OPPS Final Rules for 2026

Last week, the Centers for Medicare & Medicaid Services (CMS) released the Final Rule for The Hospital Outpatient Prospective Payment System (OPPS) for calendar year 2026. The proposed rule includes several proposals that would reduce Medicare funding for some services provided by hospital outpatient departments.

The following paragraphs summarize the "highlights" of this proposal.

• Conversion Factor: For CY 2026, CMS increased payment rates under the OPPS and the Ambulatory Surgical Center (ASC) Payment System by 2.6%. This increase factor is based on a hospital market basket percentage increase of 3.3%, reduced by a productivity adjustment of 0.7 percentage points. This update is slightly higher than the proposed 2.4% update. Based on the finalized policies, CMS estimates that total payments to OPPS and ASC providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2026 will be approximately $101.0 billion and $9.2 billion, respectively. This growth represents an increase of roughly $8.0 billion and $450 million, respectively, from CY 2025 payment levels.
• Market-based MS-Diagnostic Related Group (DRG) Data Collection: This one is freaking hospitals out--calculation of these discharge-based payments has not changed this much in eons! CMS finalizes an Inpatient Prospective Payment System (IPPS)-related proposal to use the reported median payer-specific negotiated charge by MS-DRG from Medicare Advantage in a market-based MS-DRG relative weight methodology. Eventually, these data would replace the use of charges that are found on the hospital’s chargemaster and Medicare (oldie but goldie) cost report data for the calculation of the IPPS MS-DRG relative weights. Reporting will be required for FY 2026 cost reports submitted by hospitals and utilized in the MS-DRG weight calculation for FY 2029. CMS had finalized a similar policy under the first Trump administration, but it was repealed under the Biden administration. The collection and reporting of median charges parallel the price transparency requirements, as hospitals are already required to provide this information. CMS believes that, at least initially, there would be “minimal impacts to the relative weights under this proposed market-based MS–DRG relative weight methodology.” Then why do this?
• Site-Neutral Payment for Drug Administration Services: CMS will extend site-neutral policies to drug administration services in certain hospital provider-based departments (PBDs), previously referred to as off-campus provider-based departments (250 yards to 35 miles away). CMS will reimburse drug administration services (any HCPCS codes assigned to the drug administration ambulatory payment classifications of 5691, 5692, and 5694) in excepted off-campus provider-based departments at the Physician Fee Schedule rate. Non-excepted provider-based clinics were reduced a few years ago. CMS will not implement this policy in a budget-neutral manner and estimates that it will save $290 million in 2026, with $220 million of those savings accruing to Medicare and $70 million to Medicare beneficiaries. CMS estimates savings of $11 billion over 10 years (from 2026 to 2035).
• Accelerated Timeline for Recouping Non-Drug Services Payments from 2018-2022: In a reversal from the proposed rule, CMS is NOT finalizing its proposal to revise the annual reduction to the OPPS conversion factor for non-drug items and services from 0.5% to 2.0%. As a reminder, on November 2, 2023, CMS finalized the Medicare Program; Hospital Outpatient Prospective Payment System: Remedy for the Calendar Years 2018 – 2022 rule, which addresses how the agency will restore payments to hospitals affected by a 2018 decision to cut drug reimbursement. This rule was due to a Supreme Court ruling that the 2018 payment cuts exceeded CMS's authority based on a lack of survey information (more about that later). CMS announced that it would provide hospitals with a one-time bigly payment intended to account for the difference in what was paid to the hospitals and what should have been reimbursed without said cuts. CMS also estimated that hospitals were paid $7.8 billion more for non-drug items and services from CY 2018 through September 27, 2022. To maintain budget neutrality for the payment cuts remedy, CMS should offset the $7.8 billion by adjusting the OPPS conversion factor by -0.5% starting in CY 2026. CMS said it would continue to make this adjustment until the full $7.8 billion is recouped, which could take 16 years. In this rule, CMS delays its proposed changes to the recoupment payment percentage clawback. CMS had proposed revising the annual reduction to the OPPS conversion factor for non-drug items and services from 0.5% to 2.0% effective January 1, 2026. While CMS is not finalizing the proposal, the agency states in the final rule that it may take a larger percentage reduction (such as 2.0% or another reduction greater than 0.5 percent) beginning in CY 2027.
