The Centers for Medicare & Medicaid Services (“CMS”) recently issued its calendar year (“CY”) 2026 Outpatient Prospective Payment System (“OPPS”) proposed rule (“Proposed Rule”). The following summarizes several major proposals of the Proposed Rule, and the corresponding fact sheet can be found here. For interested parties and stakeholders, comments should be submitted by September 15, 2025.
Site-Neutral Payment for Drug Administration Services
A major component of the Proposed Rule targets excepted off-campus hospital provider-based departments (“HOPDs”), intending to align reimbursement for drug administration services with rates applicable to non-excepted off-campus HOPDs. Currently, the applicable payment methodology for services provided at non-excepted HOPDs subjects such services to a 40% relativity adjuster, meaning they are paid at 40% of the amount that would have been paid under the OPPS (i.e., at 40% of the applicable rate for excepted HOPDs). In the time since the relativity adjuster was introduced for non-excepted HOPDs, CMS has gathered data on the most frequently billed Healthcare Common Procedure Coding System codes in the drug administration Ambulatory Payment Classification. Upon finding that the payments for drug administration services were 200% to 300% higher for excepted HOPDs when compared to the applicable Physician Fee Schedule payment for the same services, CMS proposes to apply the 40% relativity adjuster for drug administration services provided at all HOPDs, regardless of excepted status.
CMS intends to exempt sole community hospitals (“SCHs”) from its proposal to apply the relativity adjuster to drug administration services. In efforts to finalize the SCH exemption, CMS is seeking comments on whether such an exemption is appropriate for SCHs, the impact on SCHs should CMS decide not to finalize the exclusion, and whether any other hospital types should be subject to the exclusion.
While not official proposals, CMS included “requests for information” related to on-campus clinic visits and other, broader, site-neutral payment-related requests in the Proposed Rule. These requests signal CMS’s desire to gather information on outpatient services that could result in proposed payment reductions in future rulemaking.
Proposal to Phase Out the Inpatient Only (“IPO”) List
CMS is proposing to phase out the IPO listing of services that are covered by Medicare only when performed on an inpatient basis. CMS intends to phase out the IPO list over a 3-year period, beginning with CY 2026, wherein it proposes to remove 285 procedures from the IPO list. The majority of these procedures relate to musculoskeletal surgery and related services. In phasing out the IPO list, CMS states its goal is to allow physicians greater flexibility in determining the most appropriate site of service and to allow beneficiaries more options in choosing a care setting.
Proposal to Increase Payment Adjustments Related to 340B Final Remedy Rule
In order to offset the lump payments made to 340B hospitals related to underpayments for 340B-acquired drugs from CYs 2018 through 2022 (“Final Remedy Payment”), CMS is proposing to revise the annual reduction to the OPPS conversion factor used to determine payment amounts for non-drug items and services from 0.5 percent to 2 percent. By doing so, CMS intends to offset the $7.8 billion Final Remedy Payment over the course of six years instead of 16 years.
Removal of Several Outpatient Quality Reporting (“OQR”) Factors
CMS is proposing to remove several measures from its OQR program that subjects HOPDs failing to submit the required quality data to a 2% decrease in its annual payment update. The Proposed Rule describes four measures CMS intends to remove from the OQR program:
- COVID-19 Vaccination Coverage Among Health Care Personnel
- Hospital Commitment to Health Equity
- Screening for Social Drivers of Health
- Screen Positive Rate for Social Drivers of Health
Alongside removing these measures, CMS is proposing to adopt a new measure, Emergency Care Access & Timeliness electronic quality measure, beginning with voluntary reporting for the CY 2027 period and mandatory reporting for the CY 2028 period.
Hospital Price Transparency
The Proposed Rule includes revisions to the hospital price transparency requirements such that, beginning CY 2026, hospitals will be required to disclose the 10th, median and 90th percentile allowed amounts in machine-readable files (“MRF”) whenever a payer-specific negotiated charge is based on percentages or algorithms. CMS additionally proposes to require hospitals to attest that all payer-specific negotiated charges are included in the MRF. For payer-specific negotiated charges that are not discernible to the hospital in advance or cannot be expressed in a dollar amount, CMS proposes to require hospitals to provide in the MRF all necessary information available to the hospital that would allow the public to arrive at a dollar amount. Finally, CMS proposes to reduce the civil monetary penalty for noncompliance with hospital price transparency requirements by 35% whenever a hospital waives the right to a hearing before an Administrative Law Judge, thereby agreeing with CMS’s determination of noncompliance.
Practical Takeaways
- CMS intends to make significant changes to its payment policy for excepted HOPDs such that drug administration services at all off-campus HOPDs, regardless of excepted status, are subject to a 40% relativity adjuster (60% payment reduction).
- Given CMS was willing to exempt SCHs from the relativity adjuster for drug administration services and is soliciting feedback on similar exemptions for other hospitals with special rural status (e.g., critical access hospitals, rural emergency hospitals), stakeholders should consider submitting comments prior to the September 15, 2025, deadline.
- Hospitals should review CMS’s requests for information related to outpatient services and consider responses to assist the agency in making an appropriate payment policy.
- Hospitals should monitor for the final rule to finalize necessary changes to their OQR and hospital price transparency programs.
For more information on the Proposed Rule or if you would like assistance with submitting comments, please contact:
- Regan Tankersley at (317) 977-1445 or rtankersley@hallrender.com;
- Lori Wink at (414) 721-0456 or lwink@hallrender.com;
- Zeke Shen at (414) 617-6365 or zshen@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
