CMS finalized a 2.6% payment increase for ASCs in its November rule, continuing its use of the hospital market basket update, but SCA Health executives warn the technical adjustments in the payment calculation continue to dilute the real-world impact of the increase.
SCA Health leaders told Becker’s that while aligning ASC updates with hospital methodology is a long-overdue fix, secondary rescaling and the ASC weight scaler applied by CMS are offsetting gains at a time when labor and operating costs continue to rise.
CMS began applying the hospital market basket update to ASC payments in 2019. This year’s update reflects a projected hospital market basket increase of 3.3%, offset by a 0.7% multifactor productivity reduction mandated under the ACA.
SCA Health has supported using the hospital market basket as the ASC update factor “for a long time,” Lindsay Lowder, group vice president of operational innovation and strategy at SCA Health, told Becker’s. “It just makes sense.”
The Ambulatory Surgery Center Association has also supported using the hospital market basket, arguing it better reflects provider cost structures.
“From a methodology perspective, it makes sense for CMS to use the same update framework for ASCs that it uses for hospitals,” Matthew Humbarger, group vice president of payer engagement and strategy at SCA Health, said. “That kind of consistency supports sustainability and helps ensure ASCs remain a high-value option for outpatient care.”
Ms. Lowder said the prior update factor, CPI-U, was not a logical fit for healthcare costs. Still, she said the ASC weight scaler CMS applies in the payment calculation remains a concern.
ASC costs are climbing across the board. In 2023, 43% of ASCs reported operating budgets of $3 million or more, up from 32% in 2022, according to an OR Manager survey, with a substantial portion tied to labor. Medical supply chain costs are also projected to increase 2.41% in 2026.
“The way the calculation works — with secondary rescaling and the ASC weight rescaling — it drives down overall reimbursement relative to HOPD payments, and that’s problematic,” Ms. Lowder said. “It mitigates the increase we would otherwise get.”
Other ASC operators have raised similar concerns, saying the scaler dampens the practical impact of annual updates. Kara Newbury, chief advocacy officer of the Ambulatory Surgery Center Association, told Becker’s the group will continue advocating for CMS to remove the ASC weight scaler.
“We call it a secondary weight scaler, which has a negative impact on ASC reimbursement,” Ms. Newbury said. “But even that was better than anticipated, because in the proposed rule, once again, there was a clerical error made, and they had it as 0.842, which is almost a 16% cut to our weight. They clarified in the final rule that it was supposed to have been 0.872, so just about a 13% cut to our weight. So even that was better than expected, but we will continue in 2027 and beyond to try to get that secondary weight scale, or that ASC weight scaling, removed. We don’t think CMS is actually supposed to be applying it based on what was written in the Social Security Act back when our payment system was first tied to [HOPDs].”
With ASCs facing rising overhead and labor costs, any additional reduction to the year-over-year update could strain operations, Ms. Lowder said.
“Secondary rescaling is really key, and it needs to be addressed differently,” she said. “With multiple years now using the hospital update factor, it really highlights the impact of the weight scaler on overall reimbursement. It makes the issue more obvious and more urgent.”