• Survey of Actual Acquisition Costs: To reduce reimbursement for drugs under 340B, CMS must conduct a survey of actual acquisition costs for each separately-payable drug purchased under OPPS. CMS will survey hospitals only about drugs that are separately paid under the OPPS, AND will also ask hospitals to separately list their acquisition costs for drugs acquired through the 340B program from those acquired outside the 340B program to ensure that all discounts are accurately captured and reflect the hospital’s acquisition costs. CMS states it intends to collect and analyze the data in time to help determine Medicare Part B drug payment rates starting in 2027, not next year.
• Drug Bundling: CMS proposes to package drugs, biologicals, and therapeutic radiopharmaceuticals with a per-day cost less than or equal to $140 and identify items with a per-day cost greater than $140 as separately payable unless they are packaged by rule. This is the same as last year. For diagnostic radiopharmaceuticals, they propose packaging those items with a per-day cost of less than or equal to $655 and identifying items with a per-day cost greater than $655 as separately payable.
• The Inpatient Only List: The agency will eliminate the inpatient-only list, which specifies procedures that Medicare generally requires to be performed in the inpatient setting. Starting in CY 2026, CMS is removing 285 procedures from the inpatient-only list and phasing in the complete elimination over 3 years. The procedures broadly cover musculoskeletal services, which can be performed in the outpatient setting with shorter recovery times, according to the proposed rule. CMS would also continue the Two-Midnight Rule exemptions for procedures removed from the inpatient-only list.
• Hospital price transparency changes: President Trump issued Executive Order 14221, “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information,” aimed at strengthening existing price transparency requirements for hospitals and health plans. Since 2021, hospitals have been required to make public:
• A machine-readable file (MRF) containing a list of all standard charges for all items and services.
• A consumer-friendly list of standard charges for 300 “shoppable” services.
• The executive order also calls on federal agencies to ensure pricing information is standardized and easily comparable across hospitals. This final rule carries out the executive order by requiring that hospitals list actual dollar amounts rather than estimates and ensure that information on their MRFs can be comparable across other MRFs.
• CMS is finalizing its proposal to require hospitals to replace the estimated allowed amounts currently used in MRFs with the median allowed amount and to add the 10th and 90th percentile allowed amounts. Hospitals will be required to disclose the 10th percentile, median, and 90th percentile allowed amounts in MRFs when payer-specific negotiated charges are based on capitation, percentages, or algorithms.
• Hospitals will be required to attest that they provided all possible information that can be expressed as an actual dollar amount on their MRFs. To help ensure that the information on MRFs is comparable, CMS is requiring that hospitals encode their organizational national provider identifiers on the MRFs.
• Finally, CMS modifies the current civil monetary penalty (CMP) process to penalize hospitals found to be out of compliance and to encourage faster resolution of these cases. This includes lowering penalties by 35% when a hospital waives its right to a hearing before an administrative law judge.
• All of these modifications will be officially effective on January 1, 2026. However, CMS will delay actual enforcement of these requirements for three months, until April 1, 2026.
• Hospital quality reporting modifications: The OQR program is a pay-for-reporting quality program that requires hospital outpatient departments to report data on specific quality measures specified by CMS to avoid a penalty. Hospitals that fail to submit the required quality data receive a two-percentage-point reduction to their annual payment update. CMS finalizes the following updates to the program:

• Adopting an emergency care access and timeliness electronic clinical quality measure (eCQM), beginning with voluntary reporting for the CY 2027 reporting period, followed by mandatory reporting beginning with the CY 2028 reporting period/CY 2030 payment determination.
• Removing the COVID-19 vaccination coverage among healthcare personnel (HCP), health equity, and SDOH determination quality measures.
• Removing the median time from emergency department (ED) arrival to ED departure for discharged ED patients measure and the left without being seen measure beginning with the CY 2028 reporting period/CY 2030 payment determination.
• Extending voluntary reporting for the excessive radiation dose or inadequate image quality for diagnostic computed tomography in adults eCQM beginning with the CY 2027 reporting period.
• Updating the extraordinary circumstances exception policy to include extensions as a relief option (in addition to exceptions).

Healthcare stakeholders can comment on the CY 2026 OPPS and ASC Payment System proposed rule for 60 days following the publication of the proposal on the Federal Register.

To review more of the OPPS proposal, see the following:

• Final Rule
• Press Release
• Fact Sheet
• Fact Sheet on Hospital Transparency Policy Changes
• Addenda