On July 15, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems Proposed Rule [CMS-1834-P], which includes proposals to update payment rates and regulations affecting Medicare services furnished in hospital outpatient and ambulatory surgical center (ASC) settings beginning in CY 2026.
CMS proposes to increase payment rates under the Hospital Outpatient Prospective Payment System (OPPS) and the ASC Payment System by 2.4%. CMS continues to implement the statutory 2 percentage point reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting requirements by applying a reporting factor of 0.9805 to the OPPS payments and copayments for all applicable services. CMS notes that payments for services at hospitals subject to the proposed 340B remedy offset will be reduced by 2 percentage points.
Based on the proposed policies, CMS estimates that total payments to OPPS and ASC providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2026 will be about $100 billion and $9.2 billion, respectively. This represents an increase of about $8.1 billion and $480 million, respectively, from CY 2025 payment levels.
Key takeaways from the CY 2026 OPPS and ASC proposed rule
- Inpatient only (IPO) list: CMS proposes to eliminate the IPO list with a transitional period of three years. For CY 2026, CMS proposes to remove predominantly musculoskeletal procedures from the IPO list and assign them to clinical ambulatory payment classifications (APCs), including a proposed level 7 musculoskeletal procedures APC.
- 340B: CMS proposes to revise the annual reduction to the OPPS conversion factor for non-drug items and services from 0.5% to 2% effective January 1, 2026.
- Site neutral payments: CMS proposes to expand site neutral payment to drug administration services furnished by excepted off-campus provider-based outpatient departments (with an exemption for sole community hospitals).
- ASC covered procedures list: CMS proposes to expand the ASC covered procedures list by revising its criteria and adding 547 procedures, including 271 codes that CMS proposes to remove from the IPO list.
- Skin substitutes: Consistent with its proposal for the Medicare Physician Fee Schedule, CMS proposes to unpackage skin substitutes and pay for them separately as incident-to supplies.
- ASC payments: CMS proposes to continue to apply a productivity-adjusted hospital market basket update to ASC payments for CY 2026.
- Diagnostic radiopharmaceuticals: CMS proposes to continue to pay separately for high-cost diagnostic radiopharmaceuticals whose per day cost exceeds the annually adjusted threshold.
- Market-based MS-DRG data collection: CMS again proposes to use the reported median payer-specific negotiated charge by MS-DRG from Medicare Advantage plans in a market-based MS-DRG relative weight methodology.
- Quality reporting programs: CMS proposes several updates to the Outpatient, ASC, and Rural Emergency Hospital Quality Reporting Programs, and solicits input on the development of future quality measure concepts related to well-being and nutrition.
- Requests for information: CMS solicits feedback on future policy priorities, including a more systematic site-neutral payment policy and appropriate payment methodology for software as a service.
Comments on the proposed rule are due September 13, 2025.
Updated OPPS-PFS data dashboard
McDermott+’s new, interactive dashboard for PFS, Outpatient Prospective Payment System (OPPS), and Ambulatory Surgical Care (ASC) shows key information published by CMS for individual procedure codes. This includes for individual procedure codes (where applicable), the payment rate through the Medicare physician fee schedule, outpatient prospective payment system, and ambulatory surgical center payment system, plus status and payment indicators, geometric mean costs, device offset amounts, and other useful information.
This dashboard can be used by providers, device manufacturers and the general public to see how payments for services of interest have changed across years and see how much their services are getting paid across localities.
ACCESS DASHBOARD
OPPS and ASC Proposed Rule RESOURCES
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