Medicare hospital outpatient pay hike set for 2026

Modern Healthcare – Friday, November 21, 2025
By Bridget Early

Outpatient providers will get modest Medicare reimbursement increases in 2026, along with new “site-neutral” payment and price transparency policies, under a final rule the Centers for Medicare and Medicaid Services issued Friday.

Hospital outpatient departments and ambulatory surgical centers are set for 2.6% Medicare reimbursement hikes next year, slightly more than the 2.4% hike CMS proposed in July.

Like the recent payment regulations for physicians and other providers, the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System final rule includes substantive new policies. The recently ended 43-day federal government shutdown delayed the Medicare Part B reimbursement final rules, giving providers less time than usual to prepare for new mandates.

Notably, CMS backed off a plan from the hospital outpatient proposed rule to speed up the process to recoup nearly $8 billion in overpayments to providers participating in the 340B Drug Pricing Program.

The American Hospital Association objects to the site-neutral payments provisions and other provisions from the regulation. “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,” Ashley Thompson, senior vice president for public policy analysis and development, said in a news release.

Reimbursement updates

The 2.6% payment boosts are the product of 3.3% increases in the hospital outpatient and ambulatory surgical center expense market baskets minus 0.7 percentage point productivity adjustments. CMS proposed 2.4% raises in July.

‘Site-neutral’ payments, Inpatient Only List

Under the site-neutral payments policy in the regulation, hospital-owned outpatient facilities will receive the same fees as physician offices to administer medications. CMS projects this will save $290 million next year, $70 million of which will go to reduce coinsurance for beneficiaries, according to the agency.

In addition, CMS will phase out the Inpatient-Only List of procedure codes over three years, enabling outpatient providers to bill Medicare for those services. The agency is beginning with 300 musculoskeletal codes next year.

Price transparency

In the latest stage of a years-long effort to promote price transparency, hospitals will have to publicly disclose the real dollar costs of their services and products, rather than estimates, in standardized, machine-readable files. Hospitals may provide alternative data as a preliminary step if actual prices cannot be calculated.

Hospitals also will have to reveal the rates they negotiate with health insurance companies in those disclosures. That includes the 10th percentile, median and 90th percentile “allowed amounts” under their contracts with insurers.

Although these price transparency requirements take effect Jan. 1, CMS will delay enforcement until April 1.

340B clawbacks

CMS will devise a new plan to collect overpayments related to the 340B program starting in 2027. This is necessary because of reimbursement changes the agency implemented from 2018-2022 that a federal court ruled CMS has to unwind. CMS proposed an aggressive “clawback” policy in July that provoked ire in the hospital sector.

Other policies

CMS updated its hospital star rating system to prevent hospitals in the lowest health and safety performance quartile from receiving a five-star rating. Beginning in 2027, hospitals in the lowest quartile will receive one-star downgrades.

The agency also finalized a new emergency access metric and will eliminate a handful of quality measures tracking health equity and COVID-19 vaccination requirements for healthcare workers.

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