Medicare’s push toward site-neutral payment is no longer a future problem.
CMS’ latest hospital outpatient rule, finalized in November 2025, cut payment for certain drug administration services delivered in grandfathered off-campus hospital outpatient departments to 40% of the standard outpatient rate, a change expected to save Medicare $220 million and beneficiaries another $70 million in 2026. The agency’s proposed rule for next year, released in July, would extend that same logic to imaging services performed without contrast.
Commercial payers are moving the same direction. UnitedHealthcare’s own provider reimbursement policy already reduces payment for certain services billed by off-campus hospital outpatient departments to 40% of the allowable amount, mirroring the site-neutral logic Medicare is applying. Compass Surgical Partners CEO Mark Langston has called the broader shift a “day of reckoning” for hospitals that haven’t adjusted their cost structures.
For health systems still on the fence about building out ASC capacity, Atlas Healthcare Partners CEO Aric Burke has a blunt message. Waiting is a strategy, he said, and it’s the wrong one.
“If they’re a large enough system to need ASCs, they’re going to find that they’re going to lose a lot of their outpatient surgery, because it’s going to go somewhere,” Mr. Burke said.
Mr. Burke’s argument hinges on where government and commercial payers are willing to pay for care. As site-neutral payment becomes more widespread, procedures that once generated a facility-fee premium in a hospital outpatient department lose that advantage, and volume follows the lower-cost setting.
“As site neutrality becomes reality with both the government and the commercial payers, those cases are going to get pushed out,” he said.
Orthopedic and musculoskeletal procedures are furthest along that path. CMS’ current rule began phasing 285 musculoskeletal procedures off Medicare’s inpatient-only list over three years while adding 560 procedure codes to the approved ASC list, a shift that opens the door for more joint and spine cases to move to outpatient settings.
Once volume leaves a hospital’s outpatient department because there’s no ASC to catch it, Mr. Burke said, getting it back is far harder than building the capacity proactively.
“You really have to kind of think backwards and say, when do I need to have ASCs? How many?” he said. “Because if you wait until all your cases are getting pressured out, it’s going to be too late to go out, recapture. You’re going to lose a lot of business in the process.”
Development timelines compound the problem. A de novo ASC typically takes 18 to 24 months from site selection to opening day, once planning, licensure, design, construction and staffing are all accounted for. Mr. Burke pointed to Atlas’s own flagship market, Banner Health, as an example of how long real buildout takes: eight centers at the start, 32 roughly eight years later.
“You’ve got to try to be as correct as possible, and development takes time,” Mr. Burke said. “My advice would be to be proactive and start on strategy upfront.”
The deal activity suggests systems are responding. Ascension’s $3.9 billion acquisition of AmSurg’s 250 ASCs, announced in 2025, took its ASC footprint from 58 centers to more than 300 across 34 states. Several health systems signed new ASC joint ventures since the beginning of 2025, including Cleveland Clinic with Regent Surgical Health, Orlando Health with Solara Surgical Partners, and Baylor Scott & White Health with Surgery Partners.
Mr. Burke said Atlas is already seeing the effect show up in deal flow.
“We are seeing a lot of urgency,” he said. “There’s more and more health systems kind of looking for a partner and then also wanting to move quickly and fast. A lot of it’s payer pressure related, physician related.”
Once a joint venture is formed, he said, that urgency doesn’t fade.
“Our pipelines are filling up pretty fast,” he said.
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.
