Orthopaedic ASC Billing and Coding in 2026: Protecting Professional Revenue as Cases Move to the Surgery Center

When an orthopaedic case moves from the hospital to your ambulatory surgery center, the surgeon's professional payment does not change. Medicare pays the facility rate in both settings, so the professional fee for a case done in an ASC (place of service 24) is identical to the same case done in a hospital outpatient department (place of service 22).

What changes is everything around it: the facility payment, who owns it, which supplies are packaged, and a set of claim level details where orthopaedic groups reliably lose money. The single largest compliance exposure in the whole transition is the least glamorous field on the claim, which is the place of service code, and OIG has already quantified what it costs.

That is the practical frame for 2026, and the timing is not optional. CMS is two years into dismantling the regulatory constraint that kept major joint and spine cases inpatient, and orthopaedics went first.

The Inpatient Only list is being eliminated, and orthopaedics led the queue

The CY2026 OPPS and ASC final rule (CMS-1834-FC) finalized a phase out of the Inpatient Only list over a three year period, beginning with the removal of 285 mostly musculoskeletal procedures for CY2026. CMS grounded the decision in the observation that the evolving nature of the practice of medicine allows more procedures to be performed safely in outpatient settings.

The CY2026 removals read like an orthopaedic case list: spinal arthrodesis (22600, 22610, 22800 through 22812), spinal osteotomy (22206 through 22226), disc arthroplasty (22857 through 22865), hip arthroplasty revision (27134 through 27138), knee arthroplasty revision (27486 through 27488), shoulder arthroplasty revision (23474), and the amputation and trauma families.

Alongside that, CMS revised the ASC covered procedures list criteria and added 289 procedures to the CPL, plus 271 codes that came off the IPO list, for roughly 560 surgical procedures in total. Industry analysis puts the orthopaedic slice at 168 codes effective January 2026, spanning shoulder and upper extremity resections and revisions, hip and pelvis work including THA revision and pelvic osteotomy, knee revision and tibial plateau fracture repair, ankle and foot revision and amputation, and femoral neck and intertrochanteric fracture fixation.

The CY2027 proposed rule (CMS-1850-P) continues the phase out with 638 non musculoskeletal services across auditory, digestive, endocrine, respiratory, urinary and other families, with a proposed OPPS and ASC update of 2.4 percent. CY2026 payment updates were 2.6 percent for both OPPS and ASC, with the ASC update now benchmarked to the hospital market basket rather than CPI-U.

Two caveats:

First, CMS has tried this before and reversed. In CY2021 CMS announced elimination of the IPO list by CY2024, then in the CY2022 final rule halted the phase out and added back 293 of the 298 codes it had removed, while withdrawing 258 of the 267 procedures newly added to the ASC CPL. Total knee and total hip survived that reversal. Most of the rest did not.

Second, and more immediately relevant to your utilization review team: removal from the IPO list does not require a procedure to be performed in an outpatient setting, and it does not eliminate the need to show that an inpatient admission was medically reasonable and necessary. The IPO list going away is a permission, not an instruction.

For the record on the two procedures that started all of this: 27447 came off the IPO list for CY2018 and was added to the ASC covered procedures list for CY2020. 27130 came off the IPO list for CY2020 and was added to the ASC CPL for CY2021.

The volume shift is real and it is accelerating

MedPAC's March 2026 Report to Congress is the authoritative source here. In 2024 there were 6,436 Medicare certified ASCs treating 3.4 million fee for service beneficiaries, with $7.5 billion in Medicare FFS ASC spending. ASC counts have grown a little over 2 percent per year since 2019. Volume per beneficiary rose 3.5 percent in 2024, against 1.3 percent annually from 2019 through 2023. Medicare FFS ASC spending per beneficiary rose 9.4 percent from 2019 through 2023 and then 15.9 percent from 2023 to 2024.

The orthopaedic numbers inside that are striking: total knee volume in ASCs rose 27.6 percent and total hip 28.7 percent from 2023 to 2024, and single specialty orthopaedic ASCs grew 18.9 percent. Over 95 percent of ASCs are for profit, and most have partial or complete physician ownership.

