Proposed Rule2025-13360
Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Ratings; and Hospital Price Transparency
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Published
July 17, 2025
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This proposed rule would revise the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) payment system for calendar year 2026 based on our continuing experience with these systems. We also describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment systems. This proposed rule would also update and refine the requirements for the Hospital Outpatient Quality Reporting Program, Rural Emergency Hospital Quality Reporting Program, Ambulatory Surgical Center Quality Reporting Program, Overall Hospital Quality Star Rating, and hospitals to make public their standard charge information and enforcement of hospital price transparency. This rule also contains requests for information on measure concepts regarding Well-Being and Nutrition for consideration in future years for all three programs (OQR, REHQR, and ASCQR; expanding the method to control for unnecessary increases in the volume of covered OPD services to on- campus clinic visits; software as a service; and adjusting payment under the OPPS for services predominately performed in the ambulatory surgical center or physician office settings.
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[Federal Register Volume 90, Number 135 (Thursday, July 17, 2025)]
[Proposed Rules]
[Pages 33476-33865]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13360]
[[Page 33475]]
Vol. 90
Thursday,
No. 135
July 17, 2025
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410, 412, 415 et al.
45 CFR Part 180
Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment
and Ambulatory Surgical Center Payment Systems; Quality Reporting
Programs; Overall Hospital Quality Star Ratings; and Hospital Price
Transparency; Proposed Rule
Federal Register / Vol. 90 , No. 135 / Thursday, July 17, 2025 /
Proposed Rules
[[Page 33476]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 412, 413, 415, 416, and 419
Office of the Secretary
45 CFR Part 180
[CMS-1834-P]
RIN 0938-AV51
Medicare and Medicaid Programs: Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems; Quality
Reporting Programs; Overall Hospital Quality Star Ratings; and Hospital
Price Transparency
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare Hospital
Outpatient Prospective Payment System (OPPS) and the Medicare
Ambulatory Surgical Center (ASC) payment system for calendar year 2026
based on our continuing experience with these systems. We also describe
the changes to the amounts and factors used to determine the payment
rates for Medicare services paid under the OPPS and those paid under
the ASC payment systems. This proposed rule would also update and
refine the requirements for the Hospital Outpatient Quality Reporting
Program, Rural Emergency Hospital Quality Reporting Program, Ambulatory
Surgical Center Quality Reporting Program, Overall Hospital Quality
Star Rating, and hospitals to make public their standard charge
information and enforcement of hospital price transparency. This rule
also contains requests for information on measure concepts regarding
Well-Being and Nutrition for consideration in future years for all
three programs (OQR, REHQR, and ASCQR; expanding the method to control
for unnecessary increases in the volume of covered OPD services to on-
campus clinic visits; software as a service; and adjusting payment
under the OPPS for services predominately performed in the ambulatory
surgical center or physician office settings.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by September 15, 2025.
ADDRESSES: In commenting, please refer to file code CMS-1834-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1834-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1834-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Regulation coordination questions, contact Gina Aughenbaugh via
email at <a href="/cdn-cgi/l/email-protection#eba49e9f9b8a9f828e859fbbbbb8ab888698c5838398c58c849d"><span class="__cf_email__" data-cfemail="ce81bbbabeafbaa7aba0ba9e9e9d8eada3bde0a6a6bde0a9a1b8">[email protected]</span></a>.
Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-99m)
Derived from Domestically Produced Molybdenum-99, contact Au'Sha
Washington via email at <a href="/cdn-cgi/l/email-protection#debfabadb6bff0a9bfadb6b7b0b9aab1b09ebdb3adf0b6b6adf0b9b1a8"><span class="__cf_email__" data-cfemail="0d6c787e656c237a6c7e6564636a7962634d6e607e2365657e236a627b">[email protected]</span></a> or Leone Kisler at
<a href="/cdn-cgi/l/email-protection#fb979e94959ed5909288979e89bb989688d5939388d59c948d"><span class="__cf_email__" data-cfemail="0569606a6b602b6e6c76696077456668762b6d6d762b626a73">[email protected]</span></a>.
Adjusting Payment under the OPPS for Services Predominantly
Performed in the ASC or Physician Office Settings Request for
Information, contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#b0f5dcd9c3d59ef2d1c2c2d9ded7d5c2f0d3ddc39ed8d8c39ed7dfc6"><span class="__cf_email__" data-cfemail="d396bfbaa0b6fd91b2a1a1babdb4b6a193b0bea0fdbbbba0fdb4bca5">[email protected]</span></a>.
Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact
the HOP Panel mailbox at <a href="/cdn-cgi/l/email-protection#4e0f1e0d1e2f202b220e2d233d6026263d60292138"><span class="__cf_email__" data-cfemail="0d4c5d4e5d6c6368614d6e607e2365657e236a627b">[email protected]</span></a>.
Ambulatory Surgical Center Covered Procedures List (ASC CPL),
contact Abigail Cesnik via email at <a href="/cdn-cgi/l/email-protection#c180a3a8a6a0a8adef82a4b2afa8aa81a2acb2efa9a9b2efa6aeb7"><span class="__cf_email__" data-cfemail="f7b6959e90969e9bd9b49284999e9cb7949a84d99f9f84d9909881">[email protected]</span></a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
measures, contact Marsha Hertzberg via email at
<a href="/cdn-cgi/l/email-protection#df92beadacb7bef197baadaba5bdbaadb89fbcb2acf1b7b7acf1b8b0a9"><span class="__cf_email__" data-cfemail="fcb19d8e8f949dd2b4998e88869e998e9bbc9f918fd294948fd29b938a">[email protected]</span></a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
policies, contact Anita Bhatia via email at <a href="/cdn-cgi/l/email-protection#25644b4c51440b674d44514c44654648560b4d4d560b424a53"><span class="__cf_email__" data-cfemail="45042b2c31246b072d24312c24052628366b2d2d366b222a33">[email protected]</span></a>.
All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs
Provided by Indian Health Service (IHS) and Tribal Facilities, contact
Nate Vercauteren via email at <a href="/cdn-cgi/l/email-protection#6d230c19050c03433b081f0e0c1819081f08032d0e001e4305051e430a021b"><span class="__cf_email__" data-cfemail="a9e7c8ddc1c8c787ffccdbcac8dcddccdbccc7e9cac4da87c1c1da87cec6df">[email protected]</span></a>.
Blood and Blood Products, contact Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#e6a88f85898a83c8ab8794858995a6858b95c88e8e95c8818990"><span class="__cf_email__" data-cfemail="c28caba1adaea7ec8fa3b0a1adb182a1afb1ecaaaab1eca5adb4">[email protected]</span></a>.
Cancer Hospital Payments, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#6a3909051e1e443e0b060b0d0b2a09071944020219440d051c"><span class="__cf_email__" data-cfemail="81d2e2eef5f5afd5e0ede0e6e0c1e2ecf2afe9e9f2afe6eef7">[email protected]</span></a>.
CMS Web Posting of the OPPS and ASC Payment Files, contact Gil Ngan
via email at <a href="/cdn-cgi/l/email-protection#55123c397b1b32343b153638267b3d3d267b323a23"><span class="__cf_email__" data-cfemail="65220c094b2b02040b250608164b0d0d164b020a13">[email protected]</span></a>.
Composite APCs (Multiple Imaging and Mental Health) and
Comprehensive APCs (C-APCs), contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#1550797c66703b577467677c7b727067557678663b7d7d663b727a63"><span class="__cf_email__" data-cfemail="a0e5ccc9d3c58ee2c1d2d2c9cec7c5d2e0c3cdd38ec8c8d38ec7cfd6">[email protected]</span></a>.
Device-Intensive Status and No Cost/Full Credit and Partial Credit
Devices, contact Scott Talaga via email at <a href="/cdn-cgi/l/email-protection#6e3d0d011a1a403a0f020f090f2e0d031d4006061d40090118"><span class="__cf_email__" data-cfemail="491a2a263d3d671d2825282e28092a243a6721213a672e263f">[email protected]</span></a>.
Graduate Medical Education (GME) Accreditation, contact
<a href="/cdn-cgi/l/email-protection#5c181d1f1c3f312f7234342f723b332a"><span class="__cf_email__" data-cfemail="95d1d4d6d5f6f8e6bbfdfde6bbf2fae3">[email protected]</span></a>.
Hospital Outpatient Quality Reporting (OQR) Program policies,
contact Kimberly Go via email at <a href="/cdn-cgi/l/email-protection#145f7d79767166786d3a537b547779673a7c7c673a737b62"><span class="__cf_email__" data-cfemail="bdf6d4d0dfd8cfd1c493fad2fdded0ce93d5d5ce93dad2cb">[email protected]</span></a>.
Hospital Outpatient Quality Reporting (OQR) Program measures,
contact Kristina Rabarison via email at <a href="/cdn-cgi/l/email-protection#064d746f75726f68672854676467746f75696846656b75286e6e7528616970"><span class="__cf_email__" data-cfemail="e3a8918a90978a8d82cdb1828182918a908c8da3808e90cd8b8b90cd848c95">[email protected]</span></a>.
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#a2e7cecbd1c78ce0c3d0d0cbccc5c7d0e2c1cfd18ccacad18cc5cdd4"><span class="__cf_email__" data-cfemail="d491b8bda7b1fa96b5a6a6bdbab3b1a694b7b9a7fabcbca7fab3bba2">[email protected]</span></a>.
Hospital Price Transparency, contact Sarah Wheat via email at
<a href="/cdn-cgi/l/email-protection#6e3e1c070d0b3a1c0f001d1e0f1c0b000d1726011d1e071a0f022d060f1c090b1d2e0d031d4006061d40090118"><span class="__cf_email__" data-cfemail="97c7e5fef4f2c3e5f6f9e4e7f6e5f2f9f4eedff8e4e7fee3f6fbd4fff6e5f0f2e4d7f4fae4b9ffffe4b9f0f8e1">[email protected]</span></a>.
Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via
email at <a href="/cdn-cgi/l/email-protection#1c5d7e757b7d7570325f796f7275775c7f716f3274746f327b736a"><span class="__cf_email__" data-cfemail="69280b000e080005472a0c1a070002290a041a4701011a470e061f">[email protected]</span></a>.
Market-Based Data Collection and Market-Based MS-DRG Relative
Weight Methodology Issues, contact <a href="/cdn-cgi/l/email-protection#1f5b5e5c5f7c726c3177776c31787069"><span class="__cf_email__" data-cfemail="f2b6b3b1b2919f81dc9a9a81dc959d84">[email protected]</span></a>.
Medical Review of Certain Inpatient Hospital Admissions under
Medicare Part A for CY 2026 and Subsequent Years (2-Midnight Rule),
contact Nate Vercauteren via email at <a href="/cdn-cgi/l/email-protection#c886a9bca0a9a6e69eadbaaba9bdbcadbaada688aba5bbe6a0a0bbe6afa7be"><span class="__cf_email__" data-cfemail="a0eec1d4c8c1ce8ef6c5d2c3c1d5d4c5d2c5cee0c3cdd38ec8c8d38ec7cfd6">[email protected]</span></a>.
