Health Care Landscape Update

Logo image for ASA Center for Anesthesia and Perioperative Economics (CAPE).

Assessment of the Federal Government’s Health Care Priorities

January 2026

The ASA Center for Anesthesia and Perioperative Economics (CAPE) focuses on long-range economic strategy for anesthesiologists as it relates to regulatory initiatives as well as the economic dynamics that anesthesiologists encounter with facilities, health systems, and private payers. This informational report details federal priorities and initiatives that may affect anesthesiologists and their groups in the coming months.

Download Health Care Landscape Update (PDF)

CMS is Putting Cost-Savings First: More Threats to Physician Payments

While the previous Administration focused more on increasing health care quality and access through its Medicare policies, the Centers for Medicaid and Medicare Services’ (CMS) current strategy prioritizes Medicare cost-savings, especially through efforts to curb fraud, waste, and abuse and address low-value services.

In the new CMS Innovation Center strategy released in May 2025, CMS continuously referenced its goal of protecting the federal taxpayer, noting it to be a “foundational principle” in its strategy moving forward.^1,2 The Administration is using models and demonstrations that increase prior authorization in Medicare as one way to drive cost-savings. This strategic direction is exemplified by CMS’ Wasteful and Inappropriate Service Reduction (WISeR) Model, as well as the Prior Authorization Demonstration Project for Select Ambulatory Surgical Center (ASC) services, both of which cite fraud as a primary rationale for increased prior authorization in Medicare.^3,4 These methods of increasing prior authorization in Medicare should not be seen as one-off models, but rather should be understood as a first step in the Administration’s push toward increased Medicare prior authorization in the name of cost-savings.

The first Medicare Physician Fee Schedule (PFS) final rule of the new Administration also included regulatory changes that heavily focus on the goal of cost-savings. For example, CMS finalized a 2.3% cut within the anesthesia conversion factor through the practice expense and malpractice adjustment.⁵ To further reduce costs, CMS reallocated practice expense payments in hopes of incentivizing a shift from hospitals to physician offices. These changes to the indirect practice expense payment methodology are expected to result in an overall 7% decrease in payments for services delivered in the facility setting and a 4% increase in payments for services delivered in nonfacility settings. CMS argues that this shift is necessary in part because the current methodology contributes to “broader undesirable financial incentives toward higher-priced settings of care, like hospitals, and away from more efficient settings, like physician offices.”⁵ As a result of this policy, the growth in nonfacility procedures increases practice expense payments, particularly for high-cost supplies and procedures that were previously performed in the hospital setting. This shift erodes the pool of dollars available to pay for physician work, further contributing to downward pressure on the conversion factor.

Additionally, CMS finalized the Ambulatory Specialty Model (ASM), a CMS Innovation Center model beginning in 2027 that focuses on “protecting American taxpayers by holding specialists accountable for the cost of care.”⁶ The model, which is built on the framework of the Merit-based Incentive Payment System (MIPS), will generate Medicare savings in part by withholding 15% of specialist payments rather than redistributing the full amount through performance-based payments. This approach departs from MIPS, which is inherently budget neutral, with payment reductions for low performers financing positive payment adjustments for high performers. Risk payment adjustments for ASM range from -9% to +9% in the model’s first year but will gradually increase to -12%/+12 by 2031. ASM underscores the current Administration’s focus on achieving Medicare savings, even when those savings stem from payment cuts rather than through meaningful value-based care transformation.

Policy Considerations

ASA regulatory advocacy efforts support the need to improve cost-savings within Medicare, but these savings should not come at the expense of anesthesiologists’ ability to cover patient care and practice expenses. In previous years, CMS focused on ensuring physician payments reflected patient safety and quality improvement with less emphasis on incorporating cost-savings. To increase the likelihood of achieving mutually beneficial goals, ASA is supporting our members in creating policy solutions that recognize and reward anesthesiologists for improving care and reducing health care costs.

