Alert
Medicare Proposes Mandatory Payment Model for Specialty Providers
On July 14, 2025, the Centers for Medicare & Medicaid Services (CMS) published the Proposed 2026 Physician Fee Schedule (PFS) Rule. The proposed rule introduces a new value-based care program, the Ambulatory Specialty Model (ASM), designed to reshape how specialty care is delivered to Medicare fee-for-service (FFS) patients with congestive heart failure and low back pain—two conditions associated with high Medicare spending and considerable opportunities for cost reduction.
The five-year model is slated to begin on January 1, 2027, and run until December 31, 2031.
ASM’s goal is to reward specialty clinicians who aid in their patients’ overall health care quality and efficiency. CMS hopes to encourage specialists to collaborate with primary care providers to improve chronic disease management, detect risk signs early, and prevent the worsening or recurrence of chronic conditions.
Model Location and Participants
ASM will include roughly one-quarter of core-based statistical areas (CBSAs) and metropolitan divisions throughout the country. CMS intends to release the initial list of ASM participants at the end of 2025, finalizing the list in 2026.
The following physician specialists located in the selected CBSAs would be mandated to participate, if they have historically treated at least 20 Medicare FFS episodes per year:
- Congestive heart failure: General cardiology,
- Low back pain: Anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation.
Physician eligibility is assessed individually, not at the practice level.
Model Requirements
If the model is approved, CMS will provide enhanced data feedback to participants and require them to implement the following activities:
- Collaborative Care Arrangements with primary care
- Preventive care screening in partnership with primary care
- Support for lifestyle changes and health-related social needs screening in partnership with primary care
- Health information exchange data sharing
Payment Methodology
Participant performance would be assessed across four categories, mirroring the Merit-Based Incentive Payment System (MIPS) Value Pathways (MVP) program:
- Quality
- Cost
- Care Improvement Activities
- Improving Interoperability – currently called Promoting Interoperability in MIPS
Total performance on measures within these four domains would determine if the participant receives a positive, neutral, or negative payment adjustment on Medicare Part B claims, two years after the performance year—that is, payment years spanning 2029-2033. ASM participants would be exempt from MIPS reporting for the duration of ASM.
High performers’ total awards will be equally balanced or less than the low performers’ total payment reductions. The first program year will result in payment adjustments ranging from -9% to +9%.
Implications for Providers
For specialty providers, ASM represents both an opportunity and a challenge. On one hand, the model offers rewards for high-quality, integrated care. Specialists who are employed by or affiliated with a health system or Accountable Care Organization (ACO) that’s already delivering advanced primary care and care management services will likely have a head start in ASM. The collaboration between specialty and primary care providers will benefit both simultaneously if they are participating in value-based payment arrangements.
Additionally, participants will likely benefit from increased data transparency from CMS, if they are able to turn the data into actionable insights that reduce hospitalizations and unnecessary treatments.
On the other hand, ASM participants may find that, similar to the broader MIPS program, the vast majority of participants achieve high performance scores, resulting in negligible positive payment adjustments from CMS, as the program maintains budget neutrality. For example, in 2023, 81% of MIPS reporters earned a positive payment adjustment of up to +2.15%, while 5% earned a neutral adjustment (0%), and 14% received a negative adjustment of up to -9%. Nonetheless, it’s certainly favorable to receive a positive payment adjustment, even if small!
The majority of providers receiving negative payment adjustments in the MIPS program are rural or small practices and solo practitioners, and ASM is likely to perpetuate that trend.
As CMS continues to expand value-based payment models, the ASM is a good step toward further transforming specialty care delivery. Providers who proactively engage with ASM can position themselves for success in a healthcare environment increasingly focused on quality, efficiency, and patient-centered care, while those who ignore the call will be facing increased pay cuts in future years.
Next Steps
Comments are due to CMS by 11:59 p.m. Eastern Time on September 12, 2025.
Interested stakeholders can submit comments individually, on behalf of an organization, or anonymously, at the Federal Register website, and may wish to collaborate with industry representative groups.
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For more insights on the proposed Ambulatory Specialty Model, value-based care and other payment models, contact your firm professional.