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March 19, 2026 – Every March, the Medicare Payment Advisory Commission (MedPAC) releases a comprehensive report to Congress outlining its recommendations for updating Medicare payments – and last week, MedPAC issued its 2026 report. MedPAC is a US-taxpayer-funded commission whose purpose is to provide recommendations to Congress and the Centers for Medicare & Medicaid Services (CMS) about how to improve the Medicare program. It includes 17 commissioners who are physicians, economists, and health policy experts from across the country, as well as a sizable staff that conducts the research necessary to carry out MedPAC’s work. MedPAC not only issues annual reports but also routinely responds to congressional requests related to Medicare spending and payment policy.
In this year’s report, MedPAC states that ambulatory surgical centers (ASCs) “should submit cost data.” If this recommendation sounds familiar, it should. MedPAC has been making this recommendation since March 2009, when MedPAC originally recommended that “the Congress should require ASCs to submit to the Secretary cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.” To help me dive into this recommendation (and why MedPAC keeps proposing it), I’m bringing in my colleague, Devin Stone.
It is important to emphasize from the get-go that MedPAC’s recommendations are not binding. Congress and CMS can choose to accept them, adopt pieces of them, or ignore them completely. After MedPAC recommended in 2009 that ASCs report cost data, MedPAC reiterated this recommendation from 2010 through 2022, then again in 2024, 2025, and now 2026. Just like prior years, this latest iteration isn’t likely to gain traction or be fully adopted anytime soon.
However, let’s take a step back and discuss why this perpetual recommendation is noteworthy. In the last couple of years, Congress has been increasingly interested in moving towards site-neutral payment policies, which are likely to incentivize volume towards lower-cost settings of care. On the regulatory side, CMS finalized a site-neutral payment policy related to drug administration services in the calendar year (CY) 2026 Outpatient Prospective Payment System (OPPS) final rule. In that same rule, CMS began phasing out the inpatient only list and expanding the number of services that can be performed in the ASC. Future policy and regulatory actions may result in more services moving from the hospital outpatient department (HOPD) to the ASC, which could lead to savings for both the Medicare program and beneficiaries since ASC payment rates are lower than HOPD payment rates.
More services moving into the ASC may lead to more policymaker interest in evaluating how ASC payment rates compare to actual costs. MedPAC began this line of inquiry in its March 2009 report, where it highlighted that ASC payment rates are largely determined by HOPD data. This of course is by design, as Medicare statute instructs CMS to determine ASC payments in this manner. Every year, CMS combines Medicare fee-for-service claims data submitted by HOPDs with cost report data submitted by the same hospitals, to estimate the costs associated with performing services that map to an ambulatory payment classification (APC). CMS uses this HOPD cost data to develop the APC payment weights for the OPPS. Notably, this is hospital data, not ASC data. CMS then makes a few methodological changes to account for differences between the OPPS and ASC Payment Systems, and uses that same HOPD data to establish APC payment weights for the ASC. This means that hospital billing and charging patterns drive CMS decisions regarding relative APC payment weights and device offset amounts for ASCs.
In the 2010 OPPS final rule, CMS argued that HOPD costs are a reasonable proxy for the ASC, citing a 2006 US Government Accountability Office (GAO) study. In March 2010, MedPAC argued that HOPD costs are not a reasonably proxy for the ASC, citing data from the same GAO report. MedPAC floated the idea of requiring ASCs to submit cost data in order to help develop more accurate payment rates. Many stakeholders at the time commented that this requirement would be burdensome to both ASCs and CMS, which would have to collect and analyze the data. CMS agreed with those commenters.
Given the context and history of this recommendation, what is the likelihood of Congress actually acting on it this time around? To answer that question, it’s important to consider a few others:
Does CMS have the authority to implement this recommendation, or does it require Congress to act?
If CMS has authority, it can implement the recommendation through annual rulemaking. If not, CMS has to wait until Congress grants CMS the necessary authority. MedPAC recommends that Congress enact legislation that would require ASCs to submit cost-report data.
Would the recommendation save money for Medicare?
Policies that save money are much more likely to be implemented. Requiring ASCs to submit cost-report data would not save Medicare money unless the data was tied to ASC payment rates. Specifically, the data would have to be used to justify payment rate cuts or slower increases in Medicare payment rates to ASCs.
Does this recommendation align with a political priority for the current administration?
If yes, CMS will likely use MedPAC’s recommendation to further justify the policy. Reporting ASC cost data has not been a priority for the current or prior administrations.
How will key stakeholders react to the proposal?
If the public is overwhelmingly in favor of the proposal, Congress and CMS are more likely to adopt the policy. Right now, most ASCs still say that reporting cost data would be unreasonably burdensome.
This suggests that MedPAC’s recommendation that ASCs report cost data isn’t likely to come to fruition anytime soon. But stakeholders should keep an eye on the kitchen to see what policymakers are cooking.
We already know that CMS included a request for information in the CY 2026 OPPS proposed rule regarding future site-neutral initiatives. We also know that MedPAC strongly supports site-neutral policy proposals, and that similar policies have gained support from Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH). If these site-neutral policies gain more interest, or if we see greater volume shifting from the HOPD to the ASC, policymakers may be more interested in evaluating how ASC payment rates compare to actual costs. If that happens, cost report data may find its way onto the menu for policymakers.
As with every MedPAC recommendation, we will have to wait and see whether policymakers eventually take up this ASC recommendation. In the meantime, the March 2026 report includes a lot of other interesting data and recommendations that are worth exploring. Our weekly breakroom podcast will dive into the report further!
Until next week, this is Jeffrey (and Devin) saying, enjoy reading regs with your eggs.
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