2025 Medicare Rate Update: Widening the Gap Between Professional Fees and ASC Fees
Each fall, the healthcare industry closely watches for the release of the upcoming year’s Medicare reimbursement rates. Congress requires Medicare to maintain ‘budget neutrality’ for total professional fee spending. This means that if new procedures or billing codes are added (as happens every year), Medicare must offset those increases by cutting payments elsewhere—usually from commonly used, existing codes. As a result, even as the cost of care increases due to inflation, Medicare professional fee reimbursement continues to fall.
In contrast, Ambulatory Surgical Center (ASC) Medicare payments are based on the Hospital Outpatient Prospective Payment System (OPPS). These rates are not subject to budget neutrality and are more responsive to inflation and overall cost-of-care changes.
The difference in methodology was made clear once again when 2025 rates came out. Take, for example, one of the most common ASC procedures: colonoscopy with biopsy: we see that Professional Fee reimbursement declined 4.1% while ASC reimbursement increased 3.4%—a 7.5% swing.
This is now the fourth consecutive year that national professional fee reimbursement has decreased—and the ninth straight year that ASC payments have increased. Over time, this adds up. Using 2016 as a baseline (1.0x), we see that over the last ten years the ASC rate has increased 50% while the professional fee rate has decreased 13%. To put that in real dollars, in 2016, a colonoscopy performed at the office only reimbursed $161 less per case than one performed at an ASC; it now reimburses $411 less per case—a $250 change. No wonder that many office-based surgery suites are struggling to remain financially viable.
Looking Ahead
While there is always uncertainty over future reimbursement, it is unlikely that professional fees will receive a reprieve any time soon. The US economy is being overwhelmed by a record amount of debt, as well as an increasingly aged population with a growing number of Medicare beneficiaries each year.
On the ASC front, the future is more promising. CMS favors the ASC as a site of service—to both the unregulated office and the incredibly expensive hospital. Even today, ASC reimbursement for a given procedure is barely half what is received by a hospital, and this gap is likely to shrink. If proposed site-neutrality legislation passes (as many experts predict), hospital payments will be reduced, while ASC payments may increase—likely converging somewhere in the middle.
For now, office-based gastroenterologists who perform cases in the office are dealing with reduced Medicare reimbursement in the new year, as well as lower reimbursement for many commercial and managed plans that are in one way or another tied to Medicare.
Understanding these trends—and adapting to them—will be critical for practice sustainability in the years ahead.