CMS Finalizes 2026 Payment Updates and Policy Changes for OPPS and ASCs

The Centers for Medicare & Medicaid Services (CMS) released the Final Rule for the Hospital Outpatient Prospective Payment System (OPPS) and Medicare Ambulatory Surgical Center (ASC) payment system for calendar year 2026. This rule includes updates on payment rates, site neutral payments, packaging of certain products, and regulatory changes affecting hospital pricing and accreditation. CMS finalized a 2.6% increase to OPPS payment rates for hospitals meeting quality reporting criteria, reflecting an updated hospital market basket increase of 3.3% minus a 0.7% productivity adjustment. This adjustment is estimated to raise total OPPS payments to about $101 billion in 2026, up from earlier estimates. The ASC payment rates similarly received a 2.6% update under the hospital market basket methodology, extended through 2026 to further analyze the shift of outpatient procedures to ASC settings. This update is predicted to increase ASC payments to approximately $9.2 billion, a $450 million rise over 2025. CMS maintained its prior policy for offsetting payment increases related to non-drug items due to the 340B drug discount program. Proposed acceleration of this offset from a 0.5% to 2% annual reduction was not finalized, with CMS indicating potential reconsideration for 2027. A significant change involves skin substitute products, which CMS will now unpackage from bundled procedural payments and classify into three FDA regulatory categories. The payment structure will initially apply a uniform rate per square centimeter to these categories, intended to reflect clinical resource use and stimulate market competition. CMS is phasing out the inpatient only list (IPO) over three years, starting by removing 285 musculoskeletal procedures. This phase-out aims to enhance site of service flexibility, allowing certain procedures to be reimbursed in outpatient settings where clinically appropriate. The Final Rule expands site neutral payment policies by reimbursing drug administration services in grandfathered off-campus hospital outpatient departments at a fixed 40% of OPPS rates, addressing payment parity across care sites. Hospitals are required to report median negotiated payment rates with Medicare Advantage plans in their Medicare cost reports. This data collection supports CMS’s exploration of market-based methodologies for adjusting Medicare fee-for-service payments. CMS also set new regulations on accreditation organizations, prohibiting criteria that facilitate discrimination based on certain protected characteristics as part of medical residency program approvals. Price transparency rules were updated, replacing "estimated allowed amounts" with a requirement for hospitals to report total allowed amounts derived from actual reimbursements, based on electronic remittance data up to 12 months old. Additional updates to hospital machine-readable files and enforcement procedures for non-compliance penalties were finalized, including provisions for penalty reductions if hospitals waive appeal rights. These comprehensive policy changes reflect CMS’s ongoing efforts to refine payment systems, support cost transparency, and improve regulatory compliance across hospital outpatient and ambulatory surgical centers.