In its 2026 Physician Fee Schedule, CMS finalized a mandatory payment model that will begin Jan. 1, 2027, and hold certain outpatient specialists financially accountable for how they manage chronic conditions such as heart failure and low back pain.
The Ambulatory Specialty Model will tie Medicare payments to clinician performance on quality, cost and care coordination metrics, with the goal of reducing avoidable hospitalizations and unnecessary procedures.
1. The model will run through Dec. 31, 2031, and apply in selected geographic areas to specialists treating heart failure or low back pain.
2. CMS said delayed diagnoses, poor coordination between specialists and primary care providers, and incentives for unnecessary procedures can worsen outcomes and increase costs. The model is intended to reward specialists for improving chronic disease management, identifying risks earlier and coordinating more effectively with primary care providers.
3. The model focuses on two Medicare conditions: heart failure and low back pain. According to CMS, both account for significant spending in Original Medicare and present opportunities to reduce avoidable hospitalizations and unnecessary procedures.
4. Cardiologists will be included for heart failure, while anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery and physical medicine and rehabilitation physicians will be included for low back pain. To qualify, physicians must practice in selected core-based statistical areas or metropolitan divisions, and must have historically treated at least 20 Medicare episodes or patients for the relevant condition in a year. The list of Ambulatory Specialty Model participants can be found here.
5. CMS will score participants on quality, cost, care improvement activities and interoperability, using measures tailored to each specialty and condition. Based on performance, specialists may receive positive, neutral or negative future Medicare Part B payment adjustments.
6. CMS wants participants to use certified EHR technology to support data sharing and plans to provide more performance comparisons so physicians can assess how they compare with peers in the same specialty and region.
7. If a clinician initially qualifies for ASM, that clinician will remain in the model for the full five-year period, even if case volume later falls below the eligibility threshold.
8. Clinicians in ASM will not have to report separately under the merit-based incentive payment system because the model uses a similar measurement framework.
9. According to an analysis from the American College of Surgeons, downside risk will increase over time. By the program’s final year, clinicians could face payment adjustments of up to negative 12%, larger than the maximum negative 9% penalty under MIPS.
10. The American College of Surgeons has criticized ASM for placing too much emphasis on cost reduction and for relying on the MIPS measurement framework instead of broader, team-based quality metrics.