MedPAC also quantified the behavioral effect that every orthopaedic board already understands intuitively. After physicians obtained ASC ownership stakes, the share of surgical procedures those physicians provided in ASCs increased by 22 percent while the share provided in HOPDs decreased. When an ASC enters a market, procedures shift from HOPDs to ASCs with only modest increases in overall volume. This is substitution, not induced demand.

Where the professional fee actually moves

The Physician Fee Schedule pays two rates for the same code. The non facility rate is higher because the practice carries the overhead, staff, equipment and supplies. The facility rate is lower because it does not. Place of service 11 maps to the non facility rate. Place of service 22 and place of service 24 both map to the facility rate.

That means the site of service differential on the professional side is office versus ASC, not ASC versus hospital. Moving a case from the HOPD to your ASC does not change the surgeon's check. Moving an office eligible procedure into the ASC does, and not in your favor.

For major arthroplasty and spine codes this is academic, because those procedures have no meaningful non facility rate. The differential bites on the office eligible work: injections, minor procedures, fracture care. As your ASC schedule fills, watch for procedures drifting out of the office for scheduling convenience rather than clinical reason, because the professional fee follows the place of service.

The facility side is where the economics genuinely move, and it moves in the ASC's favor relative to the hospital's cost structure but not its rate. MedPAC's payment basics put the ASC conversion factor at $48.95, which is 59 percent of the OPPS conversion factor. Physician services are paid separately under the fee schedule.

The CY2026 Physician Fee Schedule adds a wrinkle worth putting in front of your CFO. CMS finalized recognition of greater indirect costs for practitioners in office based settings compared to facility settings. The AMA's analysis of the final rule puts the practice expense effect at roughly negative 7 percent for facility performed services and positive 4 percent for non facility services.

At the same time, CMS applied a 2.5 percent efficiency adjustment to work RVUs and intra service time for non time based services, which is to say procedures, while exempting time based services including E/M. Both changes push in the same direction: the professional economics of facility based surgical work got modestly worse in 2026, and the office based side got modestly better.

For longer context, the AMA reports that Medicare physician pay increased just 8 percent from 2001 to 2024 while Medicare hospital pay increased more than 70 percent, and that inflation adjusted physician pay declined 29 percent over the same period. Facility ownership is how orthopaedic groups have responded to that gap, and it is why the ASC question is a practice growth question and not merely a billing question.

The claim level details that cost orthopaedic groups money

Place of service 24 is not optional. The Medicare Claims Processing Manual, Chapter 14, section 50, states that the place of service code is 24 for procedures performed in an ASC. Billing POS 11 for an ASC case pays the non facility rate and creates a straightforward overpayment. Billing POS 22 does not change the surgeon's payment, since both are facility, but it misstates the claim and breaks payer edits and data matching.

This is not a theoretical risk. OIG report A-01-13-00506 found that Medicare contractors potentially overpaid physicians approximately $33.4 million for services performed in facility locations but incorrectly coded as performed in non facility locations, of which $7.3 million was attributable to ASC miscoding. An earlier OIG audit sampled 100 services and found 88 of them incorrectly coded, with 58 actually performed in hospital outpatient settings and 30 in ASCs. CMS concurred with recommendations including coordinated data matching to identify high risk miscoding. The detection method is a match of physician claims against facility claims, which any contractor can run continuously and cheaply.

‍Modifier SG belongs to the facility, not the surgeon. Since January 1, 2008, ASCs are no longer required to include the SG modifier on Medicare facility claims. SG has never been a physician claim modifier. Two errors follow: appending SG to the surgeon's professional claim, which is always wrong, and assuming SG is dead everywhere, when some commercial payers still require it on ASC facility claims. If your group owns the ASC, the facility entity and the professional entity are operating under different rules on the same case.

