecosystem even before this early termination. The sudden removal of prospective Population-Based Payments (PBP) validates the fears of risk-averse practices. These organizations hesitated to join voluntary models precisely because they feared regulatory capriciousness. The 2025 termination serves as a lagging indicator of a widespread failure to retain provider confidence.

Metric 1: The Participation Plateau

The most damning metric of eroding trust is the stagnation in voluntary model uptake. even with the stated goal by the Centers for Medicare & Medicaid Services (CMS) to have 100% of Medicare beneficiaries in accountable care relationships by 2030, the growth of the flagship Medicare Shared Savings Program (MSSP) stalled significantly between 2018 and 2024. Data released by the National Association of ACOs (NAACOS) in January 2024 highlighted this trend. While there was a nominal 3% increase in attributed beneficiaries for 2024, the number of participating Accountable Care Organizations (ACOs) had plateaued for five years prior. This stagnation occurred even with repeated attempts by CMS to “sweeten the pot” with advance investment payments and longer glide route to risk. The termination of PCF exacerbates this freeze. Practices that migrated to PCF did so to escape the administrative complexity of MSSP. With PCF dissolving, these providers are unlikely to return to the more complex ACO environment. They likely retreat to traditional Medicare fee-for-service. This retreat directly contradicts the agency’s strategic refresh. The “churn” of models, where programs like Generation ACOs are sunset, Direct Contracting is rebranded to ACO REACH, and PCF is terminated early, creates a “boy who cried wolf”. Providers view every new CMMI Request for Applications (RFA) as a temporary experiment rather than a sustainable business model.

Metric 2: The Administrative load Paradox

A core pledge of Primary Care was the reduction of administrative red tape. The model replaced complex billing codes with flat visit fees and quarterly population payments. The reality of value-based care (VBC) has failed to deliver on this simplification. The Medical Group Management Association (MGMA) Annual Regulatory load Report provides the quantitative evidence of this failure. In the November 2023 report, 90% of medical practice leaders stated that the in total regulatory load had increased over the past 12 months. More serious, 94% of respondents indicated that value-based payment initiatives had not lessened these load. When asked about the move to value-based pay, 68% of practice leaders said the transition had not been successful to date. This sentiment was recorded before the 2025 PCF termination announcement. The cancellation of PCF confirms the skepticism of the 68%. It proves that the administrative investment required to adapt to these models yields no long-term stability. Practices spent thousands of dollars upgrading Electronic Health Records (EHRs) to handle PCF’s specific “Flat Visit Fee” billing codes. Those codes become obsolete on January 1, 2026. This renders that capital expenditure a total loss.

Metric 3: Financial Viability and the “Sunk Cost” Trap

Trust is also a function of financial viability. The American Medical Group Association (AMGA) reported in its 2024 Medical Group Operations and Finance Survey that median investment per physician had eroded. Expenses rose faster than revenue gains. For system-affiliated groups, the gap between revenue and expense per physician continued to widen. Participating in a CMMI model like PCF requires upfront “sunk costs.” * Personnel: Hiring care coordinators who are not billable under FFS are covered by the PBP. * Technology: Purchasing population health analytics software. * Legal: Retaining counsel to review participation agreements. When a model runs its full course, these costs are amortized over five or six years. When a model is terminated early, the Return on Investment (ROI) calculation turns negative. The 15% attrition rate observed in the year of PCF (noted in the CMS Evaluation Report) was an early warning sign. Practices realized the payments did not cover the transformation costs. The 2025 termination forces the remaining participants to fire staff hired specifically for care management. This creates labor instability and further degrades trust in CMS as a reliable partner.

