On July 10, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to establish the Ambulatory Specialty Model (ASM)—a mandatory value-based payment model for specialists who treat patients with heart failure or low back pain.

CMS selected heart failure and low back pain because these chronic conditions represent roughly 6% of total, annual spend for traditional Medicare. The model is scheduled to run from 2027 through 2031 and represents an expansion of CMS’s strategy to integrate specialty care into its broader efforts to manage chronic disease and control Medicare spending.

CMS is accepting public comments on the proposal through September 12, 2025, offering stakeholders an opportunity to help shape the model’s design and implementation.

A New Direction for Specialist Participation in Value-Based Care

ASM comes on the heels of the Transforming Episode Accountability Model (TEAM), a mandatory episode-based model for acute care hospitals set to begin in 2026. While TEAM focuses on inpatient surgical episodes, such as coronary artery bypass grafts and spinal fusions, ASM shifts the focus to high-volume, high-cost outpatient specialty care, an area where CMS sees significant potential for earlier intervention and better coordination with primary care providers in managing chronic conditions. CMS has signaled its desire to have 100 percent of traditional Medicare beneficiaries in accountable care models by 2030.  Specialist participation is critical to achieve this goal.

Notably, ASM would be CMS’s first mandatory alternative payment model (APM) targeting specialists treating chronic conditions in ambulatory settings. The model draws upon the Merit-Based Incentive Payment System (MIPS) framework, leveraging its existing quality, cost, and interoperability metrics to evaluate performance.

Epstein Becker Green's analysis of TEAM is available here.

Model Scope and Specialist Eligibility

CMS proposes selecting providers from approximately 25 percent of metropolitan statistical areas (metropolitan divisions and core-based statistical areas or CBSAs), based on a lookback analysis of claims data. Participation would be mandatory for clinicians meeting CMS’s eligibility criteria, which include treating at least 20 episodes annually of either heart failure or low back pain. Targeted specialties include anesthesiology, pain management, neurosurgery, orthopedic surgery, interventional pain management, and physical medicine and rehabilitation.

Providers will be notified of their selection by the end of calendar year 2025, giving them over a year to prepare for the January 2027 start date. Of note, ASM-selected participants may continue to participate in other Innovation Center models and accountable care organizations (ACOs) including the Medicare Shared Savings Program and ACO REACH.

Performance Measurement and Financial Risk

Like MIPS, ASM will evaluate participating clinicians across four performance domains: (1) quality; (2) clinical practice improvement; (3) cost; and (4) promoting interoperability (i.e., the use of certified electronic health record technology). Across these four categories, each provider will receive a composite performance score, which will be compared against a performance threshold established in prior rulemaking. The measures that ASM participants would be required to report on are clinically relevant to their relevant specialty and the chronic condition. Additionally, performance is assessed against other providers that are treating the same chronic condition.

Depending on how a provider scores relative to the threshold, CMS will apply a positive, negative, or neutral payment adjustment to Medicare Part B payments—creating a two-sided risk arrangement that rewards strong performance but imposes financial consequences for underperformance. ASM imposes mandatory upside and downside risk with no “glide path” to downside risk as is often the case in other mandatory CMMI models. Participants can receive positive or negative payment adjustments of up to 9 percent. The model emphasizes individual clinician participation, which CMS notes is intended to “level the playing field” for small and independent practices that often face disadvantages in group reporting structures.

A Continued Focus on Coordination and Affiliated Agreements

Under the proposed rule, the ASM would retain MIPS requirements for collaborative care agreements (CCAs) and certified health IT infrastructure to facilitate data exchange. CMS envisions specialists taking a more proactive role in coordinating with primary care providers (PCPs), using health IT to ensure patients have consistent access to primary care, receive timely preventive services, and experience seamless transitions across care settings.

Each selected specialist must enter into at least one CCA with a PCP. These agreements must include at least three of five key elements defined by CMS: (1) bi-directional data sharing; (2) co-management of care; (3) transitions in care planning; (4) closed-loop referrals; and (5) integration of care coordination activities. Data sharing may include test results, treatment plans, and follow-up recommendations.

To support these goals, ASM will evaluate participants through the Promoting Interoperability performance category, which emphasizes the use of certified electronic health record technology (CEHRT). Specialists must meet the CEHRT standards outlined at 45 C.F.R. § 414.1305, and demonstrate capabilities in e-prescribing, health information exchange, patient access, and public health reporting. CMS expects these requirements will enhance care coordination and reduce patient burden in navigating fragmented health systems.

What Comes Next: Strategic Considerations for Specialists

Although the proposed rule is still subject to change, providers should begin assessing the model’s implications and preparing for the possibility of mandatory participation. Specialists providing low back and heart failure care should evaluate their current referral relationships, care coordination capabilities, and use of health IT systems to support efficient data exchange in preparation for the start of the model.

Participation in ASM could present meaningful financial upside for specialists who are well positioned to coordinate care, reduce low-value services, and improve patient outcomes. Conversely, the presence of mandatory downside risk heightens the importance of preparation.

Chloe Shumaker, a Summer Associate (not admitted to the practice of law) in the firm's Washington, DC, office, contributed to the preparation of this post.