On July 14, 2025, the Centers for Medicare & Medicaid Services (“CMS”) announced its CY 2026 Physician Fee Schedule (“PFS”) Notice of Proposed Rulemaking (“Proposed Rule”). The Proposed Rule includes information on a new Center for Medicare & Medicaid Innovation (“CMMI”) mandatory payment model called the Ambulatory Specialty Model (“ASM”). If finalized, the new mandatory model would begin on January 1, 2027, and run through December 31, 2031.
The ASM falls within CMMI’s larger framework of activities focusing on high-volume, high-cost chronic conditions and direct engagement of specialists in value-based care. The model focuses on improving care for two high-cost, high-utilization chronic conditions in the Medicare population: heart failure and low back pain. The stated goal of ASM is to improve beneficiary and provider engagement, encourage the provision of preventive care and increase financial accountability for certain specialists.
Participating Specialists
Under ASM, mandatory participants will include specialists located in select geographic regions who frequently treat traditional Medicare beneficiaries for low back pain or heart failure in the outpatient setting. For heart failure, participants will be physicians who specialize in general cardiology. For low back pain, participants will be physicians who specialize in anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery and physical medicine and rehabilitation.
To determine participation, each clinician will be assigned to a core-based statistical area (“CBSA”) or Metropolitan Division based on the ZIP codes of the clinician’s most common episode-level service location. CMS will randomly select approximately 25 percent of the CBSAs and Metropolitan divisions to include in the model. Clinicians in these selected regions who satisfy the participant eligibility criteria will be required to participate in ASM.
The proposed ASM participant eligibility criteria would require participation by clinicians who:
- Bill claims under the Medicare Physician Fee Schedule.
- Are identified by TIN/NPI as a selected specialty type.
- Meet the annual threshold of 20 or more attributed episodes from episode-based cost measures for the targeted chronic condition.
- Are located in one of the selected regions discussed above.
Once a specialist meets the ASM participant eligibility criteria, the specialist will be considered an ASM participant for the duration of the model; however, for any model year that a previously selected ASM participant does not continue to satisfy eligibility criteria for the upcoming ASM performance year/ASM payment year, the participant will not be required to submit ASM data, will not be scored on ASM metrics and will not receive an ASM payment adjustment. In these situations of lost ASM eligibility, participants will be required to satisfy any Merit-based Incentive Payment System (“MIPS”) reporting obligations and will receive a MIPS payment adjustment.
Incentives and Accountability
Participating specialists will be held financially responsible for early identification and management of disease progression, reducing avoidable procedures and hospitalizations and improving patient function and long-term outcomes.
The proposed model would promote preventive care by providing incentives to specialists who are ASM participants to ensure that patients have a regular source of primary care and are screened to help identify risks and early signs of chronic conditions. Performance of the participating specialists will be evaluated based on quality measures and clinical improvement activities, Medicare spending benchmarks and risk-adjusted outcomes.
Leveraging the CMS MIPS Value Pathways (“MVP”), the ASM performance measures will be specific to the type of provider and condition treated. The ASM will also offer a more focused set of performance measures that are clinically relevant to the specialty type and chronic disease to simplify reporting for participants, and to enable them to benchmark performance against other physicians of the same specialty and geographic area. While ASM will leverage the performance measurement framework from MVP, ASM participants will be exempted from MIPS requirements for applicable ASM performance years.
Payment
Through a two-sided risk arrangement, participating specialists will be eligible to share in financial gains, such as shared savings or positive payment adjustments, and are required to share in financial losses through mechanisms such as negative payment adjustments or penalties.
ASM participants will continue to bill Medicare under the traditional fee-for-service (“FFS”) system for services furnished to FFS beneficiaries. Financial reconciliation and payment or recoupment of incentive-based amounts under ASM will occur two years following the applicable performance year.
CMS has released a fact sheet and webpage with additional information on the ASM.
Technology and Collaboration
According to the Proposed Rule, technology and collaboration will play a significant role in ASM. CMS hopes to test tools to improve collaboration, such as collaborative care arrangements, and encourage participants to use Certified Electronic Health Record Technology to communicate with collaborating providers.
ASM will require collaborative care arrangements with primary care providers and health information exchange data sharing across collaborating providers. Stronger practices of collaboration and communication will be rewarded with higher ASM incentive scores.
Timeline
CMS intends to release an initial list of ASM participants by the end of CY 2025 and plans to finalize the list during CY 2026 to give specialists time to prepare for ASM requirements that will go into effect in CY 2027. CMS plans to use applicable data from CY 2024 to make participant eligibility decisions for the 2027 ASM performance year.
Practical Takeaways
ASM continues CMS’s value-based care strategy by placing financial accountability directly on specialists for chronic disease outcomes and cost of care.
Participation in ASM will be mandatory for those specialists identified by CMS. Specialists in cardiology, orthopedic surgery, neurosurgery, physical medicine and rehabilitation, anesthesiology and pain management should assess whether their practices might meet the eligibility thresholds based on 2024 Medicare data and should begin reviewing care coordination workflows and data sharing capabilities. Those who anticipate being ASM participants should also begin reviewing their Medicare claims volume, patient mix and infrastructure for care coordination and reporting now to prepare for potential inclusion. Those anticipating inclusion should take steps now to understand the ASM risk arrangement and how the 2027 ASM performance year will affect future payments.
Comments regarding the proposed model can be submitted electronically to CMS during the 60-day comment period, which ends September 12, 2025.
If you have questions about the implications of the proposed model, need assistance in submitting comments to CMS or would like additional information regarding ASM, please contact:
- Jennifer Skeels at (317) 977-1497 or jskeels@hallrender.com;
- Regan Tankersley at (317) 977-1445 or rtankersley@hallrender.com; or
- Your primary Hall Render contact.
Special thanks to Summer Associate Wyatt Poer for his assistance with this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
