CMS Finalizes Mandatory Ambulatory Specialty Model For Cardiology And Low-Back Pain

The Centers for Medicare & Medicaid Services ("CMS") recently finalized a rule establishing the new Ambulatory Specialty Model ("ASM")— a mandatory value-based payment model that could apply to nearly one-quarter of all physicians in select specialties starting January 1, 2027. The ASM applies to physicians providing services to address two high-expenditure chronic conditions among Medicare patients: heart failure (cardiology) and low-back pain (pain management, interventional pain, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation). Participation will be mandatory for eligible clinicians practicing in geographic areas selected by CMS that will likely encompass approximately one-quarter of U.S. Core-Based Statistical Areas ("CBSAs") or metropolitan divisions nationwide. Published in connection with the Calendar Year ("CY") 2026 Medicare Physician Fee Schedule ("PFS"), this alternative payment model represents a significant step in CMS's transition toward specialty-specific accountability for cost, quality, and care coordination in ambulatory care. The model has significant implications for specialty practices, particularly those participating in or aspiring to join Accountable Care Organizations ("ACOs"). Additionally, the ASM will leverage components of the existing Merit-based Incentive Payment System ("MIPS")/Medicare Value Pathways ("MVPs") frameworks. For clinicians subject to MIPS/MVP, this model introduces a revised approach to performance scoring under a familiar framework.

ASM in Brief

Beginning January 1, 2027, participating specialists will be evaluated based on their performance in four domains or "performance categories" based on the MIPS scoring framework—Quality, Cost, Improvement Activities, and Interoperability—and scored relative to peers within their geographic region. The ASM involves two-sided risk, meaning that clinicians may receive positive, neutral, or negative payment adjustments to future Medicare Part B claims depending on their composite score based on the performance categories. Unlike MIPS, however, the ASM will require clinicians to report on measures and activities clinically relevant to their specialty type and chronic condition of focus (heart failure or low-back pain). Additionally, under the MIPS framework, CMS assesses a clinician's performance against an entire pool of all MIPS participating clinicians, regardless of specialty type or service provided. However, the ASM modifies this approach, assessing individual clinical performance scores against only clinicians treating the same chronic condition.

The ASM will be tested over five performance years, from January 1, 2027, through December 31, 2033, with performance measured during those years and corresponding payment adjustments applied to Medicare Part B claims on a two-year lag (i.e., performance in CY 2027 will affect payment rates in CY 2029). In the first payment adjustment year (2029), adjustments will range from approximately –9 percent to +9 percent, with larger potential adjustments in subsequent years. To ensure that the ASM results in savings, ASM will retain a percentage of the payments rather than distributing all funds as payment adjustments to the clinicians.

To participate in the model, clinicians must have historically treated at least 20 applicable episodes per year. CMS will also identify participants based on historical claims data, publishing final participant lists and selected geographies in 2026.

Performance Categories

The four performance categories for the ASM are the same performance categories required for clinicians participating in MIPS, except that the ASM will measure quality and cost at the individual clinician level (except for small practices), while continuing to measure practice transformation and EHR interoperability at the group level:

1. Quality: The quality measurement strategy for the ASM focuses on three domains related to utilization– (1) excess utilization, (2) evidence-based care and outcomes, and (3) patient-reported outcomes and experience. The specific measures are intended to elevate the patient's voice and be clinically relevant for each specialty type for each of the two conditions (hearth failure and low-back pain).¹ Any addition or removal of a quality measure for an ASM cohort would be prospective only and will occur through notice and comment rulemaking.²
2. Cost: CMS will assess efficiency and cost-effectiveness of care by leveraging existing MIPS episode-based cost measures ("EBCMs"). For the ASM heart failure participant cohort, CMS will use the heart failure EBCM to assess a specialist's cost ASM performance category score. Similarly, CMS will use the low-back pain EBCM to determine an ASM low-back pain to calculate the ASM performance category score.³
3. Improvement Activities: CMS will evaluate clinical care coordination and patient engagement by whether a clinician (1) is connecting to primary care and ensuring completion of health-related social needs screening, and (2) establishing communication and collaboration expectations with primary care through Collaborative Care Agreements.⁴
4. Interoperability: To measure specialist performance in the interoperability performance category, CMS will review use of certified electronic health record technology ("CEHRT"), which also align with MIPS requirements. ASM participants must provide CMS evidence of their use of CEHRT by providing their EHR's CMS identification ID from CMS's Certified Health IT Product List.

