Analysis of CMS’ 2026 Proposed Payment Rule

In this episode of the Advancing Surgical Care Podcast, ASCA Chief Executive Officer Bill Prentice and ASCA Chief Advocacy Officer Kara Newbury summarize the key provisions of the Centers for Medicare & Medicaid Services’ (CMS) 2026 proposed payment rule for ASCs and hospital outpatient departments. During this enlightening conversation, Prentice and Newbury break down the proposed inflationary update and other related factors for procedures performed in ASCs. They also discuss the significant number of additional procedures that would be added to the ASC Covered Procedures List (ASC-CPL) and the proposed elimination of several quality reporting requirements. 

Comments on the proposed rule are due by September 15.

Transcript

Below is an edited transcript of ASCA Chief Executive Officer Bill Prentice’s podcast recording with ASCA Chief Advocacy Officer Kara Newbury discussing the key provisions of the Centers for Medicare & Medicaid Services’ (CMS) 2026 proposed payment rule for ASCs and hospital outpatient departments. Their conversation includes a detailed discussion of the proposed inflationary update, additions to the ASC Covered Procedures List and elimination of several quality reporting requirements. This transcript was produced using an AI-powered transcription service and there may be errors, inaccuracies or inconsistencies.

Bill Prentice:

Kara, why don’t we begin by talking about the inflationary update in the draft rule and how CMS responded to the requests that we made in February regarding the use of the hospital market basket?

Kara Newbury:

Well, I think as you mentioned Bill, ASCs were slated to default back to the Consumer Price Index for All Urban Consumers starting in 2026. We have been on the hospital market basket for the past seven years now as a trial so CMS can see if this would incentivize facilities to ship volume to the ASC setting, and we were pleased to see that CMS did extend that trial one more year through 2026. But through meetings with political appointees at CMS and just through what we read in the rule, it’s become clear that if we would like to see that policy made permanent or extended beyond 2026 at all, we’re going to need to provide CMS with some data, some information showing that this policy is really helping encourage ASCs to shift volume to their setting. Of course, it’s very difficult to separate out one specific policy, one piece of the payment updates to show CMS that this is why volume is shifting to the ASC setting. But we have done some research in the past cost savings that ASCs provide the Medicare program. We’re looking to update that and consider other ways that we can show CMS that this policy is a good one and one that they should continue.

Bill Prentice:

Great. Obviously, we have some work to do there and dig and find some evidence that will help us to try and make this permanent. But Kara, on the negative side, ASC rates are still subject to the ASC weight scalar. Can you remind our listeners of the importance of addressing that issue?

Kara Newbury:

Well, I almost continued based on the last question but wanted to wait until we talked about the weight scalar here. But part of the reason it’s difficult to say that we’re seeing this huge volume shift because of the update factor is due in large part to the weight scalar, which is negatively impacting our reimbursements and would discourage ASCs from shifting volume. So, this is the worst weight scalar that we’ve seen since our payment system was aligned to the hospital outpatient department payment system back between 2007 and 2009. But the weight scalar is proposed at 0.842 percent, which essentially means that when the weights come over from being calculated in the hospital outpatient department payment system, we are seeing almost a 16 percent cut to the weight then when they’re put in the ASC payment system. And so that is contributing to a growing disparity in reimbursement rates, even though we are on the same update factor for now.

Bill Prentice:

So, in other words, that helps explain why the huge difference between what an HOPD gets paid for doing the same procedure as an ASC.

Kara Newbury:

It’s definitely a part of it and it also helps to explain why we’re seeing unfortunately lower than the 2.4 percent update that is slated for across all codes. And for some of our higher volume codes, especially like 66984, which is our highest volume code by far, a cataract code, it’s actually proposed to have a negative update for 2026. So, we’ll certainly be commenting on that in our comment letter as well as we’ll continue to try to address it in legislation that should be introduced later this year.

Bill Prentice:

So, Kara, let’s change gears and talk about some very sweeping changes that have been proposed to the ASC Covered Procedures List. In February, we asked CMS to approve several spine and cardiac codes. Can you walk us through how CMS responded to our proposal and what else they did in terms of the ASC Covered Procedures List?

Kara Newbury:

Sure. It wasn’t completely surprising that CMS proposed to add procedures to the ASC Covered Procedures List, or what I’ll refer to as the ASC-CPL, for 2026. But the volume, the number of procedures that have been proposed for addition was surprising. So, CMS has proposed to add 276 procedures that are currently only reimbursed in HOPDs to the ASC-CPL. In addition, CMS has proposed to add 271 procedures that are right now on the inpatient-only list but are slated to come off the inpatient-only list in 2026 and add them directly to the ASC-CPL, which is unheard of. In my time at ASCA, you mentioned that we had requested some codes, which we did. There was a nomination process through which you can submit codes on the CMS portal by March 1. We submitted a lot of cardiac codes, some cardiac ablation codes, a couple of spine codes, a vascular code, and a lot of those were proposed for addition to the ASC-CPL for 2026.

Unfortunately, not all of them. There were still a few of the cardiac ablation codes that were not proposed for addition. So, we will continue to work with CMS and try to get those added. And then in addition, there are other procedures, for instance, like hernia codes, that some of our members have asked for that remain on the inpatient-only list, even though we are safely performing those on non-Medicare beneficiaries and could be done on Medicare beneficiaries in the ASC space. So, you would think that with 547 codes being proposed for addition, that everything that we could dream of would be covered. But unfortunately, that’s not the case.

Bill Prentice:

And if I recall correctly, in the final year of the previous Trump administration, they also made a similar effort to move a lot of these orthopedic procedures to us as kind of the first tranche of procedures. So, I think we could expect that next year we might see another tranche of procedures that are not orthopedic also move in a similar fashion. Do you agree?

