CMS released its final 2027 outpatient prospective payment system and ASC rule Nov. 4, giving ASCs a 2.3% payment update and adding more than 600 procedures to the ASC covered procedures list. The changes take effect Jan. 1.
Orthopedic and spine procedures have driven much of the outpatient boom. In 2026, CMS removed 285 mostly musculoskeletal procedures from the inpatient-only list, and orthopedic ASC volume is projected to grow about 6% annually through 2030.
The final rule does not treat all orthopedic and spine cases equally. CMS expects Medicare ASC payments for musculoskeletal procedures to rise 6% in 2027, led by a 35% jump for arthroscopic rotator cuff repair. Meanwhile, epidural injections, facet injections and radiofrequency ablations face cuts for the second year in a row.
Becker’s connected with 10 spine and orthopedic leaders to reflect on the final rule. Most welcomed the chance to move more cases into ASCs but said the payment update fails to keep pace with rising labor, implant and anesthesia costs. Several said the rule rewards implant-heavy case mixes while doing nothing to address the decline in physician pay.
Question: What is your reaction to the CMS final 2027 ASC rule? How will it help or hurt your practice?
Editor’s note: Responses have been edited for clarity and length.
Adil Ahmed, MD. Founder and Orthopedic Surgeon at Houston Upper Extremity Center: First, the inpatient-only list. Having additional cases transition away from the inpatient-only list is an overall benefit, allowing physicians to decide the optimal setting for surgery and give additional options to patients. Often, being forced to only operate in a hospital setting also forces one to be beholden to scheduling delays and slower OR flow, leading to longer wait times for patients. However, having the ability to perform more cases in an ASC doesn’t mean one should. And it doesn’t address the payment side for patient coinsurance. Many ortho procedures came off the IPO in 2026, so we’ve had a year of learning which patients and cases are ASC candidates. The specialties joining in 2027 will face the same lesson: A code being eligible doesn’t make it appropriate for every patient or every center. And patients need to know that ASC coinsurance isn’t capped like hospital outpatient copays. Some of these cases could actually cost Medicare patients more in the ASC than the hospital.
Regarding the finances, this rule really rewards case mix. ASC strategy comes down to which cases you bring in. CMS projects musculoskeletal procedures up 6% (rotator cuff repair up 35%), while eye and GI cases drop. For me as a shoulder and upper extremity surgeon, that’s good news. But it shows the scalar picking winners by specialty. Implant heavy ortho cases are propped up while high-volume, low-margin cases drop. Single-specialty eye or GI ASCs will feel squeezed. Multispecialty ASCs with strong ortho volume have a potential edge, as long as implant costs don’t negate the gain.
Sean Bak, MD. Orthopedic Surgeon at Motor City Orthopedics (Novi, Mich.): The biggest problem with this CMS final rule is that, once again, we’re looking at healthcare through the lens of a spreadsheet rather than looking at the quality and actual cost of delivering care. There are ways to reduce healthcare costs while improving quality, but that requires a much more comprehensive approach than simply cutting reimbursement without or seeking meaningful input from clinicians. We cannot continue designing the future of healthcare delivery primarily in administrative and financial boardrooms. The people actually providing the care need a meaningful seat at the table.
For ASCs, the 2.3% payment update is disappointing and doesn’t adequately account for the increasing complexity of cases moving into the outpatient setting or the escalating cost of anesthesia. We’re asking ASCs to take on more complex patients and maintain the highest standards of care, while simultaneously facing rising costs and an enormous administrative burden from prior authorizations and other requirements that go largely uncompensated — and incompletely addressed by policy.
Ultimately, we can’t expect ASCs to take on an increasingly complex share of America’s orthopedic care while continuing to reimburse them as though they’re simply performing routine outpatient procedures. We need to stop confusing cost shifting with meaningful healthcare cost reduction.
We’re seeing an appropriate shift of routine orthopedic procedures from hospitals to ASCs, but that leaves hospitals with increasingly complex procedures and medically compromised patients who require substantially more resources. Hospitals are going to have to rethink their financial models as they can no longer assume those revenue streams from lucrative elective procedures and the 340B program will continue to support the same operational model.
Many health systems have allowed administrative infrastructure to grow almost unchecked, accumulating layers of management, redundant functions, and bureaucratic processes that add cost without necessarily adding value to patient care. Hospitals cannot continue to protect and expand their administrative structures while asking the clinical side of the house to do more with less. It’s time to redirect more resources toward the people actually delivering care. Just as importantly, decisions about where and how care is delivered need to involve physicians, not just administrators and financial executives. The financial pressures facing hospitals should be a catalyst for operational discipline, not simply another reason to shift costs elsewhere.
