Ambulatory Specialty Model Final Rule: Bringing Specialists into Value-Based Payment

On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the final rule for the Calendar Year (CY) 2026 Medicare Physician Fee Schedule, which finalized the Ambulatory Specialty Model (ASM), targeting specialists treating chronic conditions in the outpatient setting.

The ASM represents a continuation of the CMS Innovation Center’s (CMMI’s) shift from voluntary primary care team-based models toward mandatory two-sided risk models imposed on specialist providers and facilities.

Historically, CMMI’s models, such as the Medicare Shared Savings Program, ACO REACH, and Primary Care First, concentrated on primary care providers to advance population health management and systemwide coordination. This demonstrates CMMI’s intent to bring specialists—via the ASM model—and facilities—via the recently proposed Transforming Episode Accountability Model (TEAM)—under similar value-based payment expectations in order to determine how specialty and facility-based care can be made cost-efficient and result in quality outcomes.

Ambulatory Specialty Model Overview

The ASM is a mandatory value-based care model that applies to selected specialists treating two targeted chronic conditions: heart failure and low back pain. The model seeks to prevent the worsening of chronic conditions, detect risks and signs of chronic conditions early, reduce unnecessary surgeries and procedures, and enhance the overall patient experience. The ASM requires specialists to implement preventative care screening and collaborative care arrangements with primary care providers to support lifestyle changes and health-related social need screenings, and to engage in health information exchange.

Under this model, participating providers will be assessed across four statutory categories: quality, cost, improvement activities, and promoting interoperability. These measures emphasize evidence-based clinical outcomes, such as blood pressure control and improved functional status, cost reduction through avoidance of unnecessary care, implementation of activities that enhance patient engagement and address health-related social needs, and the use of certified electronic health record technology to promote data sharing and care coordination among specialists. Participating specialists must establish Collaborative Care Arrangements (CCAs) with primary care providers to define shared roles, data-exchange expectations, and joint responsibility for patient management, including transitions between care settings. Both primary care physicians and specialists will collaborate in screening for health-related social needs and developing integrated care plans that address social and clinical risk factors. When selecting primary care practices for CCAs, ASM participants are required to ensure the primary care practice shares at least one ASM beneficiary with the participant. CCAs between primary care physicians and ASM participants will be allowed to utilize the flexibilities permitted under the CMS-sponsored model arrangements safe harbor.

The performance period for participating specialists begins January 1, 2027, and runs through December 31, 2031, with payment-adjustment years running from January 1, 2029, through December 31, 2033. Participants will be subject to two-sided risk, with payment adjustments in the first payment year based on their performance when compared to their peers. When a participant’s performance is measured against that of similarly situated peers, the participant will be eligible to receive, with respect to future Medicare Part B claims for covered services, either (i) a positive payment adjustment resulting in a higher reimbursement rate, (ii) a neutral payment adjustment resulting in the standard reimbursement rate, or (iii) a negative payment adjustment resulting in a lower reimbursement rate. In 2029, the maximum upside and downside Part B claims payment adjustment (“risk level”) that an ASM participant will be subject to is 9 percent. That risk level will increase to 12 percent by 2033.

Changes from Proposed Rule to Final Rule

In the proposed rule, CMS had outlined similar requirements for the ASM, but several changes, additions, and removals were made to create the final rule. Some of the key differences are discussed below.

Positive Scoring Adjustments for Smaller Providers and Adjustments for Complex Patient Populations

To allow for the unique challenges facing smaller and independent providers, CMS has implemented positive scoring adjustments within the ASM framework. These adjustments are designed to provide appropriate guardrails and support for entities with limited administrative capacity or resources, thereby promoting fairness and participation across provider types.

Under the final rule, the ASM will also include specific positive scoring adjustments for participants who serve a high proportion of medically or socially complex patients. In addition, ASM participants who operate as small practices or solo practitioners will be eligible for separate positive scoring adjustments.

Eligibility for each adjustment is to be evaluated independently to ensure that participants qualify for both adjustments if they meet the respective criteria. This dual eligibility framework is intended to reflect the unique patient demographics and operational realities faced by these providers.

