On November 21, 2025, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rules.
Key Takeaways from the final rules include:
- Increasing Payment Rates by 2.6%
- Initiating Hospital Drug Acquisition Costs Survey for Outpatient Drugs
- Not Adjusting the Conversion Factor related to prior 340B Overpayments
- Expanding Site-Neutral Payment Policies
- Phasing Out the Inpatient-Only (IPO) List
- Expanding the ASC Covered Procedures List (CPL)
- Enhancing Hospital Price Transparency Requirements
Updates to OPPS and ASC Payment Rates
CMS is updating OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.6%, a marginal increase from the proposed rule’s 2.4%. Similarly, CMS is increasing ASC payment rates by 2.6%. These payment increases are based on a market-basket update of 3.3%, reduced by a 0.7% productivity adjustment. CMS plans to use the hospital market basket update for ASCs again next year and monitor the impact.
Notice of Intent to Conduct Medicare OPPS Drugs Acquisition Cost Survey
CMS will be conducting a survey from January 1 through March 31, 2026 on hospital acquisition costs for drugs paid under the OPPS. The date range for such drug purchases will be July 1, 2024 through June 30, 2025. CMS is asking hospitals to report both 340B and non-340B drug acquisition costs separately. The survey will be conducted through an online portal. CMS intends for the survey to be completed in time for the survey results to be used to inform policymaking, including Medicare Part B drug payment rates, beginning with the CY 2027 OPPS/ASC proposed rule. Participation in the survey is not mandatory, though CMS states non-responses will be taken into account in any rulemaking.
Acquisition cost surveys could be used to justify differential payment rates for 340B-acquired drugs, which could result in Medicare Part B pay rates for 340B drugs that could be as low as acquisition cost. These reductions were previously in place, though overturned by the Supreme Court of the United States (SCOTUS) in CY 2022. This administration is taking the next step through this survey to reimplement these reductions in accordance with directives provided by SCOTUS.
CMS confirms that any reductions in payment rates would be budget neutral, requiring redistribution of the savings through increased payments for other items and services to all OPPS hospitals, including non-340B hospitals. This policy will be harmful to 340B qualified safety net hospitals as 340B savings will essentially be redistributed in a way that favors organizations with a more varied payer mix.
While CY 2018 340B-acquired drug reimbursement reductions may be used as a proxy for potential impact to hospitals, it remains unknown whether CMS will return to the ASP-22.5% formula that led to the 27% reimbursement reduction.
Continuing efforts to inform policy makers of the harm reductions in Medicare Part B rates and redistribution of 340B savings could have on safety net hospitals is essential during the next CY as the process unfolds.
To prepare for potential reimbursement impacts, Advis can help your organization project the impact to inform responsive strategies.
340B Payment Policy
CMS did not finalize its proposed accelerated offset and instead has maintained the previous 0.5 percent cut to the OPPS conversion factor (non-drug items/services) starting in CY 2026, as a prospective adjustment (“offset”) to recoup previously increased payments tied to the 340B policy. This 0.5 percent reduction will remain in effect until the estimated aggregate payment reduction reaches $7.8 billion of increased non-drug item and services payments made from CY 2018 through CY 2022.
While the .5 percent cut is just for CY 2026, CMS signaled larger reductions might occur beginning CY 2027 (such as 2.0 percent or other reduction greater than 0.5 percent).
Expansion of Site-Neutral Payment Policies
In CY 2019, CMS adopted a policy to decrease Medicare reimbursement for clinic visits furnished in excepted off-campus provider-based departments (PBDs) by paying at the site neutral rate.
While noting several objections from industry stakeholders, CMS expanded this policy in the application of the Physician Fee Schedule (PFS) equivalent rate (40 percent of OPPS) to drug administration services furnished in excepted off-campus PBDs. (Rural Sole Community hospitals will be exempt from this policy.)
CMS estimates that this policy will decrease total Medicare payments in 2026 by $290 million, with Medicare OPPS payments decreasing $220 million and beneficiary copayments decreasing $70 million.
