For two decades, the financial risk in Medicare’s value-based experiments landed on institutions. Hospitals took on the bundles. Accountable care organizations absorbed the shared savings and the shared losses. The individual surgeon mostly kept billing fee-for-service and let the layer above sort out the accounting.
The Ambulatory Specialty Model breaks that pattern. Beginning Jan. 1, 2027, CMS will tie a meaningful slice of a clinician’s Medicare Part B reimbursement to how their own episode-of-care costs for low back pain stack up against their peers, scored at the individual level rather than the institution’s. The penalty, or the bonus, attaches to the physician.
For orthopedic and spine leaders, that is the structural shift worth understanding now. The model does not just change the math on a line of business. It changes who carries the risk, and that has consequences most organizations may not have priced in.
What the model does
CMS finalized the Ambulatory Specialty Model in the 2026 Medicare Physician Fee Schedule on Oct. 31, 2025. It is the agency’s first mandatory alternative payment model built around specialists managing chronic conditions in the outpatient setting, and it covers two conditions: low back pain and heart failure.
The low back pain cohort sweeps in six specialties: anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation. Cardiologists carry the heart failure cohort. Clinicians who meet the criteria inside a selected region are enrolled automatically. There is no opt-out and no hardship exemption.
The scale is significant. CMS estimates about 8,600 physicians will be pulled in across the chosen markets, which cover roughly a quarter of the nation’s core-based statistical areas and metropolitan divisions. Those clinicians account for an estimated $2.8 billion in annual episode spending. The model runs five performance years through 2031, and adjustments hit two years after each one, starting in 2029.
Here is the part that reshapes the economics. The risk corridor opens at plus or minus 9% of Medicare Part B payments in 2027 and 2028, then widens to 10%, 11% and 12% over the final three years. And the adjustment is not ring-fenced to back pain work. It lands on every Part B dollar a participant bills. A surgeon with a modest back pain panel still exposes their full Part B book to the swing.
Why this is different
Two design choices set ASM apart from the value-based models that came before.
The first is that scoring is personal. CMS rates each participant across four categories: quality, cost, care improvement activities and interoperability. It benchmarks the clinician against regional peers, not against a system average. There is no institutional buffer. A health system cannot fold a lagging surgeon’s cost profile into a strong service line and net out even.
The second is that the risk is portable. Because the adjustment rides on the clinician’s Part B claims, it moves with the clinician. A surgeon who falls into the penalty band carries that exposure to the next employer. For systems recruiting spine and pain talent, and for groups underwriting an acquisition, a physician’s ASM standing becomes a financial variable that simply did not exist before. A practice could buy into a hidden two-year rate cut without knowing it.
That portability is where the strategic stakes live, and it is the piece most organizations may not have built into their recruiting math, their compensation models or their diligence checklists.
The awareness gap
Compounding all of it: Many of the affected physicians have no idea they are affected.
Selection runs on claims data, quietly. CMS published a preliminary participant list in February drawn from 2024 claims, and a final 2027 roster built on 2025 data is due in July. A clinician who misses the marks gets no alert. The first signal is a smaller check two years later.
Mike Verdon, MD, a neurosurgeon in Dayton, Ohio, put the problem plainly. He checked the list, found he was not on it, then looked up colleagues who were. “I know a lot of people that are and they don’t know,” Dr. Verdon told Becker’s.
For executives, the takeaway is operational, not rhetorical. The single most concrete step available right now costs nothing: Pull the CMS list and find out which clinicians on your roster are in the model. Everything else depends on knowing who is exposed: care-pathway standardization, cost benchmarking, primary care tie-ins.
Why it lands now
ASM arrives on a cost base that was already under strain. Orthopedic surgeon pay slipped 3% year over year in 2025 after CMS trimmed the conversion factor by 2.83%, while labor and supply costs ran up 82% per full-time equivalent between 2013 and 2022 in physician-owned multispecialty groups.
“We’re just having to fight more every day for the same dollar,” Andrew Lovewell, CEO of Columbia, Mo.-based Columbia Orthopaedic Group, told Becker’s.
The model is also not the only federal lever pressing on these specialties. The NOPAIN Act is widening access to nonopioid pain treatment, and the WISeR model is layering AI-assisted prior authorization onto the same caseloads. For a spine or pain practice, that is three CMS forces hitting one income statement at once.
Set ASM against the consolidation already underway and the stakes sharpen further. Site-neutral payment pressure, flat-to-falling fee schedules and rising overhead have been nudging independent groups toward employment and private equity for years. ASM’s portable, individual risk hands those deals a new variable to underwrite.
Where leaders disagree
Orthopedic leaders are split on whether a model like this is overdue accountability or cost-cutting in value-based clothing.
Some see the logic.
“The field of orthopedic surgery must continue to move toward value-based care and reimbursements tied to outcomes,” Amit Momaya, MD, chief of sports medicine at the University of Alabama at Birmingham, told Becker’s. “It is concerning that the same patient with the same pathology can get such different treatment based on which orthopedic surgery office they show up to.”
The specialty societies are more skeptical of ASM as built. The American College of Surgeons opposed the model even while backing the idea of looking across episodes, arguing the design rewards cost-cutting over team-based care and that CMS plans to keep a slice of redistributable dollars as program savings rather than return it to high performers.
The American Medical Association pressed CMS to make the model voluntary and to drop a structure that, by its read, cuts reimbursements for most participants regardless of how they perform.
The leaders best positioned for ASM tend to share one trait: They already know their own episode economics before a payer, employer or government model tells them what those economics should be. Groups that have run bundled payments for years track cost per episode against regional benchmarks as a matter of routine, which is exactly the comparison ASM runs. And the spread between average and top-quartile performance on cost, denials and clean claims has grown wide enough to absorb part of the reimbursement squeeze, several spine and orthopedic leaders told Becker’s. ASM rewards that discipline and punishes its absence.
What is still unknown
A few things are not settled, and they matter for planning.
The final 2027 roster does not land until July, so the affected universe can move between the preliminary and final cuts. The geographies are set, but the selection logic is worth watching: CMS weighed specialty penetration, episode volume and outcome variability alongside spending, so the chosen markets are not simply the highest-cost ones.
The harder question is whether an organization can mount a real defense around a measure built to land on a person. The standard playbook helps at the margins: standardized pathways and centralized cost management. It does not change the fact that the score, and the cut, belong to an individual National Provider Identifier.
That is the signal leaders should not miss. CMS has been candid that mandatory models exist to produce findings it can generalize, and the American College of Surgeons has warned its members that because most surgical care now happens in the outpatient setting, models aimed there are likely to expand. The low back pain specialists scored individually in 2027 may be the first cohort to carry portable, personal Medicare risk. They are unlikely to be the last.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
