Insurers are heading into 2027 under political and regulatory pressure that has been building steadily over the last year, with lawmakers enhancing their scrutiny of vertical integration and prior authorization denials.
That same reckoning is bleeding into the ASC industry, with an AI-driven Medicare pilot drawing bipartisan fire, claims denials keep climbing, and Medicaid uncertainty is colliding with a reimbursement structure that is already squeezing ASC margins.
Politicians, celebrities put pressure on payers
Sen. Elizabeth Warren, D-Mass., and Sen. Josh Hawley, R-Mo., introduced the “Break Up Big Medicine Act” earlier this year, which would bar companies from owning both a health insurer or pharmacy benefit manager and a medical provider or management services organization. Mark Cuban, the billionaire entrepreneur behind Cost Plus Drugs who has been building a portfolio of healthcare businesses aimed at bypassing the traditional payer model, backed the bill.
Ms. Warren and Mr. Cuban both took to X in August to renew pressure on insurers, reaching their combined following of 15.2 million. Ms. Warren advocated for her bill, and Mr. Cuban called for divestment from insurers.
“If you own shares in a fund that owns any of the biggest insurance carriers, you are part of the cost of healthcare problem in this country,” he wrote.
The bill hasn’t advanced, and divesting from major insurers would be a herculean task given their presence in index funds, 401(k)s and the broader economy. But the critiques are adding to a broader narrative shaping how insurers are perceived — one that’s playing out just as concretely in outpatient surgery, where prior authorization has become the flashpoint.
WISeR draws fire from Washington and the states
CMS’ Wasteful and Inappropriate Service Reduction model, known as WISeR, took effect Jan. 1 as a pilot in Arizona, Washington, New Jersey, Texas, Ohio and Oklahoma, running through 2031. The AI-assisted initiative applies new prior authorization requirements to select traditional Medicare services, with CMS contractors using a combination of artificial intelligence tools and clinical review to evaluate requests.
The initial procedures subject to the model lean heavily on the kind of pain management and spine cases ASCs perform regularly: electrical nerve stimulator implants, epidural steroid injections (excluding facet joint injections), percutaneous vertebral augmentation for compression fractures and percutaneous image-guided lumbar decompression for spinal stenosis. Deep brain stimulation was delayed from the initial rollout for later reassessment. CMS plans to pilot a “gold carding” feature by mid-2026 that would exempt clinicians with high approval rates from future prior authorization or pre-payment review.
The model hasn’t escaped scrutiny. House Democrats introduced a congressional resolution opposing it over concerns about AI’s role in care decisions, and the House Appropriations Committee advanced a 2026 spending bill with an amendment blocking funding for the pilot. Iowa Gov. Kim Reynolds signed legislation May 13 prohibiting AI algorithms from being the sole basis for denials, downgrades or delays in prior authorization, and barring insurers from penalizing out-of-network referrals. North Carolina’s House Bill 565 would similarly bar payers from using AI as the exclusive basis for denying claims or prior authorization requests.
Prior authorization pledges collide with reality
Roughly 50 insurers pledged in June 2025 to simplify prior authorization, covering plans for an estimated 257 million Americans. An April 2026 survey found participating insurers had collectively eliminated 11% of requirements since then, representing 6.5 million fewer requests, with Medicare Advantage plans seeing reductions exceeding 15%. By 2027, insurers have committed to standardizing electronic submissions and processing at least 80% of approvals in real time. UnitedHealthcare has said it’s targeting a 30% reduction in prior authorization for outpatient surgeries and diagnostic tests by year-end. Aetna says it has standardized 88% of its prior authorization volume, with 95% of eligible requests approved within 24 hours. Cigna has cut its medical prior authorization volume by about 15% and is exploring strategic alternatives for its EviCore subsidiary.
“During the past 10 months, the Blues made significant, measurable strides toward delivering on our promise to make this process faster, simpler and more transparent,” Blue Cross Blue Shield Association CEO Kim Keck said.
Providers remain skeptical the progress is showing up in daily practice. The American Hospital Association found 95% of hospitals reported spending more time on prior authorization approvals over the past year, and the Kaiser Family Foundation has said the public reporting payers now provide on prior authorization offers “only limited insight.” An Aetna-commissioned survey of 827 hospital executives, physicians, nurses, pharmacists and health IT leaders, released in April, found only 36% of providers believe payers reliably deliver on their promises more broadly, and just 44% believe the payers they work with prioritize clarity and patient well-being. A separate American Medical Association survey found 93% of physicians report prior authorization causes care delays and 82% say it leads patients to abandon treatment plans altogether — and just 16% of physicians working with UnitedHealthcare, and 16% working with Cigna, say the insurers’ changes actually reduced how often prior authorization was required.
