CMS cut its 2027 ASC payment update to 2.3% from the 2.4% it proposed, and the weight scalar turns even that into a pay cut for half of the 30 procedures that bring ASCs the most Medicare dollars.
The agency finalized a 2.3% payment update Nov. 4 for ASCs that meet quality reporting requirements, down from the 2.4% it proposed. It also finalized paying for 340B-acquired drugs at average sales price minus 28%, rather than the proposed ASP minus 33.4%. But because ASC rates are pegged to hospital outpatient weights, the 340B policy still pulled the weight scalar down to 0.814 from 0.872 this year. CMS proposed 0.809.
For ASC leaders, the rule pulls in two directions. It opens the door to 619 more procedures, many of them higher-acuity cases leaving the inpatient-only list. At the same time, it pays less for cataract surgery, colonoscopy and other bread-and-butter cases; eye and gastrointestinal procedures alone account for 38% of Medicare ASC spending. Rates take effect Jan. 1 for about 6,400 ASCs.
The full final rule can be found here.
The update shrank to 2.3%
ASC leaders called the proposed 2.4% update inadequate, and the final number came in lower. CMS kept its 3.2% hospital market basket projection but raised the productivity adjustment to 0.9 percentage point from 0.8. That sets the ASC conversion factor at $57.721 for centers meeting quality reporting requirements, up from $56.322 this year but below the proposed $57.766. Centers that miss those requirements lose 2 percentage points, for a conversion factor of $56.592 and an update of just 0.3%. The tenth-of-a-point drop is small per case, but it lands on top of the cost gap ASC leaders were already flagging.
The payment update topped ASC leaders’ worries before the rule dropped. When Becker’s asked eight ASC and physician practice leaders in October which proposed policy concerned them most, the common answer was that CMS is pushing more complex cases into ASCs without paying for them.
Raghu Reddy, chief administrative officer of MiOrtho Surgery Center in Southfield, Mich., said staffing, anesthesia and supply costs are rising faster than CMS’ forecast, so each “increase” is “really a margin cut.” Neeraja Kikkeri, CEO of North Texas Team Care Surgery Center in Mesquite, Texas, pointed to implant-heavy cases: “For some cases, the implant alone can cost more than Medicare pays.” Patrick McEneaney, DPM, owner and CEO of Northern Illinois Foot & Ankle Specialists in Crystal Lake, Ill., said that the gap between payment and cost determines whether a case can move to the ASC at all.
One piece of the methodology held. CMS extended its use of the hospital market basket, rather than the consumer price index, to update ASC rates, but only through 2027. Many commenters asked CMS to make that permanent, arguing ASCs buy the same supplies and compete for the same staff as hospitals. CMS stuck with a one-year extension and said that without ASC cost reports, it can’t tell whether ASC costs differ enough from hospitals’ to need a different update. That keeps ASC and hospital updates aligned for 2027, but puts the update method itself back up for debate in next year’s rule.
340B and the scalar: The number to check first
For most centers, the weight scalar matters more than the update. CMS builds ASC relative weights from hospital outpatient weights, then scales them down to keep ASC spending budget neutral. In July, CMS proposed cutting the scalar to 0.809 from 0.872, largely because its 340B cut would have funded an 8.44% increase in non-drug hospital outpatient payments.
The Ambulatory Surgery Center Association calculated that the proposed scalar would cut payment for 85 of the top 100 ASC procedures and drop ASC pay to 44% of the hospital outpatient rate, from 53%. ASCA President Todd Currier said the proposal would “reduce payments for the most common procedures that ASCs perform.”
GI centers felt it in specific codes. Julie Jackson, chief administrative officer of Milwaukee-based GI Associates, said the proposed rates would cut colonoscopy with lesion removal and colonoscopy with biopsy by about $20 per case, and EGD with biopsy by about $15. Adam Bruggeman, MD, CEO and surgeon at Texas Spine Care Center in San Antonio, said the scalar undercuts CMS’ own site-of-service goals: “We need to get rid of the scalar once and for all.”
