Site Neutral Policies Dominate the Medicare 2026 Proposed Rule for Outpatient Services
The Centers for Medicare & Medicaid Servies (CMS) released the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule for CY 2026. The proposed regulation makes payment and policy changes to the services provided under the OPPS and ASC payment system, including updating payment rates and quality measures, proposing changes to the inpatient only procedure list, and other policies. The proposed rule is accompanied by a fact sheet, addenda used by CMS in rate setting, and a press release. Comments are due to the agency by September 15.
Payment Increase for OPPS and ASC Services
CMS proposes a 2.4% payment increase for both hospital outpatient department (OPPS) and ambulatory surgical center (ASC) services in 2026. This update is based on a 3.2% inpatient hospital market basket increase, reduced by a 0.8% productivity adjustment. Total OPPS payments, including beneficiary cost sharing, are projected to reach $100 billion next year, while ASC payments are expected to be approximately $9.2 billion.
Phase-out of the Inpatient Only List
The agency also plans to begin phasing out the Inpatient Only (IPO) list in 2026, with complete elimination by January 1, 2029. The first procedures slated for removal include 269 musculoskeletal services and 16 cardiovascular, lymphatic, digestive, gynecological (CPT code 56630: Vulvectomy, radical, partial), and endovascular procedures. CMS believes advances in technology, surgical techniques, and safety standards have made the IPO list unnecessary and that physicians, in consultation with patients, are best positioned to determine the safest site of care.
Payment Cuts Target Drug Administration in Excepted Off-Campus Provider-Based Departments
To address payment-driven growth in certain outpatient services, CMS proposes to reduce payments for specific drug administration services furnished in excepted off-campus provider-based departments to 40% of the OPPS rate, with an exemption for Sole Community Hospitals. The agency notes that chemotherapy and other drug administration services often cost more and are delivered more frequently in the outpatient setting due to provider consolidation and higher payment rates.
Request for Information on Site-of-Service Shifts
Finally, CMS seeks public feedback on a more systematic approach to identifying ambulatory services that may be shifting to hospital outpatient settings for financial rather than clinical reasons. The agency is exploring payment adjustments to better align rates across care settings and reduce incentives for site-of-service shifts.