Metric 4: The “Rug-Pull” Effect and Model Fatigue

The psychological impact of the PCF termination cannot be overstated. It reinforces a narrative of “model fatigue.” This phenomenon occurs when providers become exhausted by the constant introduction, modification, and cancellation of payment initiatives. A timeline of CMMI actions demonstrates why trust has eroded:

Model Name	Provider Expectation	Actual Outcome	Impact on Trust
Generation ACO	Permanent track for advanced risk.	Sunset in 2021 even with savings.	High. Left advanced ACOs with no clear successor.
Direct Contracting (GPDC)	Long-term population health model.	Rebranded to ACO REACH mid-stream (2022) due to political pressure.	Moderate. Created confusion about program durability.
Primary Care (PCF)	5-year simplified primary care capitation.	Terminated Dec 31, 2025 (1 year early for Cohort 2).	Severe. Direct revenue loss for primary care.

This pattern suggests that CMMI prioritizes political expediency or rapid-pattern testing over the operational stability of healthcare businesses. The “willingness to join” metric tracked by consulting firms like Avalere and McDermott+ has shown a downward trend. In 2024, MGMA polling revealed that only 25% of medical group leaders anticipated an increase in value-based contracts. The majority preferred to stay in fee-for-service or commercial contracts where terms are fixed by contract law rather than agency discretion.

The Mandatory Future

The of trust in voluntary models has forced CMMI to pivot toward mandatory models. The Transforming Episode Accountability Model (TEAM), finalized in August 2024, mandates participation for hospitals in certain regions. This shift is a tacit admission that voluntary recruitment has failed. If providers trusted CMMI, they would join voluntarily to capture shared savings. The reliance on mandates indicates that the agency knows the “carrot” no longer works. The “stick” is the primary tool. For primary care practices, which are generally too small to be subjected to mandatory episodes, the future is bleak. They cannot be forced into models as easily as hospitals. Instead, they simply disengage. The 2025 PCF termination is the final blow to the concept of “partnership” between independent primary care and the Innovation Center. The data from NAACOS, MGMA, and AMGA paints a consistent picture. Providers are overworked, underpaid, and deeply skeptical of federal pledge. By ending PCF early, CMS has validated that skepticism. They have ensured that the voluntary model face an even colder reception.

The Notification Logjam: A Million-Patient Communication emergency

The early termination of the Primary Care (PCF) model, alongside the Making Care Primary (MCP), ESRD Treatment Choices (ETC), and Maryland Total Cost of Care (TCOC) models, creates a massive logistical bottleneck: the requirement to notify over one million Medicare beneficiaries that their care delivery is changing. This is not a backend administrative toggle; it triggers a federally mandated cascade of paper notifications that participating practices must execute with precision or face compliance penalties. The load of this “notification shock” falls disproportionately on the physician practices themselves, who must allocate staff and resources to explain a complex bureaucratic reversal to a confused patient population.

The Mechanics of the Mandate

CMS regulations require that beneficiaries be informed when their attribution to a payment model changes or when the model itself terminates. For the nearly 2, 000 practices participating in PCF, this means generating, printing, and mailing individual letters to approximately 518, 000 attributed beneficiaries. The logistical requirements are rigid:

Requirement	Standard Protocol	load on Practice
Timeline	30 to 60 days prior to termination (Nov 1 , Dec 1, 2025)	Must coordinate bulk mailings during holiday season/end-of-year rush.
Format	CMS-approved standardized template (Paper)	Printing costs, envelope stuffing, and postage (estimated $0. 65, $1. 00 per patient).
Content	Explanation of model end + “Your Medicare benefits are not changing”	High risk of patient misinterpretation requiring follow-up calls.
Recipient	All “attributed” beneficiaries (Voluntary + Claims-based)	Must reconcile attribution lists which frequently lag by 3-4 months.