The final rule barely moved that math. CMS softened the 340B cut to ASP minus 28%, the alternative it floated in July, but finalized the scalar at 0.814, compared with 0.809 proposed and 0.872 in 2026. CMS attributed the drop to the 340B policy’s budget-neutral boost to hospital outpatient rates. That boost raises the device portion of device-intensive ASC procedures, and non-device procedures absorb the offset.
CMS rejected each fix commenters offered. It declined to eliminate the scalar and declined to strip the 340B adjustment out of ASC ratesetting. It also passed on an alternative that would have raised the scalar to about 0.865 by scaling device costs, saying that would cut device portions roughly 14%. Because ASCs don’t file cost reports, CMS said, it can’t independently judge whether rates cover costs; it said it will keep exploring alternatives in future rulemaking. For ASC leaders, that means no relief in 2027, and ASC rates that stay tied to hospital payment decisions, including 340B, that centers have no part in.
“Other than the IPO list changes, the 2027 final rule disappoints in that it maintains the status quo for surgery center policy,” ASCA CEO Bill Prentice said in a news release shared with Becker’s.
The result is a split by specialty, and a center’s case mix now decides whether 2027 is a raise or a cut. CMS projects aggregate Medicare ASC payments will rise 2%. But eye and gastrointestinal procedures fall 1% each, while musculoskeletal and nervous system procedures rise 6% and cardiovascular procedures 5%. Single-specialty eye and GI centers have few device-intensive cases to offset the scalar. Multispecialty centers with orthopedic, spine or pain volume are better positioned to come out ahead.
Here is how CMS projects 2027 Medicare ASC payments will change for eight high-volume procedures, with estimated 2026 payments in parentheses:
- Cataract removal, CPT 66984 ($1.38 billion): Down 2%
- Total knee arthroplasty, CPT 27447 ($529 million): Up 4%
- Spinal cord stimulator generator, CPT 63685 ($421 million): Up 13%
- Colonoscopy with lesion removal, CPT 45385 ($273 million): Down 1%
- Colonoscopy with biopsy, CPT 45380 ($253 million): Down 1%
- EGD with biopsy, CPT 43239 ($174 million): Down 1%
- Lumbar transforaminal epidural injection, CPT 64483 ($108 million): Down 3%
- Rotator cuff repair, CPT 29827 ($97 million): Up 35%
More cases are coming. The payment question isn’t settled.
CMS finalized the second year of its three-year inpatient-only list phaseout as proposed, removing 637 services across 11 clinical families, including digestive, urinary, respiratory, endocrine and male and female genital procedures. The agency said in its news release that it is expanding the ASC covered procedures list by “several hundred” procedures. The final count is 619: the 618 it proposed, drawn from procedures leaving the inpatient-only list, plus basivertebral nerve ablation for each additional vertebral body (CPT 64629), which commenters recommended.
CMS turned down the other 25 procedures commenters suggested, most of them cardiovascular imaging and diagnostic services. For ASC leaders, the additions open potential service lines in digestive, urologic, gynecologic and other procedures that Medicare paid only in the hospital until now. Whether any of them pencil out depends on the rate, the implant and the anesthesia coverage each case requires.
CMS kept that pace despite pushback, saying state rules, conditions for coverage, accreditation and malpractice law give physicians enough guardrails. CMS also stressed that a procedure’s addition to the list doesn’t make the ASC the default site; that call stays with the physician.
The American Hospital Association asked CMS to drop the proposed ASC list expansion over safety concerns, and the American Medical Association asked CMS to base each phase on clinical and utilization evidence, according to Becker’s analysis of 2,180 comments. CMS went ahead with removing the eight metabolic and bariatric codes that surgeons largely backed taking off the inpatient-only list, though the American Society for Metabolic and Bariatric Surgery questioned whether the assigned rates would cover costs.
ASC leaders have not objected to the shift itself. Brian Cohen, MD, CEO of Miami Anesthesia Services, said anesthesiologists will keep steering each case to the safest setting through patient selection, but payment methodology is not keeping pace with the policy. Travis Doering, MD, owner of Upper Extremity ATX in Austin, Texas, said payment policy is moving faster than the evidence on patient selection, and asked CMS to “pair site-neutral payment with site-neutral regulation.”
