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During 2025, the Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services (CMS) announced seven new value-based payment models. Among these new models is the Ambulatory Specialty Model (ASM), which is specifically focused on improving efficiency in care for two chronic conditions—lower back pain and heart failure. Another new model, the Long-term Enhanced ACO Design (LEAD) Model, which will launch in January 2027, also includes episode-based payments. Specifically, LEAD accountable care organizations (ACOs) will be able to set condition-specific spending targets within an ACO’s total cost of care benchmarks called CMS-Administered Risk Arrangements (CARAs). This approach is an exciting step toward “nesting” bundles within total cost-of-care models. In a March 2026 Health Affairs Forefront article, Joshua Liao and Amol Navathe point out many of the theoretical benefits of engaging medical specialists through the ASM. We build on their insights and suggest below that specialist engagement is more effective when it is done in the context.
With the cost of treating chronic conditions in the US estimated at between $1.1 and $3.7 trillion dollars annually, CMS cannot contain health care spending without engaging both primary and specialty care providers in value-based care. Episodes of care, which bundle all of the services needed to treat an illness or injury, are a central tool in this push for greater value in specialty care, but key considerations must be weighed before payment model alignment is guaranteed.
As Liao and Navathe point out, Medicare has limited experience using payment policy to encourage coordination between primary and specialist providers. What’s more, this is an area of payment where it is particularly hard to get the pricing (or target price) right, particularly for a clinician or medical group that may have a small number of traditional Medicare patients with a specific chronic condition.