On November 21, CMS released its calendar year (CY) 2026 Outpatient Prospective Payment System (OPPS) final 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 changes in the rule will increase OPPS payments by $1.77 billion in CY 2026, excluding changes in enrollment, case mix, and utilization. However, the rule also continues recoupment related to the 340B separately payable Part B drug settlement, which will reduce payments by an estimated $275 million in CY 2026 for hospitals that are impacted. This reduction is significantly less than the estimated $1.1 billion under an accelerated recoupment plan that was included in the 2026 OPPS proposed rule but was not finalized.
In addition to the payment update and recoupment related to 340B, other key provisions in the proposed rule include:
- Fielding a drug pricing cost acquisition 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
- Modifying the Outpatient Quality Reporting (OQR) Program
Although the final rule was delayed 20 days from its anticipated issue date, CMS will retain the effective date of January 1, 2026. Below we explore the provisions of the final rule and their impact on healthcare organizations.
Payment Update Less Than Recent Input Price Inflation
CMS finalizes a net OPPS market basket update (MBU) of 2.6% (3.3% gross MBU reduced by the ACA-mandated 0.7% productivity adjustment) for hospitals that meet OQR requirements. This is an increase from 2.4% as proposed, and is the same as the MBU in the Inpatient Prospective Payment System (IPPS) final rule for fiscal year 2026. After budget neutrality and other adjustments, the resulting OPPS conversion factor is $91.415 (reduced from $91.747 as proposed). Despite the increased net MBU, the decrease in the area wage index budget neutrality adjustment from the proposed rule (1.0116) to the final rule (0.9990) drove the reduction in the OPPS conversion factor. For providers subject to the 340B recoupment, the conversion factor is $90.967 (increased from $89.958 as proposed).
CMS is extending its pandemic-era policy to use the hospital MBU for ASCs, so the net update also is 2.6% for ASCs that meet ASC Quality Reporting Program (ASCQRP) requirements. CMS estimates that applying the hospital MBU to ASCs will increase payments by $170 million in CY 2026. The ASC conversion factor is $56.322 (increased from $56.207 as proposed).
Despite concerns from hospitals and MedPAC that the MBU is inadequate, CMS did not adjust it to better reflect input price 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.
Recoupment of Increased Payments for Non-Drug Services
CMS did not finalize its proposal to accelerate recoupment from hospitals that received increased payments for non-drug services from CY 2018 through 2022 by increasing the rate to 2% starting in CY 2026. Instead, recoupment will begin January 1, 2026 at the previously finalized rate of 0.5%. The status indicators affected by this policy include J1, J2, P, Q1, Q2, Q3, R, S, S1, T, U, and V. The recoupment does not apply to providers that began billing Medicare under OPPS after January 1, 2018.
CMS estimates the recoupment will reduce payments by $275 million in CY 2026 for providers subject to the 340B remedy offset. The final rule also notes that CMS anticipates implementing a larger percentage reduction (such as the 2% or other reduction) beginning in CY 2027.
Site-Neutral Payment for Drug Administration Services in Excepted HOPDs
Beginning in CY 2026, CMS finalizes its proposal to pay for drug administration services provided in excepted off-campus HOPDs (those billing with a PO modifier) at the physician fee schedule equivalent—40% of the applicable Ambulatory Payment Classification (APC) rate. The policy will apply to APCs 5691 through 5694. CMS estimates this will save $290 million in 2026 ($220 million saved by CMS, $70 million saved by beneficiaries). Like the site-neutral clinic visit policy, CMS exempts 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. However, that ruling occurred prior to the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overturned the “Chevron doctrine” that required courts to defer to federal agencies’ reasonable interpretations of ambiguous statutes they administer.
In addition, CMS requested feedback on expanding the site-neutral clinic visit policy to apply to clinic services provided in on-campus HOPDs. While CMS did not provide a summary of the comments received, the agency notes it received a range of comments on expanding site-neutral payments to on-campus settings for clinic visits, imaging without contrast in off-campus provider-based departments, and other services that it intends to consider in future rulemaking. CMS also sought 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. Similarly, the agency did not provide a summary of comments but notes it received 43 pieces of feedback and may consider them in future rulemaking.