‍The practice cannot bill implants. Chapter 14, section 10.2, packages payment for implantable prosthetic devices without OPPS pass through status into the ASC payment for the covered surgical procedure, and section 40 does the same for implantable DME. Implants belong to the facility claim and are packaged there unless they carry pass through status. Device intensive procedures, where device cost exceeds 30 percent of total cost, get the OPPS device portion paid to the ASC. For a physician owned orthopaedic ASC doing arthroplasty, this is where margin is made or lost, and on the commercial side implant carve outs are negotiated separately from the Medicare structure entirely.

‍Professional billing is genuinely separate. Chapter 14, section 10.4, confirms that physicians who furnish services in ASCs may bill for and receive separate payment under Part B. The facility claim and the professional claim travel different paths, and reconciling them is nobody's default job unless someone is assigned to it.

What to put in place before your next volume shift

Four things, in order of return.

Reconcile professional claims against facility claims monthly on place of service. This is the same match OIG uses. Running it yourself is the difference between finding a systematic POS error at 40 claims and finding out about it at 4,000.

Set the place of service at the point of scheduling, carried through to the claim, rather than defaulting it from the rendering provider's primary location. Most POS errors are inherited from a template, not typed by a person.

Separate your facility and professional coding rules explicitly, in writing, including the SG modifier and implant packaging. Groups that own their ASC run two billing regimes under one roof and frequently document only one.

Track office eligible procedures that migrate to the ASC. If a procedure with a meaningful non facility rate is being scheduled in the surgery center for convenience, quantify the professional fee difference before it becomes routine.

Where automated coding fits

Place of service, modifier eligibility, global period status and implant handling are all determinable from the operative note, the schedule and the code set before a claim goes out. They are also exactly the determinations that degrade when volume rises, which is the situation every orthopaedic group adding ASC cases is walking into.

Maia's AutoCoder works inside the EHR to populate codes, modifiers and place of service with the supporting clinical justification, so the facility and professional sides are coded from the same record under the same rules. For groups running both entities, that consistency is worth more than any single claim correction, because the OIG detection method and the payer edit both key on the mismatch between them.

Frequently asked questions

Does a surgeon get paid less for operating in an ASC instead of a hospital?‍

No. Both place of service 24 (ASC) and place of service 22 (hospital outpatient) map to the facility rate under the Physician Fee Schedule, so the professional payment is the same. The meaningful professional differential is between the office (place of service 11, non facility rate) and any facility setting.

‍What place of service code do I use for an ASC case?‍

Place of service 24. The Medicare Claims Processing Manual, Chapter 14, section 50, states this directly. Using place of service 11 pays the higher non facility rate and creates an overpayment; using 22 misstates the setting even though the payment is the same.

‍Can the physician practice bill for implants used in an ASC case?‍

No. Payment for implantable prosthetic devices without OPPS pass through status is packaged into the ASC's payment for the covered surgical procedure, per Chapter 14, section 10.2. Implants belong to the facility claim. Commercial implant carve outs are contract specific and do not change the Medicare structure.

‍Now that total joints are off the Inpatient Only list, do they have to be done outpatient?‍

No. CMS has stated that removal from the IPO list does not require a procedure to be performed in an outpatient setting and does not eliminate the need to show that inpatient admission was medically reasonable and necessary. The decision remains clinical and must be documented as such.

‍Is the Inpatient Only list going away completely?‍

CMS finalized a three year phase out beginning in CY2026 with 285 mostly musculoskeletal procedures, and the CY2027 proposed rule continues it with 638 non musculoskeletal services. Note that CMS announced a similar elimination in CY2021 and reversed it in CY2022, adding back 293 codes. Plan for the phase out, but do not treat the end date as settled.

‍Should we still use modifier SG?‍

Not on the surgeon's professional claim, ever. For Medicare ASC facility claims, SG has not been required since January 1, 2008. Some commercial payers still require it on the facility claim, so check contracts rather than applying a single rule to both entities.

See how Maia's AutoCoder supports orthopaedic practices. Book a demo at usemaia.com.