CY 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Final Rule (CMS-1834-FC)

December 2025

Overview

On November 21, 2025, CMS issued sweeping reforms in the CY 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Final Rule (CMS-1834-F), which was posted in the Federal Register on November 25, 2025 and will become effective January 1, 2026.  This is a mandatory annual CMS regulatory update, the purpose of which is to provide notice of adjustments to Medicare payment policies and rates for both inpatient and long-term care hospitals. Based upon CMS estimates, OPPS and ASC providers should expect payments approximately $101 billion and $9.2 billion respectively, given the adjustments made to the CY 2026 OPPS and ASC payment system rules. This Final Rule includes a number of Program updates, what follows are several of the most impactful updates to our providers.

Key Updates

I. OPPS and ASC Payment Rate Update

CMS finalized an update to both the CY 2026 OPPS and ASC payment rates for hospitals and ASCs, increasing the hospital market basket percentage by 3.3%, which was then reduced by a 0.7% productivity adjustment, equating to an overall increase of 2.6%, and applies to both hospitals and ASCs meeting the relevant reporting requirements. CMS noted this increase also comports with the FY 2026 IPPS finalized basket percentage increase. 

II. Elimination of the Inpatient-Only List

One of the most significant updates this year finalizes eliminating the Inpatient Only (IPO) List, which was tried and reversed a handful of years ago. Arguing that advancements in medicine and technology now allow many procedures to be performed safely in outpatient settings, CMS believes the time is ripe to resume phasing out the IPO over a three-year period.

The phase-out will begin with the removal of 285 (mostly musculoskeletal) procedures for CY 2026, with additional services/procedures falling off the list over the course of the next 3-years.  A list of the initial 285 procedures can be found within the CY 2026 OPPS Final Rule at Table 132.  In its discussion of the elimination of the Inpatient Only List, CMS re-emphasized that removal of a procedure or service from this list should not be interpreted as identifying that procedure as appropriately performed only in a hospital outpatient setting. Similarly, they clarified that the designation of a service as Inpatient Only does not preclude the service from being furnished in a hospital outpatient setting but will preclude Medicare from making payment for the service if furnished to a Medicare beneficiary in an outpatient setting. CMS stressed that the Agency expectation remains, in every case, that the treating physician (or surgeon) and hospital will exercise their professional judgment and assess the risk of the procedure or service to the individual patient and the site of service that serves the beneficiary’s best interest.

IPO Medical Review Exemption: Similar to the CY 2021 OPPS/ASC Final Rule relating to the previous elimination of the IPO list and policy, which exempted procedures removed from the IPO list from certain medical review activities related to the 2-midnight rule, this Rule finalizes CMS’ proposal to continue this existing exemption for CY 2026 and subsequent years. This indefinite exemption from audit activity will remain until such time as the Secretary determines sufficient evidence exists to support these services, which are more commonly performed for the general Medicare population in the outpatient setting.

III. Updates to the Ambulatory Surgical Center List

In an effort to ensure physician considerations regarding patient safety, CMS also finalized its proposal to revise the ASC Covered Procedures List (CPL) criteria to modify the general standard criteria and eliminate five (5) exclusion criteria, re-identifying them as non-binding physician consideration for patient safety. This includes removal of exclusions 1-5 under 42 CFR §416.166(c).  This change resulted in the addition of 289 procedures to the ASC CPL, and also added 271 codes to the ASC CPL that will be removed from the IPO in CY 2026 which can be found at Table 131 in the Final Rule.

CMS further stressed that ultimate deference will be given to the treating physician to exercise their medical judgment and thereby increase flexibility for patients to have greater options when choosing setting of care for surgical procedures.

 IV. Updates Regarding Skin Substitutes

CMS has historically and unconditionally packaged skin substitute products furnished in an outpatient setting with their associated procedures as part of a broader drug and biologic payment policy. In the CY 2026 OPPS/ASC Final Rule, CMS has finalized its proposal to un-package skin substitute products and establish several APCs based upon relevant product characteristics. 

Although these products are not commonly used in the ASC setting, CMS believes it is necessary to extend this uniform coding framework from the physician office and hospital settings to the ASC setting to ensure equitable access to these products in the future.  Skin substitute products will be paid for at annual prospective rates adopted under the CY 2026 OPPS/ASC, effective January 1, 2026.  These rates would not be subject to the ASC wage index adjustment and beneficiaries would be responsible for 20 percent coinsurance.

 V. Update to Hospital Price Transparency

In accordance with President Trump’s Executive Order 14221, “Making America Healthy Again by Empowering Patients with Clear, Accurate and Actionable Healthcare Pricing Information,” CMS has now finalized a number of modifications to the Hospital Price Transparency Rule in an effort to ensure hospitals provide meaningful and accurate information related to the amounts they charge for health care items and services.

Effective January 1, 2026, hospitals will be required to calculate and encode the median, tenth and ninetieth percentile allowed amount as well as the count of allowed amounts in their machine-readable file (MRF) when negotiated charges are based upon percentages or algorithms. 

In addition to the MRF updates, the NPIs and the new data fields, CMS has also finalized the requirement for hospitals to attest that they have included all applicable payer-specific negotiated charges and that the hospital has provided in the MRF all necessary information available for the public to be able to derive the dollar amount. Hospitals must also encode in the MRF the name of the hospital’s CEO, president or senior official designated to oversee the encoding of true, accurate and complete data. And hospitals will also be required to encode their NPI numbers in the MRF.

CMS also finalized reducing the amount of any civil monetary penalties for noncompliance by 35% if a hospital admits violating the HPT and waives their right to an Administrative Law Judge (ALJ) hearing to challenge the noncompliance determination, with CMS’ stated intent here being to facilitate efficient enforcement.  Further, although effective January 1, 2026, CMS will delay the enforcement of the MRF requirements until April 1, 2026.

 VI. Market-Based MS-DRG Data Collection Initiative

In furtherance of the above HPT initiatives, CMS has also finalized its market-based approach to collect the median payer-specific charges hospitals negotiate with their Medicare Advantage Organizations, using data disclosed under the CMS Hospital Price Transparency Rules. This data will then be utilized to help determine relative Medicare payment rates for inpatient hospital services, thereby reducing the need for Medicare reliance on the hospital chargemaster.

For more information regarding this update, CMS has posted a Fact Sheet highlighting the most relevant updates to the CY 2026 OPPS Final Rule, as well as a Fact Sheet and Press Release announcing the policy updates to the Hospital Price Transparency Rule.