On July 16, 2025, CMS released its calendar year (CY) 2026 Outpatient Prospective Payment System (OPPS) proposed rule. The rule is expansive and covers a wide range of payment policy and quality reporting issues for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). CMS estimates proposed changes in the rule will increase OPPS payments by $1.61 billion in CY 2026, excluding changes in enrollment, case mix, and utilization. However, the rule also proposes accelerated recoupment related to the 340B separately payable Part B drug settlement, which would reduce payments by an estimated $1.1 billion in CY 2026 for providers that are impacted.
In addition to the payment update and accelerated recoupment related to 340B, other key provisions in the proposed rule include:
- Fielding a drug pricing survey
- Implementing a site-neutral payment policy for drug infusion services
- Modifying price transparency requirements
- Phasing out the inpatient only (IPO) list
- Expanding the ASC covered procedures list
- Aligning the outpatient and inpatient wage index
- Modifying the Outpatient Quality Reporting (OQR) Program
Below we explore these provisions and their impact on healthcare organizations.
Payment Update Less Than Recent Input Price Inflation
CMS proposes a net OPPS market basket update (MBU) of 2.4% (3.2% gross MBU reduced by the ACA-mandated 0.8% productivity adjustment) for hospitals that meet OQR requirements. This MBU is the same as in the Inpatient Prospective Payment System (IPPS) proposed rule for fiscal year 2026. After budget neutrality and other adjustments, the resulting OPPS conversion factor is $91.747. For providers subject to the 340B recoupment, it’s $89.958.
CMS is extending its pandemic-era policy to use the hospital MBU for ASCs, so the net update is also 2.4% for ASCs that meet ASC Quality Reporting Program (ASCQRP) requirements. CMS estimates that applying the hospital MBU to ASCs will increase payments by $160 million in CY 2026. The ASC conversion factor is $56.207.
Despite concerns from hospitals and MedPAC that the MBU is inadequate, CMS is unlikely to adjust it to better reflect inflation. This puts pressure on providers to accelerate aggressive cost management efforts, look for opportunities to increase allowable Medicare reimbursement, and improve revenue cycle operations across all payors to increase the realized yield on negotiated rates. For example, our experience has shown that many organizations have opportunities to improve margins through non-labor cost management.
Accelerated Recoupment of Increased Payments for Non-Drug Services
Starting in CY 2026, CMS proposes increasing the recoupment adjustment from 0.5% (finalized in the 2025 OPPS rule) to 2% for providers that received increased payments for non-drug services from CY 2018 through 2022. This is projected to shorten the recoupment period by approximately 10 years—from 2041 to 2031. CMS believes this change is necessary to ensure a more equitable impact on all hospitals by minimizing potential changes in non-drug services over time. CMS estimates the recoupment will reduce payments by $1.1 billion in CY 2026 for providers subject to the 340B remedy offset. The recoupment does not apply to providers that began billing Medicare under OPPS after January 1, 2018.
Site-Neutral Payment for Drug Administration Services in Excepted HOPDs
Beginning in CY 2026, CMS proposes to pay for drug administration services provided in excepted off-campus HOPDs at the physician fee schedule equivalent—40% of the applicable Ambulatory Payment Classification (APC) rate. If finalized, the policy will apply to APCs 5961 through 5964. CMS estimates this will save $280 million in 2026 ($210 million saved by CMS, $70 million saved by beneficiaries). Like the site-neutral clinic visit policy, CMS proposes to exempt rural sole community hospitals from this policy.
CMS applies this policy change in a non-budget-neutral manner. It justifies this action as a “volume-control method” and cites the growth in spending for drug administration services provided in excepted HOPDs. It’s worth noting that CMS used the same justification when it applied site-neutral payments to clinic visits provided in excepted off-campus HOPDs. While hospitals challenged the policy in court, it was upheld by a federal appeals court, and the Supreme Court declined to hear an appeal.
In addition, CMS requests feedback on expanding the site-neutral clinic visit policy to apply to clinic services provided in on-campus HOPDs. It also seeks feedback on developing a systematic process for identifying ambulatory services at risk of being shifted to more expensive hospital-based settings due to financial incentives.
Outpatient Drug Pricing Survey
In response to President Donald Trump’s drug pricing executive order, CMS announces it will field a drug cost acquisition survey for covered hospital outpatient drugs. Based on the proposed rule, the survey will open in late 2025 and close in early 2026. CMS will use the survey results to inform payment rates for covered outpatient drugs in the 2027 OPPS rule. This would likely result in a reprisal of payment reductions for separately payable Part B drugs acquired under the 340B program.
When the prior Trump administration attempted to field a similar survey in the spring of 2020, there were issues with low response rates. The rule considers approaches to account for non-responses to ensure the data set provides a large enough sample size to be statistically reliable and meet statutory requirements. One approach under consideration is assigning hospitals that don’t respond the lowest reported acquisition cost for their peer group. The rule also notes that CMS may consider expanding packaging in some instances, as low response rates might indicate insignificant outpatient drug costs.
Hospital Price Transparency Changes
CMS proposes changes to the hospital price transparency requirements, effective January 1, 2026, in areas related to the machine-readable file (MRF), penalties for noncompliance, and compliance attestation:
- MRFs – Prices Based on Algorithms or Percentages: When negotiated charges included in the MRF are based on a percentage or algorithm, CMS proposes replacing the estimated allowed amount with the 10th percentile, median, and 90th percentile allowed amounts. To help MRF users understand the reliability of these statistics, CMS proposes requiring hospitals to include the count of allowed amounts used to calculate these values. The proposed rule provides additional detail on how these statistics should be calculated.
