CMS Finalizes 2026 OPPS Rule: Payment Updates and Policy Changes for Outpatient Care

CMS Finalizes 2026 OPPS Rule: What Insurers Need to Know

The Centers for Medicare & Medicaid Services has released its final rule for the CY 2026 Outpatient Prospective Payment System, and the changes are poised to influence payers, providers, and downstream contracting strategies well beyond the hospital walls. While the rule arrives with its usual mix of payment tweaks and policy refinements, the 2026 updates reflect a broader push toward transparency, site neutrality, and market-based pricing.

“CMS is signaling a long-term shift toward aligning payments with true market dynamics while containing cost growth.”
Health Policy Analyst

Payment Updates Take Center Stage

For 2026, CMS finalized a net OPPS market basket update of 2.6%, generating an estimated $1.77 billion in additional payments. The conversion factor rises to $91.415 after wage index budget neutrality adjustments. Ambulatory surgical centers also receive a 2.6% update, maintaining the pandemic-era policy of tying ASC updates to the hospital market basket. This practice continues CMS’s effort to stabilize ASC operations while supporting outpatient migration.

But the headline increase comes with a caveat. A recoupment tied to the 340B Part B drug payment remedy will offset payments by $275 million. Though smaller than originally proposed, this recoupment serves as a reminder that litigation-driven reconciliation will continue to influence OPPS rates.

“Even with modest updates, rising input costs mean providers must remain vigilant about revenue optimization and operational efficiency.”
Hospital Finance Executive

Site-Neutrality Gains Momentum

Perhaps the most strategically important move for insurers is CMS’s push toward greater site neutrality. Beginning in 2026, certain drug administration services in excepted off-campus hospital outpatient departments will be reimbursed at 40% of the APC rate. Rural sole community hospitals remain exempt, but the change signals CMS’s intent to narrow payment differentials that have long made hospital-based outpatient care more expensive.

CMS is also seeking feedback on expanding site-neutral payments to on-campus hospital departments, an area of heightened industry interest given the significant share of outpatient volume that remains hospital-affiliated.

One Section With Bullet Points

Key elements of the final rule include:

• A 2.6% OPPS and ASC update aligned with the hospital market basket

• A reduced 340B recoupment of $275 million for 2026

• Site-neutral drug administration payments at 40% of APC rates in certain off-campus HOPDs

• Expansion of the ASC Covered Procedures List by 560 services

• New requirements for hospitals to report median Medicare Advantage rates by MS-DRG starting in 2026

• Strengthened hospital price transparency enforcement beginning April 2026

• A three-year phase-out of the Inpatient-Only list

• Separate payments for high-cost drugs, biologics, and radiopharmaceuticals that exceed thresholds

Transparency and Market-Based Pricing Accelerate

Hospitals will face new transparency expectations in 2026, including more accurate and complete machine-readable files with payer-specific negotiated charges. Enforcement begins April 1, giving facilities a narrow window to calibrate systems and avoid compliance actions. For insurers, these expanded disclosures represent new opportunities to analyze rate variation and support competitive contracting.

CMS also finalized a requirement for hospitals to report median Medicare Advantage rates by MS-DRG. These data will feed into MS-DRG weight calibration starting in FY 2029, signaling a move toward market-based reimbursement methodologies with potential ripple effects across contract negotiations, benchmarking, and actuarial assumptions.

Drug Acquisition Survey and High-Cost Drug Payments

In early 2026, CMS will survey hospitals on drug acquisition costs, including discounts and 340B pricing. Insights from the survey will shape the 2027 OPPS rule, and CMS is considering methodologies to reduce biases from non-responding hospitals.

Additionally, separate payments will be available for high-cost drugs, biologics, and radiopharmaceuticals that exceed cost thresholds. Hospitals will need to adjust billing practices to capture these payments, while insurers should prepare for shifts in cost distributions as high-acuity therapies grow in volume.

Quality, Virtual Supervision, and IPO Changes

CMS updated the Outpatient Quality Reporting program and extended virtual direct supervision flexibilities for cardiac and pulmonary rehabilitation services performed via audiovisual technology. Certain diagnostics and audio-only services remain excluded.

The rule also initiates a three-year phase-out of the Inpatient-Only list. Musculoskeletal codes will shift into a multi-level APC structure, with continued exemption from medical review until CMS determines outpatient predominance.

What This Means for the Insurance Industry

The 2026 OPPS final rule reinforces CMS’s trajectory toward cost containment, transparency, and payment parity across care settings. For insurers, the rule creates opportunities to refine network strategies, evaluate site-of-service incentives, and prepare for more granular pricing insights as transparency expands.

The emphasis on site neutrality and market-based methodology indicates that CMS is laying groundwork for long-term structural change. Payers who respond proactively will be best positioned to navigate upcoming shifts while supporting affordable, high-value care for beneficiaries.

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