Modification of Measure Specifications

CMS has modified the measure specifications within the ASM to attribute performance solely to ASM participants who have had one or more visits with a given beneficiary. This adjustment increases accountability on providers who have directly engaged in the treatment of patients and strengthens the connection between care delivery and performance outcomes. This was included to allow CMS to address concerns related to the misrepresentation of individual accountability in team-based or collaborative care settings.

Reporting Requirements for Small Practices

CMS has revised its proposal to allow ASM participants in small practices to report quality measures at the Taxpayer Identification Number level within the ASM performance category. This modification is intended to reduce administrative burden and streamline reporting obligations for small entities, thereby supporting broader participation and compliance.

Expansion of Value-Based Care

The ASM is one of the few CMMI-led models that is specifically designed for specialists, signaling a deliberate shift in CMMI’s focus. Historically, CMMI has concentrated its efforts on primary care transformations and accountable care organizations (ACOs), but the ASM brings specialist providers directly into value-based arrangements that hold the providers financially accountable for quality, coordination, and total cost.

Additionally, the ASM is mandatory and includes two-sided (downside) risk, which distinguishes it from the voluntary, upside-only models that have been present in most other CMMI models. CMS has acknowledged that voluntary participation can limit the impact of programs because high-performing providers tend to put themselves into these programs already. By mandating participation, the ASM aims to produce more comprehensive results and to accelerate the national transition toward value-based payment.

While the ASM broadens value-based accountability into specialty care, it still ensures specialists operate within a primary care framework. Under the model, specialists must maintain a contractual relationship with at least one primary care provider (PCP) to ensure coordination and continuity for beneficiaries. This requirement reinforces that primary care is at the center of Medicare’s value-based ecosystem.

CMS’s references to both the TEAM and the ASM in recent rulemaking reinforce that CMMI is no longer viewing value-based care as a primary-care-only initiative. Instead, the agency is expanding value-based accountability across the full spectrum of care, including specialists who drive a substantial amount of Medicare spending. In this respect, the ASM is more than just a payment model; it is instead a signal that value-based care will be part of every part of the patient care experience.

Strategic Considerations

The ASM may introduce strategic and compliance challenges for specialists and health systems as CMMI expands value-based care into the specialty space. Because the model requires participating specialists to maintain a contractual relationship with at least one PCP, independent practices will need to develop strategies to support care coordination and compliance. Additionally, the ASM’s mandatory two-sided risk exposes specialists to financial losses if they fail to meet quality or cost benchmarks. For smaller or rural practices, these demands may mean creating strategic alliances so that these practices have the resources to comply with the rule. On the other hand, participation in the ASM also presents meaningful opportunities for specialists. The model offers the potential for upside risk through positive payment adjustments, providing financial rewards to high performers who improve outcomes and reduce unnecessary utilization. The ASM may also increase care-delivery transformation by incentivizing specialists to adopt new technologies, partner more closely with primary care, and expand preventive and team-based approaches to chronic disease management. Finally, the ASM’s mandatory structure may set a notable precedent for future CMMI initiatives, as it demonstrates CMS’s growing willingness to require participation when it deems it necessary.

Conclusion

The ASM represents a shift in federal payment reform by bringing specialists, who have long operated outside CMMI’s primary-care and ACO-focused models, into a mandatory, two-sided value-based system. By tying reimbursement to performance and requiring coordinated care arrangements with primary care, the ASM seeks to reduce unnecessary utilization, improve chronic disease management, and integrate specialists into Medicare’s value-based arrangement. Its mandatory nature signals CMS’s increasing willingness to test large-scale reforms. The ASM also demonstrates CMS’s broader push to extend value-based care across the full continuum of Medicare services, marking an important step in the evolution of federal payment policy and the alignment of specialist care with national quality and cost goals.

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Sara Devaraj, a Law Clerk – Admission Pending (not admitted to the practice of law) in Epstein Becker Green’s Washington, DC, office, contributed to the preparation of this Insight.