ASA is engaging with CMS to align the Administration’s goal of cost-savings with ASA’s goal of ensuring anesthesiologists have opportunities to be rewarded with practical and meaningful ways of assessing quality and patient-centered care. ASA highlighted concerns about ASM, practice expense reallocation, and the practice expense and malpractice adjustment in comments to CMS on the 2026 Medicare PFS final rule.⁷ ASA emphasized to CMS that ASM will increase the burden on anesthesiologists who focus primarily on pain medicine. For example, the model does not incorporate several protections that exist in MIPS, including the financial threshold for MIPS participation and special status designations that have historically protected anesthesiologists from burdensome quality reporting requirements. ASM also includes quality and cost measures that are rarely, if ever, reported by anesthesiologists. Furthermore, ASA is currently in discussion with CMS to obtain more transparency regarding the methodology used for the practice expense and malpractice adjustment. CAPE continues to publish policy briefs on various regulatory changes, including CMS’ practice expense payment reallocation.⁸

HHS Goes All in on AI: Health Care Tech Startups Become Key Players

Artificial intelligence (AI) is increasingly being used for health care decisions. Reflecting this change, OpenAI launched ChatGPT Health just days into 2026.⁹ While previous administrations have taken a more cautious approach to incorporating new technologies into government-run health care, the Trump Administration has set itself apart by quickly embracing AI. For example, the WISeR Model relies on technology companies leveraging AI and machine learning capabilities for prior authorization of select Medicare codes.³ Additionally, CMS declined to finalize a proposal from the 2026 final rule for Medicare Advantage (MA) that would have required guardrails for AI use in MA decision-making.¹⁰ The move toward AI can also be seen internally in the Department of Health and Human Services (HHS), where employers are now encouraged to use generative AI in their work.¹¹

States have been more cautious about incorporating AI, but federal actions could soon supersede state-level regulations. On December 11, 2025, President Trump signed an executive order that limits state authority to regulate AI. This includes regulation for AI in health care, which could pose an issue for the more than 250 state-level AI health care bills that were introduced in 2025.¹² Overall, the Administration appears to be taking a bold approach to AI that puts the benefits of quick, innovative, adoption above any risks associated with pursuing new technology with limited guardrails. It is likely that this embracement of AI will only continue to grow. Indeed, on December 23, 2025, HHS announced a Request for Information (RFI) on how AI can be accelerated in clinical care.¹³ This RFI will likely inform additional policy actions by HHS and CMS in the coming years.

Additionally, the Trump Administration is prioritizing health care data access for patients. The CMS Innovation Center emphasized the goal of “unlocking data access” for individuals in its strategy, and CMS appears to be laying the groundwork to make this a reality.¹ For example, the recently announced Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) Model focuses on expanding “access to new technology-supported care options that help people improve their health and prevent and manage chronic disease.”¹⁵ Additionally, the 2026 final rule for MA included requirements that intend to increase beneficiary access to provider directory data.¹⁴ Furthermore, on July 30, 2025, CMS hosted a “Make Health Tech Great Again” event at the White House that focused on private-public partnerships for a CMS Interoperability Framework for data sharing.¹⁶ While proponents of the Administration’s push for data interoperability praise the focus on transparency and the predicted decrease in fragmentation, skeptics are critical of private technology firms’ increased involvement with CMS data.

Policy Considerations

The Trump Administration has not been shy about its aspiration to run the government like a business, and this approach extends to the Administration’s approach toward health care. In this new framework, the desire for rapid innovation appears to take precedence over concerns about potential risks or disruptions. ASA expects more AI-focused innovation efforts and continued emphasis on data access for individuals.

Additionally, private sector firms, seen by the current Administration as the gold standard of efficiency and innovation, are increasingly being woven into CMS’ health care strategy. In this new reality, ASA advocacy efforts and relationship building will not only target CMS but will also engage health care and technology firms that are being incorporated into the Administration’s strategic partnerships. ASA will analyze where AI and health technology are being deployed and the effects on anesthesiologists, their groups, and the facilities where they work. ASA has expressed its concerns to CMS regarding WISeR and will continue to engage with the Administration on the appropriate use of AI within health care.¹⁷ With the Administration focusing on rapid innovation, it is especially important that outside organizations are proactive in identifying and communicating any perceived risks and suggested guardrails.

