In the CY 2026 Medicare Physician Fee Schedule proposed rule (PFS Proposed Rule), released on July 14, 2025, the Center for Medicare and Medicaid Innovation (CMMI) introduced the Ambulatory Specialty Model (ASM), a new payment model focused on specialists who treat heart failure and low back pain in ambulatory settings. If implemented as proposed, participation in ASM will be mandatory for specialists, including cardiologists, orthopedic surgeons, pain management specialists, anesthesiologists, and neurosurgeons, who are located in designated regions and treat Medicare Fee-for-Service (FFS) beneficiaries for heart failure or low back pain. Participating providers will continue to bill Medicare FFS but will receive payment adjustments – positive, neutral, or negative – based on their performance across four domains: cost, quality, care improvement, and interoperability. 

Overview of ASM

Aligned with CMMI’s strategic direction under the Trump administration, ASM focuses on two high-volume, high-cost chronic conditions – heart failure and low back pain. Unlike typical CMMI payment models, ASM requires participation of individual specialists rather than larger organizations (e.g., ACOs, health systems, and provider networks), which CMMI states will increase transparency and accountability at the clinician-level and help identify specialists within larger organizations that may be providing “low-value” care, such as unnecessary surgeries, imaging, and hospital admissions.

CMMI proposes to use performance measures to make payment adjustments on future Part B claims for covered services, similar to the methodology employed in the longstanding Merit-based Incentive Payment System. In the first payment year (2028), the adjustments would range from -9% to +9%. The performance measures focus on cost, quality, care improvement, and interoperability. However, the final score is calculated based solely on performance on the quality and cost performance measures, and ASM participants who fail to satisfy all of the care improvement and interoperability requirements will receive negative scoring adjustments. Specific details on the performance measures under consideration are described in the PFS Proposed Rule, and interested stakeholders should consider reviewing and commenting on the feasibility of performance measures, in particular, given their potential impact to specialists’ Medicare payments in the future. 

Beneficiary Incentives

CMMI proposes a framework for in-kind beneficiary incentives aimed at engaging patients in managing their chronic conditions and improving ASM participants’ performance. For example, ASM participants (or their agents) could provide ASM beneficiaries with remote monitoring devices, healthy food vouchers, or fitness memberships. Beneficiary incentives that satisfy all of the proposed requirements under ASM would be protected from liability under the federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements CMP. 

While similar in spirit to the existing AKS safe harbor for patient engagement tools and supports, in many ways, the ASM proposal for beneficiary incentives is much more prescriptive. The beneficiary incentives must be provided directly by the ASM participant (or an agent under the ASM participant’s direction and control), the ASM participant must be solely responsible for any costs associated with the incentive, and there are strict documentation and retrieval requirements for technology exceeding $75 in value. Keeping in mind that ASM participants are individual specialists rather than their organizations or networks, these requirements seem rather difficult to execute, and large physician organizations and provider networks may find the AKS safe harbor for patient engagement tools and supports more palatable. However, it is worth noting that CMMI proposes a monetary limit for the beneficiary incentives of $1000 per beneficiary, which is significantly higher than the $605 per year per beneficiary monetary limit currently available under the AKS safe harbor for patient engagement tools and supports.

Collaborative Care Arrangements with Primary Care Providers

A cornerstone of ASM is its emphasis on collaborative care between specialists and primary care providers (PCPs), which is demonstrated by its performance measures for care improvement. Under CMMI’s proposal, ASM participants will be required to confirm that ASM beneficiaries have access to a PCP, assist in establishing those relationships if needed, communicate relevant clinical information back to PCPs after each visit, and ensure that annual health-related social needs (HRSN) screenings are completed—either by PCPs or the ASM participant. Evidence of compliance may include documented workflows, electronic health records (EHR) configurations, staff training materials, and audit trails.

ASM participants are also required to execute at least one Collaborative Care Arrangement (CCA) with a primary care practice that shares ASM beneficiaries with the ASM participant. CCAs must address at least three of five core elements: data sharing, co-management, transitions in care, closed-loop communication, and care coordination integration. These arrangements are intended to formalize expectations around shared responsibilities, improve continuity of care, and embed coordination processes into routine practice operations. 

CMMI proposes a framework to protect CCAs from liability under the AKS and the Beneficiary Inducements CMP. However, as proposed, the framework’s requirements offer limited flexibility, and, in fact, CCAs that satisfy the framework’s requirements would seemingly also satisfy the AKS’s safe harbor for personal services and management contracts. Health care organizations and systems looking to maximize performance should consider implementing CCAs that utilize the AKS’s value-based care safe harbors, which offer significantly more room for innovative, risk-sharing arrangements.

Key Takeaways for Health Care Organizations with Specialists

If finalized as proposed, ASM represents a significant shift in how CMMI engages specialists in value-based care. For health care organizations with cardiologists, orthopedic surgeons, pain management specialists, neurosurgeons, or anesthesiologists, the model introduces both compliance obligations and strategic opportunities. Unlike prior voluntary models, ASM is mandatory in selected regions (to be announced) and applies directly to individual specialists, requiring organizations to assess their readiness at the clinician level. The model’s emphasis on care coordination with PCPs, interoperability, and beneficiary engagement will require robust infrastructure, including interoperable EHR systems, documented workflows, and formalized collaborative care arrangements with PCPs.

Health care organizations with specialists should consider submitting comments before the PFS Proposed Rule’s September 12th deadline. CMMI anticipates announcing the initial participant list by the end of 2025, and ASM will launch in January 2027.