Underneath every conversation about ASCs taking on total joints, spine and cardiac cases is CMS and a handful of state legislatures rewriting the rules that used to keep those cases in the hospital.
“As CMS moves toward site-neutral, single-payment policy, the economics of keeping cases in the hospital disappear,” said Peter Bravos, MD, chief medical officer of Sutter Health Surgery Center Division in Sacramento, Calif. “When payment is the same regardless of setting, migration isn’t a trend, it’s an inevitability. What migrates next isn’t the simple work, it’s the complex case volume including total joints, spine, and the leading edge of cardiac. The winners won’t just be the centers that capture volume, they’ll be the ones built to safely absorb it through disciplined patient selection, sophisticated anesthesia coverage, and deeper clinical competency.”
The policy is catching up to that prediction in stages. CMS’ 2026 hospital outpatient and ASC final rule raised payments 2.6% and finalized a three-year plan to eliminate the inpatient-only list entirely, starting with the removal of 285 primarily musculoskeletal procedures in the first year. That follows a CY2025 rule that had added just 21 new procedures to the ASC Covered Procedures List — a number many operators saw as too conservative given how fast acuity was already moving to the outpatient setting, according to VMG Health’s 2026 Healthcare M&A Report.
Full site-neutral parity isn’t finalized yet, but CMS has taken its first concrete step. The CY2026 rule moves payment for drug administration services in certain off-campus hospital outpatient departments onto the physician fee schedule rather than the higher OPPS rate, an estimated $290 million reduction in OPPS spending, including $220 million in Medicare savings and $70 million in beneficiary coinsurance savings. Under current rules, hospitals still receive roughly 60% higher Medicare payments than outpatient settings for comparable services, which is the exact gap site-neutral policy is designed to close.
States are moving on a parallel track. Leo Spector, managing partner at The Spine Institute in Murray, Utah, described the combined effect of state and federal deregulation as “flux” — a word he used specifically to capture change happening from multiple directions at once.
“In North Carolina, certificate-of-need reform dismantled the restrictions that had forced new surgery centers into joint ventures with hospitals, closing out more than a decade of waiting almost overnight,” Mr. Spector said. “At the federal level, CMS continues to pull cases off the inpatient-only list, catching up to what we’ve known clinically for years: that a hip or knee replacement doesn’t need three days in a hospital bed anymore. Layer site neutrality on top of this, where payers are moving toward paying the same rate for the same procedure no matter where it’s done, and that’s where influx comes into play. But there’s real flux underneath that too, because the organizations, the payment models and even the physical capacity are all still catching up to where the volume is actually heading.”
The North Carolina law, Session Law 2023-7, created a CON exemption for qualified urban ambulatory surgical facilities in 22 counties with populations over 125,000, including Wake, Mecklenburg and Guilford, in exchange for those facilities earning at least 4% of revenue from self-pay and Medicaid patients. It’s one of the more aggressive state-level rollbacks of CON restrictions specifically written around ASCs, and it’s a template other states with pending CON reform bills are watching closely.
Raghu Reddy, chief administrative officer of MiOrtho Surgery Center in Southfield, Mich., and secretary of the board of the Ambulatory Surgery Center Association, said the direction is no longer in question, only the pace.
“The question is no longer whether the ASC industry will grow, but whether reimbursement, staffing, regulation and physician alignment will keep pace with that growth,” Mr. Reddy said. “ASCs should be further empowered to reduce healthcare costs, expand access and deliver high-quality care — not subjected to continued reimbursement pressure that further compresses already narrow margins.”
Matthew Reeder, RN, administrator of Harris Health’s ASC at LBJ in Houston, sees the inpatient-only list rollback in more immediate, practical terms.
“With the recent removal of many surgical cases off the in-patient only list, ASCs in general continue to be opportunities for our patients to receive top-level care in a safe and efficient environment,” he said. “It also allows owners/operators to look at new cases that may help them secure a solid bottom line while offering efficient and economical care in a more economically challenging market for many consumers.”
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.