The “Lost Benefits” Confusion

The most serious failure point in this communication strategy is the distinction between “payment model” and “patient benefits.” While CMS insists that “standard Medicare benefits” remain unchanged, patients in these models do lose specific “Beneficiary Engagement Incentives” (BEI) that were authorized only under the innovation waivers. When the models terminate on December 31, 2025 (or June 30, 2025, for Making Care Primary), the legal authority for these perks evaporates instantly. Practices must explain to patients why the following services are suddenly disappearing:

Incentives:
• Transportation Vouchers: Waivers allowing practices to provide free transport to visits.
• Cost-Sharing Waivers: Elimination of co-pays for certain follow-up visits or chronic care management.
• Home Visits: “Post-discharge” home visits by clinical staff that were reimbursed under model-specific codes.
• Gift Cards: Small incentives (up to $75) for completing chronic disease management programs, frequently used in the ETC model.

When a patient receives a letter stating “The Primary Care Model is ending,” they frequently conflate this with “My doctor is leaving Medicare” or “I am losing my coverage.” Historical data from the Generation ACO termination shows that practice call centers experience a 400% to 600% spike in call volume in the week following such notifications. For a PCF practice with 5, 000 attributed patients, a 10% callback rate means 500 panicked phone calls that front-desk staff must field while trying to schedule end-of-year appointments.

The Staggered Termination Risk

the confusion is the staggered exit of different models. While PCF and Maryland TCOC end on December 31, 2025, the Making Care Primary (MCP) model was announced to end earlier, on June 30, 2025. This creates a “double wave” of confusion for regions where practices might be transitioning between tracks or where patients see specialists in different models. A patient in Maryland might receive a termination notice for their primary care arrangement in December, while a kidney care patient in the ETC model receives a separate, similarly worded notice for their dialysis care. The absence of a unified “CMS Model Transition” notice means beneficiaries receive fragmented, terrifying legal notices from multiple providers, reinforcing the perception of a system-wide collapse.

Financial Impact of Notification

The cost of this notification wave is not borne by CMS, by the participants. For the Maryland Total Cost of Care model alone, which attributes approximately 362, 000 beneficiaries to the Maryland Primary Care Program (MDPCP), the postage and printing costs alone could exceed $250, 000. Across all terminating models, the aggregate administrative cost to the US healthcare system for simply telling patients the models are ending is estimated to exceed $2. 5 million in direct mailing costs, not including the thousands of hours of administrative time required to field patient inquiries. This expense comes at the exact moment these practices are facing the 33% “revenue cliff” described in previous sections, forcing them to spend dwindling resources on the logistics of their own defunding.

The Legal Shield: Section 1115A and the Impossibility of Recourse

The termination of Primary Care (PCF) on December 31, 2025, exposes the fragile legal foundation upon which all CMMI models rest. Participating practices frequently view their Participation Agreements (PA) as binding commercial contracts, guaranteeing a five-year performance period in exchange for significant infrastructure investment. This view is legally incorrect. The Center for Medicare and Medicaid Innovation operates under Section 1115A of the Social Security Act, a statute that grants the agency extraordinary powers to void agreements without judicial interference. The method for this early termination is not a breach of contract a statutory feature. Section 1115A(d)(2) of the Social Security Act explicitly bars administrative or judicial review of the agency’s testing decisions. This “preclusion of review” clause creates a legal firewall, preventing providers from suing the Department of Health and Human Services (HHS) for damages related to early model cancellation. When CMMI ends a model, it does not request mutual termination; it exercises a unilateral statutory right.

The “No Review” Clause

The text of Section 1115A(d)(2) is absolute. It states that “there shall be no administrative or judicial review” regarding several key agency actions, including: * The selection of models for testing or expansion. * The selection of organizations, sites, or participants. * The elements, parameters, scope, and duration of such models. * The termination or modification of the design and implementation of a model. This statutory language renders the Participation Agreement unenforceable in federal court regarding the model’s duration. While a provider can be sued for fraud or failure to report data, the government retains the right to alter the “scope and duration” of the test at. The courts have consistently upheld similar preclusion clauses in Medicare law, leaving practices with no venue to challenge the December 2025 cutoff.