Medicare OPPS Drug Acquisition Cost Survey, contact Cory Duke via
email at <a href="/cdn-cgi/l/email-protection#abe8c4d9d285efdec0ceebc8c6d885c3c3d885ccc4dd"><span class="__cf_email__" data-cfemail="71321e03085f35041a1431121c025f1919025f161e07">[email protected]</span></a> or Gil Ngan at <a href="/cdn-cgi/l/email-protection#da9db3b6f494bdbbb49ab9b7a9f4b2b2a9f4bdb5ac"><span class="__cf_email__" data-cfemail="ce89a7a2e080a9afa08eada3bde0a6a6bde0a9a1b8">[email protected]</span></a> or
Nate Vercauteren at <a href="/cdn-cgi/l/email-protection#81cfe0f5e9e0efafd7e4f3e2e0f4f5e4f3e4efc1e2ecf2afe9e9f2afe6eef7"><span class="__cf_email__" data-cfemail="014f607569606f2f576473626074756473646f41626c722f6969722f666e77">[email protected]</span></a>.
Method to Control Unnecessary Increases in the Volume of Outpatient
Services, contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#70351c1903155e32110202191e17150230131d035e1818035e171f06"><span class="__cf_email__" data-cfemail="692c05001a0c472b081b1b00070e0c1b290a041a4701011a470e061f">[email protected]</span></a>.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at <a href="/cdn-cgi/l/email-protection#5506363a21217b013439343234153638267b3d3d267b323a23"><span class="__cf_email__" data-cfemail="c291a1adb6b6ec96a3aea3a5a382a1afb1ecaaaab1eca5adb4">[email protected]</span></a>.
Non-Opioid Policy or Implementation of Section 4135 of the
Consolidated Appropriations Act (CAA), 2023,
[[Page 33477]]
contact Cory Duke via email at <a href="/cdn-cgi/l/email-protection#df9cb0ada6f19baab4ba9fbcb2acf1b7b7acf1b8b0a9"><span class="__cf_email__" data-cfemail="afecc0ddd681ebdac4caefccc2dc81c7c7dc81c8c0d9">[email protected]</span></a> or Nicole Marcos
via email at <a href="/cdn-cgi/l/email-protection#f1bf98929e9d94dfbc9083929e82b1929c82df999982df969e87"><span class="__cf_email__" data-cfemail="f2bc9b919d9e97dcbf9380919d81b2919f81dc9a9a81dc959d84">[email protected]</span></a>.
OPPS Brachytherapy, contact Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#3f7c504d46117b4a545a7f5c524c1157574c11585049"><span class="__cf_email__" data-cfemail="33705c414a1d7746585673505e401d5b5b401d545c45">[email protected]</span></a> and Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#5f0c3c302b2b710b3e333e383e1f3c322c7137372c71383029"><span class="__cf_email__" data-cfemail="bcefdfd3c8c892e8ddd0dddbddfcdfd1cf92d4d4cf92dbd3ca">[email protected]</span></a>.
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact Erick Chuang via email at
<a href="/cdn-cgi/l/email-protection#c287b0aba1a9ec81aab7a3aca582a1afb1ecaaaab1eca5adb4"><span class="__cf_email__" data-cfemail="db9ea9b2b8b0f598b3aebab5bc9bb8b6a8f5b3b3a8f5bcb4ad">[email protected]</span></a> or Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#7b2818140f0f552f1a171a1c1a3b18160855131308551c140d"><span class="__cf_email__" data-cfemail="f6a595998282d8a2979a979197b6959b85d89e9e85d8919980">[email protected]</span></a>.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Gil Ngan via email at <a href="/cdn-cgi/l/email-protection#6a2d030644240d0b042a09071944020219440d051c"><span class="__cf_email__" data-cfemail="d592bcb9fb9bb2b4bb95b6b8a6fbbdbda6fbb2baa3">[email protected]</span></a>, Cory Duke
via email at <a href="/cdn-cgi/l/email-protection#75361a070c5b31001e10351618065b1d1d065b121a03"><span class="__cf_email__" data-cfemail="31725e43481f75445a5471525c421f5959421f565e47">[email protected]</span></a>, or Nate Vercauteren via email at
<a href="/cdn-cgi/l/email-protection#5d133c29353c33730b382f3e3c2829382f38331d3e302e7335352e733a322b"><span class="__cf_email__" data-cfemail="236d42574b424d0d754651404256574651464d63404e500d4b4b500d444c55">[email protected]</span></a>.
OPPS New Technology Procedures/Services, contact the New Technology
APC mailbox at <a href="/cdn-cgi/l/email-protection#420c27351627212a0312012332322e2b2123362b2d2c3102212f316c2a2a316c252d34"><span class="__cf_email__" data-cfemail="763813012213151e3726351706061a1f1517021f19180536151b05581e1e0558111900">[email protected]</span></a>.
OPPS Packaged Items/Services, contact Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#0c4f637e7522487967694c6f617f2264647f226b637a"><span class="__cf_email__" data-cfemail="d192bea3a8ff95a4bab491b2bca2ffb9b9a2ffb6bea7">[email protected]</span></a>.
OPPS Pass-Through Devices, contact the Device Pass-Through mailbox
at <a href="/cdn-cgi/l/email-protection#aaeecfdcc3c9cffafecbdadac6c3c9cbdec3c5c4d9eac9c7d984c2c2d984cdc5dc"><span class="__cf_email__" data-cfemail="4105243728222411152031312d28222035282e2f3201222c326f2929326f262e37">[email protected]</span></a>.
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova via email at <a href="/cdn-cgi/l/email-protection#105d7162797e713e5b6563787e79627f667150737d633e7878633e777f66"><span class="__cf_email__" data-cfemail="baf7dbc8d3d4db94f1cfc9d2d4d3c8d5ccdbfad9d7c994d2d2c994ddd5cc">[email protected]</span></a> or Tonya
Gierke at <a href="/cdn-cgi/l/email-protection#e6b289889f87c8a18f83948d83a6858b95c88e8e95c8818990"><span class="__cf_email__" data-cfemail="75211a1b0c145b321c10071e10351618065b1d1d065b121a03">[email protected]</span></a>.
Overall Hospital Quality Star Rating policies, contact Tyson
Nakashima Sr. via email <a href="/cdn-cgi/l/email-protection#a7f3ded4c8c989e9c6ccc6d4cfcecac6e7c4cad489cfcfd489c0c8d1"><span class="__cf_email__" data-cfemail="12466b617d7c3c5c737973617a7b7f7352717f613c7a7a613c757d64">[email protected]</span></a>.
Partial Hospitalization Program (PHP), Intensive Outpatient (IOP),
and Community Mental Health Center (CMHC) Issues, contact the PHP
Payment Policy Mailbox at <a href="/cdn-cgi/l/email-protection#a0f0e8f0f0c1d9cdc5ced4f0cfccc9c3d9e0c3cdd38ec8c8d38ec7cfd6"><span class="__cf_email__" data-cfemail="104058404071697d757e64407f7c79736950737d633e7878633e777f66">[email protected]</span></a>.
Remote Services, contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#d590b9bca6b0fb97b4a7a7bcbbb2b0a795b6b8a6fbbdbda6fbb2baa3"><span class="__cf_email__" data-cfemail="783d14110b1d563a190a0a11161f1d0a381b150b5610100b561f170e">[email protected]</span></a> or Nate Vercauteren via email at
<a href="/cdn-cgi/l/email-protection#064867726e676828506374656773726374636846656b75286e6e7528616970"><span class="__cf_email__" data-cfemail="642a05100c050a4a320116070511100116010a240709174a0c0c174a030b12">[email protected]</span></a>.
Rural Emergency Hospital Quality Reporting (REHQR) Program
policies, contact Anita Bhatia via email at <a href="/cdn-cgi/l/email-protection#42032c2b36236c002a23362b2302212f316c2a2a316c252d34"><span class="__cf_email__" data-cfemail="2a6b44435e4b0468424b5e434b6a49475904424259044d455c">[email protected]</span></a>.
Rural Emergency Hospital Quality Reporting (REHQR) Program
measures, contact Melissa Hager via email at <a href="/cdn-cgi/l/email-protection#5b163e373228283a75133a3c3e291b38362875333328753c342d"><span class="__cf_email__" data-cfemail="b7fad2dbdec4c4d699ffd6d0d2c5f7d4dac499dfdfc499d0d8c1">[email protected]</span></a>.
Skin Substitute Products, contact Susan Janeczko via email at
<a href="/cdn-cgi/l/email-protection#dd8ea8aebcb3f397bcb3b8bea7b6b29dbeb0aef3b5b5aef3bab2ab"><span class="__cf_email__" data-cfemail="33604640525d1d79525d565049585c73505e401d5b5b401d545c45">[email protected]</span></a>, Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#7c3f130e0552380917193c1f110f5214140f521b130a"><span class="__cf_email__" data-cfemail="72311d000b5c3607191732111f015c1a1a015c151d04">[email protected]</span></a>, or Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#1c52757f73707932517d6e7f736f5c7f716f3274746f327b736a"><span class="__cf_email__" data-cfemail="e5ab8c868a8980cba88497868a96a5868896cb8d8d96cb828a93">[email protected]</span></a>.
Software as a Service, contact Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#6826010b07040d4625091a0b071b280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="6e20070d01020b40230f1c0d011d2e0d031d4006061d40090118">[email protected]</span></a>.
Virtual Direct Supervision of Outpatient Therapeutic and Diagnostic
Services in Hospitals and CAHs, contact Nate Vercauteren via email at
<a href="/cdn-cgi/l/email-protection#3977584d515857176f5c4b5a584c4d5c4b5c57795a544a1751514a175e564f"><span class="__cf_email__" data-cfemail="6826091c000906463e0d1a0b091d1c0d1a0d06280b051b4600001b460f071e">[email protected]</span></a>.
All Other Issues Related to Hospital Outpatient Payments Not
Previously Identified, contact the OPPS mailbox at
<a href="/cdn-cgi/l/email-protection#531c26272332273a363d2703030013303e207d3b3b207d343c25"><span class="__cf_email__" data-cfemail="5a152f2e2a3b2e333f342e0a0a091a39372974323229743d352c">[email protected]</span></a>.
All Other Issues Related to the Ambulatory Surgical Center Payments
Not Previously Identified, contact the ASC mailbox at
<a href="/cdn-cgi/l/email-protection#cc8d9f8f9c9c9f8cafa1bfe2a4a4bfe2aba3ba"><span class="__cf_email__" data-cfemail="a2e3f1e1f2f2f1e2c1cfd18ccacad18cc5cdd4">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
Deregulation Request for Information (RFI): On January 31, 2025,
President Trump issued Executive Order (E.O.) 14192 ``Unleashing
Prosperity Through Deregulation,'' which states the Administration
policy to significantly reduce the private expenditures required to
comply with Federal regulations to secure America's economic prosperity
and national security and the highest possible quality of life for each
citizen. We would like public input on approaches and opportunities to
streamline regulations and reduce administrative burdens on providers,
suppliers, beneficiaries, and other interested parties participating in
the Medicare program. CMS has made available an RFI at <a href="https://www.cms.gov/medicare-regulatory-relief-rfi">https://www.cms.gov/medicare-regulatory-relief-rfi</a>. Please submit all comments
in response to this request for information through the provided
weblink.