Insights

The ASM aims to drive participating specialists to transition from a volume-based to a value-based care model by emphasizing early intervention, evidence-based treatment, and strong collaboration with primary care clinicians and ACOs.

Clinicians will need to redesign workflows around longitudinal patient management, adopt tools for capturing functional outcomes, and ensure accurate documentation of conditions, interventions, and coordination efforts. Given the model's two-sided risk, practices should consider modeling potential financial exposure and planning accordingly. The shift also presents opportunities for those who proactively embrace data-driven management and conservative, outcomes-oriented care. Because each individual clinician's performance will be assessed relative to regional peers, understanding cost drivers and practice variation will be essential to success.

The ASM's introduction also intersects with other value-based frameworks, most notably ACOs and the MIPS and its evolving MVPs. For specialists affiliated with ACOs, the ASM adds a layer of accountability that may overlap with total cost of care benchmarks. Coordination will be critical to align incentives and avoid attribution conflicts. We also note that not only will ASM participation be assessed yearly, but MIPS-eligible clinicians that participate in the ASM will be exempt from MIPS reporting requirements for the performance years they are also included in ASM. Clinicians participating in MIPS or MVP reporting will need to harmonize measure selection and reporting strategies, as ASM domains closely mirror MIPS categories but operate under distinct benchmarks.

Beyond the ASM, the final rule includes separate conversion factors for Qualifying APM Participants (QPs) and non-QPs, efficiency adjustments for technology adoption, and site-neutral payment and telehealth expansion policies. These updates reinforce CMS's goal of linking reimbursement to care outcomes rather than service volume. Further technical guidance, including episode definitions and risk adjustment details, is expected in 2026.

Healthcare organizations and specialty practices should consider preparing for ASM participation immediately. Practices may assess eligibility, conduct readiness evaluations, and review CEHRT capabilities. Specialty clinicians already participating in ACOs or MIPS would benefit from mapping existing quality measures to ASM domains to avoid duplication. Financial modeling is essential to anticipate exposure under two-sided risk, while governance structures should incorporate compliance oversight and value-based strategy alignment.

Key Client Takeaways for Consideration

• Assess eligibility – Confirm whether your practice meets the 20-episode threshold and monitor CMS's participant list.
• Readiness planning – Conduct operational gap analyses focusing on data, CEHRT, care coordination, and outcome measurement.
• Align value-based strategies – Coordinate ASM implementation with ACO participation and existing value-based contracts to ensure alignment with required performance categories under the ASM.
• Harmonize reporting frameworks – Identify overlaps between ASM and MIPS/MVP reporting to streamline compliance, which may require clinicians to modify measures they report to conform to required ASM performance standards.
• Model financial exposure – Project the impact of the ±9% adjustment range in early years to inform investment decisions.
• Governance and compliance oversight – Update governance charters to oversee ASM participation and clinician engagement.

Conclusion

The ASM underscores CMS's intent to expand value-based accountability into specialty care. By prioritizing care coordination, interoperability, and outcomes measurement, CMS aims to reduce costs and improve care quality for high-spend conditions such as heart failure and low-back pain. Practices should evaluate their readiness from a data, workflow, risk management, and strategic alignment perspective. Specialists who proactively prepare will be best positioned to mitigate downside risk and achieve performance-based gains.

Footnotes

1 42 CFR §§ 512.725(b) and (c).

2 42 CFR §§ 512.725(d).

3 42 CFR §§ 512.730.

4 42 CFR § 512.735(c).

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