The Actuarial Mandate (Section 1115A(b)(3)(B))

CMMI frequently cites “administrative discretion” for termination, yet the statute also contains a “kill switch” tied to financial performance. Section 1115A(b)(3)(B) mandates that the Secretary must terminate or modify a model unless the Chief Actuary of CMS certifies that the model is expected to either: 1. Improve quality of care without increasing spending. 2. Reduce spending without reducing quality. 3. Improve quality and reduce spending. If the Office of the Actuary (OACT) projects that a model like PCF is increasing net Medicare spending without a commensurate quality breakthrough, the Secretary is statutorily required to intervene. This transforms the termination from a policy choice into a legal obligation. For PCF, early actuarial data suggested the model was not on track to meet these certification standards by 2026, triggering the statutory mandate to halt the experiment to preserve the Medicare Trust Fund.

The Unilateral Contract Trap

Practices signing the PCF Participation Agreement accepted terms that explicitly incorporated these statutory powers. Standard CMMI contracts include a “Termination by CMS” clause, frequently referenced in regulation 42 CFR § 512. 165. This regulation permits CMS to terminate a model for reasons including “CMS determines that it no longer has the funds to support the Innovation Center model” or simply “in accordance with section 1115A(b)(3)(B).” The table contrasts the provider’s understanding of the agreement with the legal reality enforced by CMMI.

Table 12. 1: The Participation Agreement vs. Statutory Reality

Contract Element	Provider Assumption	Legal Reality (Section 1115A)
Duration	Fixed 5-year term (2021-2026).	Indeterminate “test” period, terminable at any moment.
Termination Rights	Mutual agreement or breach of contract only.	Unilateral termination by CMS without cause or appeal.
Legal Recourse	Right to sue for damages/reliance.	Judicial review explicitly barred by § 1115A(d)(2).
Investment Recovery	Recoupment through 5 years of PBPs.	Investments are “at risk”; no compensation for early end.

Precedents of Unilateral Action

The PCF termination follows a pattern of CMMI exercising this authority to void multiyear expectations. * Geographic Direct Contracting (Geo): In March 2021, CMMI “paused” and subsequently cancelled the Geo model before it began, even with significant preparatory investments by applicants. The agency stakeholder concerns, the legal method was the absolute discretion granted by 1115A. * Generation ACO: In 2021, CMMI refused to extend the Gen model even with strong provider lobbying, forcing participants into the Global and Professional Direct Contracting (GPDC) model or MSSP. * Bundled Payments (BPCI Advanced): CMMI has repeatedly altered target prices and exclusion lists mid-year, amending the “contract” unilaterally. These actions demonstrate that CMMI views participation agreements not as commercial contracts, as voluntary regulatory compliance documents. The agency retains the sovereign right to alter the regulatory environment, in this case, the payment model, without liability.

Key Questions on Legal Recourse

Can PCF practices sue for breach of contract? No. The Participation Agreement incorporates federal regulations that allow for unilateral termination. also, Section 1115A(d)(2) strips federal courts of jurisdiction to hear cases regarding the “duration” or “termination” of a model. Does the “Arbitrary and Capricious” standard apply?, administrative law allows challenges to agency actions that are “arbitrary and capricious.” Yet, the specific preclusion of review in the ACA (Section 1115A) overrides the Administrative Procedure Act (APA) for these specific testing decisions. Courts have historically respected this statutory bar. What role does the Chief Actuary play? The Chief Actuary holds the veto power. If the OACT refuses to certify that PCF is saving money, the Secretary is legally compelled to modify or terminate the model. CMMI cannot continue a money-losing experiment indefinitely, regardless of the impact on practice revenue.

The December 31, 2025, termination of Primary Care (PCF) was not an administrative closure. It marked the operational commencement of the CMS Innovation Center’s (CMMI) “2026 Pivot,” a strategic reorientation that abandons practice-level voluntary pilots in favor of state-level global budgets. This shift, formalized by the activation of the States Advancing All-Payer Health Equity method and Development (AHEAD) model on January 1, 2026, represents the most aggressive centralization of payment authority since the Affordable Care Act passed in 2010.

