From CMS updates to certificate-of-need laws, several policy changes in the last 18 months signal a major shift in how ASCs are taxed, licensed and regulated at both the state and federal levels.
Below is a breakdown of the newest changes affecting ASCs, according to a report from Holland & Knight.
State taxes and facility assessments
New Jersey is changing how ASCs are taxed and assessed, which could raise costs for high-volume centers and expand who must pay.New Jersey’s AB 5809 took effect July 1, reducing ASC assessment rates from 2.95% to 2.5%, while also expanding which facilities are subject to the assessment. The law also eliminated the $350,000 annual cap, meaning high-volume ASCs may pay more despite the lower rate.
The state also extended assessments to ASCs earning less than $300,000 in gross receipts, which were previously exempt. Beginning in 2026, one-room surgical practices will be subject to assessments for the first time.
Many ASC leaders worry the changes could threaten financial sustainability in the state.
“Increasing the ambulatory care assessment on surgery centers places significant strain on their financial stability, reducing resources available to reinvest in patient care,” Meg Stagliano, MSN, president of the New Jersey Association of Ambulatory Surgery Centers, told Becker’s in September. “With more dollars diverted to cover the tax, centers face difficulty adopting innovative technology and advancing clinical practices that directly enhance the quality of patient care. This downward financial pressure not only limits growth but also threatens long term sustainability of smaller surgery centers. This ultimately impacts the ASC industry in New Jersey [trying to meet] the evolving needs of patients and communities.”
State licensing and office-based surgery regulation
Massachusetts is increasing oversight of outpatient procedures performed outside traditional ASC settings. The state expanded the Department of Public Health’s authority to monitor healthcare providers and transactions through H.5159, signed in January 2025.
Massachusetts also authorized licensure requirements for office-based surgical centers performing liposuction or using more than minimal sedation.
Certificate-of-need shifts and exemptions
Across the country, states are loosening CON requirements, expanding exemptions or debating full repeal.
- Georgia: HB 1339 (2024) removed capital expenditure thresholds and allowed hospitals and facilities to expand services without CON review. The law also expanded exemptions for single-specialty ASCs by allowing non-owner physicians to operate there as long as they share the same specialty. It also created a CON exemption for certain hospital-physician joint-venture ASCs when capital expenditures stay under $5 million and the hospital partner is in the same county.
- Iowa: A 2024 law exempted cosmetic, reconstructive and plastic surgery services provided at licensed ASCs from CON requirements.
- Tennessee: The state is phasing out CON requirements for ASCs by December 2027, but non-hospital ASCs will be required to participate in TennCare and serve Medicaid and charity patients similarly to hospital-based ASCs.
- North Carolina: Though the state was widely expected to repeal its CON system, a state trial court upheld the constitutionality of the laws, rejecting a long-running challenge from an ophthalmologist. The court also rejected claims that CON laws create an unconstitutional monopoly or exclusive benefit for incumbent providers.
Federal Medicare payments and reimbursement policy
CMS is increasing ASC payment rates while tying reimbursement more closely to compliance with quality reporting.
For calendar year 2025, CMS increased ASC payment rates 2.9%, based on a 3.4% market basket update minus a 0.5% productivity adjustment. ASCs that fail to meet reporting requirements face a 2% payment penalty. CMS also began allowing separate payments for certain non-opioid pain relief treatments and devices under the NOPAIN provisions, effective Jan. 1, 2025.
For calendar year 2026, CMS finalized a 2.4% ASC payment increase using the hospital market basket update. Hospital outpatient departments meeting quality reporting requirements will receive a 2.6% payment increase. CMS plans to use the hospital market basket update for ASCs again next year and monitor the effects. The ASC conversion factor is $56.322, while the HOPD conversion factor is $91.415.
Federal quality reporting and compliance requirements
CMS is expanding the ASC Quality Reporting Program to include measures tied to health equity and social needs.
- Facility Commitment to Health Equity became mandatory beginning with the calendar year 2025 reporting period.
- Reporting on screening for Social Drivers of Health was voluntary in 2025 and now becomes mandatory in 2026.
These changes could affect accreditation and deemed status for some ASCs, depending on how accrediting bodies align with Medicare compliance requirements.
CMS also revised its proposals for 2026. The agency decided not to adopt the following reporting measures:
- Patient Understanding of Key Information Related to Recovery After Facility-based Outpatient Procedure or Surgery
- Patient Reported Outcome-Based Performance measure
CMS also decided not to require ASCs to use the Hospital Quality Reporting system for ASC data as previously proposed. Additionally, ASCs will not be required to report on COVID-19 vaccines for healthcare providers, health equity measures or social determinants of health next year.
“The ASC Quality Reporting Program must remain focused on measures that have been tested for validity in the surgery center setting and are directly related to safety and quality outcomes,” Bill Prentice, ASCA CEO, said. “Additionally, the more information surgery centers are mandated to obtain from patients, the less likely they are to get patients to respond — survey fatigue is real and CMS needs to address our concerns about the length, complexity and high cost of the OAS CAHPS Survey. The newly proposed survey on discharge instructions only added fuel to this fire, so we applaud CMS for pausing on its implementation.”
Expanded ASC covered procedure list
CMS continues to broaden what procedures Medicare will reimburse in the ASC setting. In 2025, CMS added 32 new procedures and 33 previously nonpayable medical and dental procedures to the ASC Covered Procedures List.
For 2026, CMS finalized plans to phase out the inpatient-only list over three years and will remove 285 primarily musculoskeletal procedures from the list next year. CMS will also add 560 codes to the ASC Covered Procedure List, many requested by ASCA. Those include 289 codes currently paid in HOPDs and 271 codes coming off the inpatient-only list.
Prior authorization demonstration program
CMS is also piloting prior authorization requirements for select ASC procedures in certain states, beginning in late 2025. CMS launched a five-year, voluntary prior authorization demonstration starting Dec. 15 in 10 states: Arizona, California, Florida, Georgia, Maryland, Ohio, Pennsylvania, New York, Tennessee and Texas.
CMS contractors will use a combination of artificial intelligence tools and clinical review to evaluate prior authorization requests. The process is expected to align with existing Medicare coverage policies and patient safety standards.
The initial procedures subject to prior authorization include:
- Electrical nerve stimulator implants
- Epidural steroid injections for pain management (excluding facet joint injections)
- Percutaneous vertebral augmentation for vertebral compression fractures
- Percutaneous image-guided lumbar decompression for spinal stenosis