Addenda Available Only Through the Internet on the CMS Website
In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the calendar year
(CY) 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear
in the Federal Register as part of the annual OPPS/ASC proposed and
final rules to decrease administrative burden and reduce costs
associated with publishing lengthy tables. Instead, these Addenda are
published and available only on the CMS website. The Addenda relating
to the OPPS are available at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>.
The Addenda relating to the ASC payment system are available at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices</a>.
Current Procedural Terminology (CPT) Copyright Notice
Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2025 American Medical Association (AMA). All Rights
Reserved. CPT is a registered trademark of the AMA. Applicable Federal
Acquisition Regulations and Defense Federal Acquisition Regulations
apply.
Table of Contents
I. Summary and Background
A. Executive Summary of This Document
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel)
F. Public Comments Received on the CY 2025 OPPS/ASC Final Rule
With Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default Cost-to-Charge Ratios
(CCRs)
E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs)
and Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2026
F. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2026
G. Proposed Hospital Outpatient Outlier Payments
[[Page 33478]]
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New and Revised HCPCS Codes
B. OPPS Changes--Variations Within APCs
C. New Technology APCs
D. Universal Low Volume APC Policy for Clinical and
Brachytherapy APCs
E. APC-Specific Policies
F. Comment Solicitation on Payment Policy for Software as a
Service (SaaS)
G. Continuation of Payment Policy for Radiation Therapy Services
Furnished at Nonexcepted Off-Campus Provider Based Departments
(PBDs)
IV. OPPS Payment for Devices
A. Pass-Through Payment for Devices
B. Device-Intensive Procedures
V. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Payment Status
C. Notice of Intent To Conduct Medicare OPPS Drugs Acquisition
Cost Survey
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Amount of Additional Payment and Limit on Aggregate Annual
Adjustment
B. Proposed Estimate of Pass-Through Spending for CY 2026
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
VIII. Payment for Partial Hospitalization and Intensive Outpatient
Services
A. Background
B. Coding and Billing for PHP and IOP Services Under the OPPS
C. Proposed CY 2026 Payment Rates for PHP and IOP
D. Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
B. Current Methodology for Identifying Appropriate Changes to
the IPO List
C. Proposed CY 2026 Changes to IPO List
X. Nonrecurring Policy Changes
A. Method To Control Unnecessary Increases in the Volume of
Outpatient Services Furnished in Excepted Off-Campus Provider-Based
Departments (PBDs)
B. Request for Information: Adjusting Payment Under the OPPS for
Services Predominately Performed in the Ambulatory Surgical Center
or Physician Office Settings
C. Virtual Direct Supervision of Cardiac Rehabilitation (CR),
Intensive Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation
(PR) Services and Diagnostic Services Furnished to Hospital
Outpatients
D. Medical Review of Certain Inpatient Hospital Admissions Under
Medicare Part A for CY 2026 and Subsequent Years
E. Coding and Payment for Category B IDE Devices and Studies
XI. Proposed CY 2026 OPPS Payment Status and Comment Indicators
A. Proposed CY 2026 OPPS Payment Status Indicator Definitions
B. Proposed CY 2026 Comment Indicator Definitions
XII. MedPAC Recommendations
A. OPPS Payment Rates Update
B. Medicare Safety Net Index
XIII. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
A. Background, Legislative History, Statutory Authority, and
Prior Rulemaking for the ASC Payment System
B. Proposed ASC Treatment of New and Revised Codes
C. Proposed Payment Policies Under the ASC Payment System
D. Proposed Additions to ASC Covered Surgical Procedures and
Covered Ancillary Services Lists
E. Proposed CY 2026 Non-Opioid Policy for Pain Relief Under the
OPPS and ASC Payment System
F. Proposed New Technology Intraocular Lenses (NTIOLs)
G. Proposed Calculation of the ASC Payment Rates and the ASC
Conversion Factor
XIV. Cross-Program Proposals for the Hospital Outpatient Quality
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR),
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
A. Background
B. Measure Concepts Under Consideration for Future Years in the
Hospital OQR, REHQR, and ASCQR Programs-Request for Information
(RFI): Well-Being and Nutrition
C. Proposed Changes to the Hospital OQR, REHQR, and ASCQR
Program Measure Sets
D. Proposed Updates to the Extraordinary Circumstances Exception
(ECE) Policy for the Hospital OQR, REHQR, and ASCQR Programs
XV. Hospital Outpatient Quality Reporting (OQR) Program
A. Background and History of the Hospital OQR Program
B. Proposed Changes to the Hospital OQR Program Measure Set
C. Proposed Updates to the Form, Manner, and Timing of Hospital
OQR Program Data Submission
D. Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Program Requirements for the CY 2026 Payment
Determination
XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program
A. Background and History of the REHQR Program
B. Proposed Changes to the REHQR Program Measure Set R-C Pages
C. Proposed Updates to the Form, Manner, and Timing of REHQR
Program Data Submission
XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program
A. Background and History of the ASCQR Program
B. Proposed Changes to the ASCQR Program Measure Set
C. Proposed Updates to the Form, Manner, and Timing of ASCQR
Program Data Submission
D. Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
XVIII. Overall Hospital Quality Star Rating Modification To
Emphasize the Safety of Care Measure Group
A. Summary
B. Background
C. Current Overall Hospital Quality Star Rating Methodology
(Sec. 412.190)
D. Proposed Modification to the Overall Hospital Quality Star
Rating Methodology
XIX. Updates to Requirements for Hospitals To Make Public a List of
Their Standard Charges
A. Introduction and Overview
B. Proposal To Modify the Requirements for Making Public
Hospital Standard Charges at 45 CFR 180.50
C. Proposal To Improve and Enhance Enforcement
XX. Proposed Market-Based Medicare Severity-Diagnosis Related Groups
(MS-DRG) Relative Weight Data Collection and Change in Methodology
for Calculating MS-DRG Relative Weights Under the Inpatient
Prospective Payment System
A. Overview
B. Factors Considered
C. Market-Based MS-DRG Relative Weight Estimation
XXI. Graduate Medical Education Accreditation
XXII. Collection of Information Requirements
A. ICRs for the Hospital Outpatient Quality Reporting (OQR)
Program
B. ICRs for the Rural Emergency Hospital Quality Reporting
(REHQR) Program
C. ICRs for the Ambulatory Surgical Center Quality Reporting
(ASCQR) Program
D. Summary of Information Collection Burden Estimates for the
Overall Hospital Quality Star Rating
E. ICRs for Payer-Specific Negotiated Charges Data Collection
F. ICRs for Medicare OPPS Drug Acquisition Cost Survey
G. ICRs for Hospital Price Transparency
XXIII. Files Available to the Public via the Internet
XXIV. Response to Comments
XXV. Economic Analyses
A. Statement of Need
B. Overall Impact of Provisions of This Proposed Rule
C. Detailed Economic Analyses
D. Regulatory Review Cost Estimation
E. Regulatory Flexibility Act (RFA) Analysis
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
H. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
[[Page 33479]]
I. Summary and Background
A. Executive Summary of this Document
1. Purpose
We propose to update the payment policies and payment rates for
services furnished to Medicare beneficiaries in hospital outpatient
departments (HOPDs) and ambulatory surgical centers (ASCs), beginning
January 1, 2026. Section 1833(t) of the Social Security Act (the Act)
requires us to annually review and update the payment rates for
services payable under the Hospital Outpatient Prospective Payment
System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires
the Secretary of the Department of Health and Human Services (the
Secretary) to review certain components of the OPPS not less often than
annually, and to revise the groups, the relative payment weights, and
the wage and other adjustments to take into account changes in medical
practice, changes in technology, and the addition of new services, new
cost data, and other relevant information and factors. In addition,
under section 1833(i)(D)(v) of the Act, we annually review and update
the ASC payment rates. This proposed rule also includes additional
policy changes made in accordance with our experience with the OPPS and
the ASC payment system and recent changes in our statutory authority.
We describe these and various other statutory authorities in the
relevant sections of this proposed rule. In addition, this proposed
rule would update the requirements for the Hospital Outpatient Quality
Reporting (OQR), the Rural Emergency Hospital Quality Reporting
(REHQR), the Ambulatory Surgical Center Quality Reporting (ASCQR)
Programs, and Overall Hospital Quality Star Rating. Finally, we would
also update and refine the requirements for hospitals to make public
their standard charges and CMS enforcement of hospital price
transparency (HPT) regulations.
Please note, some sections of this proposed rule contain a request
for information (RFI). In accordance with the implementing regulations
of the Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR
1320.3(h)(4), these general solicitations are exempt from the PRA.
Facts or opinions submitted in response to general solicitations of
comments from the public, published in the Federal Register or other
publications, regardless of the form or format thereof, provided that
no person is required to supply specific information pertaining to the
commenter, other than that necessary for self-identification, as a
condition of the agency's full consideration, are not generally
considered information collections and therefore not subject to the
PRA.
Respondents are encouraged to provide complete but concise
responses. These RFIs are issued solely for information and planning
purposes; they do not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. These RFIs do not
commit the U.S. Government to contract for any supplies or services or
make a grant award. Further, CMS is not seeking proposals through these
RFIs and will not accept unsolicited proposals. Responders are advised
that the U.S. Government will not pay for any information or
administrative costs incurred in response to these RFIs; all costs
associated with responding to these RFIs will be solely at the
interested party's expense. Not responding to these RFIs does not
preclude participation in any future procurement, if conducted. It is
the responsibility of the potential responders to monitor these RFI
announcements for additional information pertaining to these requests.
Please note that CMS will not respond to questions about the policy
issues raised in these RFIs. CMS may or may not choose to contact
individual responders. Such communications would only serve to further
clarify written responses. Contractor support personnel may be used to
review RFI responses. Responses to this notice are not offers and
cannot be accepted by the U.S. Government to form a binding contract or
issue a grant. Information obtained as a result of these RFIs may be
used by the U.S. Government for program planning on a non-attribution
basis. Respondents should not include any information that might be
considered proprietary or confidential. These RFIs should not be
construed as a commitment or authorization to incur cost for which
reimbursement would be required or sought. All submissions become U.S.
Government property and will not be returned. CMS may publicly post the
comments received, or a summary thereof.
2. Summary of the Major Provisions
<bullet> OPPS Update: For CY 2026, we propose to increase the
payment rates under the OPPS by an Outpatient Department (OPD) fee
schedule increase factor of 2.4 percent. This increase factor is based
on the proposed inpatient hospital market basket percentage increase of
3.2 percent for inpatient services paid under the hospital inpatient
prospective payment system (IPPS) reduced by a proposed productivity
adjustment of 0.8 percentage point. Based on this update, we estimate
that total payments to OPPS providers (including beneficiary cost
sharing and estimated changes in enrollment, utilization, and case mix)
for calendar year (CY) 2026 will be approximately $100.0 billion, an
increase of approximately $8.1 billion compared to estimated CY 2025
OPPS payments.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals that fail to meet the hospital
outpatient quality reporting requirements by applying a reporting
factor of 0.9805 to the OPPS payments and copayments for all applicable
services. We note that under the proposed 340B remedy offset, payments
for services at hospitals subject to the 340B remedy offset will be
reduced by 2.0 percentage points.