The Consolidation Mandate

CMMI’s 2021 “Strategic Refresh” signaled this contraction years in advance. The agency concluded that voluntary, disease-specific models like PCF and the Oncology Care Model failed to generate net savings because they absence the use to control total system costs. Practice-level incentives could reduce readmissions, yet they could not cap the aggregate growth of hospital pricing or specialist volume. The 2026 Pivot operationalizes the “streamlining” objective outlined in the 2021 white paper. By terminating PCF and forcing the transition to the AHEAD model, CMS nationalizes the “Maryland Model”, the only CMMI experiment to demonstrate consistent, large- savings. Maryland’s Total Cost of Care (TCOC) program saved Medicare $689 million between 2019 and 2021 by placing hospitals under global budgets. The AHEAD model attempts to replicate this by capping hospital revenue and channeling the “savings” into primary care investment, it removes the autonomy independent practices enjoyed under PCF.

From Performance Bonuses to Global Caps

For the 2, 000 practices ejected from PCF, the financial reality of 2026 is a clear regression. PCF offered upside performance bonuses of up to 50% of revenue for reducing acute hospitalization rates. The AHEAD model replaces this chance with a “transformation” payment that is fixed, predictable, and significantly lower. Under AHEAD, primary care funding is no longer a reward for beating a benchmark; it is a line item within a state’s global budget. Hospitals in participating states (Cohort 1 went live January 2026) receive a fixed annual revenue regardless of volume. Primary care practices receive enhanced payments, yet these are tethered to the state’s ability to keep total spending a pre-negotiated growth target ( 1% above CPI). If the state misses its target, primary care investments face stagnation.

Table: The Autonomy Deficit , PCF vs. State Global Budgets

Metric	Primary Care (Terminated 2025)	AHEAD Model (Active 2026)
Payment Unit	Practice-level Population Based Payment (PBP)	State-level Global Budget & Fixed Enhancement
Upside chance	Up to 50% performance bonus	Capped “Transformation” payments
Accountability	Practice vs. National Benchmark	State vs. CMS Growth Target
Risk Adjustment	Complex, patient-level HCC coding	State-wide demographic & social risk adjustment
Autonomy	High (Practice chooses pathways)	Low (State sets investment )

The Maryland Blueprint vs. The Pennsylvania Warning

CMS justifies the 2026 Pivot using data from Maryland, yet it ignores contradictory evidence from other state-based attempts. While Maryland achieved a 2. 1% reduction in Medicare fee-for-service spending, the Pennsylvania Rural Health Model (PARHM), a direct precursor to AHEAD, failed to show statistically significant reductions in avoidable utilization or total cost of care between 2019 and 2023. The Vermont All-Payer ACO Model also missed serious. In its performance year, Vermont achieved only 35% of its Medicare target against a goal of 60%. By forcing a national pivot based on a single success case (Maryland) while ignoring the structural failures in Pennsylvania and Vermont, CMMI risks locking states into rigid budget caps that may accelerate hospital closures rather than prevent them.

The “No-Exit” Framework

The most contentious element of the AHEAD model is its “lock-in” method. Unlike PCF, where practices could exit the model annually without penalty, states signing AHEAD agreements commit to an 11-year timeline (2024–2034). Once a state implements hospital global budgets, unwinding the financial integration is nearly impossible without causing immediate insolvency for rural hospitals dependent on the fixed payments. For primary care physicians, this means the era of “testing” value-based care is over. The 2026 Pivot establishes a permanent, state-administered payment infrastructure. Practices in AHEAD states (Cohort 1 includes Maryland, Vermont, and select new entrants) function as de facto utilities, with their revenue determined not by their own efficiency, by the state’s negotiation with CMS.