CMS suggests a modest 2.4% payment update in the 2026 Hospital Outpatient Prospective Payment System proposed rule on top of changes to site-neutral payments, price transparency, and 340B funds.
CMS recently released the 2026 Hospital Outpatient Prospective Payment System (OPPS) proposed rule, outlining a 2.4% payment update for hospitals and ambulatory surgical centers (ASCs) that meet quality reporting requirements.
CMS is also proposing the expansion of site-neutral payment policies, new enforcement mechanisms for price transparency regulations, and a payment reduction related to the 340B Final Remedy rule issued in 2023.
The American Hospital Association (AHA) immediately pushed back against the modest payment update, calling it “inadequate.”
Expansion of site-neutral payments
CMS signaled its intention to expand site-neutral payment policies to include drug administration services delivered in provider-based departments, estimating the move would reduce Medicare spending by $280 million.
Site-neutral payment policies have garnered some bipartisan support among federal legislators. Site-neutral payment advocates say that current policies encourage health system consolidation, driving up costs, while critics say hospitals require higher payments to maintain access to care.
CMS also proposed phasing out the inpatient only list over a three-year period, beginning with the removal of 285 procedures in 2026.
“We oppose the proposal to expand ‘site-neutral’ cuts and eliminate the inpatient-only list, as both policies fail to account for the real and crucial differences between hospital outpatient departments and other sites of care,” Ashley Thompson, AHA senior vice president of public policy analysis and development, said in a statement.
New price transparency requirements
If implemented, the proposed rule would require hospitals to disclose the 10th, median, and 90th percentile allowed amounts negotiated with payers when charges are based on percentages or algorithms. The intent behind the shift is to provide patients with more accurate information about actual prices rather than estimates.
This proposal aligns with an executive order issued by the Trump administration earlier this year, which called for additional price transparency and increased enforcement of price transparency requirements.
If the government does ramp up enforcement, that could spell trouble for health systems that have broadly had difficulty complying with requirements.
CMS conducted price transparency reviews of 1,746 hospitals between 2021 and 2023. Of these, 74% were subjected to enforcement actions, resulting in more than $4 million in penalties, according to a 2024 report from the U.S. Government Accountability Office.
A quicker timeline for repayment of 340B funds
The proposed rule adds a new twist to yearslong drama surrounding the 340B Drug Pricing Program. During the first Trump administration, CMS implemented a change to reduce Medicare payments to hospitals for 340B drugs by 30% and to raise reimbursement for non-drug outpatient services.
In 2022, the Supreme Court later ruled that these changes were illegal. A year later, CMS said it would issue a $9 billion lump sum payment to eligible hospitals to account for the drug cuts, but that it would also recoup $7.8 billion in increased payments for non-drug services by codifying a 0.5% reduction in the OPPS conversion for impacted services beginning in 2026.
In the OPPS proposed rule for 2026, CMS suggests revising the downward offset from 0.5% to 2% and estimates that the offset would last through 2031.
“It is important to remember that this clawback punishes 340B hospitals for the agency’s own mistake in implementing a policy that a unanimous Supreme Court held to be unlawful,” Thompson said in the AHA statement. “Doubling down on that unlawfulness, the proposed recoupment is both illegal and unwise, and it should not be finalized.”
As with all proposed rules, these policies are not yet final. However, they certainly offer revenue cycle leaders plenty to think about until the final rule is released. Public comment on the proposed rule is open through September 15, 2025.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
· CMS is continuing its push for site-neutral payments, suggesting an expansion to include drug administration services and a phasing out of the inpatient only list.
· The proposed rule tightens price transparency regulations in alignment with earlier Trump administration actions.
· Under the proposal, CMS suggests raising the downward conversion factor offset for non-drug services in a clawback of 340B funds.