Andrew Chung, DO. Orthopedic Spine Surgeon at Banner Health (Phoenix): It’s unfortunate. For those that are employed, it may not currently affect us, but the downward pressure in reimbursement is 100% coming as a result of these constant pay cuts in some way, shape, or form to all of us whether employed or independent.
I particularly worry about my colleagues in independent practice and the patients they treat who are doing their best to provide high quality spine care to all.
Major downstream consequences: Medicare opt-outs leads to less access for patients to quality spine care, lower reimbursements per case encourages higher volume and potentially lesser quality or meticulous care, and the dark side of medicine: a potential increase in the number of unnecessary interventions as practices struggle to keep up financially.
If we want to continue to attract the best of the best to medicine and surgery and improve access to high-quality care, particularly in the setting of an impending physician shortage and a growing elderly population, continuing to implement cuts to reimbursement in the setting of increasing inflation and practice overhead makes zero sense.
Eric Cohen, MD. Orthopedic Surgeon at University Orthopedics (Providence, R.I.): The CMS final 2027 ASC rule exposes a widening economic divide in outpatient surgery, where the baseline 2.3% inflationary update fails to match the reality of rising staffing costs and anesthesia subsidies. Because of budget-neutrality adjustments driven by hospital drug policies, CMS applied a heavy downward weight scalar across the board. However, implant-intensive procedures are shielded from this downward pressure, shifting the financial advantage entirely toward high-acuity musculoskeletal and implant intensive cases.
To survive this margin compression, orthopedic and spine ASCs must pivot their case mix and block schedules. Premium facility time must be reallocated away from scalar-penalized, low-acuity interventional pain lines — such as spinal injections, which face net reimbursement cuts — and dedicated exclusively to high-margin, device-heavy programs like total joint arthroplasty, arthroscopic rotator cuff repairs, and spinal cord stimulator placements that received payment boosts under the final rule.
Mikel Daniels, DPM. President, Chief Medical Officer and Managing Member of WeTreatFeet Podiatry (Owings Mills, Md.): My reaction is cautiously optimistic.
I’m a podiatrist who owns podiatry-specific ASCs. Given the reimbursement pressure on the physician side, I’m happy to see a positive facility payment update. However, I’m not budgeting for a 2.3% increase across our cases. I’m reviewing the individual codes, because the headline update does not tell me what we will actually collect.
Our centers perform foot and ankle surgery across both soft tissue and osseous procedures. I don’t expect this rule to change our surgical volume. We already work to use our centers efficiently for patients who are appropriate for that setting. Expanding the covered procedures list does not automatically bring additional cases through our doors.
What gets my attention is whether the payment covers the cost of performing the procedure. Payroll is a constant pressure, and rising operating costs put additional pressure on the bottom line. A procedure can be clinically appropriate for an ASC and still lose money at the facility level. As an owner, I have to pay attention to that.
One caveat: I see our ASCs more as time machines than cash machines. When looking at the cost of a case, we also include the time the physician spends on travel, paperwork and so on. Because our centers are in our offices, travel and paperwork time is minimized when we perform cases there. So while we may have to block out two to three hours for a physician to do a hammertoe arthroplasty in a hospital, we can limit that to 45 minutes in the ASC. That frees up more than an hour the physician can spend seeing patients. Given that the physician component of our revenue is declining, we need to maximize physician utilization in the office. In this example, our ASCs can generate four to eight more patient encounters in the office for the same procedure. That difference is sizable and might be part of why we would do a case in the ASC that is a loss leader.
I would like CMS to address the purchasing power we have lost over the past several years. The update already includes an inflation component, but CMS reduces that amount through a productivity adjustment. For 2027, a 3.2% market basket increase becomes a 2.3% update after that adjustment. I want reimbursement to keep pace with what it actually costs us to deliver care. Plus, never forget we are still subject to a 2% sequestration.
Les Jebson. Regional Administrator of Prisma Health Orthopedics and Sports Medicine Institute (Columbia, S.C.): The final rule, released Nov. 4, creates a mixed and financially tight landscape for medical practices and ASCs, and the implementation window is tight with a Jan. 1 start. Key potential benefits include the expansion of covered procedures and the removal of more than 600 procedures from the inpatient-only list. The base rate update is modest. Under the physician fee schedule final rule, CMS replaced the office/outpatient evaluation and management visit complexity add-on code with a modifier that increases payment for base evaluation and management codes by more than 15%. For medical practices billing under the physician fee schedule, CMS finalized a conversion factor that decreases for qualifying Advanced Alternative Payment Model (APM) participants and 2.31% for all other clinicians. This has prompted the Medical Group Management Association to criticize the cuts as deepening financial pressures. Furthermore, CMS finalized a site-neutral payment policy paying physician fee schedule-equivalent rates for certain non-contrast imaging services (such as X-rays, CT scans and MRIs) furnished in excepted off-campus hospital outpatient departments, slashing projected Part B outlays and affecting integrated health system revenues. In all, medical practices, HOPD imaging centers and ASCs will all have to adjust on a very short timeline.