HHS Builds a Deregulatory Environment: Opportunities and Concerns

The Trump Administration has been very clear about its goal to decrease regulations. President Trump’s executive order entitled “Unleashing Prosperity Through Deregulation” in January 2025 set a foundation that influenced policy across all agencies.¹⁸ HHS built on this foundation by releasing an RFI in May 2025 that aimed to identify unnecessary regulations for elimination.¹⁹ CMS is planning a Burden Reduction Conference for February, 2026, where issues such as transparency, chronic care, and AI tools will be discussed.²⁰

HHS continues to target health care policies for deregulation. AI deregulation has been one of the more prominent areas, but evidence of the deregulatory environment can be seen across Administration priorities. For example, in November 2025, CMS made significant changes to the Inpatient Only (IPO) list and ASC Covered Procedures List (CPL) through the 2026 Hospital Outpatient Prospective Payment System (OPPS) and ASC Final Rule. In a move to deregulate and increase patient choice, CMS finalized a three-year phase out of the IPO. CMS also revised its regulations to eliminate several criteria previously used to determine Medicare coverage of surgical procedures in ASCs, a change that substantially expanded the ASC Covered Procedures List.²¹ Additionally, the Trump Administration has rolled back numerous health-related executive orders from the Biden Administration in the name of deregulation.²²

Policy Considerations

Deregulation is a two-edged sword. On one hand, it can unleash or promote current practices and keep up with technology that may have been limited. On the other hand, it can eliminate regulations that help anesthesiologists to provide safe, high-quality care. For example, ASA submitted a comment to CMS in September 2025 regarding the elimination of the IPO and associated patient safety implications.²³ Additionally, ASA continues to advocate for the importance of regulations that protect physician-led care within the Anesthesia Care Team. It is also important to recognize that while some deregulatory actions are framed as reducing administrative burden, they can impose economic costs because changing workflows and updating processes may introduce unintended risks to patient safety and quality of care. ASA calls on the Administration to provide transparency in announcing any deregulatory items and to engage physician organizations through appropriate channels to ensure that regulatory relief is implemented thoughtfully, preserves patient safety, and does not disrupt care delivery.

HHS Focuses on Preventive Care: Anesthesiology Finds its Place in the MAHA Agenda

Preventive care has been a core tenet of the Make America Healthy Again (MAHA) movement, and this framework has been continuously integrated into HHS strategy documents and reports. Indeed, HHS’ Make Our Children Healthy Again Report utilizes a prevention-focused approach to analyze rising chronic disease in children.²⁴ Furthermore, CMS Innovation Center’s latest strategy emphasizes the importance of evidence-based preventive care and states that all current and future innovation models will include preventive elements.⁷ Additionally, HHS Secretary Robert F. Kennedy Jr. has promoted his belief that all Americans should use “wearables” to proactively monitor health metrics.²⁵

Policy Considerations

While HHS has been clear about its strategic goal to increase preventive care, innovation in this space is largely still forthcoming. Anesthesiologists, primarily those focused on pain medicine, should look out for opportunities to participate in CMS Innovation Center models that relate to preventive and chronic care. ASA will be looking into how anesthesiologists can be more engaged with facility leaders, surgeons, and other physicians in the postoperative environment. ASA is cautiously optimistic that the MAHA agenda can incorporate each phase of perioperative care and may afford additional opportunities for anesthesiologists to be recognized in preventing 30-day postoperative mortality.

References

Suggested Citation:
Center for Anesthesia Perioperative Economics. CMS’ Arbitrary Practice Expense Allocation Diminishes Anesthesiologists’ RBRVS Payments in Facility Settings. Schaumburg, IL: American Society of Anesthesiologists; January 2026.