Even the transparency payers do owe under federal rules has been shaky. The American Medical Association reviewed 15 Medicare Advantage contracts and found some plans burying required prior authorization disclosures behind password-protected portals, posting an 832-page list of billing codes with no plain-language description, and reporting turnaround-time metrics without units, making the figures effectively unreadable.
“Patients should not need a portal password, a billing manual or medical training to find and understand a health plan’s prior authorization practices,” said Willie Underwood III, MD, president of the American Medical Association. CMS has since updated its guidance to close those gaps, clarifying that password-protected portals don’t satisfy public disclosure requirements and requiring plain-language code descriptions and time units alongside turnaround metrics.
ASCs are falling within that gap, with 46% of ASC cases requiring prior authorization in 2024, up from 42% in 2023, according to HST Pathways’ latest “State of the Industry Report,” which surveyed 590 ASCs across 47 states. Only 24% of cases requiring prior authorization completed the process that year, a modest increase from 21% in 2023.
“We’re actively fighting the insurance company regularly and escalating every single time,” said Elisa Auguste, administrator of Precision Care Surgery Center in East Setauket, N.Y. “The problem is it’s not a sustainable system.”
Claims denials keep climbing
Fifty-four percent of revenue cycle leaders say claim denials are increasing, and 41% say at least 1 in 10 claims now faces rejection, according to Experian Health’s third annual “State of Claims” survey of 250 healthcare revenue cycle leaders. Missing or inaccurate data, authorization issues and incomplete patient information remain the top three causes, with 26% of respondents tracing at least 10% of denials to inaccurate or incomplete data collected at intake. Confidence in claims technology has fallen sharply, with only 56% saying their current systems are sufficient to meet revenue cycle needs, down from 77% in 2022 — even as 59% plan to invest in claims management technology within the next six months.
Medicaid concerns persist
HR 1 lays out work requirements and more frequent eligibility checks for the Medicaid expansion population beginning in 2027, threatening the viability of some managed care programs that serve outpatient providers’ patient populations. Centene and Elevance Health, both large Medicaid insurers, have expressed confidence in their positioning, but enrollment drops are still expected. The Congressional Budget Office estimated in 2025 that 5.3 million people would become uninsured by 2034 as a result of the new community engagement rules. Even patients who fulfill work requirements risk losing coverage while they navigate verification with state Medicaid agencies.
Nebraska is among the states permitted an early rollout of work requirements, with verification checks that began in August. On a July earnings call, Molina President and CEO Joseph Zubretsky said Nebraska is the “only real data point” on work requirements so far. He added that concerns around the definition of “medical frailty,” reliance on self-attestation and pending legal challenges linger more broadly — all factors that will shape how much Medicaid volume outpatient surgery providers can count on next year.
ASCs’ reimbursement squeeze deepens
CMS’ proposed 2027 payment rule, released July 2, would raise the ASC conversion factor to $57.766 and the hospital outpatient conversion factor to $102.004 — a gap that widens even as both settings receive an average 2.4% payment update. The proposal would add more than 600 new procedures to the ASC Covered Procedures List and continue phasing more than 600 services off the Medicare inpatient-only list in the second year of a three-year transition, while proposing to discontinue the ASC-9 quality measure. But several of the most common pain and spine procedures ASCs perform would actually see reimbursement cuts under the proposal — including a $40.39 reduction for lumbar radiofrequency ablation and an $18.55 reduction for transforaminal epidural steroid injections. The rule is still in its public comment period, with a final version expected around November.
Anesthesia coverage has become its own crisis. UnitedHealthcare cut pay 15% for independently practicing certified registered nurse anesthetists in select states and eliminated payments for key modifiers, compounding an 8.2% decline in CMS anesthesia reimbursement from 2019 to 2024 and another 2.83% cut in 2025. The Ambulatory Surgery Center Association is pushing Congress and CMS for permanent alignment with the hospital market basket update, expanded procedure access, greater deference to physician judgment on site-of-care decisions and relief from mounting quality reporting requirements.
Insurers, for their part, aren’t escaping their own financial reckoning — 73% of health plans reported operating losses in 2025, and job cuts across the industry have accelerated. Heading into 2027, both sides of the payer-provider relationship are bracing for a tighter squeeze, and ASCs are watching to see which pressures ease first.
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.