<bullet> ASC Payment Update: For CYs 2019 through 2023, we adopted
a policy to update the ASC payment system using the hospital market
basket update. In light of the impact of the COVID-19 public health
emergency (PHE) on healthcare utilization, we extended our policy to
update the ASC payment system using the hospital market basket update
an additional 2 years--through CYs 2024 and 2025. In this proposed
rule, we propose to extend our utilization of the hospital market
basket update as the update factor for the ASC payment system for 1
additional year (through CY 2026). Using the hospital market basket
update, for CY 2026, we propose to increase payment rates under the ASC
payment system by 2.4 percent for ASCs that meet the quality reporting
requirements under the ASCQR Program. This increase is based on a
proposed hospital market basket percentage increase of 3.2 percent
reduced by a proposed productivity adjustment of 0.8 percentage point.
Based on this proposed update, we estimate that total payments to ASCs
(including beneficiary cost sharing and estimated changes in
enrollment, utilization, and case-mix) for CY 2026 will be
approximately $9.2 billion, an increase of approximately $480 million
compared to estimated CY 2025 Medicare payments.
<bullet> Device Pass-Through Payment Applications: For CY 2026, we
received 7 complete applications for device pass-through payments. We
solicit public comment on these applications and will make final
determinations on these applications in the CY 2026 OPPS/ASC final rule
with comment period.
<bullet> Changes to the List of ASC Covered Surgical Procedures and
Ancillary
[[Page 33480]]
Services Lists: For CY 2026, we propose to expand the ASC CPL by
revising the criteria under Sec. 416.166 to modify the general
standard criteria and to eliminate five of the general exclusion
criteria, moving them into a new section as nonbinding physician
considerations for patient safety. We also propose to add 276
procedures to the ASC CPL based on these criteria changes and add an
additional 271 codes to the ASC CPL that are proposed for removal from
the IPO list for CY 2026.
<bullet> Changes to the Inpatient Only (IPO) List: For CY 2026, we
propose to phase out the IPO list over 3 years, beginning with the
removal of 285 mostly musculoskeletal services for CY 2026.
<bullet> Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-
99m) Derived from Domestically Produced Molybdenum-99 (Mo-99): In the
CY 2025 OPPS/ASC final rule with comment period, we finalized that for
CY 2026 the add-on payment for radiopharmaceuticals produced without
the use of Tc-99m derived from non-Highly Enriched Uranium sources
would be replaced with an add-on payment for radiopharmaceuticals that
use Tc-99m derived from domestically produced Mo-99. For CY 2026, we
propose a $10 per dose amount for this add-on payment, and that at
least 50 percent of the Mo-99 used in the Tc-99m generator that
produces a dose of Tc-99m must be domestically produced for the dose to
qualify for the add-on payment. We also propose to codify our
definition for domestically produced Mo-99, and to establish new HCPCS
C-code C917X (Tc-99m from domestically produced non-HEU Mo-99, [minimum
50 percent], full cost recovery add-on, per study dose).
<bullet> Cross-Program Proposals for the Hospital Outpatient
Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting
(REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR)
Programs: We propose to remove: (1) the COVID-19 Vaccination Coverage
Among Healthcare Personnel (HCP) measure from the Hospital OQR and
ASCQR Program measure sets beginning with the CY 2024 reporting period/
CY 2026 payment determination; (2) the Hospital Commitment to Health
Equity (HCHE) measure from the Hospital OQR and REHQR Program measure
sets and the Facility Commitment to Health Equity (FCHE) measure from
the ASCQR Program measure set beginning with the CY 2025 reporting
period/CY 2027 payment or program determination; and (3) the Screening
for Social Drivers of Health (SDOH) measure and the Screen Positive
Rate for SDOH measure from the Hospital OQR, REHQR, and ASCQR Program
measure sets beginning with the CY 2025 reporting period. Additionally,
we seek comments regarding measured concepts related to well-being and
nutrition for future consideration in the Hospital OQR, REHQR, and
ASCQR Programs. We also propose to update and codify the Extraordinary
Circumstance Exception (ECE) policy to clarify that CMS has the
discretion to grant an extension in response to an ECE request for the
Hospital OQR, REHQR, and ASCQR Programs.
<bullet> Hospital Outpatient Quality Reporting (OQR) Program: In
addition to the cross-program measures and policies, we propose to: (1)
adopt the Emergency Care Access & Timeliness eCQM with one year of
voluntary reporting for the CY 2027 reporting period followed by
mandatory reporting for the CY 2028 reporting period/CY 2030 payment
determination and subsequent years; (2) remove the Median Time from
Emergency Department (ED) Arrival to ED Departure for Discharged ED
Patients and the Left Without Being Seen measures beginning with the CY
2028 reporting period/2030 payment determination, contingent upon
finalization of adoption of the Emergency Care Access and Timeliness
eCQM; and (3) modify the Excessive Radiation Dose or Inadequate Image
Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital
Level--Outpatient) measure (Excessive Radiation eCQM) from mandatory
reporting beginning with the CY 2027 reporting period to continue
voluntary reporting in the CY 2027 reporting period and subsequent
years.
<bullet> Rural Emergency Hospital Quality Reporting (REHQR)
Program: In addition to the cross-program measures and policies, we
propose to: (1) adopt the Emergency Care Access & Timeliness eCQM
beginning with the CY 2027 reporting period/CY 2029 program
determination; and (2) establish related eCQM data submission and
reporting requirements, including that REHs would be provided the
option of reporting either the Emergency Care Access and Timeliness
eCQM or the Median Time from Emergency Department (ED) Arrival to ED
Departure for Discharged ED Patients measure beginning with the CY 2027
reporting period/CY 2029 program determination.
<bullet> Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: In addition to the cross-program measures and policies, we
propose to: (1) adopt the Patient Understanding of Key Information
Related to Recovery After a Facility-Based Outpatient Procedure or
Surgery, Patient Reported Outcome-Based Performance Measure
(Information Transfer PRO-PM) beginning with voluntary reporting for
the CY 2027 and CY 2028 reporting periods followed by mandatory
reporting beginning with the CY 2029 reporting period/CY 2031 payment
determination.
<bullet> Overall Hospital Quality Star Rating Modification to
Emphasize the Safety of Care Measure Group: We propose updating the
methodology that will be used to calculate the Overall Hospital Quality
Star Rating through implementation of a 2-stage methodologic update. We
are updating the methodology to emphasize the importance of the Safety
of Care measure group, particularly to address the issue of hospitals
receiving a high Star Rating despite performing in the lowest quartile
of the Safety of Care measure group. The first-stage methodology update
would be a narrow but focused transitional step that would limit
hospitals to a maximum of four out of five stars (based on at least
three Safety of Care measure scores) if they performed in the lowest
quartile of the Safety of Care measure group in the 2026 Overall
Hospital Quality Star Rating. The second stage of the methodology
update would replace the first-stage update and reduce the Star Rating
of any hospital in the lowest quartile of Safety of Care (based on at
least three Safety of Care measure scores) by one star, to a minimum 1-
star rating for the 2027 Overall Hospital Quality Star Rating and later
years. These changes will prioritize safety for both patients and
healthcare workers and reflect CMS' fundamental commitment to ensuring
high-quality, safe care as a central component of health system
performance.
<bullet<ls-thn-eq> Partial Hospitalization and Intensive
Outpatient: We propose to calculate the CY 2026 Community Mental Health
Center (CMHC) Partial Hospitalization Program (PHP), and Intensive
Outpatient Program (IOP) costs based on 40 percent of the corresponding
proposed hospital-based PHP and IOP costs. This change would resolve a
cost inversion in CMHC cost data that resulted in higher geometric mean
costs for 3-service days than for 4-service days. It would also
stabilize rates for CMHCs by basing them on data from a much larger set
of providers while preserving the adjustment for the structural
differences between CMHC and hospital costs.
<bullet<ls-thn-eq> Notice of Intent to Conduct a Medicare OPPS
Drugs Acquisition Cost
[[Page 33481]]
Survey: Section 1833(t)(14)(D)(ii) of the Act requires the Secretary to
periodically conduct surveys of hospital acquisition costs for each
specified covered outpatient drug for use in setting the payment rates
for such drugs. Additionally, on April 18, 2025, President Trump signed
Executive Order (E.O.) 14273, ``Lowering Drug Prices by Once Again
Putting Americans First.'' Section 5 of the E.O., ``Appropriately
Accounting for Acquisition Costs of Drugs in Medicare,'' which directs
the Secretary of HHS to publish in the Federal Register a plan to
conduct a survey under section 1833(t)(14)(D)(ii) of the Act so he can
determine the hospital acquisition cost for covered outpatient drugs at
hospital outpatient departments. Accordingly, we will be conducting a
survey, with the survey submission window opening by early CY 2026, of
the acquisition costs for each separately payable drug acquired by all
hospitals paid under the OPPS. We intend for the survey to be completed
in time for the survey results to be used to inform policymaking
beginning with the CY 2027 OPPS/ASC proposed rule.
<bullet> Two-Midnight Rule Medical Review Activities Exemptions:
For CY 2026, we propose to continue our existing policy exempting
procedures that are removed from the inpatient only (IPO) list under
the OPPS from certain medical review activities related to the two-
midnight policy. Under this policy, procedures removed from the IPO
list are exempted from site-of-service claim denials, Beneficiary and
Family-Centered Care Quality Improvement Organization (BFCC-QIO)
referrals to Recovery Audit Contractor (RAC) for persistent
noncompliance with the 2-midnight rule, and RAC reviews for ``patient
status'' (that is, site-of-service) until claims data demonstrates that
the procedures are more commonly billed in the outpatient setting than
the inpatient setting. We also propose to revise 42 CFR 412.3(d)(2) for
clarity.
<bullet<ls-thn-eq> Virtual Direct Supervision of Pulmonary
Rehabilitation (PR), Coronary Rehabilitation (CR), Intensive Coronary
Rehabilitation and Diagnostic Services. For CY 2026, we propose to
revise Sec. 410.27(a)(1)(iv)(B)(1) and Sec. 410.28(e)(2)(iii) to make
the availability of the direct supervision of CR, ICR, PR services and
diagnostic services via audio-video real-time communications technology
(excluding audio-only) permanent, except for diagnostic services that
have a global period indicator of 010 or 090.
<bullet<ls-thn-eq> Prospective Adjustment to Payments for Non-Drug
Items and Services to Offset the Increased Payments for Non-Drug Items
and Services Made in CY 2018 Through CY 2022 as a Result of the 340B
Payment Policy. For CY 2026, we propose to revise the reduction to the
OPPS conversion factor under Sec. 419.32(b)(1)(iv)(B)(12) used to
determine the payment amounts for non-drug items and services for
hospitals for whom this adjustment applies from 0.5 percent to 2
percent. The Remedy for the 340B-Acquired Drug Payment Policy for
Calendar Years 2018-2022 (88 FR 77150) codified a 0.5 percent reduction
in the OPPS conversion factor applicable to non-drug items and
services, excluding hospitals that enrolled in Medicare after January
1, 2018. This 0.5 percent reduction would remain in effect until the
estimated payment reduction reached the estimated $7.8 billion of
increased non-drug item and services payments made from CY 2018 through
CY 2022, which we estimated would occur in CY 2041. This prospective
offset aimed to balance the goal of restoring hospitals to their
financial position had the original 340B policy never existed, while
avoiding burdening them with an immediate single year recovery. After
subsequent reconsideration of balancing these two goals, we have
determined a shorter timeframe to be more appropriate. This proposed 2
percent reduction would remain in effect for certain hospitals until
the estimated payment reduction reaches $7.8 billion, which we estimate
will occur in CY 2031.
