Dear COF Members,
The Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2026 Outpatient Prospective Payment System (OPPS) proposed rule. This rule includes updates to outpatient hospital payment rates for CY 2026, proposals for site neutral payment policies, notice of intent to survey Medicare OPPS drugs acquisition costs, updates to hospital price transparency rules, changes to quality reporting, phase out of the inpatient only list, and many other policies.
CMS also seeks public input on approaches to streamline regulations and reduce burdens through a standalone RFI available here. Comments are due Monday, September 15.
Below are highlights of provisions in the proposed rule.
Payment Proposals
Payment Update. Increase payment rates under the OPPS by 2.4 percent. Proposed increase is based on inpatient hospital market basket increase of 3.2 percent, reduced by a productivity adjustment of 0.8 percentage point. Hospitals must meet the requirements of the Hospital Outpatient Quality Reporting Program to be eligible for the full update.
Adjustment to Payments for Non-Drug Items and Services to Offset the Increased Payments as a Result of Remedying the 340B Payment Policy. Revise the annual offset percentage to claw back the increased payment for non-drug items and services during CY 2018 through CY 2022 from 0.5 percent to 2 percent effective CY 2026. CMS estimates repayment under this proposal will take five years, rather than 16 years as originally finalized.
Expanding the Method to Control Unnecessary Increases in the Volume of Outpatient Services. Apply the Physician Fee Schedule equivalent payment rate, 40 percent of the OPPS rate, for HCPCS codes assigned to the drug administration ambulatory payment classifications (APCs) when provided at an off-campus hospital outpatient department (HOPD) excepted from section 603 of the Bipartisan Budget Act of 2015. CMS is also requesting information on expanding this volume control method to on-campus clinic visits.
RFI: Adjusting Payment under the OPPS for Services Predominately Performed in the Ambulatory Surgical Center or Physician Office Settings. Requesting information on developing a systematic process to identify ambulatory services at high risk of shifting to the hospital setting based on financial incentives rather than medical necessity and adjusting payments accordingly.
OPPS Ratesetting. Use most updated cost reports and claims data available for CY 2024 OPPS ratesetting.
Notice of Intent to Conduct Medicare OPPS Drugs Acquisition Cost Survey. CMS announced it will be conducting a survey by early CY 2026 on the acquisition costs for each separately payable drug acquired by all hospitals paid under the OPPS and plans to have the survey completed in time to inform policymaking for the CY 2027 OPPS/ASC proposed rule. This survey could be the first step in an effort by CMS to lower the Medicare payment rates that hospitals receive in the future for 340B drugs.
Proposals Related to 340B in the CY 2026 PFS Proposed Rule. CMS included proposals to identify 340B drug units to exclude them from inflationary rebates in the CY 2026 Physician Fee Schedule Proposed Rule. Specifically, in the PFS CMS proposed to establish a claims-based methodology to remove 340B units from Part D rebate and establish a Medicare Part D Claims Data 340B Repository for voluntary submissions by covered entities for Part D claims.
Market-Based MS-DRG Relative Weight Data Collection and Methodology Proposal. Collect median payer-specific charges by MS-DRG as negotiated by hospitals with Medicare Advantage organizations to utilize in determining IPPS MS–DRG relative weights in the future.
Inpatient Only (IPO) List. Phase out the IPO list over three years, starting with the removal of 285 musculoskeletal procedures in CY 2026. Continue exemption for procedures removed from the IPO list for certain medical review activities related to the two-midnight policy.
Ambulatory Surgery Center Covered Procedures List (CPL). Revise the ASC CPL criteria by modifying the general standard criteria and eliminate five of the general exclusion criteria. Add 276 procedures to the ASC CPL based on these criteria changes and add an additional 271 codes to the ASC CPL as proposed for removal from the IPO list for CY 2026.
Access to Non-Opioid Treatments for Pain Relief. Add five drugs and six devices to qualify as non-opioid treatments for pain relief to be paid separately in both the HOPD and ASC settings, starting in CY 2026.
Virtual Direct Supervision of Pulmonary Rehabilitation (PR), Coronary Rehabilitation (CR), Intensive Coronary Rehabilitation and Diagnostic Services. Make direct supervision of CR, ICR, PR services and diagnostic services via audio-video real-time communications technology permanent, except for diagnostic services that have a global period indicator of 010 or 090.
Hospital Price Transparency. CMS proposes the following modifications to the hospital price transparency regulation, beginning January 1, 2026: Require hospitals report the following four new data elements when the payer-specific negotiated charge is based on a percentage or algorithm: the tenth, median, and ninetieth percentile allowed amounts in machine readable files (MRFs) and the count of allowed amounts; require hospitals to use electronic data interchange (EDI) 835 electronic remittance advice (ERA) transaction data to calculate and encode allowed amounts when a payer-specific negotiated charge is based on a percentage or algorithm; require hospitals to attest inclusion of all applicable payer-specific negotiated charges in dollars, and for payer-specific negotiated charges that are not known or cannot be expressed as a dollar amount, all necessary information is available for the public to derive the dollar amount; add their national provider identifiers in their MRF; and reduce the amount of civil monetary penalty for a noncompliance by 35 percent when a hospital agrees with CMS' determination of noncompliance and waives the right to a hearing by an Administrative Law Judge.
Add-on Payment for Technetium-99m (Tc-99m) Derived from Domestically Produced Molybdenum-99 (Mo-99). Codify the definition for domestically produced Mo-99 and establish new HCPCS C-code C917X.
Software as a Service. CMS is seeking comments from the public on payment policies for software-based technologies that are used to support clinical decision-making, referred to as software as a service (SaaS).
Graduate Medical Education (GME). Only approved medical residency programs are eligible for Medicare GME reimbursement. CMS proposes to modify the definition for approved medical residency programs to include that accreditors may not require as part of accreditation, or otherwise encourage institutions to put in place, diversity, equity, and inclusion programs that encourage unlawful discrimination on the basis of race or other violations of federal law.
Quality Proposals
Outpatient Quality Reporting (OQR) Program. CMS proposes to adopt a new measure on Emergency Care Access & Timeliness, to replace the Median Time for Discharged Emergency Department Patients and the Left Without Being Seen measures; remove additional four measures, including COVID-19 vaccination coverage among health care personnel and equity-related measures; request for feedback on measures for future consideration in the OQR on well-being and nutrition; and update the Extraordinary Circumstances Exception Policy to include reporting extensions as a type of relief that CMS may grant to a hospital with an approved extraordinary circumstance.
Overall Hospital Quality Star Ratings. CMS proposes to modify the rating methodology in two stages to emphasize the Safety of Care measure group. Stage 1 would implement a 4-star cap on hospitals in the lowest quartile of Safety of Care performance for CY 2026 and Stage 2 would implement a 1-star reduction for hospitals in the lowest quartile of Safety of Care performance beginning with CY 2027 and onwards.
The press release on the proposed rule can be found here and the fact sheet rule can be found here. The proposed rule is scheduled to be published in the Federal Register on July 17.
The AAMC will be providing members with additional information and will be seeking feedback as we prepare our comment letter. Information about the AAMC's OPPS proposed rule webinar will be forthcoming.
Please direct questions on the payment proposals to Katie Gaynor, question on the GME proposals to Brad Cunningham, and questions on the quality proposals to Phoebe Ramsey.
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Kenyetta Wood
Constituent Engagement Specialist (GRA, COF)
Association of American Medical Colleges
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