Here’s what to know about CMS’ new specialty payment model

Modern Healthcare – Friday, November 7, 2025
By Bridget Early

The Centers for Medicare and Medicaid Services has finalized a new payment model that will be mandatory for select specialty care providers.

As outlined in a final rule published last week, CMS is establishing the Ambulatory Specialty Model, a two-sided risk model geared toward improving identification and management of chronic conditions.

Some provider groups, however, have encouraged CMS to make the model optional ahead of its implementation and raised concerns about its quality measurement strategy.

Here’s what to know about the new Ambulatory Specialty Model.

What is the Ambulatory Specialty Model?

ASM is a five-year payment demonstration run by the Center for Medicare and Medicaid Innovation. ASM will begin in 2027 and run for five performance years through Dec. 31, 2031. Payments for the model will run on a two-year lag from January 2029 through December 2033.

ASM is meant to improve the prevention and early management of chronic conditions, CMS said on its website about the model. The model requires participating providers to demonstrate improved care for heart failure and lower back pain.

Medicare annually spends between $10 billion and $13 billion on heart failure and between $6 billion and $8 billion on lower back pain, according to the CMS website.

“ASM will focus on interventions that are low cost with high patient benefits,” CMS said in a brief about the model. The interventions include screening for chronic disease. “It will test how different incentives, primarily payment adjustments, could transform specialist care delivery to improve chronic disease prevention, early diagnosis, and disease management.”

Providers will be assessed individually regarding quality and cost performance, but measured against others in their region on care improvement activities and any interoperability work.

How could providers’ payments be affected?

The model features two-sided risk. In the first payment year, overall payments to providers for heart failure- and lower back pain-related services could decrease or increase by as much as 9%, CMS said in the rule.

Potential adjustments will start at 9% in the first payment year and grow by one percentage point annually to 12% by 2033.

Who must participate in the model?

Providers in a quarter of “core-based statistical areas,” a group of geographical regions set by the White House Office of Management and Budget, will participate in the model. CMS has yet to announce which regions are selected.

According to CMS’ brief, participation in the model will be mandatory for specialists in those regions who commonly treat traditional Medicare enrollees with heart failure or lower back pain in outpatient settings.

The group includes physicians specializing in cardiology, anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery or physical medicine and rehabilitation.

How will CMS measure performance?

CMS will use the Merit-based Incentive Payment System’s Value Pathways measures to track quality, spending, technological interoperability and early intervention.

MIPS has been used to report quality measurement in traditional Medicare since 2015, but doctors have long complained the system is burdensome and costly. They have also said the quality benchmarks are increasingly stringent, which puts their reimbursements at risk.

And though MIPS Value Pathways were originally pitched as a streamlined alternative to the original version of MIPS, with fewer reporting requirements, physicians have raised concerns the Value Pathways limit their ability to select which quality measures to report.

What do provider groups think?

The American Medical Association raised concerns with the model’s incentives. Although a spokesperson said AMA is pleased CMS is focusing on care for patients with chronic conditions, the trade group predicted the model would cut payments to the majority of participating physicians.

“The added administrative burdens and payment cuts under this model could make it harder for patients with heart failure and back pain to find physicians to take care of them,” the spokesperson said.

Henry McCants, director of payer and care delivery policy for the American College of Cardiology, said the model helps move the industry toward “a more clinically relevant, specialty-aligned value framework” of quality reporting.

However, he said it doesn’t fully address the complexity of how care is administered.

“For over a decade the cardiology community has emphasized high-quality, team-based cardiovascular care, where cardiologists, advanced practice providers, primary care and multiple cardiovascular subspecialties work together to manage complex heart failure patients,” McCants said. “However, the ASM attributes accountability only to cardiologists, excluding these other key contributors to patient care. The ACC would have preferred a more inclusive, team-based design aligned with how heart failure is actually managed.”

CMS also plans on using quality measures, such as a heart failure episode-based cost measure, that are too new to have publicly available cost data for providers to begin preparing for the model, McCants said.

CMS did not immediately respond to a request for comment.

The American Physical Therapy Association wrote in comments ahead of the final rule that CMS should include in the model whether providers referred patients to physical therapy. Physical therapy is both low-cost and well-suited to addressing the model’s aims, the group said. CMS noted in the final rule it would not be doing so.

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