CMS Finalizes CY 2026 OPPS-ASC Rule with Key Medicare Reimbursement Updates

The U.S. Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Final Rule (OPPS-ASC Final Rule), effective January 1, 2026. The rule finalizes important provisions affecting Medicare reimbursement methodologies, particularly for radiopharmaceuticals and skin substitutes. CMS declined to update the 340B "offset" remedy but plans to survey hospitals’ drug acquisition costs, which may lead to reduced future reimbursements for 340B drugs. CMS finalized the policy to reduce outpatient hospital reimbursement for drug administration by "non-excepted" off-campus providers to the Physician Fee Schedule (PFS) payment rate, impacting ambulatory payment classification codes 5691–5694. This adjustment aims to curb growth in outpatient department service volume driven by existing reimbursement incentives and is estimated to save Medicare $220 million and reduce beneficiary co-payments by $70 million in CY 2026. Rural Sole Community Hospitals are exempted to maintain rural access. CMS will conduct a survey on OPPS drug acquisition costs to comply with statutory requirements and support future reimbursement decisions. This survey, pending Office of Management and Budget approval, will collect acquisition data for all separately payable drugs by hospitals from July 1, 2024, to June 30, 2025. Compliance with the survey is mandatory for OPPS-paid hospitals. The data will inform Medicare Part B reimbursement rates under the Social Security Act. Regarding the 340B program, CMS previously issued repayments related to reimbursement cuts from 2018 to 2022 and established a 0.5% annual reduction in the conversion factor for nondrug OPPS items for 16 years, starting in 2025, to offset these payments. While CMS proposed increasing this annual offset to 2% in 2026 to expedite recovery, it has opted to maintain the 0.5% rate for 2026, with potential increases in 2027, balancing budget neutrality against hospital financial reliance. Overall, the CY 2026 OPPS-ASC Final Rule reflects CMS’s efforts to refine outpatient payment policies, manage drug reimbursement costs, and maintain regulatory compliance following legal and executive decisions, all of which bear significant implications for Medicare providers, particularly hospitals reliant on outpatient services and 340B drug pricing.