Image by Wenhan Cheng from PixabayThe Centers for Medicare & Medicaid Services (CMS) is moving to dramatically reshape the surgical care landscape with its 2026 proposed payment rule for ambulatory surgery centers (ASCs).
The nearly 1,000-page document, released July 15, outlines plans to phase out the Medicare Inpatient Only (IPO) list, significantly expand the ASC Covered Procedures List (ASC-CPL) and make targeted changes to the Ambulatory Surgical Center Quality Reporting (ASCQR) Program.
Industry stakeholders told Ambulatory Surgery Center News that the rule, if finalized, could be transformative, but not without risks.
A three-year exit for the IPO list
Under the proposed rule, CMS would eliminate the IPO list over three years, beginning with the removal of hundreds of primarily musculoskeletal procedures in calendar year 2026. If approved, these procedures would become eligible for payment in outpatient settings when clinically appropriate.
“Removing this list will further drive surgical volume out of the inpatient setting and into ASCs. It would not be surprising to see subsequent changes to Medicare and commercial reimbursement rates that continue to shift inpatient surgical volume toward surgery centers and hospital outpatient departments (HOPDs),” Joan Dentler, founder of health care advisory firm Avanza Healthcare Strategies, told ASC News.
CMS is also proposing to add 547 codes to the ASC-CPL for 2026, 276 of which are newly considered procedures and 271 of which are tied to the IPO list phase-out. Many of these additions align with longstanding requests from ASC advocates, particularly in orthopedic, spine and cardiovascular specialties.
“The proposed expansion in surgical procedures that may be performed in ambulatory surgery centers reflects our longstanding belief that the clinical judgment of the medical community is the proper determinant for where patients can receive their care,” Bill Prentice, CEO of the Ambulatory Surgery Center Association, said in a statement shortly after CMS released its proposal.
Operators applaud expanded access
Stakeholders across the ASC landscape largely praised the IPO list elimination and ASC-CPL expansion for enhancing access and empowering providers.
“These proposed changes by CMS are a step in the right direction, especially for rural Americans,” Linda Bedwell, CEO of ASCend Specialists, a management service organization focused on rural ASCs, told ASC News. “Phasing out the Inpatient Only List and expanding the ASC Covered Procedures List empowers rural ASCs to offer more high-quality, cost-effective care locally, without patients needing to travel hours to urban hospitals.”
Regulatory barriers have long limited the ability of rural centers to grow their case mix, Bedwell said.
“These changes will strengthen health care infrastructure, reduce patient costs and help attract new physician partners to rural ASCs,” she said. “Further, CMS’s decision to remove low-impact but high-burden ASCQR measures while emphasizing patient-focused recovery data show they are emphasizing outcomes over bureaucracy.”
Heather Richards, chief financial officer of Atlas Healthcare Partners, also welcomed the proposed rule.
“We’re excited by CMS’s proposal to eliminate the inpatient-only list and expand the ASC Covered Procedure List, giving more patients access to high-quality, cost-effective care in outpatient settings,” Richards said. “This proposal rightly prioritizes physician judgment in determining the most clinically appropriate site of care, ensuring decisions are based on patient needs rather than outdated policy restrictions.”
Established in 2018, Arizona-based Atlas specializes in developing and managing ASCs in collaboration with not-for-profit health systems and physicians.
Stacy LaLonde, vice president of payer strategy at Compass Surgical Partners, echoed Richard’s sentiment.
“We support the elimination of the IPO list as it improves patient access, lowers cost for patients and Medicare, and puts the site of service decision in physicians’ hands,” LaLonde told ASC News. “ASCs are a safe, cost-effective site of service for surgery and offer a high degree of patient satisfaction.”
North Carolina–based Compass Surgical Partners is a developer and manager of ASCs, focusing on joint ventures with physicians and health systems.
Cautious optimism
While most responses to the rule were positive, several industry leaders also flagged risks tied to implementation, commercial reimbursement and macroeconomic headwinds.
“The proposed elimination of the Inpatient Only list continues CMS’s broader trend toward migration of appropriate surgical cases to lower-cost, high-quality outpatient settings,” Danilo D’Aprile, president of the Arizona Ambulatory Surgery Center Association and vice president of business development for Merritt Healthcare, told ASC News. “For ASC operators, this could open the door to additional procedure volume, particularly in higher-acuity specialties like orthopedics, spine, and cardiovascular care, assuming however, that payers and individual state departments of health follow CMS’s lead in updating their own policies.”
But D’Aprile noted that hospitals rely heavily on these higher-acuity cases to support their revenue, raising the likelihood of pushback in certain markets.
“We expect to see resistance in certain markets, particularly where certificate of need laws are still in effect or where hospital-physician dynamics are sensitive,” he said. “The shift will likely continue the acceleration of joint ventures between hospitals and ASC operators to align interests and mitigate revenue loss.”
He also questioned whether the proposed 2.4% payment update would be enough to keep pace with rising costs.
“It is better than a freeze or cut, but still trails behind inflation and rising costs in staffing, anesthesia subsidy dynamics, supplies and compliance,” D’Aprile said. “ASCs continue to operate on thin margins and will need to remain highly efficient while navigating these changes.”
Michael McClain, managing partner at LeftCoast Healthcare Advisors, raised a different but related concern: the potential for commercial payers to use CMS policy changes to push rates downward.
“When CMS moves many procedures over to the ASC-CPL, that gives commercial payers an opportunity to falsely claim a new market shift in rate and puts downward pressure on all commercial reimbursement for those cases, even those that were previously negotiated,” McClain said. “So, while it will open the opportunity for more volume, it also opens the door for commercial payers to lower rates stating that ASC Medicare is the baseline for reimbursement on these cases.”
McClain said he supports the phased approach to the IPO list and the use of a physician-led decision-making body to guide additions to the ASC-CPL.
But he warned that such large swings in CMS policy can have unintended consequences.
“That is always the potential double-edged sword of big moves by CMS,” he said.
Quality reporting measures get a makeover
CMS is also proposing changes to the ASCQR Program. Notably, the agency wants to remove several measures that many ASC operators found burdensome or redundant, including those related to COVID-19 vaccinations, health equity commitments and social determinants of health.
Instead, CMS plans to add a new measure focused on whether patients understood key recovery information following outpatient procedures.
Bedwell called the shift a “big win for providers and patients,” saying it reflected a focus on outcomes over bureaucracy.
“This expansion increases clinical capability, supports site-of-service migration and empowers physicians to perform surgeries in cost-effective ASC settings,” Todd Currier, CEO and administrator of Bend Surgery Center, previously told ASC News in an email.
While most stakeholders are optimistic, there will be a need for careful planning, strong payer relationships and collaboration across the care continuum.
“Ultimately, the proposed changes underscore the need for ASC operators to be strategic and collaborative, particularly in aligning with surgeons, hospitals, and payers to make the most of what could be a major shift in care delivery,” D’Aprile said.
The public comment period for the proposed rule is now open, with a final rule coming later this year.