<bullet<ls-thn-eq> Payment for Skin Substitute Products under the
OPPS. For CY 2026, we propose to separately pay for the provision of
certain groups of skin substitute products as supplies when they are
used during a covered application procedure paid under the PFS in the
non-facility setting or under the OPPS. We propose to group skin
substitutes that are not drugs or biologicals using three FDA
regulatory categories (PMAs, 510(k)s, and 361 HCT/Ps) to set payment
rates. To effectuate this categorization into a payment policy under
the OPPS, we propose to create three new APCs for HCPCS codes that
describe skin substitute products organized by clinical and resource
similarity. These three APCs will divide skin substitutes by their FDA
regulatory pathway. Specifically, we propose to create: APC 6000 (PMA
Skin Substitute Products); APC 6001 (510(k) Skin Substitute Products);
and APC 6002 (361 HCT/P Skin Substitute Products). This proposal would
result in an initial payment rate of $125.38 for each of the new
proposed APCs. We propose implementing this policy in both the non-
facility, ambulatory surgical center setting, and outpatient hospital
settings.
<bullet<ls-thn-eq> Method to Control Unnecessary Increases in the
Volume of Outpatient Services Furnished in Excepted Off-Campus
Provider-Based Departments (PBDs): For CY 2026, we propose to use our
authority under section 1833(t)(2)(F) of the Act to apply the Physician
Fee Schedule equivalent rate for any HPCPCs codes assigned to the drug
administration services APCs, when provided at an off-campus PBD
excepted from section 1833(t)(21) of the Act. We propose to exempt
rural Sole Community Hospitals from this method to control the
unnecessary volume of drug administration services. Finally, we are
requesting information on expanding our volume control method to on-
campus clinic visits.
<bullet<ls-thn-eq> Request for information on Adjusting Payment
under the OPPS for Services Predominately Performed in the Ambulatory
Surgical Center or Physician Office Settings: For CY 2026, we are
requesting information for future rulemaking on the development of a
systematic process for identifying ambulatory services at high risk of
shifting to the hospital setting based on financial incentives rather
than medical necessity and adjusting payments according.
<bullet<ls-thn-eq> Request for information on Software as a
Service: We are issuing a request for information on alternative and
consistent payment methods for software as a service (SaaS) services
under the OPPS to consider for future rulemaking. We intend to identify
whether specific adjustments to our payment policies for SaaS services
are needed to more accurately and appropriately pay for these products
and services across settings of care.
<bullet<ls-thn-eq> Proposed Market-Based MS-DRG Relative Weight
Data Collection and Change in Methodology for Calculating MS-DRG
Relative Weights Under the Inpatient Prospective Payment System: As
discussed in section XX. of the proposed rule, in order to reduce the
Medicare program's reliance on the hospital chargemaster, and to
support the development of a market-based approach to payment under the
Medicare FFS system, we propose that hospitals would be required to
report certain market-based payment rate information on their Medicare
cost report for cost reporting periods ending on or after January 1,
2026, to be used in a proposed change to the methodology for
calculating the IPPS MS-DRG relative weights to reflect
[[Page 33482]]
relative market-based pricing. Specifically, the market-based rate
information we propose to collect on the Medicare cost report would be
the median of the payer-specific negotiated charges by MS-DRG, for a
hospital's MA organizations (MAOs). As described further in section
XX.C.2. of this proposed rule, we specifically propose that for the
purposes of reporting the data on the cost report, hospitals would
report the median of the payer-specific negotiated charges for an MS-
DRG that the hospital has disclosed for all of its MAOs on the most
recent version of the machine-readable file (MRF) that the hospital is
required to disclose under the hospital price transparency regulations
at 45 CFR part 180. We also propose a change to the methodology for
calculating the IPPS MS-DRG relative weights to incorporate this
market-based rate information, beginning in FY 2029. This proposed MS-
DRG relative weight methodology would utilize the proposed median
payer-specific negotiated charge information, collected on the cost
report, for calculating the MS-DRG relative weights.
<bullet<ls-thn-eq> Graduate Medical Education (GME) Accreditation:
In order to ensure that accreditation for approved medical residency
programs is in compliance with applicable laws related to race-based
admission policies and to improve the accreditation process, we propose
that accreditors may not require as part of accreditation, or otherwise
encourage institutions to put in place, diversity, equity, and
inclusion programs that encourage unlawful discrimination on the basis
of race or other violations of Federal law. We also note that the
Secretary may recognize other organizations that meet or exceed
Medicare's requirements as accreditors in order to increase the
potential for competition in the accreditation space and improve the
quality of the accreditation process. The effective date of this
proposal would be January 1, 2026.
<bullet<ls-thn-eq> Proposed Updates to Requirements for Hospitals
to Make Public a List of Their Standard Charges: We propose amendments
to the hospital price transparency (HPT) regulations to enhance clarity
and standardization in hospital pricing disclosures. Specifically, we
propose revisions to Sec. 180.20 to add definitions for ``tenth (10th)
percentile allowed amount,'' ``median allowed amount,'' and ``ninetieth
(90th) percentile allowed amount,'' to more accurately reflect the
distribution of actual amounts that the hospital has received for an
item or service. In tandem with this, we propose revisions to Sec.
180.50 to remove the requirement for hospitals to encode the estimated
allowed amount and instead require hospitals, beginning January 1,
2026, to disclose the 10th percentile, median, and 90th percentile
allowed amounts in machine-readable files (MRFs) when standard charges
are based on percentages or algorithms, as well as the count of allowed
amounts. We also propose that hospitals should use EDI 835 transaction
remittance advice (ERA) transaction data to calculate and encode these
values, and we propose specific instructions to hospitals with regard
to the methodology, including lookback period, that should be used to
calculate these amounts. We propose revisions to Sec. 180.50(a)(3) to
update the attestation language hospitals must include in the MRF and
to require hospitals to encode the name of the chief executive officer,
president or senior hospital official designated to oversee the
encoding of true, accurate, and complete data in the MRF. We also
propose revisions to Sec. 180.50(b)(2)(i)(A) to require hospitals,
beginning January 1, 2026, to encode in a newly created general data
element in the MRF their Type 2 (organizational) National Provider
Identifier(s) (NPI). Finally, to encourage faster resolution and
payment of CMPs and in exchange for a hospital's admission of having
violated HPT requirements, we propose to update Sec. 180.90 to allow
hospitals, under certain circumstances, the opportunity to have the
amount of a CMP reduced by 35 percent where the hospital waives its
right to an ALJ hearing. These proposed changes aim to improve price
transparency, facilitate efficient enforcement, and empower consumers
with actionable pricing information.
3. Summary of Costs and Benefits
In section XXV. of this proposed rule, we set forth a detailed
analysis of the regulatory and Federalism impacts that the proposed
changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of all OPPS Changes
Table 112 in section XXV.C. of this proposed rule displays the
distributional impact of all the OPPS changes on various groups of
hospitals and CMHCs for CY 2026 compared to all estimated OPPS payments
in CY 2025. We estimate that the proposed policies in this proposed
rule would result in a 1.9 percent increase in OPPS payments to
providers for services prior to the 340B remedy offset. We estimate
that total OPPS payments for CY 2026, including beneficiary cost-
sharing, to the approximately 4,000 facilities paid under the OPPS
(including general acute care hospitals, children's hospitals, cancer
hospitals, and CMHCs) would increase by approximately $1.61 billion
compared to CY 2025 payments due to the OPD update, excluding changes
in enrollment, utilization, and case-mix. However, for providers
subject to the 340B remedy offset, the 340B remedy offset is estimated
to reduce payments by $1.1 billion in CY 2026.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs have historically only been paid for partial
hospitalization services under the OPPS. Beginning CY 2024, they are
also paid for IOP services under the OPPS. Based on our proposal to
calculate CMHC PHP and IOP costs based on 40 percent of the
corresponding proposed hospital-based PHP and IOP costs, we estimate a
0.6 percent increase in CY 2026 payments to CMHCs relative to their CY
2025 payments.
b. Impacts of the Updated Wage Indexes
We estimate that our update of the wage indexes based on the fiscal
year (FY) 2026 IPPS proposed rule wage indexes will result in a 0.1
percent increase for urban hospitals under the OPPS and a 0.4 percent
increase for rural hospitals. These wage indexes include continued
implementation of the Office of Management and Budget (OMB) labor
market area delineations based on 2020 Decennial Census data, with
updates, as discussed in section II.C. of this proposed rule.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
For CY 2026, we proposed to continue to provide additional payments
to cancer hospitals so that a cancer hospital's payment-to-cost ratio
(PCR) after the additional payments is equal to the weighted average
PCR for the other OPPS hospitals using the most recently submitted or
settled cost report data. Section 16002(b) of the 21st Century Cures
Act requires that this weighted average PCR be reduced by 1.0
percentage point. In light of the COVID-19 PHE impact on claims and
cost data used to calculate the target PCR, we maintained the CY 2021
target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, we
finalized a policy to reduce the target PCR by 1.0 percentage point
each calendar year until the target PCR equals the PCR of non-cancer
hospitals using the most recently submitted or settled cost report
data. For CY 2025, we finalized a target PCR of 0.87. For CY 2026, we
propose
[[Page 33483]]
a target PCR of 0.87, the same PCR of non-cancer hospitals using the
most recently submitted or settled cost report data, to determine the
CY 2026 cancer hospital payment adjustment to be paid at cost report
settlement. That is, the payment adjustments would be the additional
payments needed to result in a PCR equal to 0.87 for each cancer
hospital.
d. Impacts of the OPD Fee Schedule Increase Factor
For the CY 2026 OPPS/ASC, we are establishing an OPD fee schedule
increase factor of 2.4 percent and applying that increase factor to the
conversion factor for CY 2025. As a result of the OPD fee schedule
increase factor and other budget neutrality adjustments, we estimate
that urban hospitals would experience an increase in payments of
approximately 2.6 percent and that rural hospitals would experience an
increase in payments of 2.5 percent. Classifying hospitals by teaching
status, we estimate non-teaching hospitals would experience an increase
in payments of 2.6 percent, minor teaching hospitals would experience
an increase in payments of 2.8 percent, and major teaching hospitals
would experience an increase in payments of 2.3 percent. We also
classified hospitals by the type of ownership. We estimate that
hospitals with voluntary ownership would experience an increase of 2.5
percent in payments, while hospitals with government ownership would
experience an increase of 2.5 percent in payments. We estimate that
hospitals with proprietary ownership will experience an increase of 3.0
percent in payments.
e. Impacts of the ASC Payment Update
For impact purposes, the surgical procedures on the ASC covered
surgical procedure list are aggregated into surgical specialty groups
using CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the proposed CY 2026
payment rates, compared to estimated CY 2025 payment rates, generally
ranges between an increase of 1 percent and an increase of 3 percent,
depending on the service, with some exceptions from expected
utilization changes with new CY 2026 AMA CPT codes.
f. Impacts of the Proposed Market-Based MS-DRG Relative Weight Data
Collection and Change in Methodology for Calculating MS-DRG Relative
Weights Under the Inpatient Prospective Payment System.
