The Centers for Medicare and Medicaid Services (CMS) has distinguished itself as a pivotal agency in the U.S. health care landscape during the first year of President Donald Trump’s second term. While other health agencies, notably the Food and Drug Administration (FDA), have faced challenges and internal turmoil, CMS has managed to innovate and adapt, overseeing approximately $1.7 trillion in health care services, which represents 24% of the federal budget.
The Trump administration has seen a significant turnover in federal employment, with over 300,000 federal workers leaving government service in 2025. This includes more than 10,000 individuals with advanced degrees in science, technology, engineering, and mathematics (STEM). The departure of skilled employees has impacted various agencies, including the Department of Veterans Affairs, where 50,000 employees left, leading to increased wait times and diminished care quality for veterans. In contrast, CMS has focused on crucial reforms that have bolstered its nonpartisan mission.
One major achievement for CMS has been the enhancement of primary care services. The agency has increased reimbursement rates for primary care physicians while reducing payments for specialists, a change advocated by experts and think tanks. Although the recent pay increase is modest, it signals a commitment to addressing primary care needs and improving overall health outcomes.
Innovative Payment Models and Cost Savings
CMS has also made strides in implementing site-neutral payments, addressing disparities in reimbursement rates for similar services provided in different settings. For instance, a hip replacement performed in a hospital can cost nearly $3,500 more than the same procedure done in an ambulatory surgical center. By equalizing payments, CMS aims to shift care to lower-cost settings, potentially saving the U.S. health care system $100 billion annually without compromising quality.
Recently, CMS announced the expansion of site-neutral payments in Medicare for certain drug administration services, a change that reflects ongoing efforts to streamline costs. As noted by KFF’s Zachary Levinson, these adjustments represent a positive step in implementing site-neutral payment reforms, although they may not be as extensive as some advocates had hoped.
Surprisingly, CMS has proposed a minimal payment increase of 0.09% (approximately $700 million) for Medicare Advantage plans in 2027. This contrasts sharply with the previous year’s increase of more than 5% (about $25 billion). Experts have criticized the Medicare Advantage system for practices such as “upcoding,” which inflates costs by categorizing healthier patients as sicker. With the recent announcement, CMS has indicated a shift towards rooting out such practices and preserving taxpayer funds.
Future Directions and Challenges
The CMS Innovation Center has continued to develop programs that build on previous successes without dismantling existing frameworks. The new Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) model aims to integrate artificial intelligence technologies into chronic condition management, addressing serious health issues like hypertension and diabetes. This model emphasizes payment based on patient outcomes, moving away from a fee-for-service approach.
Another recently introduced initiative, the Wasteful and Inappropriate Service Reduction (WISeR) model, will test prior authorization for specific high-cost medical services. Although prior authorization has received mixed reactions, the model seeks to address significant spending increases in certain areas, such as skin substitutes, which have seen Medicare expenditures jump from $252 million in 2019 to an estimated $15 billion in 2025.
Despite these advancements, not all actions taken by CMS under the current administration have been well-received. The withdrawal of Biden-era guidance related to abortion care under the Emergency Medical Treatment and Labor Act (EMTALA) has raised concerns about legal uncertainties for health care providers.
As health care costs continue to be a pressing issue for American households, the need for comprehensive reforms is evident. Polls indicate that health care expenses now surpass concerns regarding groceries, housing, and utilities. The anticipated “affordability” reform package will be crucial for whichever administration takes office in 2029.
While challenges persist, the proactive measures taken by CMS to enhance primary care and mitigate excessive spending are commendable. The agency’s efforts represent a critical step in reforming the U.S. health care system amid broader federal challenges.
Ezekiel J. Emanuel, vice provost for global initiatives at the University of Pennsylvania, along with co-author Merjan L. Ozisik, a research fellow in the Department of Medical Ethics and Health Policy, highlight the importance of these developments in their analysis of CMS’s role during this administration.
