| The Centers for Medicare & Medicaid Services (CMS) has released the CY 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (CMS-1834-P). This sweeping proposed rule outlines new payment policies, transparency requirements, and quality program updates that will shape how outpatient care is delivered and reimbursed starting January 1, 2026.
Here are the key highlights you need to know:
1. Payment Rate Increases
- Hospital Outpatient Departments (HOPDs) and Ambulatory Surgical Centers (ASCs):
- Proposed 2.4% OPPS payment rate increase.
- Hospitals/ASCs failing to meet reporting requirements may face a 2.0% reduction.
2. Phasing Out the Inpatient Only (IPO) List
- Phase-out begins in CY 2026 with 285 musculoskeletal procedures.
- Goal: eliminate IPO list over three years and promote site-neutral payment policies.
3. Two-Midnight Rule Exemption Continues
- CMS proposes to continue exempting procedures removed from the IPO list from site-of-service medical reviews under the Two-Midnight Rule
- These procedures will not be subject to claim denials, RAC audits, or BFCC-QIO referrals for patient status until CMS data shows they are more frequently performed outpatient than inpatient – supporting flexibility during the IPO phase-out.
4. ASC Covered Procedure List (CPL) Expansion
- CMS proposes adding 547 new procedures:
- 276 based on updated criteria that emphasize physician discretion and patient safety.
- 271 procedures are being removed from the Inpatient Only (IPO) list.
- This shift aims to increase access to surgical procedures in outpatient settings, reduce costs, and expand patient choice.
5. Major Overhaul of Skin Substitute Product Payment
- CMS proposes to separately reimburse skin substitute products when used during a covered application procedure under MPFS, OPPS, and ASC payment systems to create consistency across settings of care and reflect the actual resource utilization.
- CMS proposes to group skin substitutes into three new Ambulatory Payment Classifications (APCs) based on their FDA regulatory approval pathway, not their brand, manufacturer, or application site.
- Despite the regulatory distinction, CMS proposes the same payment rate ($125.38) for all three APCs in the first year of implementation to simplify transition, avoid abrupt shifts in access or provider behavior and allow CMS time to monitor utilization, and refine payment rates in the future.
6. 340B Remedy Offset Policy
- A proposed 2% reduction in OPPS payments (up from 0.5%) for certain non-drug services.
- Seeks to recover an estimated $7.8 billion in overpayments from CY 2018–2022 more quickly—by CY 2031.
7. Hospital Price Transparency Enhancements
CMS proposes several changes to strengthen price transparency enforcement:
- Hospitals must disclose 10th, median, and 90th percentile allowed amounts in machine-readable files.
- CEO or senior official’s name must now be included with attestation and hospitals must include their organizational NPI to improve enforcement and data integrity.
- A 35% civil monetary penalty (CMP) reduction offered for hospitals that admit noncompliance and waive appeal rights.
8. Virtual Supervision – Here to Stay
- Real-time audio-video (excluding audio-only) supervision is proposed to become permanent for:
- Cardiac and pulmonary rehab
- Intensive cardiac rehab
- Certain diagnostic services (excluding those with a 010 or 090 global period)
9. Market-Based MS–DRG Payment Reform (Starting FY 2029)
- CMS proposes to replace the traditional cost-based MS–DRG weight calculation with a market-based methodology using payer-specific negotiated charge data reported on hospital cost reports.
- Hospitals would report the median negotiated rate by MS–DRG for all Medicare Advantage Organizations (MAOs), pulled from the machine-readable files (MRFs) required under hospital price transparency rules.
- The goal is to reduce reliance on hospital chargemaster data, align payments more closely with actual market rates, and enhance pricing accountability across inpatient services.
10. Quality Reporting Programs – Removals and Additions
CMS proposes updates across:
- Hospital OQR
- Rural Emergency Hospital QR (REHQR)
- Ambulatory Surgical Center QR (ASCQR)
11. Star Ratings Reform
- CMS proposes two-phase methodology change to prioritize safety:
- 2026: Hospitals in lowest quartile for safety measures will be capped at 4 stars.
- 2027 onward: These hospitals will be automatically reduced by 1 star, down to a minimum of 1.
12. Other Key Proposals
- Add-on payments for Tc-99m radiopharmaceuticals using domestically produced Mo-99.
- GME accreditation changes to remove unlawful race-based DEI mandates and allow more accrediting bodies.
📌 Why It Matters
This proposed rule introduces significant changes for both hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). Stakeholders are strongly encouraged to review the rule in full to identify provisions relevant to their organizations. Given the breadth and depth of these proposed updates—and with implementation potentially less than six months away—it’s essential for healthcare leaders, providers, hospitals, coding professionals, and revenue cycle teams to begin assessing and preparing for the operational, financial, and compliance implications now.
The Proposed Rule can be found here: Federal Register :: Public Inspection: Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Ratings; and Hospital Price Transparency
The CMS Fact Sheet can be accessed here: Calendar Year 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Proposed Rule (CMS-1834-P) | CMS |
