A New Update From CMS
The Centers for Medicare & Medicaid Services (CMS) has finalized its 2025 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rule, which includes a big change for orthopedic practices with their own surgery centers. Starting in calendar year 2026, CMS is extending the policy that lets ASCs (Ambulatory Surgical Centers) receive the same annual payment update as HOPDs (Hospital Outpatient Departments).
For 2025, both ASCs and HOPDs will see about a 2.9% increase in their Medicare payment rates—as long as they meet quality reporting requirements.
This is important because at the same time, the Physician Fee Schedule (PFS)—which covers the professional fees you bill as doctors—is actually going down. CMS cut PFS rates by 2.9% for 2025.
So while your professional fees are shrinking, your ASC facility payments are growing. For a small ortho group, this is a chance to keep margins healthy and protect earnings.
How This Change Affects Your Revenue & Earning Potential
1. Better Margins on Outpatient Cases
If your ASC receives about $1M in total Medicare payments (allowable reimbursement) in a year, the 2.9% update would mean nearly $29,000 more in revenue—without changing your case volume. This provides more operational margin on high-volume procedures like TKAs, arthroscopies, and small joint surgeries. Those extra earnings can be used to cover staffing, upgrade equipment, or just protect your bottom line as supply and labor costs keep rising.
2. A Leveler Against Hospitals
Hospital-owned ASCs and HOPDs have historically enjoyed stronger updates than physician-owned centers. With CMS keeping the updates equal, you’re no longer stuck playing catch-up. It makes your center more competitive and helps you retain referrals that might otherwise shift toward hospital-owned facilities.
3. More Room to Add New CPT Codes
With reimbursements nudging upward, the cost-benefit calculation for investing in new equipment or credentialing new procedures (e.g., outpatient spinal decompressions, robotic-assisted TKAs) improves. When margins are better, the risk of investing in new equipment or training goes down with the shorter break-even timelines.
4. Sheltering Revenue Against Professional Fee Cuts
Professional fees under the PFS are dropping again in 2025, which hits many small groups hard. That means your professional fee income is shrinking— but the ASC facility payment increase helps balance this out. That divergence can help buffer the financial impact of PFS cuts, especially for groups that bill both professional and facility fees.
Strategies to Make the Most of This Change
Ensure You Meet Quality Reporting to Capture the Full Increase
These payment updates only apply to ASCs that meet quality reporting requirements. If your ASC misses reporting deadlines, you don’t get the increase. Audit your current ASCQR (Ambulatory Surgical Center Quality Reporting) status now: ensure timely submission of all required data so you don’t leave money on the table.
Revisit Your Case Mix
With improved reimbursement, lean into higher-margin cases, consider shifting more of your high-value cases to your ASC. For example, Medicare is steadily approving procedures like total knee replacement for the ASC setting. A higher payment update means those cases are more financially viable than ever.
Communicate With Payers and Referring Physicians
Use this policy update to your advantage in payer negotiations—Let referring physicians and commercial payers know you’re offering cost-effective, quality care with better facility rates aligned with Medicare trends. This helps you reinforce your value proposition versus HOPD options. Referring doctors may also be more likely to keep cases in your center if they know reimbursement is improving.
Model the Financial Forecast
Do a quick forecast. Run a quick margin simulation: estimate revenue lift from the 2.9% bump across your case types, subtract any increased supply or staffing costs, and project net gain over the year. Even a small lift can add up to thousands of dollars, which could guide investment decisions (e.g., new instrumentation, capital improvements, staffing needs) and help offset inflation in supply costs.
Get Expert Revenue Cycle Support
The update is good news, but it also adds complexity—tracking quality data, staying compliant, optimizing coding, making sure denials don’t eat away at the extra margin—all these demand resources.
This is where a Revenue Cycle Management (RCM) partner can help. A good RCM team will:
- Make sure your quality reporting is submitted correctly.
- Help you code and bill procedures accurately so you capture every dollar.
- Monitor payer denials and appeal aggressively.
- Model how the CMS update affects your center’s long-term financial outlook.
That way, you can spend less time worrying about payment policies and more time focusing on your patients and growing your practice. Free your team to focus on care rather than reconciliation.
A Reimbursement Win You Can’t Overlook
CMS’s decision to extend equal updates to ASCs and HOPDs through 2026 is a real win for small orthopedic groups operating their own ASCs. While physician fee cuts are under pressure, this ASC facility payment lift delivers breathing room—soak it up where you can, reposition strategy, and lean in on your ASC’s long-term potential.
To translate that 2.9% bump into real impact, plan strategically: stabilized margins, expanded case mix, investment-enabled growth, negotiate smarter with payers, and make sure your quality reporting is airtight with good RCM support. You can convert this CMS rule into a bigger, brighter revenue forecast.
With our professional guidance, you can not only capture this increase but also find other areas to boost revenue, reduce denials, and keep your practice strong in a changing payment environment.
Bottom line: don’t miss out on this opportunity. Turn CMS’s rule change into real dollars and long-term stability for your orthopedic group.
