On November 21, 2025, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule, affecting approximately 4,000 hospitals and 6,000 ASCs.¹ The rule finalizes payment updates, policy reforms, and transparency requirements that will impact hospital and ASC operations beginning January 1, 2026. This Health Capital Topics article discusses the key OPPS changes and updates included in the Final Rule.

Payment Rate Updates

For 2026, CMS finalized a 2.6% payment rate increase for hospital outpatient departments (HOPDs) and ASCs meeting quality reporting requirements.² This update is based on a hospital market basket increase of 3.3%, reduced by a 0.7% productivity adjustment.³ This represents a modest improvement from the proposed 2.4% increase.⁴ CMS finalized the HOPD conversion factor at $91.415 and the ASC conversion factor at $56.322.⁵ Total 2026 payments to HOPDs and ASCs are anticipated to reach approximately $101.0 billion and $9.2 billion, respectively, increases of approximately $8.0 billion and $450 million from 2025.⁶

Elimination of the Inpatient-Only List

CMS finalized its proposal to phase out the inpatient-only (IPO) list over the next three years, beginning with the removal of 285 (predominantly musculoskeletal) procedures in 2026.⁷ The agency asserts that advances in medical practice now allow many procedures to be performed safely on an outpatient basis with shorter recovery times, giving physicians greater flexibility in determining the clinically appropriate site of service and potentially reducing beneficiary out-of-pocket costs.⁸

ASC Covered Procedures List Expansion

The Final Rule includes one of the largest expansions of the ASC Covered Procedures List (ASC-CPL) in Medicare history. CMS revised the criteria for adding procedures to the ASC-CPL giving physicians more decision-making power and rendering it easier to add procedures. The changes resulted in the addition of 289 procedures to the ASC-CPL.⁹ CMS also added 271 codes that were removed from the IPO list for 2026 to the ASC-CPL, totaling 560 newly covered procedures.¹⁰ Significant additions include cardiovascular codes, spine codes, and vascular codes.¹¹

340B Recoupment Policy

CMS declined to finalize its proposal to accelerate the 340B recoupment timeline from 0.5% to 2.0% annually., and instead will maintain the previous 0.5% annual reduction to the OPPS conversion factor for 2026.¹² As discussed in a previous Health Capital Topics article, this recoupment policy stems from increased payments that all OPPS hospitals received under the 340B program 2018 and 2022, resulting from CMS’s budget-neutral policy to reduce payments to 340B-covered entities, which the U.S. Supreme Court unanimously struck down in American Hospital Association v. Becerra.¹³ Critically, while CMS declined to accelerate the recoupment for 2026, the agency explicitly stated that hospitals should anticipate larger reductions, potentially up to 2%, beginning in 2027,¹⁴ creating ongoing uncertainty for hospital financial planning.

Drug Acquisition Cost Survey

In one of the OPPS Final Rule’s most consequential provisions, CMS finalized its proposal to conduct a comprehensive survey of hospital acquisition costs for separately payable drugs under the OPPS.¹⁵ The survey will be conducted promptly, between late 2025 and early 2026, with results compiled and used to inform payment rate setting for separately payable drugs in the 2027 OPPS rulemaking.¹⁶ This survey represents a critical step in CMS’s efforts to establish payment rates based on actual acquisition costs rather than average sales price methodologies.

The survey generated substantial concern among hospital stakeholders, particularly 340B-covered entities. While CMS acknowledges that the statute does not explicitly mandate specific consequences for hospitals that fail to respond to the survey, the agency indicated it may interpret non-responses as meaningful data that could inform payment decisions. CMS suggested it might consider a hospital’s failure to respond as confirmation that the facility does not have meaningful additional costs beyond current payment rates, potentially justifying either packaging drug costs into service payments or reducing separate reimbursement rates.¹⁷ The AHA characterized the survey as burdensome and expressed concern that CMS might use the survey results to drastically reduce Medicare payments to hospitals serving vulnerable communities.¹⁸

Hospital Price Transparency Enhancements

The Final Rule establishes several modifications to hospital price transparency regulations. First promulgated in the 2020 OPPS Final Rule, the regulations require hospitals to disclose their standard charges for various services on their website.¹⁹ Beginning January 1, 2026, hospitals will be required to also report the median, 10th percentile, and 90th percentile allowed amounts, as well as a comprehensive explanation of their methodology.²⁰ The Final Rule also establishes new attestation requirements, mandating that hospitals include the name of the CEO, president, or senior official designated to oversee the encoding of data.²¹ While the effective date for the new data elements is January 1, 2026, CMS will delay enforcement until April 1, 2026.²²

Other Provisions

The 2026 OPPS/ASC Payment System Final Rule also includes provisions to:

• Finalize expanded site-neutral payment policies to drug administration services furnished in excepted off-campus provider-based departments, setting payment at the Medicare Physician Fee Schedule (MPFS) equivalent rate of 40% of the OPPS, which will reduce OPPS spending by $290 million in 2026;²³
• Finalize a significant payment revision for skin substitute products, establishing a uniform per-square-centimeter payment rate of $127.14 for 2026;
• Update the methodology used to calculate the Overall Hospital Quality Star Rating to emphasize the Safety of Care measure group in hospitals’ star ratings; and
• Finalize updates to the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs.²⁴

Stakeholder Comments

Reactions to the 2026 OPPS Final Rule have been decidedly mixed. The American Hospital Association (AHA) expressed substantial disappointment with the Final Rule. Ashley Thompson, AHA’s Senior Vice President, stated:

“The AHA is disappointed that CMS has finalized cuts to hospitals and health system services, including those in rural and underserved communities. Combined with its continued inadequate market basket updates, the agency is exacerbating the challenging financial pressures under which hospitals are operating to serve their patients and communities.”²⁵

Specifically, the AHA characterizes the payment update as inadequate, noting that hospital expenses grew by 5.1% in 2024.²⁶ The association also strongly opposes the site-neutral payment policy expansion and the elimination of the IPO List, contending that such policies ignore critical differences between HOPDs and other care settings and arguing that HOPDs serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than patients seen in other settings, such as independent physician offices.²⁷

On the other hand, the Ambulatory Surgery Center Association (ASCA) welcomed the significant expansion of the ASC-CPL. CEO Bill Prentice stated:

“CMS acknowledges in this rule that ASCs can provide safe care to many more beneficiaries for a much wider range of procedures than is currently available. While more work is needed to address structural payment issues that limit surgery centers’ ability to perform certain procedures, Medicare beneficiaries will greatly benefit from the finalized policies in this rule.”²⁸

Conclusion

The 2026 OPPS Final Rule introduces significant policy changes that will reshape hospital and ASC operations beginning January 1, 2026. The 2.6% payment rate increase, while nominally positive, falls short of actual cost inflation historically experienced by providers. CMS’s expansion of site-neutral payment policies to drug administration services and the three-year phase-out of the IPO List reflect the agency’s continued emphasis on encouraging care delivery in lower-cost settings.

The cumulative financial impact on hospitals is substantial. Beyond the modest payment update, facilities face the ongoing 2% Medicare sequester,²⁹ the 0.5% 340B recoupment reduction (which could increase to as much as 2% in 2027), and an estimated $290 million reduction from site-neutral payment expansion. These pressures are particularly acute for smaller hospitals and those serving high proportions of Medicare and Medicaid beneficiaries.

While CMS characterizes the 2026 OPPS Final Rule as advancing patient-centered care and modernizing Medicare payments, hospital industry stakeholders have expressed substantial concerns about the financial implications of several finalized provisions.