This audio is automatically generated. Please let us know if you have any comments.
CMS finalized a regulation Friday that includes a small increase in Medicare reimbursement for outpatient services next year, as well as policies to implement site-neutral payments and increase price transparency.
The agency will increase wages for outpatient care by 2.6% in 2026, including a 3.3% increase in the hospital market basket reduced by a 0.7 percentage point productivity adjustment. This is slightly higher than the 2.4% initially proposed by CMS this summer.
The rule also includes changes that require hospitals to publish more information about their prices in an effort to improve cost transparency for patients. Additionally, it plans to expand new site-neutral policies, in which hospital outpatient departments are paid at the same level as doctors’ offices.
“We continue to advance Medicare payment reform by advancing policies that help prevent services from being provided unnecessarily in hospitals when they can be safely provided in less intensive settings, streamlining hospital billing systems, and ensuring that patients receive transparent and accurate pricing information,” Chris Klomp, CMS deputy administrator and director of the Center for Medicare, said in a statement.
Hospital groups have called the final payment rule inadequate, arguing the sector faces significant financial pressures such as inflation and labor shortages.
The healthcare industry also said it had less time than usual to comply with the rule. The regulations were delayed, after a funding impasse centered on Affordable Care Act subsidies paralyzed the federal government for about six weeks. Last year’s outpatient payment rule was released on November 1.
“With implementation timelines now severely compressed, hospitals have little time to understand finalized changes, adjust systems, update billing processes, review budgets and train staff,” said Soumi Saha, senior vice president of government affairs at healthcare services company Premier, in a statement released Friday. “This last-minute rush creates operational chaos and increases administrative burden, making it harder for hospitals to focus on what matters most: providing high-quality patient care. »
Site-neutral policies, inpatient list only
Hospital outpatient departments currently receive higher reimbursement for providing the same services as free-standing doctor’s offices and ambulatory surgery centers — a policy that critics say increases costs for patients and for Medicare.
In the latest payment rule, CMS finalized a regulation that would reimburse hospital-owned off-campus outpatient services at the same rates as physician offices for drug administration services.
This change is expected to reduce outpatient spending by $290 million in 2026, with $220 million in savings returning to Medicare and $70 going to beneficiaries, according to CMS.
Additionally, the agency plans to phase out, over three years, the inpatient list, a list of surgical procedures that must be provided in hospitals. CMS will begin by eliminating 285 procedures, primarily musculoskeletal, next year.
The American Hospital Association has blasted the neutral policy changes, arguing that they ignore the differences between care delivery in hospital outpatient departments and other sites of care.
“The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than patients seen in independent physician offices,” Ashley Thompson, senior vice president of public policy analysis and development at the AHA, said in a statement.
Price transparency
The regulation will also require hospitals to publish actual price information, not estimates, to patients.
CMS has been trying for years to require hospitals to post publicly available information. information about their prices, but research has found that many hospitals have not complied with previous price transparency requirements.
Hospitals will be required to display prices in a standardized format so patients can see how much their care will cost. They will need to display the median amount allowed for a service, as well as the 10th and 90th percentile allowed amounts, in a machine-readable format.
The rule will go into effect on January 1, but CMS will delay implementing the changes until April 1.
340B
CMS is backtracking on a plan that would have accelerated recovery of funds from the 340B drug discount program, under which drugmakers are required to give providers who serve large numbers of low-income patients a discount on outpatient drugs.
After the Supreme Court ruled illegal a policy change from the first Trump administration that reduced the program’s drug reimbursement, CMS had to send $9 billion in lump sum payments to affected hospitals. However, the agency also estimated that hospitals received $7.8 billion more for non-drug services during that period.
To ensure the fix is budget neutral, CMS finalized a 0.5% reduction in the conversion factor for non-drug items and services for all hospitals until the regulator reaches the $7.8 billion threshold. The CMS estimates this would happen in 2041.
But in a rule proposed this summer, CMS decided to shorten that deadline, bringing the reduction to 2% starting next year. Hospitals decried the proposal, arguing that it punished providers for the CMS error.
In response to the comments, CMS said Friday it would not change the $340 billion recapture, which was 0.5%, at this time. However, the regulator said it plans to finalize a deeper reduction from 2027.
“We are grateful that the agency has accepted our position that an accelerated recovery of Remedy 340B would harm hospitals that relied on the previous timeline,” the AHA’s Thompson said in a statement. “However, we are concerned that he intends to move forward with an accelerated schedule next year. An accelerated schedule, whether now or in the future, is both bad policy and illegal.”
Hospital Star Rating
CMS also finalized a policy that would ensure that hospitals that are in the lowest quartile in terms of safety measures could not receive a 5-star rating in hospital quality measures. And, starting in 2027, hospitals that achieve safety scores in the lowest quartile will automatically receive a downgraded one-star rating.
Additionally, CMS will update quality reporting requirements to remove certain “burdensome” health equity and COVID-19 vaccination measures, and adopt a new measure that assesses wait times in emergency departments.
:max_bytes(150000):strip_icc()/Health-GettyImages-2235363670-fba43f1978a841afa750b646804b679e.jpg?w=390&resize=390,220&ssl=1 "12 foods more filling than bread")
