CMS Finalizes Medicare Payment Policies For Hospital Outpatient And Ambulatory Surgery Center Services

The Centers for Medicare & Medicaid Services ("CMS") final rule for Medicare payment for services provided in hospital outpatient departments (paid under the Outpatient Prospective Payment System or "OPPS") and ambulatory surgery centers ("ASCs") during calendar year ("CY") 2026 (the "Final Rule") largely adopts CMS' proposed changes to advance President Trump's policy directives to:

• Drive cost-efficiency and cost savings for the Medicare program;
• Enhance hospital price transparency requirements and enforcement;
• Embrace adoption of digital health applications, software-as-a-service, and other virtual health services;
• End diversity, equity and inclusion programs that "encourage unlawful discrimination;" and
• Reduce Medicare reimbursement for drugs in an effort to lower drug prices.

Except where otherwise noted, these policies take effect January 1, 2026. Payment policies of significant interest to hospitals, ASCs and their patients, partners, vendors and other stakeholders include:

Changes to Site of Service

CMS finalized both of its proposals to remove Medicare payment limitations on site of service and permit more procedures to be performed in lower-cost hospital outpatient or ASC settings. CMS acknowledged stakeholder concerns about patient safety and the need for additional clinical evidence to ensure safe transitions of care, but noted that in light of developments in surgical technique, technology advances, innovations in infection control, and other safeguards, CMS will proceed with phasing out the Inpatient Only ("IPO") list over the course of the next 3 years. CMS will start by removal of 285 musculoskeletal-related services in CY 2026. CMS also finalized its proposed overhaul of the criteria for adding procedures to the ASC Covered Procedures List ("CPL"). CMS will add the 547 procedures it proposed and an additional 13 procedure codes recommended by commenters to the ASC CPL for CY 2026 as a result of these changes.

Site Neutral Payment

In keeping with President Trump's priorities of driving cost-efficiency and cost savings for the Medicare program, CMS also significantly expanded its site-neutral payment policy to apply to drug administration services (e.g., chemotherapy infusion services) furnished in off-campus hospital departments. Since the Bipartisan Budget Act of 2015, CMS has reimbursed services provided in new or relocated off-campus provider-based departments ("PBDs") at a "site-neutral" rate equivalent to payments made under the Medicare Physician Fee Schedule ("PFS") for services provided in physician offices – approximately 40% of the OPPS rate. In its CY 2019 OPPS/ASC final rule, citing "unnecessary" increases in the volume of clinic visits in hospital PBDs, CMS adopted a similar site neutral payment rate for clinic visits at off-campus PBDs that were otherwise exempted or "excepted" under the Bipartisan Budget Act of 2015. Starting in CY 2026, CMS will further extend the same site neutral payment rate and will reimburse drug administration services provided at excepted off-campus PBDs at approximately 40% of the OPPS rate. CMS again cited significant increases in the volume of these services provided in PBDs since 2011, which CMS believes are driven by payment differentials rather than patient safety or clinical needs. The policy will likely have a significant adverse financial impact on many off-campus hospital-based cancer centers and infusion centers. CMS estimates that the policy will reduce OPPS payments nationwide by approximately $290 million. To mitigate that impact and maintain necessary access to care in less-served areas, CMS will exempt rural Sole Community Hospitals from this payment reduction.

While CMS declined to extend site-neutrality to services provided in on-campus PBDs at this time, the agency remains committed to evaluating broader site neutral payment reforms and will use public input provided in response to its RFI to consider whether more comprehensive site-neutral policies should be pursued in future rulemaking.

Hospital Price Transparency

CMS also adopted several significant updates to hospital price transparency requirements, with the stated goal of helping consumers, employers, and others more easily compare hospital charges and make informed healthcare decisions. Although the changes take effect January 1, 2026, CMS will delay enforcement of the new data reporting and attestation requirements until April 1, 2026, giving hospitals a three-month window to adapt their processes, review updated guidance, and implement necessary changes.

CMS finalized a new mandate for hospitals to replace the "estimated allowed amount" data element in their machine-readable file ("MRF") with three new data elements when payer-specific negotiated charges are based on a percentage or algorithm:

• Median allowed amount: Median reimbursement to the hospital over a "lookback period" (now defined as no less than 12 months and no longer than 15 months).
• 10th percentile allowed amount: Represents the lower range of actual paid amounts over the lookback period.
• 90th percentile allowed amount: Represents the upper range of paid amounts over the lookback period.
• Count of allowed amounts: The total number of remittance transactions used to derive the percentiles, with masking for small counts (<11) per privacy standards.

Hospitals must also report the count of allowed amounts used to calculate these data elements, enhancing the credibility and statistical clarity of published pricing information. To facilitate consistency and comparability, CMS is requiring these data points to be derived from EDI 835 electronic remittance advice ("ERA") transaction data or an equivalent source.

To strengthen compliance and CMS's enforcement authority, a hospital's MRF must now include an attestation from its CEO, president, or another senior executive designated as responsible for data integrity. CMS modified its proposed language for the attestation to maintain a "knowledge" qualifier. The attester must state, to the best of the hospital's knowledge and belief, that the file is accurate, complete, and in compliance with regulatory requirements, and must confirm either that all payer-specific negotiated charges are listed as dollar amounts or, where not possible, that all information necessary for the public to derive a dollar amount has been provided. Hospitals must also include the name of the hospital CEO, president, or senior official designated to oversee the encoding of true, accurate, and complete data, as well as their organizational National Provider Identifier(s), directly in the MRF.