In section XX. of this proposed rule, we seek comment on a proposed
methodology for estimating the MS-DRG relative weights beginning in FY
2029 based on the median payer-specific negotiated charge information
we propose to collect on the cost report. We note that the estimated
total annual burden hours for this proposal are as follows: 3,038
hospitals times 20 hours per hospital equals 60,760 annual burden hours
and $4,857,458.20. We refer readers to section XXII.E. of this proposed
rule for further analysis of this assessment.
g. Impacts of Hospital Price Transparency
We propose to require hospitals to report four new data elements
when the payer-specific negotiated charge is based on a percentage or
algorithm--the median allowed amount (which would replace the estimated
allowed amount data element), the 10th percentile allowed amount, the
90th percentile allowed amount, and the count of allowed amounts. We
also propose to update the attestation language hospitals must include
in the MRF and to require hospitals to encode the name of the chief
executive officer, president or senior official designated to oversee
the encoding of true, accurate and complete data in the MRF.
Additionally, we propose to require hospitals to add their National
Provider Identifiers (NPIs) to the MRF. The proposals would advance the
comparability of standard charge information across hospitals and of
the HPT data with other healthcare data, including health plan
transparency data from the Transparency in Coverage (TiC) MRFs. These
proposals include a one-time burden of $478.08 per hospital, and a
total national cost of $3,545,441.28 ($478.08 x 7,416 hospitals). As
discussed in detail in section XIX. of this proposed rule, we believe
that the benefits to the public (and to hospitals themselves) outweigh
the burden imposed on hospitals.
B. Legislative and Regulatory Authority for the Hospital OPPS
When Title XVIII of the Act was enacted, Medicare payment for
hospital outpatient services was based on hospital-specific costs. In
an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act, authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (HCERA, Pub. L. 111-152), enacted
on March 30, 2010 (these two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93),
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2,
2015; the Consolidated Appropriations
[[Page 33484]]
Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, the 21st
Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016; the
Consolidated Appropriations Act, 2018 (Pub. L. 115-141), enacted on
March 23, 2018; the Substance Use Disorder- Prevention that Promotes
Opioid Recovery and Treatment for Patients and Communities Act (Pub. L.
115-271), enacted on October 24, 2018; the Further Consolidated
Appropriations Act, 2020 (Pub. L. 116-94), enacted on December 20,
2019; the Coronavirus Aid, Relief, and Economic Security Act (Pub. L.
116-136), enacted on March 27, 2020; the Consolidated Appropriations
Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020; the
Inflation Reduction Act, 2022 (Pub. L. 117-169), enacted on August 16,
2022; and the Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-
238), enacted December 29, 2022.
Under the OPPS, we generally pay for hospital Part B services on a
rate-per-service basis that varies according to the APC group to which
the service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C of this proposed rule. Section
1833(t)(1)(B) of the Act provides for payment under the OPPS for
hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by CMHCs), and
certain inpatient hospital services that are paid under Medicare Part
B.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use, as required by section
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of
the Act, subject to certain exceptions, items and services within an
APC group cannot be considered comparable with respect to the use of
resources if the highest median cost (or mean cost, if elected by the
Secretary) for an item or service in the APC group is more than 2 times
greater than the lowest median cost (or mean cost, if elected by the
Secretary) for an item or service within the same APC group (referred
to as the ``2 times rule''). In implementing this provision, we
generally use the cost of the item or service assigned to an APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
clinical information and cost data to appropriately assign them to a
clinical APC group, we have established special APC groups based on
costs, which we refer to as New Technology APCs. These New Technology
APCs are designated by cost bands which allow us to provide appropriate
and consistent payment for designated new procedures that are not yet
reflected in our claims data. Similar to pass-through payments, an
assignment to a New Technology APC is temporary; that is, we retain a
service within a New Technology APC until we acquire sufficient data to
assign it to a clinically appropriate APC group.
C. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain services that are paid under fee schedules or other payment
systems. Such excluded services include, for example, the professional
services of physicians and nonphysician practitioners paid under the
Medicare Physician Fee Schedule (MPFS); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. In
addition, section 1833(t)(1)(B)(v) of the Act does not include
applicable items and services (as defined in subparagraph (A) of
paragraph (21)) that are furnished on or after January 1, 2017, by an
off-campus outpatient department of a provider (as defined in
subparagraph (B) of paragraph (21)). We set forth the services that are
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals are:
<bullet> Critical access hospitals (CAHs);
<bullet> Hospitals located in Maryland and paid under Maryland's
All-Payer or Total Cost of Care Model;
<bullet> Hospitals located outside of the 50 States, the District
of Columbia, and Puerto Rico;
<bullet> Indian Health Service (IHS) hospitals; and
<bullet> Rural emergency hospitals (REH).
D. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, the relative payment weights, and the wage and other
adjustments to take into account changes in medical practices, changes
in technology, the addition of new services, new cost data, and other
relevant information and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS website at: <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>.
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)
1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113,
[[Page 33485]]
requires that we consult with an expert outside advisory panel composed
of an appropriate selection of representatives of providers to annually
review (and advise the Secretary concerning) the clinical integrity of
the payment groups and their weights under the OPPS. In CY 2000, based
on section 1833(t)(9)(A) of the Act, the Secretary established the
Advisory Panel on Ambulatory Payment Classification Groups (APC Panel)
to fulfill this requirement. In CY 2011, based on section 222 of the
Public Health Service Act (the PHS Act), which gives discretionary
authority to the Secretary to convene advisory councils and committees,
the Secretary expanded the panel's scope to include the supervision of
hospital outpatient therapeutic services in addition to the APC groups
and weights. To reflect this new role of the panel, the Secretary
changed the panel's name to the Advisory Panel on Hospital Outpatient
Payment (the HOP Panel). The HOP Panel is not restricted to using data
compiled by CMS, and in conducting its review, it may use data
collected or developed by organizations outside the Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the Panel, and, at that time, named the APC Panel. This
expert panel is composed of appropriate representatives of providers
(currently employed full-time, not as consultants, in their respective
areas of expertise) who review clinical data and advise CMS about the
clinical integrity of the APC groups and their payment weights. Since
CY 2012, the Panel also is charged with advising the Secretary on the
appropriate level of supervision for individual hospital outpatient
therapeutic services. The Panel is technical in nature, and it is
governed by the provisions of the Federal Advisory Committee Act
(FACA). The current charter specifies, among other requirements, that
the Panel--
<bullet> May advise on the clinical integrity of Ambulatory Payment
Classification (APC) groups and their associated weights;
<bullet> May advise on the appropriate supervision level for
hospital outpatient services;
<bullet> May advise on OPPS APC rates for ASC covered surgical
procedures;
<bullet> Continues to be technical in nature;
<bullet> Is governed by the provisions of the FACA;
<bullet> Has a Designated Federal Official (DFO); and
<bullet> Is chaired by a Federal Official designated by the
Secretary.
The Panel's charter was amended on November 15, 2011, renaming the
Panel and expanding the Panel's authority to include supervision of
hospital outpatient therapeutic services and to add critical access
hospital (CAH) representation to its membership. The Panel's charter
was also amended on November 6, 2014 (80 FR 23009), and the number of
members was revised from up to 19 to up to 15 members. The Panel's
current charter was approved on November 21, 2024, for a 2-year period.
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS website at <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html">https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html</a>.
3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 26, 2024. The recommendations of the Panel for the most
recent meeting are available on the CMS website at <a href="https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment">https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment</a>. Prior to each meeting, we publish a notice in the Federal
Register to announce the meeting, new members, and any other changes of
which the public should be aware. Beginning in CY 2017, we have
transitioned to one meeting per year (81 FR 31941). In CY 2022, we
published a Federal Register notice requesting nominations to fill
vacancies on the Panel (87 FR 68499). We are currently accepting
nominations at: <a href="https://mearis.cms.gov">https://mearis.cms.gov</a>.
In addition, the Panel has established an administrative structure
that, in part, currently includes the use of three subcommittee
workgroups to provide preparatory meeting and subject support to the
larger panel. The three current subcommittees include the following:
<bullet> APC Groups and Status Indicator Assignments Subcommittee,
which advises and provides recommendations to the Panel on the
appropriate status indicators to be assigned to HCPCS codes, including
but not limited to whether a HCPCS code or a category of codes should
be packaged or separately paid, as well as the appropriate APC
assignment of HCPCS codes regarding services for which separate payment
is made.
<bullet> Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them; and
<bullet> Visits and Observation Subcommittee, which reviews and
makes recommendations to the Panel on all technical issues pertaining
to observation services and hospital outpatient visits paid under the
OPPS.
Each of these workgroup subcommittees was established by a majority
vote from the full Panel during a scheduled Panel meeting, and the
Panel recommended at the August 26, 2024, meeting that the
subcommittees continue. We accepted this recommendation.
For discussions of earlier Panel meetings and recommendations, we
refer readers to previously published OPPS/ASC proposed and final
rules, the CMS website mentioned earlier in this section, and the FACA
database at <a href="https://facadatabase.gov">https://facadatabase.gov</a>.
F. Public Comments Received on the CY 2025 OPPS/ASC Final Rule With
Comment Period
We received approximately 29 timely pieces of correspondence on the
CY 2025 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 27, 2024 (88 FR 93912).
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for Ambulatory Payment Classifications (APCs). In the April 7, 2000,
OPPS final rule with comment period (65 FR 18482), we explained in
detail how we calculated the relative payment weights that were
implemented on August 1, 2000, for each APC group.
For the CY 2026 OPPS, we propose to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2026, and
before January 1, 2027 (CY 2026), using the same basic methodology that
we described in the CY 2025 OPPS/ASC final rule with comment period (89
FR 93921 through 93922), using CY 2024 claims data. That is, we propose
to recalibrate the relative payment weights for each APC based on
claims and cost report data for hospital outpatient department (HOPD)
services to construct a database for calculating APC group weights.
For the purpose of recalibrating the proposed APC relative payment
weights
[[Page 33486]]
for CY 2026, we began with approximately 143 million final action
claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2024, and before January 1, 2025, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 76
million final action claims to develop the proposed CY 2026 OPPS
payment weights. For exact numbers of claims used and additional
details on the claims accounting process, we refer readers to the
claims accounting narrative under supporting documentation for this
proposed rule on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient</a>.
Addendum N to this proposed rule (which is available via the
internet on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>)
includes the proposed list of bypass codes for CY 2026. The proposed
list of bypass codes contains codes that are reported on claims for
services in CY 2024 and, therefore, includes codes that were in effect
in CY 2024 and used for billing. We propose to retain these deleted
bypass codes on the proposed CY 2026 bypass list because these codes
existed in CY 2024 and were covered HOPD services in that period, and
CY 2024 claims data were used to calculate proposed CY 2026 payment
rates. Keeping these deleted bypass codes on the bypass list
potentially allows us to create more ``pseudo'' single procedure claims
for ratesetting purposes. ``Overlap bypass codes'' that are members of
the proposed multiple imaging composite APCs are identified by
asterisks (*) in the third column of Addendum N to this proposed rule.