Michael Knudsen, MD. Assistant Professor of Orthopedic Surgery, Shoulder, Elbow and Sports Medicine, at Columbia University Irving Medical Center/NewYork-Presbyterian (New York City): Overall, I think this is a step in the right direction. We’ve gotten very good at performing complex orthopedic procedures safely in outpatient settings, and it’s encouraging to see Medicare recognize that. But I think we have to be careful not to lose sight of the patient in all of this. A healthy patient undergoing a straightforward shoulder replacement is very different from an older patient with multiple medical problems. Just because a procedure can be performed in an ASC doesn’t mean it’s the right setting for everyone. I also think we need to be realistic about reimbursement. Expanding outpatient surgery is great, but the economics have to support the teams, resources and expertise needed to do it safely. Ultimately, success shouldn’t be measured by how many procedures we move out of hospitals but by whether we’re delivering better care for patients.
EJ Ledesma. CEO of 360 Orthopedics (Sarasota, Fla.): The CMS changes give our providers an opportunity to identify hospital-based cases that could move to our ASC, leveraging its strengths in quality, financial value and patient satisfaction. Like many practices nationwide, we anticipated the 2027 CMS payment reduction outlined in the payment rule and planned for its impact to maintain our margin targets. These changes also offer a chance to prepare for future shifts, grow revenue, recruit providers and maximize our ASC investments while strengthening provider alignment.
Richard Menger, MD. Vice Chair of Neurosurgery, Director of USA Spine Institute and Chief of Complex Spine Surgery at University of South Alabama (Mobile): AMA data show Medicare physician payment, adjusted for inflation in practice costs, has fallen about a third since 2001. That is the backdrop. Many physicians use ASC ancillary investment to offset that loss as they become less dependent on hospitals. Medicare has reduced reimbursement for more common ASC procedures, cutting into that margin. As such, more centers will look for more intensive orthopedic or neurosurgical procedures to offset it.
Adding hundreds of codes to the ASC list while the payment update stays thin just means more volume at rates that do not keep up. Sites can take more cases and still lose ground on margin.
So my reaction is negative. The rule essentially moves more surgery to the outpatient setting, which can be good for patients when the case fits. It does not fix underpayment. Until CMS ties physicians’ payment to inflation in a durable way, “more cases” will keep meaning “less real pay” for unit work.
Jacob Rodman. CEO of NeuroCarolina (Raleigh, N.C.): My reaction to the 2027 CMS final rule is mixed. From an ASC perspective, I am encouraged by the continued recognition of the value of outpatient surgery and the movement toward expanding the types of procedures that can be performed in an ASC setting. As a physician-owned practice with our own ambulatory surgery center, we are well positioned to take advantage of these changes. However, when you look at what is happening on the physician reimbursement side, the picture becomes much more concerning.
The continued expansion of outpatient surgical opportunities is a significant positive for our practice. We have invested heavily in developing our own ASC because we believe we can deliver high-quality surgical care more efficiently and at a lower overall cost than traditional hospital settings. Greater flexibility in the ASC setting allows us to shift more appropriate cases into a facility we own and operate, improve the patient experience and maintain greater control over quality, scheduling and costs. These are exactly the types of investments CMS should be encouraging.
The extreme negative, however, is the continued erosion of physician reimbursement under the Medicare Physician Fee Schedule. While CMS is creating more opportunities for procedures to move into outpatient facilities, it continues to place tremendous financial pressure on the physicians actually performing those procedures. Rising practice expenses, declining inflation-adjusted reimbursement and increasing administrative burdens are creating an increasingly unsustainable environment for independent physician practices.
What I find particularly frustrating is the disconnect between these two policies. CMS appears to recognize the value and efficiency of independent outpatient facilities while simultaneously undermining the financial viability of the physicians who make those facilities successful. Our ability to own and operate an ASC helps offset some of these pressures, but it does not eliminate the fundamental problem with physician reimbursement. Not every independent practice has the capital or resources to develop its own surgical facility, and those without that opportunity are being squeezed even harder.
Ultimately, I see the ASC rule as a positive for our organization and for the future of outpatient surgery. But we cannot continue to celebrate incremental improvements in facility reimbursement while ignoring the long-term decline in physician payment. If CMS truly wants to preserve independent medicine, increase access to care and reduce healthcare costs, it must address the physician reimbursement crisis alongside its efforts to expand outpatient surgery. Otherwise, we risk creating a system where the facility is financially sustainable but the physicians providing the care are not.
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.