Despite taking comments via the proposed rule, CMS did not provide any further discussion related to extension of site neutral policies to on-campus clinic visits and imaging without contrast in off-campus excepted PBDs, or adjusting OPPS payment for services deemed to be predominately performed in ASCs or physician offices. Rather, CMS stated it intends to utilize comments received in future rulemaking, indicating that site neutral expansion may still be forthcoming in the CY2027 rulemaking cycle.
CMS explains in great detail its legal position for implementing site neutrality unilaterally, despite Congress already having addressed the issue in statute via Section 603 of the Bipartisan Budget Act of 2015 (which implemented excepted/non-excepted status and PO/PN modifiers). With SCOTUS having now overturned the Chevron agency deference doctrine, legal challenges to CMS’ authority on this matter are expected.
Advis recommends estimating the impact of these proposals on your organization and is available to assist.
Eliminating the Inpatient Only (IPO) List
CMS is phasing out the IPO list over a 3-year period, beginning with the removal of 285 mostly musculoskeletal procedures for CY 2026. This will shift high-acuity surgeries into HOPDs and ASCs, moving revenue out of inpatient DRGs. It may also result in loss of inpatient coverage by commercial insurers over time for certain surgeries, as was seen when CMS removed total hip and knee from the IPO list.
Two-Midnight Rule Medical Review Activities Exemptions: Procedures removed from the IPO list will remain exempt from certain inpatient medical review activities (related to the two-midnight policy) until CMS determines they are more commonly outpatient.
ASC Covered Procedures List (ASC CPL)
CMS has revised the ASC CPL criteria to eliminate five of the general exclusion criteria, moving them into a new section as nonbinding physician considerations for patient safety. As a result, CMS added 289 procedures to the ASC CPL. Additionally, CMS added 271 codes to the ASC CPL that were removed from the IPO list for CY 2026. This could meaningfully increase ASC case mix, revenues, and market competitiveness.
Hospital Price Transparency (HPT)
CMS has finalized several modifications to the HPT regulations to ensure that hospitals provide meaningful, accurate information about the amount they charge for health care items and services. Changes include but are not limited to:
- Hospitals must report in their machine-readable files (MRFs) the median, the 10th percentile, and 90th percentile, and the count of allowed amounts when payer-specific negotiated charges are based on percentages or algorithms.
- Hospitals must attest in the MRF that their data is complete, accurate, and that all applicable payer-specific negotiated charges are included.
- Hospitals will be required to encode the name of the hospital’s chief executive officer, president or senior official designated to oversee the encoding of true, accurate, and complete data.
- Hospitals must encode their national provider identifiers (Type 2 NPIs) in the MRFs.
- For non-compliance, CMS will offer a 35 percent reduction in civil monetary penalties (CMPs) in certain cases if the hospital waives its right to an Administrative Law Judge (ALJ) hearing.
Contact Advis to assess your organization’s position and technical standards as it relates to these proposals.
Other notable changes include:
Partial Hospitalization and Intensive Outpatient Programs: CMS finalized CY 2026 payment methodologies for Partial Hospitalization (PHP) and Intensive Outpatient (IOP) programs. Hospital-based programs will receive per-dem payments of $321.83 for three-service days and $421.67 for days with four or more services. Community Mental Health Centers (CMHCs) will continue to receive payments equal to 40 percent of hospital-based rates.
Virtual Direct Supervision Made Permanent: CMS finalized permanent adoption of virtual direct supervision via real-time audio/video for most outpatient therapeutic and diagnostic services.
Overall Hospital Quality Star Rating Finalized Modification: Beginning in 2026, hospitals in the lowest quartile of Safety of Care performance are capped at four stars. Beginning in 2027, they will see a one-star reduction.
Reach out to Advis today to discuss the impact of the above final rules. As seasoned consultants with deep expertise in CMS regulations, payment models, and quality reporting programs, Advis offers actionable guidance to ensure your organization is compliant, financially optimized, and strategically positioned for the future.
Published December 1, 2025