HCPCS codes that we propose to add for CY 2026 are identified by
asterisks (*) in the fourth column of Addendum N.
b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2026, we propose to continue to use the hospital-specific
overall ancillary and departmental cost-to-charge ratios (CCRs) to
convert charges to estimated costs through application of a revenue
code-to-cost center crosswalk. To calculate the APC costs on which the
proposed CY 2026 APC payment rates are based, we calculated hospital-
specific departmental CCRs for each hospital for which we had CY 2024
claims data by comparing these claims data to the most recently
available hospital cost reports, which, in most cases, are from CY
2023. For the proposed CY 2026 OPPS payment rates, we used the set of
claims processed during CY 2024. We applied the hospital-specific CCR
to the hospital's charges at the most detailed level possible, based on
a revenue code-to-cost center crosswalk that contains a hierarchy of
CCRs used to estimate costs from charges for each revenue code. To
ensure the completeness of the revenue code-to-cost center crosswalk,
we reviewed changes to the list of revenue codes for CY 2024 (the year
of claims data we used to calculate the proposed CY 2026 OPPS payment
rates) and updates to the National Uniform Billing Committee (NUBC)
2024 Data specifications Manual. That crosswalk is available for review
and continuous comment on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient</a>.
In accordance with our longstanding policy, similar to our
finalized policy for CY 2025 OPPS ratesetting, we propose to calculate
CCRs for the standard cost centers--cost centers with a predefined
label--and nonstandard cost centers--cost centers defined by a
hospital--accepted by the electronic cost report database. In general,
the most detailed level at which we calculate CCRs is the hospital-
specific departmental level.
While we generally view the use of additional cost data as
improving our OPPS ratesetting process, we have historically not
included cost report lines for certain nonstandard cost centers in the
OPPS ratesetting database construction when hospitals have reported
these nonstandard cost centers on cost report lines that do not
correspond to the cost center number. We believe it is important to
further investigate the accuracy of these cost report data before
including such data in the ratesetting process. Further, we believe it
is appropriate to gather additional information from the public as well
before including the data in OPPS ratesetting. For CY 2026, we propose
not to include the nonstandard cost centers reported in this way in the
OPPS ratesetting database construction.
2. Proposed Data Development and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the OPPS payment rates for CY 2026. The Hospital OPPS page
on the CMS website on which this proposed rule is posted (<a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient</a>) provides an accounting of claims used in the development of
the proposed payment rates. That accounting provides additional detail
regarding the number of claims derived at each stage of the process. In
addition, later in this section we discuss the file of claims that
comprises the data set that is available upon payment of an
administrative fee under a CMS data use agreement. The CMS website
<a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient</a>, includes information about obtaining the ``OPPS
Limited Data Set,'' which now includes the additional variables
previously available only in the OPPS Identifiable Data Set, including
International Classification of Diseases, Tenth Revision, Clinical
Modification (ICD-10-CM) diagnosis codes and revenue code payment
amounts. This file is derived from the CY 2024 claims that are used to
calculate the proposed payment rates for this proposed rule.
Previously, the OPPS established the scaled relative weights on
which payments are based using APC median costs, a process described in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188).
However, as discussed in more detail in section II.A.2.f. of the CY
2013 OPPS/ASC final rule with comment period (77 FR 68259 through
68271), we finalized the use of geometric mean costs to calculate the
relative weights on which the CY 2013 OPPS payment rates were based.
While this policy changed the cost metric on which the relative
payments are based, the data process in general remained the same under
the methodologies that we used to obtain appropriate claims data and
accurate cost information in determining estimated service cost.
We used the methodology described in sections II.A.2.a. through
II.A.2.c. of this proposed rule to calculate the costs we used to
establish the proposed relative payment weights used in calculating the
OPPS payment rates for CY 2026 shown in Addenda A and B to this
proposed rule (which are available via the internet on the CMS website
at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>). We refer readers to section
II.A.4. of this proposed rule for a discussion of the conversion of APC
costs to scaled payment weights.
We note that under the OPPS, CY 2019 was the first year in which
the claims data used for setting payment rates (CY 2017 data) contained
lines with the modifier ``PN,'' which indicates nonexcepted items and
[[Page 33487]]
services furnished and billed by off-campus provider-based departments
(PBDs) of hospitals. Because nonexcepted items and services are not
paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58832), we finalized a policy to remove those claim lines
reported with modifier ``PN'' from the claims data used in ratesetting
for the CY 2019 OPPS and subsequent years. For the CY 2026 OPPS, we
propose to continue to remove claim lines with modifier ``PN'' from the
ratesetting process.
For details of the claims accounting process used in this CY 2026
OPPS/ASC proposed rule, we refer readers to the claims accounting
narrative under supporting documentation for this proposed rule on the
CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient</a>.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs. We propose to continue to establish
payment rates for blood and blood products using our blood-specific CCR
methodology (88 FR 49562), which utilizes actual or simulated CCRs from
the most recently available hospital cost reports to convert hospital
charges for blood and blood products to costs. This methodology has
been our standard ratesetting methodology for blood and blood products
since CY 2005. It was developed in response to data analysis indicating
that there was a significant difference in CCRs for those hospitals
with and without blood-specific cost centers and past public comments
indicating that the former OPPS policy of defaulting to the overall
hospital CCR for hospitals not reporting a blood-specific cost center
often resulted in an underestimation of the true hospital costs for
blood and blood products. To address the differences in CCRs and to
better reflect hospitals' costs, our methodology simulates blood CCRs
for each hospital that does not report a blood cost center by
calculating the ratio of the blood-specific CCRs to hospitals' overall
CCRs for those hospitals that do report costs and charges for blood
cost centers and applies this mean ratio to the overall CCRs of
hospitals not reporting costs and charges for blood cost centers on
their cost reports. We propose to calculate the costs upon which the
proposed payment rates for blood and blood products are based using the
actual blood-specific CCR for hospitals that reported costs and charges
for a blood cost center and a hospital-specific, simulated, blood-
specific CCR for hospitals that did not report costs and charges for a
blood cost center.
We continue to believe that the hospital-specific, simulated,
blood-specific CCR methodology takes into account the unique charging
and cost accounting structure of each hospital, as it better responds
to the absence of a blood-specific CCR for a hospital than alternative
methodologies, such as defaulting to the overall hospital CCR or
applying an average blood-specific CCR across hospitals. This
methodology also yields more accurate estimated costs for these
products and results in payment rates for blood and blood products that
appropriately reflect the relative estimated costs of these products
for hospitals without blood cost centers and for these blood products
in general.
We refer readers to Addendum B to this proposed rule (which is
available via the internet on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>) for the proposed CY 2026 payment rates for blood
and blood products (which are generally identified with status
indicator ``R'').
For a more detailed discussion of payments for blood and blood
products through APCs, we refer readers to:
<bullet> the CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for
a more comprehensive discussion of the blood-specific CCR methodology;
<bullet> the CY 2008 OPPS/ASC final rule with comment period (72 FR
66807 through 66810) for a detailed history of the OPPS payment for
blood and blood products; and
<bullet> the CY 2015 OPPS/ASC final rule with comment period (79 FR
66795 and 66796) for additional discussion of our policy not to make
separate payments for blood and blood products when they appear on the
same claims as services assigned to a C-APC.
(2) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy--cancer treatment through solid source radioactive
implants--consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 and 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for several reasons (77 FR 68240). The general OPPS
methodology uses costs based on claims data to set the relative payment
weights for hospital outpatient services. This payment methodology
results in more consistent, predictable, and equitable payment amounts
per source across hospitals by averaging the extremely high and low
values, in contrast to payment based on hospitals' charges adjusted to
costs. We believe that the OPPS methodology, as opposed to payment
based on hospitals' charges adjusted to cost, also would provide
hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for most items and
services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70323 through 70325) for further
discussion of the history of OPPS payment for brachytherapy sources.
For CY 2026, except where otherwise indicated, we propose to
continue our policy and use the costs derived from CY 2024 claims data
to set the proposed CY 2026 payment rates for brachytherapy sources
because we propose to use CY 2024 data to set the proposed payment
rates for most other items and services that would be paid under the CY
2026 OPPS. With the exception of the proposed payment rate for
brachytherapy source C2645 (Brachytherapy planar source, palladium-103,
per square millimeter) and the proposed payment rates for low-volume
brachytherapy APCs discussed in section III.D. of this proposed rule,
we propose to base the payment rates for brachytherapy sources on the
geometric mean unit costs for each source, consistent with the
methodology that we propose for other items and services paid under the
OPPS, as discussed in section II.A.2. of this proposed rule. We also
propose for CY 2026 and subsequent years to continue the other payment
policies for
[[Page 33488]]
brachytherapy sources that we finalized and first implemented in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60537). For CY 2026
and subsequent years, we propose to pay for the stranded and
nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698
(Brachytherapy source, stranded, not otherwise specified, per source)
and C2699 (Brachytherapy source, non-stranded, not otherwise specified,
per source), at a rate equal to the lowest stranded or nonstranded
prospective payment rate for such sources, respectively, on a per-
source basis (as opposed to, for example, per mCi), which is based on
the policy we established in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66785). For CY 2026 and subsequent years, we also
propose to continue the policy we implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60537) regarding payment for new
brachytherapy sources for which we have no claims data, for the same
reasons we discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66786; which was delayed until January 1, 2010, by
section 142 of Pub. L. 110-275). Specifically, this policy is intended
to enable us to assign new HCPCS codes for new brachytherapy sources to
their own APCs, with prospective payment rates set based on our
consideration of external data and other relevant information regarding
the expected costs of the sources to hospitals. The proposed CY 2026
payment rates for brachytherapy sources are included in Addendum B to
this proposed rule (which is available via the internet on the CMS
website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>) and identified with
status indicator ``U (Brachytherapy Sources, Paid under OPPS; separate
APC payment).''
For CY 2018, we assigned status indicator ``U'' to HCPCS code C2645
(Brachytherapy planar source, palladium-103, per square millimeter) in
the absence of claims data and established a payment rate using
external data (invoice price) at $4.69 per mm\2\ for the brachytherapy
source's APC--APC 2648 (Brachytx planar, p-103) (82 FR 49233 through
49244). For CY 2019, in the absence of sufficient claims data, we
continued to establish a payment rate for C2645 at $4.69 per mm\2\ for
APC 2648 (Brachytx planar, p-103) (83 FR 58834 through 58836). Our CY
2018 claims data available for the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61142) included two claims with a geometric mean
cost for HCPCS code C2645 of $1.02 per mm\2\. In response to comments
from interested parties, we agreed that, given the limited claims data
available and a new outpatient indication for C2645, a payment rate for
HCPCS code C2645 based on the geometric mean cost of $1.02 per mm\2\
may not adequately reflect the cost of HCPCS code C2645. In the CY 2020
OPPS/ASC final rule with comment period, we finalized our policy to use
our equitable adjustment authority under section 1833(t)(2)(E) of the
Act, which states that the Secretary shall establish, in a budget
neutral manner, other adjustments as determined to be necessary to
ensure equitable payments, to maintain the CY 2019 payment rate of
$4.69 per mm\2\ for HCPCS code C2645 for CY 2020. Similarly, in the
absence of sufficient claims data to establish an APC payment rate, in
the CY 2021, CY 2022, CY 2023, CY 2024, and CY 2025 OPPS/ASC final
rules with comment period (85 FR 85879 through 85880, 86 FR 63469, 87
FR 71760-71761, 88 FR 81553, and 89 FR 93925), we finalized our policy
to use our equitable adjustment authority under section 1833(t)(2)(E)
of the Act to maintain the CY 2019 payment rate of $4.69 per mm\2\ for
HCPCS code C2645 for CYs 2021 through 2025.
