Exploring the 2026 OPPS, ASC Payment System Proposed Rule

OPPS, ASC payment rates for CY 2026

OPPS payment rates are set to increase by 2.4% if hospitals meet quality reporting requirements, according to the proposed rule. The update is based on a projected hospital market basket percentage increase of 3.2% minus a 0.8 percentage point productivity adjustment.

The proposed rule would also increase ASC payment rates by 2.4% using the same methodology.

Overall, CMS estimated the payment updates and other policies in the proposed rule to save nearly $11 billion over the next ten years. CMS also anticipates the changes, if finalized, to improve access to outpatient care and reduce unnecessary costs.

"We are advancing our mission to protect Medicare and its beneficiaries, fight fraud, and empower patients with access to the latest innovations, all while holding providers accountable and ensuring taxpayer dollars are spent wisely," CMS Administrator Mehmet Oz, MD, said in an announcement. “These reforms expand options and enforce the transparency Americans deserve to ensure they receive high-quality care without hidden costs.”

Expansion of site-neutral payments

Additionally, CMS is seeking to expand site-neutral payments under the OPPS through the proposed rule for CY 2026. If finalized, site-neutrality would apply to drug administration in excepted off-campus provider-based departments. CMS would pay for drug administration in these settings at the applicable Medicare Physician Fee Schedule rate.

CMS estimated the provision to reduce OPPS spending by $280 million, with beneficiaries slated to see $70 million of those savings in the form of reduced coinsurance.

Further down, CMS plans to expand the services delivered in the outpatient setting. The agency proposed in the CY 2026 rule to eliminate the inpatient-only list, which specifies procedures that Medicare generally requires to be performed in the inpatient setting.

Starting in CY 2026, CMS would remove 285 procedures from the inpatient-only list. The procedures largely cover musculoskeletal services, as these services can be performed in the outpatient setting with a shorter recovery time, according to the proposed rule.

CMS would also continue the Two-Midnight Rule exemptions for procedures removed from the inpatient-only list and add 276 procedures to the ASC Covered Procedures List. The agency would also shift 271 codes from the ASC Covered Procedures List after removing them from the inpatient-only list in CY 2026.

Hospital price transparency changes

CMS plans to modify hospital price transparency requirements per an executive order signed by President Donald Trump earlier this year. The executive order aims to bring more dollar-and-cents pricing to healthcare.

As part of the rule, the agency proposed requiring:

• Disclosure of the 10th, median and 90th percentile allowed amounts in machine-readable files when payer-specific negotiated charges are based on percentages or algorithms.
• Disclosure of the count of allowed amounts used to determine these percentiles to show the distribution of actual prices the hospital has received for an item or service.
• Use electronic data interchange 835 electronic remittance advice transaction data to determine and encode allowed amounts when a payer-specific negotiated charge is based on a percentage or algorithm.
• Attestation that hospitals have included all payer-specific negotiated charges that can be expressed as dollar amounts, and for those that cannot, all necessary information is provided in the machine-readable file.
• Encoding of national provider identifiers in machine-readable files.

CMS also proposed reducing the civil monetary penalty by 35% for hospitals that agree with noncompliance determinations from CMS. These hospitals would also waive their right to a hearing with an administrative law judge.

Hospital quality reporting modifications

Another major policy change in the CY 2026 OPPS and ASC Payment System proposed rule would alter the Hospital Quality Star Rating Program. Under the program, CMS assesses hospital quality performance by giving hospitals a star rating from one to five, with five being the highest quality. The program assesses performance based on quality measures like hospital readmissions, mortality rates, patient experience, safety of care and timely access to care.

CMS proposed to update the methodology used to determine the star rating to emphasize a hospital's safety of care performance in its star rating. Specifically, CMS would implement a 4-star cap for hospitals in the lowest quartile for safety of care performance starting in CY 2026.

By CY 2027, hospitals in the lowest quartile for safety of care performance would also receive a blanket 1-star reduction.

However, only hospitals with at least three safety of care measures would be subject to the new methodology.

Additionally, CMS proposed updates to other hospital quality reporting programs to generally remove health equity and COVID-19 vaccine reporting requirements and adopt a measure that evaluates long wait times in emergency departments.

The federal agency is seeking comments on incorporating quality measures focused on nutrition, wellness and preventive health.

340B payment offset

CMS wants to revise an annual payment offset as required by the 340B Final Remedy rule, which addresses unlawful payment cuts to certain hospitals participating in the 340B Drug Pricing Program from 2018 through 2022.

The 340B Final Remedy Rule required a one-time lump sum payment to hospitals that were underpaid due to the payment cuts. However, to remain budget neutral as required by law, CMS implemented a 0.5% downward adjustment to OPPS payments for non-drug items and services starting in CY 2026 and lasting for 16 years.

CMS proposed in the recent rule to hike the downward adjustment to 2.0% next year, excluding hospitals enrolled in Medicare after Jan. 1, 2018. The higher adjustment would last until the settled-upon $7.8 billion, which CMS estimated to occur in CY 2031.

Healthcare stakeholders can comment on the CY 2026 OPPS and ASC Payment System proposed rule for 60 days following the publication of the proposal on the Federal Register, which is scheduled for July 17.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.