Outpatient Drug Pricing Survey
In response to President Donald Trump’s drug pricing executive order, CMS will field a drug cost acquisition survey in early 2026 for covered hospital outpatient drugs. Hospitals will have 90 days to respond so that the survey can be completed in time for the results to inform the 2027 OPPS proposed rule. In addition to drug acquisition prices, the survey will require hospitals to report all discounts, rebates, and other price concessions provided, including 340B discounts. The survey results likely will be used to reprise a payment reduction 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. However, the final rule clarifies that CMS has not decided on how, if at all, it will account for non-responses. Any policies based on this discussion would be included in future rulemaking after CMS has had an opportunity to analyze the data.
Hospital Price Transparency Changes
CMS finalizes 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. CMS will delay enforcement of these new and revised requirements until April 1, 2026:
- MRFs – Prices Based on Algorithms or Percentages: When negotiated charges included in the MRF are based on a percentage or algorithm, CMS will replace the estimated allowed amount with the 10th percentile, median, and 90th percentile allowed amounts based on the electronic data interchange (EDI) 835 electronic remittance advice (ERA) or an alternative, equivalent source of remittance data. In addition, CMS requires hospitals to use a lookback period of no less than 12 months and no more than 15 months prior to posting the MRF to calculate these values. To help MRF users understand the reliability of these statistics, CMS requires hospitals to include the count of allowed amounts used to calculate these values. The final rule provides additional detail on how these statistics should be calculated.
- MRF – Executive & Facility Information: CMS finalizes 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 requires hospitals to include their National Provider Identifier (NPI) to “advance the comparability of data.”
- Penalties for Noncompliance: CMS decreases noncompliance penalties in certain situations by 35% when a hospital waives its right to a hearing by an administrative law judge.
- Compliance Attestation: CMS replaces 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 as a dollar. The new attestation statement (pg. 1653–1654 in the display version) is more nuanced and specific than the existing requirement. It reads:
To the best of its knowledge and belief, this hospital has included all applicable standard charge information in accordance with the requirements of 45 CFR 180.50, and the information encoded is true, accurate, and complete as of the date in the file. This hospital has included all payer-specific negotiated charges in dollars that can be expressed as a dollar amount. For payer-specific negotiated charges that cannot be expressed as a dollar amount in the machine-readable file or not knowable in advance, the hospital attests that the payer-specific negotiated charge is based on a contractual algorithm, percentage or formula that precludes the provision of a dollar amount and has provided all necessary information available to the hospital for the public to be able to derive the dollar amount, including, but not limited to, the specific fee schedule or components referenced in such percentage, algorithm or formula.
Phaseout of the Inpatient Only (IPO) List
Beginning in CY 2026 and completing in CY 2029, CMS will phase out the IPO list over three years by removing 285 CPT codes, mostly for musculoskeletal services, which are listed in Table 119 (pg. 888) in the display version. Correspondingly, CMS creates a seven-level Musculoskeletal Procedures APC to which it will assign procedures removed from the list based on applicable estimated cost.
CMS will continue 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 final rule expands the ASC CPL by 560 services (289 procedures in general plus 271 that were removed from the IPO list), which are listed in Tables 131 and 132 (begins pg. 1068) in the display version.
Reporting Requirement for Medicare Advantage Negotiated Rates
For cost reporting periods ending on or after January 1, 2026, CMS requires hospitals to include 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 are included in an Information Collection Request available here.
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.
Permanent Extension of Virtual Supervision Flexibility
The final rule permanently extends 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, except for diagnostic services that have a global surgery indicator of 010 or 090. Audio-only technologies are excluded.
Packaging Threshold for Drugs, Biologics, & Radiopharmaceuticals
CMS finalizes separate payment for non-policy packaged drugs, biologics, and radiopharmaceuticals with a per-day cost greater than $140.
In addition, CMS finalizes 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 finalizes several changes to the OQR:
- Measure Adoption & Replacement: CMS adopts 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. CMS removes the Left Without Being Seen measure and the Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients measure beginning with the CY 2028 reporting period/CY 2030 payment determination.
- Measure Removal: CMS removes 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 extends 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 final rule may impact your organization, please reach out to our professionals.