The Medicare Advantage Squeeze: What It Means for ASCs

Medicare Advantage (MA) plans are being squeezed, and the impact will shake up the healthcare landscape – opening up both hurdles and opportunities for ambulatory surgery centers (ASCs). This week, CMS announced the final MA reimbursement rate for 2025. The declared 3.7% average increase is significantly lower than the industry expected, causing insurers’ stocks to tumble. 

These rates pose a dilemma for providers: reimbursement needs to keep pace with inflation and labor costs, especially when MA utilization is growing rapidly.

The ripple effects of a growing gap between costs per patient and paid reimbursement rates could hit surgical practices hard. Here’s what you need to know:

Dropping MA Plans: Don’t be surprised if more surgical groups start dropping MA plans. Profit margins will shrink due to lower rates, increased denials, and frustrating authorization battles. ASCs must look for ways to provide cost-effective alternatives and potentially partner with surgical groups to reduce costs while also attracting commercially insured patients.

Prior Authorization Scrutiny: MA plans will likely double down on prior authorizations to curb utilization. While CMS is pushing reforms, they’ll take time. Get ready to deal with more paperwork and delayed reimbursements, which means ASCs with streamlined administrative processes will gain an edge. 

Tougher Commercial Negotiations: Insurers will try to recoup MA losses elsewhere, likely targeting commercial rates. ASCs, often seen as more cost-effective than hospitals, might become even more attractive to payers, especially if they can prove their value. 

The Outpatient Boom: The shift of orthopedic procedures to ASC settings is set to accelerate. This benefits ASCs significantly, especially those partnered with orthopedic groups. It’s a chance for ASCs to position themselves as the go-to solution for cost-effective yet high-quality care.

Steer Health’s solutions can help health systems gain prior authorization. For example, we recently introduced the general availability of our self-service digital kiosk. Our kiosk enhances real-time insurance eligibility and identity verification to ensure accurate upfront collections, improving cash flow by nearly 50%. 

In addition, eliminating manual entry errors completely (previously at 2.7%) minimizes claim denials and delays and significantly boosts your return on investment (ROI).