CMS ups hospital outpatient rates 2.6%, expands site-neutral payments in 2026: 14 notes
By Laura Dyrda and Alan Condon / November 21, 2025
CMS on Nov. 21 finalized its Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System rule for 2026, enacting reforms to boost price transparency and expand outpatient access.
Fourteen things to know:
Hospital outpatient departments
1. CMS is phasing out the inpatient-only list over a three-year period and expanding the ASC covered procedures list. The agency will remove 285 procedures, mostly musculoskeletal, from the inpatient-only list and add 289 procedures to the ASC covered list next year. The policy does allow Medicare to pay for procedures in the HOPD when clinically appropriate.
“We are strengthening Medicare’s foundation by protecting beneficiaries, eliminating fraud, and advancing medical innovation — all while maintaining strict provider accountability and responsible use of taxpayer funds,” CMS Administrator Mehmet Oz, MD, said. “These comprehensive reforms expand patient choice and establish the price transparency Americans need for confident healthcare decisions.”
2. CMS will continue its policy to exempt certain medical review activities related to the two-midnight policy for procedures removed from the inpatient only list throughout next year and into the future, until it’s determined the procedure is more common in ASCs than HOPDs for the Medicare population.
3. The agency also will raise outpatient payment rates by 2.6% in 2026 for hospitals that meet quality-reporting requirements. The increase reflects a 3.3% market basket update, offset by a 0.7 percentage-point productivity cut.
4. Next year, the hospital market basket update will be applied to ASC payment system rates and CMS will continue to study the migration of outpatient procedures. CMS initially updated the payment factor for five years beginning in the 2019 calendar year, but extended the observation period during the COVID-19 public health emergency.
5. CMS also will align payment rates for certain outpatient services delivered at hospital outpatient departments and off-campus facilities. The goal of the site-neutral payments is to avoid higher copays for patients based solely on care location.
“We continue to advance Medicare payment reform by advancing policies that help prevent services from unnecessarily being performed in hospitals when they can be safely provided in less intensive settings, streamlining hospital billing systems, and ensuring patients receive transparent, accurate pricing information,” said Chris Klomp, CMS deputy administrator and director of the Center for Medicare.
6. CMS will continue the two-tier payment system for intensive outpatient program services for mental illness or substance use disorder in HOPDs and community mental health centers. There will be one payment for days with three services per day and open for days with four or more services per day.
7. The agency projects the rule will save Medicare and beneficiaries $11 billion over the next 10 years by reducing unnecessary services and aligning payments with care costs.
Price transparency
8. Hospitals will now be required to post actual, consumer-friendly prices — not estimates — in standardized formats. Noncompliance will result in civil monetary penalties.
“This final rule from CMS closes the loopholes hospitals exploit to hide real prices and advances President Trump’s demand for radical hospital price transparency,” HHS Secretary Robert F. Kennedy, Jr., said in a Nov. 21 news release.
9. Beginning Jan. 1, 2026, hospitals will be required to include the median, 10th percentile and 90th percentile allowed amounts in their machine-readable files. They must also include the count of allowed amounts when changes are based on percentages or algorithms. CMS said it will delay enforcement of these requirements until April 1, 2026.
10. Hospitals must attest in their machine-readable files that the information provided is accurate, complete and current as of the date listed in the file. They must also include all payer-specific negotiated charges that can be expressed as a dollar amount and provide enough information for patients to calculate charges that cannot be directly expressed.
11. Hospitals will be required to include the name of their CEO, president or other leader who oversees the data encoding process to ensure accountability for the accuracy of the posted pricing data.
12. The agency is also mandating that hospitals encode their Type 2 national provider identifiers in machine-readable files to support comparison across healthcare datasets.
13. Hospitals that accept CMS’ determination of noncompliance and waive their right to an administrative law judge hearing may receive a 35% reduction in civil monetary penalties. This is not available to hospitals that fail to publish a machine-readable file or consumer-friendly pricing tools.
CMS Star Ratings
14. Starting in 2026, hospitals in the lowest quartile for safety performance will be ineligible for a 5-star rating. In future years, these hospitals will be automatically downgraded to one star.