CMS also finalized a policy that allows hospitals that admit noncompliance and waive their right to an administrative hearing to receive a 35 percent reduction in civil monetary penalties for most violations. However, if a hospital's violation is a core requirement, such as failing to post an MRF or a consumer-friendly tool, the hospital will be ineligible for the penalty reduction.

CMS did not finalize a number of its other proposed changes to the required data elements for the MRF, such as the proposals to include: (1) all charges reported as dollar and cent amounts; (2) professional fees of non-employed providers; and (3) a broader range of identifiers (such as CMS Certification Numbers). CMS also declined or deferred requests to further tailor or reduce requirements for small or specialized hospitals, to combine price and quality data, or to eliminate certain technical formats (such as JSON).

Expanding Use of Digital Health and Virtual Services

The Final Rule adopts, without modification, CMS's proposal to permanently permit direct clinician supervision via audio-video real-time communications technology (excluding audio-only) for the supervision of Cardiac Rehabilitation (CR), Intensive Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation (PR) services and most diagnostic services, except for diagnostic procedures that are subject to a 10-day post-operative global surgery payment period or a 1-day pre-operative and 90-day post-operative global payment period (i.e., services/procedures with a global surgery indicator of 010 or 090).

CMS also finalized its proposed payment rates for the following software as a service (SaaS) services: Atherosclerosis Imaging-Quantitative Computed Tomography; LiverMultiScan Service; Quantitative Magnetic Resonance Imaging for Analysis of Tissue Composition; Quantitative Magnetic Resonance Cholangiopancreatography; and Fractional Flow Reserve Derived From Computed Tomography.

Although CMS summarized and responded to public comments it received in response to its request for information to help it identify alternative and consistent payment methods for SaaS services across settings of care, the agency did not signal any clear policy directions for future rulemaking.

Changes Related to Payment for Graduate Medical Education Programs and DEI

CMS finalized its proposed change to the definition of "approved medical residency program" and equivalent terms to specify that accrediting organizations must not use accreditation criteria that promote or encourage discrimination on the basis of race, color, national origin, sex, age, disability, or religion, including the use of those characteristics or intentional proxies for those characteristics as a selection criterion for employment, program participation, resource allocation, or similar activities, opportunities, or benefits.

CMS also noted that it is considering methods for encouraging accrediting bodies to incorporate nutrition education requirements into the accreditation standards for graduate medical education programs.

Changes Related to Hospital Payment for Drugs and the 340B Program

CMS confirmed that pursuant to Executive Order 14273, "Lowering Drug Prices by Once Again Putting Americans First," the agency will be conducting a nationwide survey of hospital acquisition costs for all covered outpatient drugs at hospital outpatient departments that are separately paid under the OPPS. The survey will be conducted January 1 through March 31, 2026 and CMS intends for the survey to be completed in time to inform policymaking the calendar year 2027 OPPS proposed rule.

To respond to commenters' concerns about the time, resources and administrative burden placed on hospitals to complete the survey, CMS explained that it designed a survey instrument that consists of an online portal, where hospitals can either directly enter acquisition costs or download and reupload an excel template of acquisition costs. CMS also agreed with commenters to exclude radiopharmaceuticals from the survey. Although CMS indicated it will be gathering additional data on hospital characteristics, the survey specifically requests hospitals separately report acquisition costs for 340B drugs and non-340B drugs.

CMS announced that hospitals that received OPPS payments for outpatient drugs between July 1, 2024 and June 30, 2025 must complete the survey and report data on all payable drugs during that period via the Fee-for-Service Data Collection System. CMS hosted webinars on December 9 and 11, 2025 related to the survey and instructs hospitals to register with the system and to contact OPPSDrugSurvey@cms.hhs.gov to confirm their Point of Contact for the survey.

The survey results could lead to significant changes to Medicare payment for hospital outpatient departments with infusion centers or that otherwise administer large volumes of drugs covered and paid for under Medicare Part B. CMS noted that it has not yet decided how it will account for hospitals that do not respond to the survey and that any policies related to proposed payment methodologies for hospitals that did not respond to the survey would be included in calendar year 2027 rulemaking.

Many commenters objected to CMS's proposal to significantly increase the percentage reduction to OPPS payments for non-drug items and services (from 0.5 percent to 2 percent) in order to accelerate the process for CMS to fully offset payments previously made to hospitals as a remedy for its unlawful reduction in payments for drugs obtained through the 340B program. Although CMS noted that it disagreed with many of those comments, the agency is not yet finalizing that proposal. CMS warned hospitals, however, that it currently anticipates delaying such a change for only one year and that hospitals should anticipate that CMS will implement a larger adjustment (such as 2 percent or another adjustment greater than 0.5 percent) in calendar year 2027. Any future change to the payment adjustment percentage would be proposed through the ordinary annual rulemaking process for OPPS payments for 2027.

Payment Update

CMS finalized a 2.6% update to the OPPS and ASC payment rates, slightly higher than the 2.4% updates that were proposed. CMS also finalized its proposal to apply a 2% reduction in payments to hospitals and ASCs that fail to meet quality reporting requirements. CMS estimates that the Final Rule will result in a total increase in Medicare OPPS and ASC expenditures of approximately $8.0 billion and $450 million, respectively.