Mr. Reddy, who also sits on ASCA’s board, told Becker’s in October that moving higher-acuity cases into ASCs solves only half the problem. “Yes, it is beneficial to bring the case from the hospital to ASC, but I really think we should also be looking at the reimbursement for the cases because our margins are still going to be compressed,” he said.
Patient cost-sharing is another factor centers will need to explain. CMS acknowledged that ASC coinsurance isn’t capped the way hospital outpatient copays are, which are limited to the inpatient deductible. For some higher-priced procedures moving into ASCs, a Medicare patient could owe more in the ASC than in the hospital.
The phaseout’s final year, 2028, is slated to cover the most clinically complex procedures still on the list. That gives centers a year to see which 2027 additions work financially before the hardest cases arrive.
What else CMS finalized
Site-neutral imaging. Off-campus hospital departments will be paid physician fee schedule-equivalent rates for imaging without contrast, including certain X-rays, ultrasounds, bone density scans, CT scans and MRIs. CMS estimates savings of $260 million in 2027 and more than $9 billion through 2036. Rural sole community hospitals are exempt. The policy doesn’t change ASC rates, but it extends CMS’ push to pay the same for a service regardless of where it’s performed, the principle Dr. Doering asked CMS to apply to regulation as well. Hospital groups, which filed many of the policy’s roughly 850 comments, argued their departments carry costs physician offices do not.
Botulinum toxin prior authorization. CMS added eight botulinum toxin injection codes to the hospital outpatient prior authorization program, despite near-unanimous opposition from physiatrists in 153 comments. CMS said outpatient department claims for those codes rose 42.8% from 2017 to 2024, while overall hospital outpatient volume fell 8.3%. The requirement applies only to hospital outpatient departments, so ASCs that perform these injections avoid the added approval step. The American Society of Interventional Pain Physicians noted in its proposed-rule analysis that HOPD-only prior authorization makes the ASC the faster site of service. It takes effect for services on or after July 1, 2027.
Quality reporting. CMS removed the measure for appropriate follow-up interval after a normal colonoscopy in average-risk patients, beginning with the 2027 reporting period and 2029 payment determination. It made no other changes to the ASC Quality Reporting Program, so centers have no new measures to stand up in 2027 and GI-heavy centers have one fewer to report.
Stimulator discount reversed. Pain physicians who filed at least 77 comments against a multiple-procedure payment reduction for spinal cord and peripheral nerve stimulator implants won that fight. CMS said the change in the proposed rule’s ASC addendum was inadvertent and will not take effect, so codes including 63650, 63685 and 64590 keep their exemption. When a lead and generator are implanted in the same session, both stay paid in full rather than at a 50% discount, protecting the economics behind neuromodulation’s projected 2027 gains.
What to watch
The headline update tells ASC leaders little on its own. CMS’ own projections show cataract surgery, colonoscopy and epidural injections losing ground in 2027 while device-heavy orthopedic and neurostimulation cases gain, so each center’s outcome depends on its case mix. CMS said it will monitor access to non-device-intensive procedures and may address payment for them in future rulemaking.
CMS cited the same gap twice in the rule: ASCs don’t submit cost reports. The agency said that limits its ability to judge whether ASC rates cover costs and whether ASCs need their own update method. For an industry pressing CMS to drop the scalar and lock in the market basket, the missing cost data is the objection the agency keeps returning to.
Those numbers will travel beyond Medicare. Commercial payers commonly benchmark ASC contracts to Medicare rates, so a scalar-driven cut on high-volume codes can follow centers into payer negotiations.
The 340B fight may not be over. The AHA, 340B Health and America’s Essential Hospitals called the proposed cut unlawful in their comments, and any legal challenge to the 340B rate would ripple back into ASC weights through the scalar.
The rule also lands alongside CMS’ final 2027 physician fee schedule and weeks before the mandatory Ambulatory Specialty Model begins Jan. 1. For physician-owned centers, the facility and professional sides of the same case are shifting at once, and the combined math will shape which cases move next.
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.