- MRF – Executive & Facility Information: CMS proposes requiring hospitals to encode the name of the hospital CEO, president, or senior official designated to oversee the encoding of true, accurate, and complete data in the MRF. The rule also proposes hospitals include their National Provider Identifier (NPI) to “advance the comparability of data.”
- Penalties for Noncompliance: CMS proposes decreasing noncompliance penalties in certain situations by 35% when a hospital waives its right to a hearing by an administrative law judge.
- Compliance Attestation: CMS proposes replacing the existing compliance statement with a new statement to make clear the agency’s expectations that hospitals encode all available negotiated rate information, including all information necessary to derive a dollar amount when a hospital is unable to display negotiated rates in dollars. The proposed attestation statement (pg. 738–739 in the display version) is more nuanced and specific than the existing requirement. It reads:
Phaseout of the Inpatient Only (IPO) List
Beginning in CY 2026 and completing in CY 2029, CMS proposes phasing out the IPO list over three years by removing 285 CPT codes, mostly for musculoskeletal services, which are listed in Table 69 (pg. 469) in the display version. Correspondingly, CMS proposes creating a seven-level Musculoskeletal Procedures APC to which it will assign procedures removed from the list based on applicable estimated cost.
CMS proposes continuing to exempt procedures removed from the IPO list from medical review activities to assess compliance with the Two-Midnight rule until the HHS secretary determines that the service or procedure is more commonly performed in the outpatient setting for the Medicare population.
Expansion of the ASC Covered Procedures List (CPL)
The proposed rule expands the ASC CPL by 547 services (276 procedures in general plus 271 that were removed from the IPO list), which are listed in Tables 80 and 81 (begins pg. 568) in the display version.
Reporting Requirement for Medicare Advantage Negotiated Rates
Beginning January 1, 2026, CMS proposes requiring hospitals to report, on their Medicare cost reports, the median of their negotiated Medicare Advantage rates for each MS-DRG for all plans. This data would come from the most recent version of the hospital’s price transparency MRF. Critical access hospitals are excluded from this requirement. Instructions for reporting the data will be discussed in a forthcoming Information Collection Request, which the proposed rule states “is currently under development.”
CMS intends to use this data to set MS-DRG weights effective for FY 2029. The agency believes there is a need to reduce reliance on hospital charge masters and develop “market-based approaches” to establishing payment rates under the Medicare fee-for-service system. The prior Trump administration included this policy in the 2021 IPPS rule, and the Biden administration later repealed it in the 2022 IPPS rule.
Aligning the Outpatient & Inpatient Area Wage Index
To realign IPPS and OPPS wage index values, CMS proposes to eliminate the low wage index hospital policy under the OPPS and use the IPPS wage index in CY 2026 and subsequent years. CMS proposes to adopt the final fiscal year IPPS post-reclassified wage index as the calendar year wage index for the OPPS. The agency also continues its policy of applying a 60% labor-related share to determine hospital OPPS payments.
Permanent Extension of Virtual Supervision Flexibility
The rule proposes permanently extending pandemic-era flexibilities in the OPPS related to virtual direct supervision for cardiac rehabilitation, intensive cardiac rehabilitation, and pulmonary rehabilitation and diagnostic services via audiovisual communications technology. Audio-only technologies are excluded.
Packaging Threshold for Drugs, Biologics, & Radiopharmaceuticals
CMS proposes separate payment for non-policy packaged drugs, biologics, and radiopharmaceuticals with a per-day cost greater than $140.
In addition, CMS proposes separate payment for diagnostic radiopharmaceuticals with a per-day cost greater than $655. Qualifying products will be paid based on their mean unit cost, which is based on hospital claims data.
Hospitals should revisit their charge capture and billing processes for qualifying diagnostic radiopharmaceuticals to make sure these separately payable items are accurately captured and included on the Medicare claim.
Hospital Outpatient Quality Reporting (OQR) Program Changes
CMS proposes several changes to the OQR:
- Measure Adoption & Replacement: CMS proposes adopting the Emergency Care Access & 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. If this is finalized, CMS will remove the Left Without Being Seen measure beginning with the CY 2028 reporting period/CY 2030 payment determination.
- Measure Removal: CMS proposes removing the following measures:
- COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP), beginning with the CY 2024 reporting period/CY 2026 payment determination
- Hospital Commitment to Health Equity (HCHE), beginning with the CY 2025 reporting period/CY 2027 payment determination
- Screening for Social Drivers of Health (SDOH), beginning with the CY 2025 reporting period
- Screen Positive Rate for SDOH, beginning with the CY 2025 reporting period
- Voluntary Reporting Extension: CMS proposes extending voluntary reporting for the Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults eCQM, beginning with the CY 2027 reporting period.
How Forvis Mazars Can Help
As federal healthcare policies continue to evolve, Forvis Mazars is committed to helping hospitals and health systems maintain regulatory excellence to support their pursuit of achieving health for their enterprises and those they serve. If you have questions about how the 2026 OPPS proposed rule may impact your organization, please reach out to our professionals.