CMS Emerges as Key Player in U.S. Healthcare Reform Amid Turmoil

The Centers for Medicare and Medicaid Services (CMS) has gained prominence as a vital agency in U.S. healthcare during the early months of Donald Trump’s second term. This shift comes in stark contrast to the challenges faced by the Food and Drug Administration (FDA) and other health agencies. With oversight of approximately $1.7 trillion in healthcare outlays, CMS has taken significant steps to innovate and improve health services at a time when many federal health organizations are grappling with internal issues.

Since 2025, the federal workforce has seen a notable decline, with over 300,000 employees leaving government service, including more than 10,000 individuals holding doctoral degrees in STEM fields. This exodus has left many agencies struggling, as dedicated public servants have been driven out or demoralized. In particular, the departure of approximately 50,000 employees from the Department of Veterans Affairs has resulted in longer wait times for veterans seeking care.

Despite these challenges, CMS has emerged as a beacon of progress in U.S. healthcare policy. Notably, it has focused on strengthening primary care by increasing compensation for primary care physicians while reducing payments for specialists. This reform, long advocated by healthcare experts, marks a crucial step toward prioritizing comprehensive patient care.

Innovations in Payment Structures and Care Delivery

CMS has also made strides in addressing disparities in payment rates for similar medical services based on where they are provided. For example, a hip replacement performed in a hospital costs nearly $3,500 more than the same procedure done in an ambulatory surgical center. The organization aims to equalize these payments through expanded site-neutral payment policies, which could save an estimated $100 billion annually without compromising care quality.

Recently, CMS announced an expansion of site-neutral payments for Medicare, specifically targeting drug administration services, including chemotherapy and immunotherapies for chronic conditions. According to Zachary Levinson from KFF, this change represents a step towards implementing site-neutral payment reforms, though it remains modest compared to more ambitious proposals from the Medicare Payment Advisory Committee (MedPAC).

Interestingly, CMS has taken a cautious approach towards Medicare Advantage plans, which receive around $500 billion annually in federal payments. The agency proposed a mere 0.09% increase in payments for 2027, a stark contrast to the previous year’s increase of over 5%. Experts highlight that private insurers often exploit this system, leading to annual overpayments exceeding $75 billion. The modest payment increase indicates a shift away from the significant profits anticipated by private insurers.

CMS has also announced plans to audit all Medicare Advantage plans rather than just a subset, reflecting its commitment to curbing waste and abuse within the system. This proactive stance signifies the agency’s determination to ensure accountability in healthcare spending.

Addressing Healthcare Spending and Systemic Flaws

The CMS Innovation Center has also been active, building on successful models from previous administrations while introducing new initiatives that aim to enhance care quality and reduce costs. One notable model, the Advancing Chronic Care with Effective, Scalable Solutions (ACCESS), intends to leverage artificial intelligence for better management of chronic conditions like hypertension and diabetes. These conditions collectively contribute to approximately 1 million deaths annually.

Another recent initiative, the Wasteful and Inappropriate Service Reduction (WISeR), aims to implement prior authorization for 17 medical services that are often subject to abuse. For instance, Medicare spending on skin substitutes has skyrocketed from $252 million in 2019 to an estimated $15 billion in 2025. The WISeR model is designed to address such excessive spending while ensuring that necessary services remain accessible.

While CMS has made commendable progress, not all its policies have been positively received. The recent withdrawal of Biden-era Emergency Medical Treatment and Labor Act (EMTALA) guidance regarding abortion care has raised concerns. Although this change does not alter existing law, it has introduced legal uncertainties for providers.

Polling data indicates that healthcare costs are now the top concern for American households, surpassing worries about groceries, housing, and utilities. The ongoing challenges within the U.S. healthcare system suggest that comprehensive affordability reforms will be necessary for any administration taking office in 2029.

Despite these systemic issues, the actions taken by CMS to uplift primary care and address exorbitant healthcare spending in recent months are noteworthy. As the agency continues to navigate the complexities of the current administration, its focus on reform and innovation may hold the key to improving the overall health landscape in the United States.