Medicare Reshuffles Hospital Money While Teaching Hospital Goes Belly-Up
Published Date: 11/25/2025
Rule
Summary
Starting in 2026, Medicare is updating how it pays hospitals and surgery centers for outpatient care, making sure payments are fair and clear. Hospitals must keep sharing quality scores and prices so patients can shop smart, while a teaching hospital is closing and offering its spots to others. These changes affect hospitals, surgery centers, and patients, with new rules kicking in next year and some money adjustments to watch for.
Analyzed Economic Effects
10 provisions identified: 6 benefits, 1 costs, 3 mixed.
OPPS Payment Rates Up 2.6% in 2026
Starting January 1, 2026, Medicare is increasing Hospital Outpatient Prospective Payment System (OPPS) payment rates by an OPD fee schedule increase factor of 2.6 percent. CMS estimates total OPPS payments (including beneficiary cost sharing) for CY 2026 will be about $101.0 billion—roughly $8.0 billion higher than estimated CY 2025 OPPS payments.
ASC Payment Update: 2.6% Increase
For calendar year 2026, Medicare is increasing payment rates under the Ambulatory Surgical Center (ASC) payment system by 2.6 percent for ASCs that meet quality reporting requirements. CMS estimates total Medicare payments to ASCs for CY 2026 will be about $9.2 billion, an increase of roughly $450 million compared to estimated CY 2025 payments.
Many More Procedures Allowed at ASCs
Effective for CY 2026, CMS is expanding the ASC Covered Procedures List by adding 276 procedures under revised criteria and by adding 271 additional codes moved from the Inpatient-Only list. This change lets more procedures be performed in ASCs instead of inpatient hospital settings.
Phase-Out of Inpatient-Only (IPO) List Starts
CMS is phasing out the Inpatient-Only (IPO) list over three years beginning in CY 2026 by removing 285 mostly musculoskeletal services for CY 2026. Those services may be furnished and paid in outpatient settings going forward.
Market-Based MS-DRG Data Reporting Starts 2026
For cost reporting periods ending on or after January 1, 2026, hospitals must report the median of payer-specific negotiated charges by MS-DRG (from their most recent machine-readable file) on the Medicare cost report. CMS will use that market-based information to change the IPPS MS-DRG relative weight methodology beginning in FY 2029. CMS estimates this data collection will involve 3,038 hospitals × 20 hours each (60,760 annual burden hours) and an estimated cost of $4,857,458.20.
340B Remedy Offset and OPPS Conversion Factor Cut
CMS is applying a previously finalized 0.5 percentage point reduction to the OPPS conversion factor for non-drug items and services for hospitals to which the 340B remedy offset applies, and estimates the 340B remedy offset will reduce payments by $275 million in CY 2026 for affected hospitals.
Tc-99m Domestic Add-On Payment: $10 Per Dose
For CY 2026, CMS finalizes a $10 per dose add-on payment for radiopharmaceutical doses of technetium-99m (Tc-99m) produced from domestically produced molybdenum-99 (Mo-99). To qualify, at least 50 percent of the Mo-99 in the Tc-99m generator used for the dose must be domestically produced; CMS establishes HCPCS code C9176 for this add-on.
Hospital Price Transparency Data Changes
Beginning January 1, 2026 (with enforcement delayed until April 1, 2026), hospitals must report new machine-readable file elements when payer-specific negotiated charges are based on percentages or algorithms: the 10th percentile allowed amount, the median allowed amount (replacing the estimated allowed amount), the 90th percentile allowed amount, and the count of allowed amounts. Hospitals must also encode an attestation and the name of a senior official and include organizational Type 2 NPIs in the file.
Enforcement Change: CMP Reduction Option
Starting January 1, 2026, CMS will reduce a civil money penalty (CMP) by 35 percent in certain cases when a hospital admits it violated hospital price transparency requirements and waives its right to an ALJ hearing, to encourage faster settlement and payment of CMPs.
Hospital Quality Star Rating Emphasis on Safety
CMS is changing the Overall Hospital Quality Star Rating methodology to emphasize Safety of Care. For the 2026 rating, hospitals in the lowest quartile of Safety of Care (with at least three Safety of Care measures) will be limited to a maximum of four stars; starting with the 2027 rating, hospitals in the lowest Safety of Care quartile will have their star rating reduced by one star to a minimum of one star.
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