MSK Executive Daily

The CMS CY2026 OPPS and ASC Payment System final rule removed 285 mostly musculoskeletal procedures from the Medicare inpatient-only list while simultaneously adding 289 procedures to the ASC covered procedure list. The ASC payment system received a 2.6% rate increase for facilities meeting quality reporting requirements. These changes represent the largest single-year expansion of outpatient- and ASC-eligible orthopedic procedures under Medicare in recent history, continuing CMS's multi-year strategy to migrate lower-acuity MSK cases out of hospital inpatient settings.

CMS's CY2026 final rule approved complex joint replacement surgeries—including complex total knee arthroplasty revisions and complex hip replacements—for performance in the ambulatory surgical center setting, removing prior restrictions that had limited these higher-acuity procedures to hospital inpatient settings. The expansion covers both new and revision arthroplasty procedures that were previously deemed too clinically complex for outpatient care. This change builds on CMS's sustained effort to broaden the ASC-covered procedure list and reduce Medicare spending through outpatient site migration.

Saginaw, Michigan-based Covenant HealthCare broke ground on April 8, 2026 on a $25 million, 25,700-square-foot orthopedic facility at its Mackinaw campus. The center will consolidate outpatient orthopedic services and feature 44 exam rooms, four X-ray suites, casting and procedure rooms, orthotics and prosthetics services, and a new OrthoExpress urgent care clinic offering walk-in treatment for bone, joint, and muscle injuries. The facility is expected to open in summer 2027 and will deepen Covenant's integrated outpatient orthopedic footprint across mid-Michigan.

Orthopedic ASCs face a convergence of financial pressures in 2026, including expanding payer prior authorization requirements, rising implant and pharmaceutical costs, and a widening "cost of getting paid" in revenue cycle management. The Medicare ASC-to-hospital outpatient payment gap persists—with the ASC conversion factor at $56.32 versus $91.42 for hospital outpatient departments—while implant vendor pricing and surgeon preference items continue to drive case-by-case profitability volatility. Industry leaders are responding through data analytics investment, renegotiated implant contracts, and standardized clinical pathways to reduce cost variability.