Reading Between the Lines: What Paragon’s Reform Agenda Signals for the Innovation Center
A new report from the Paragon Institute, "How to Reform the CMS Innovation Center with a Choice and Competition Approach," offers a view into how the Trump administration may be thinking about the Center for Medicare & Medicaid Innovation (CMMI). Beyond its critique of the past decade of spending and model design, the report reads like a framework for where CMMI may be headed and, in many ways, aligns with what we're already seeing emerge from the Innovation Center.
Accountability and "Mandatory" as the New Normal
Paragon's central argument is that CMMI's voluntary approach hasn't delivered the savings or system transformation envisioned when it launched in 2010. The call for "true demonstrations" that are limited, mandatory, and rigorously evaluated echoes loudly in CMS's current portfolio. The Transforming Episode Accountability Model (TEAM) and other forthcoming demonstrations emphasize mandatory participation and clearer financial accountability.
These changes reflect a broader philosophical shift: innovation must now prove it works. The administration's messaging around "protecting the taxpayer" and "market discipline" pairs with Paragon's recommendations for models that are smaller in scope, shorter in duration, and more transparently evaluated.
State Alignment and Structural Reform
The Paragon report calls for a more coordinated approach to innovation that reduces duplication and aligns federal and state efforts. CMMI’s AHEAD Model embodies that goal, linking state-level payment reform, Medicaid alignment, and commercial payer participation in one integrated framework.
Rather than testing isolated pilots, CMS is building models that braid funding streams and policy levers across payers and programs. The updated AHEAD requirements, which ask states to implement competition-enhancing policies like eliminating certificate of need requirements or reforming scope of practice laws, show this direction toward fewer, bigger, and more integrated demonstrations.
Broadening the Definition of "Innovator"
Paragon's vision for reform includes opening model participation to a wider range of market actors, leveraging competition and consumer choice to drive value. That idea has materialized in recent CMMI announcements.
We are now seeing non-traditional participants take center stage:
Technology firms advancing digital infrastructure and risk-stratification tools in rural and primary care models
The WISeR (Wasteful and Inappropriate Service Reduction) model bringing in third-party administrators using AI and machine learning for prior authorization
Direct-to-consumer entities and employer-sponsored care arrangements partnering under new waiver authorities
These entrants signal a CMMI more open to private-sector collaboration and to innovation that doesn't originate solely from traditional provider or payer systems.
Benchmarking Reform
The Paragon report highlights opportunities for CMMI to strengthen accountability through more standardized, formula-driven benchmarks that reduce discretion and promote market-based competition. The proposed Ambulatory Surgery Model exemplifies this approach, linking payments to relative peer performance rather than individualized projections. Similar competitive mechanisms appear in the Geographic track of the AHEAD Model, where bidding against a discounted benchmark is intended to drive competition and efficiency.
Together, these designs reflect an administrative push to pair innovation with measurable, market-oriented outcomes. Benchmarking reform is less about shifting between retrospective or prospective methods and more about creating consistent, data-driven approaches to assess whether models deliver real systemwide value.
A Market-Oriented Future for Innovation
The common thread between Paragon's recommendations and CMMI's current actions is an emphasis on competition, accountability, and measurable outcomes. For stakeholders, this signals clear priorities. Providers, states, and technology partners entering CMMI's ecosystem will need to demonstrate operational readiness, data sophistication, and capacity for mandatory participation where required.
At Coral Health Advisors, we view refinement as the natural next stage in CMMI’s evolution. But the way this refinement is unfolding reflects the Trump administration’s distinct priorities of market orientation, fiscal restraint, and competition as the driver of accountability. The Innovation Center’s current trajectory emphasizes performance over participation and outcomes over experimentation. Organizations that can align operational and strategic capabilities with this approach will be best positioned to thrive as CMMI’s new chapter unfolds.
For strategic guidance on navigating CMMI's evolving landscape, contact Coral Health Advisors.