Kara Newbury:

Absolutely. So yes, this is a three-year process. CMS is transitioning. They’ve proposed to remove the inpatient-only list altogether. And this first tranche of codes, there are more than 271 that are being removed from the inpatient-only list. But only 271 of those are also at the same time being proposed for addition to the ASC-CPL. But they are predominantly musculoskeletal codes as you indicated. But we’ll still, in our comment letter, make a push for some of the other procedures that we would like to see added to the ASC-CPL and then with the understanding that probably some of the ones that are not proposed for addition in 2026, we would be looking at 2027 for their inclusion.

Bill Prentice:

Got it. If you step back and look at this, I think the thing that we find most beneficial about this is that CMS is basically confirming our position, which is that the clinical judgment of medical professionals should determine where procedures are being performed on a given patient rather than just some rule that prevents any of these procedures being performed in our setting. So, I think we would expect that for many of these procedures that are now available to ASCs, we still won’t see much volume because it’s going to be determined by whether or not our clinicians decide that their patients can be safely seen in the surgery center versus the hospital. Correct?

Kara Newbury:

That’s absolutely correct. And I think that there’s a misconception among some that when a procedure is added to the ASC-CPL, that the assumption is that all the volume or a lot of the volume is supposed to be going to the ASC setting. And that’s not the case. It’s just providing clinicians that option. It’s giving them the authority to determine where the procedure can be performed instead of the Medicare program. So, it gives them a little bit more autonomy in their practice.

Bill Prentice:

Well said. So, kind of a related issue, let’s move on to the ASC Quality Reporting Program. And here, too, we were pleased to see that CMS was responsive to several of our recommendations about what to do with that program. But before you walk us through the proposed changes in the draft, I want to say a few words about quality reporting in general, especially considering our request to eliminate some measures that they recently tried to add to the program. ASCA and the ASC community support quality reporting that improves transparency, safety and patient care. We believe patients are entitled to this information. We also believe quality reporting continues to validate the excellent care that surgery centers provide. It’s done a great job in terms of convincing others in the healthcare space of the good care we are providing to the patients that we serve. And I think our quality reporting program is probably something that has made it easier for CMS to expand the ASC-CPL. But as this program continues to evolve, it’s fair to ask, as we did with CMS, to eliminate several measures that we thought provide little or no benefit to patients. So, with all of that, Kara, can you tell us about how our recommendations were received and what is being proposed both in terms of additions and subtractions?

Kara Newbury:

Sure. Just to piggyback off what you said Bill, for a while now, ASCA has commented that really any measures that are in the quality reporting program or being contemplated for addition should benefit the patient and the public and the facility. And a lot of the measures that we’ve seen lately, we’re just unclear how that’s being accomplished. So, as you know, one of my happiest moments was seeing ASC-20 proposed for removal. Listeners will recall that is the COVID-19 Vaccination Coverage Among Health Care Personnel measure. And it just got to the point where it’s been extremely burdensome for our facilities and it’s unclear that there’s really any quality or epidemiology rationale behind it, so that is proposed to be removed effective immediately. So, hopefully it’ll be in the final rule on November 1 and folks can stop their reporting right then.

And then the other three that were proposed for removal were those health equity measures that had just been added last year. So, ASC-22 through ASC-24, the Screening for Social Drivers of Health, the Screen Positive Rate for Social Drivers of Health and the Facility Commitment to Health Equity measures, were all proposed for removal. ASCA opposed those last year primarily because they had never been tested in the ASC setting. And that is something that ASCA has been pushing hard for, that any measures prior to being added to the ASC Quality Reporting Program should be tested in our space because it’s not the same as an inpatient hospital.

Bill Prentice:

Can you touch on the one new proposed measure?

Kara Newbury:

Sure. And of course, this measure was not tested in the ASC setting, so we will provide pushback based on that. It is quite the mouthful. It is the Patient Understanding of Key Information Related to Recovery After a Facility-Based Outpatient Procedure or Surgery. It’s a patient reported outcome-based performance measure. So, that’s a lot. And the measure is a lot. It is a survey that is patient reported, of course, that is indicating that the patient feels that they were given the adequate information that they needed to recover postoperatively, and ASCA has a couple of concerns with this. Number one being that we haven’t seen any of the research that has indicated that this is a problem in the ASC setting. So once again, a solution in search of a problem. And number two, it hasn’t been tested in our setting.

Gina Throneberry from ASCA was on a technical expert panel for this measure and tried to provide constructive feedback that was, to be frank, largely ignored. We said that this needed to be tested before it was added. And then we see it added here. So, I think we’ll be pushing back on this measure. And it’s just another survey too—we’re already seeing on ASCA Connect and hearing from our members that they’re having problems getting high return rates for the OAS CAHPS Survey, and now we’re just adding another survey to the quality reporting program. So, I do think it’s incumbent upon us, the ASC community, to provide options and think through what we should be proposing that CMS add to the ASC Quality Reporting Program, so we don’t continue to get measures like this that we don’t think are going to help.

Bill Prentice:

Great point. And as I started off this podcast, we have until September 15 to submit comments about this proposed rule. And I would also encourage any listener who feels that they have a stake in this to also submit comments on the things that they like and the things that they don’t like in this rule. And this last point about this new proposed measure is a perfect example of something that I think if the agency got enough pushback on, maybe we could see it being pulled back. 

Kara, I want to thank you and the rest of the ASCA team for the quick analysis you did on the draft rule. As I mentioned earlier, I know that you have more to share in the days ahead, but I very much appreciate this early read on what’s in the proposed rule.

Kara Newbury:

Absolutely. It’s what we do.