There are no CY 2024 claims available that reported HCPCS code
C2645 for this proposed rule. Therefore, in the absence of claims data,
we propose to continue to use our equitable adjustment authority under
section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate
of $4.69 per mm\2\ for HCPCS code C2645, which we propose to be
assigned to APC 2648 (Brachytx planar, p-103), for CY 2026.
Additionally, for CY 2022 and subsequent calendar years, we adopted
a Universal Low Volume APC policy for clinical and brachytherapy APCs.
As discussed in further detail in section X.C. of the CY 2022 OPPS/ASC
final rule with comment period (86 FR 63743 through 63747), we adopted
this policy to mitigate wide variation in payment rates that occur from
year to year for APCs with low utilization. Such volatility in payment
rates from year to year can result in even lower utilization and
potential barriers to access. Brachytherapy APCs that have fewer than
100 single claims used for ratesetting purposes are designated as Low
Volume APCs unless an alternative payment rate is applied, such as the
use of our equitable adjustment authority under section 1833(t)(2)(E)
of the Act in the case of APC 2648 (Brachytx planar, p-103), for which
HCPCS code C2645 (Brachytherapy planar source, palladium-103, per
square millimeter) is the only code assigned as discussed previously in
this section.
For CY 2026, we propose to designate six brachytherapy APCs as Low
Volume APCs as these APCs meet our criteria to be designated as Low
Volume APCs. For more information on the brachytherapy APCs we propose
to designate as Low Volume APCs, see section III.D. of this proposed
rule.
We invite interested parties to submit recommendations for new
codes to describe new brachytherapy sources. Such recommendations
should be directed via email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="f69983828697829f939882868685b6959b85d89e9e85d8919980">[email protected]</a>. We will
continue to add new brachytherapy source codes and descriptors to our
systems for payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2026
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure under the OPPS at the
claim level. The policy was finalized in CY 2014, but the effective
date was delayed until January 1, 2015, to allow additional time for
further analysis, opportunity for public comment, and systems
preparation. The comprehensive APC (C-APC) policy was implemented
effective January 1, 2015, with modifications and clarifications in
response to public comments received regarding specific provisions of
the C-APC policy (79 FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to support the
delivery of the primary service. We established C-APCs as a category
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015
(79 FR 66809 and 66810). We have gradually added new C-APCs since the
policy was implemented beginning in CY 2015, with the number of C-APCs
now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844
through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87
FR 71769; 88 FR 81562; and 89 FR 93926).
Under our C-APC policy, we designate a service described by a HCPCS
code assigned to a C-APC as the primary service when the service is
[[Page 33489]]
identified by OPPS status indicator ``J1.'' When such a primary service
is reported on a hospital outpatient claim, taking into consideration
the few exceptions that are discussed below, we make payment for all
other items and services reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service (hereinafter collectively referred to as ``adjunctive
services'') and representing components of a complete comprehensive
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services
are packaged into the payments for the primary services. This results
in a single prospective payment for each of the primary, comprehensive
services based on the costs of all reported services at the claim
level. One example of a primary service would be a partial mastectomy,
and an example of a secondary service packaged into that primary
service would be a radiation therapy procedure.
Services excluded from the C-APC policy under the OPPS include
services that are not covered OPD services, services that cannot, by
statute, be paid for under the OPPS, and services that are required by
statute to be separately paid. This includes certain mammography and
ambulance services that are not covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which
also require separate payment under section 1833(t)(6) of the Act;
self-administered drugs (SADs) that are not otherwise packaged as
supplies because they are not covered under Medicare Part B under
section 1861(s)(2)(B) of the Act; and certain preventive services (78
FR 74865 and 79 FR 66800 and 66801). A list of services excluded from
the C-APC policy is included in Addendum J to this proposed rule (which
is available via the internet on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>). If a service does not appear on this
list of excluded services, payment for it will be packaged into the
payment for the primary C-APC service when it appears on an outpatient
claim with a primary C-APC service.
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period and modified and implemented
beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR
66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-APC payment policy as including
all covered OPD services on a hospital outpatient claim reporting a
primary service that is assigned to status indicator ``J1,'' \1\
excluding services that are not covered OPD services or that cannot by
statute be paid for under the OPPS. Services and procedures described
by HCPCS codes assigned to status indicator ``J1'' are assigned to C-
APCs based on our usual APC assignment methodology by evaluating the
geometric mean costs of the primary service claims to establish
resource similarity and the clinical characteristics of each procedure
to establish clinical similarity within each APC.
---------------------------------------------------------------------------
\1\ Status indicator ``J1'' denotes Hospital Part B Services
Paid Through a Comprehensive APC. Further information can be found
in CY 2026 Addendum D1.
---------------------------------------------------------------------------
In the CY 2016 OPPS/ASC final rule with comment period, we expanded
the C-APC payment methodology to qualifying extended assessment and
management encounters through the ``Comprehensive Observation
Services'' C-APC (C-APC 8011). Services within this APC are assigned
status indicator ``J2.'' \2\ Specifically, we make a payment through C-
APC 8011 for a claim that:
---------------------------------------------------------------------------
\2\ Status indicator ``J2'' denotes Hospital Part B Services
That May Be Paid Through a Comprehensive APC. Further information
can be found in CY 2026 Addendum D1.
---------------------------------------------------------------------------
<bullet> Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T;'' \3\
---------------------------------------------------------------------------
\3\ Status Indicator ``T'' is defined as a ``Procedure or
Service, Multiple Procedure Reduction Applies'' the OPPS payment
status is ``Paid under OPPS; separate APC payment.'' Definitions to
all OPPS payment status indicators are available in Addenda D1 to
this proposed rule.
---------------------------------------------------------------------------
<bullet> Contains 8 or more units of services described by HCPCS
code G0378 (Hospital observation services, per hour);
<bullet> Contains services provided on the same date of service or
one day before the date of service for HCPCS code G0378 that are
described by one of the following codes: HCPCS code G0379 (Direct
admission of patient for hospital observation care) on the same date of
service as HCPCS code G0378; CPT code 99281 (Emergency department visit
for the evaluation and management of a patient (Level 1)); CPT code
99282 (Emergency department visit for the evaluation and management of
a patient (Level 2)); CPT code 99283 (Emergency department visit for
the evaluation and management of a patient (Level 3)); CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)) or HCPCS code G0380
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B
emergency department visit (Level 2)); HCPCS code G0382 (Type B
emergency department visit (Level 3)); HCPCS code G0383 (Type B
emergency department visit (Level 4)); HCPCS code G0384 (Type B
emergency department visit (Level 5)); CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient
clinic visit for assessment and management of a patient); and
<bullet> Does not contain services described by a HCPCS code to
which we have assigned status indicator ``J1.''
The assignment of status indicator ``J2'' to a specific set of
services performed in combination with each other allows for all other
OPPS payable services and items reported on the claim (excluding
services that are not covered OPD services or that cannot by statute be
paid for under the OPPS) to be deemed adjunctive services representing
components of a comprehensive service and resulting in a single
prospective payment for the comprehensive service based on the costs of
all reported services on the claim (80 FR 70333 through 70336).
Services included under the C-APC payment packaging policy, that
is, services that are typically adjunctive to the primary service and
provided during the delivery of the comprehensive service, include
diagnostic procedures, laboratory tests, and other diagnostic tests and
treatments that assist in the delivery of the primary procedure; visits
and evaluations performed in association with the procedure; uncoded
services and supplies used during the service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that represent services that are provided
during the complete comprehensive service (78 FR 74865 and 79 FR
66800).
In addition, payment for hospital outpatient department services
that are similar to therapy services, such as speech language
pathology, and delivered either by therapists or nontherapists is
included as part of the payment for the packaged complete comprehensive
service. These services that are provided during the perioperative
period are adjunctive services and are deemed not to be therapy
services as described in section
[[Page 33490]]
1834(k) of the Act, regardless of whether the services are delivered by
therapists or other nontherapist health care workers. We have
previously noted that therapy services are those provided by therapists
under a plan of care in accordance with section 1835(a)(2)(C) and
section 1835(a)(2)(D) of the Act and are paid for under section 1834(k)
of the Act, subject to annual therapy caps as applicable (78 FR 74867
and 79 FR 66800). However, certain other services similar to therapy
services are considered and paid for as hospital outpatient department
services. Payment for these nontherapy outpatient department services
that are reported with therapy codes and provided with a comprehensive
service is included in the payment for the packaged complete
comprehensive service. We note that these services, even though they
are reported with therapy codes, are hospital outpatient department
services and not therapy services. We refer readers to the July 2016
OPPS Change Request 9658 (Transmittal 3523) \4\ for further
instructions on reporting these services in the context of a C-APC
service.
---------------------------------------------------------------------------
\4\ <a href="https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r3523cp.pdf">https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r3523cp.pdf</a>.
---------------------------------------------------------------------------
Items included in the packaged payment provided in conjunction with
the primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged
supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer
readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy
Manual for a description of our policy on SADs treated as hospital
outpatient supplies, including lists of SADs that function as supplies
and those that do not function as supplies.\5\
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\5\ <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf</a>.
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We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line-
item charges for services included on the C-APC claim are converted to
line-item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all the items and services included in the C-APC service
payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described above). We apply our standard data trims,
which exclude claims with extremely high primary units or extreme
costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof, we
identify one ``J1'' service as the primary service for the claim based
on our cost-based ranking of primary services. We then assign these
multiple ``J1'' procedure claims to the C-APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services on a claim map to different C-APCs, we designate the ``J1''
service assigned to the C-APC with the highest comprehensive geometric
mean cost as the primary service for that claim. If the reported
multiple ``J1'' services on a claim map to the same C-APC, we designate
the most costly service (at the HCPCS code level) as the primary
service for that claim. This process results in initial assignments of
claims for the primary services assigned to status indicator ``J1'' to
the most appropriate C-APCs based on both single and multiple procedure
claims reporting these services and clinical and resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form or version of the
primary service according to the following criteria:
<bullet> Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
<bullet> Violation of the 2 times rule, as stated in section
1833(t)(2) of the Act and section III.B.2. of this proposed rule, in
the originating C-APC (cost threshold).
These criteria identify paired code combinations that occur
commonly and exhibit materially greater resource requirements than the
primary service. The CY 2017 OPPS/ASC final rule with comment period
(81 FR 79582) included a revision to the complexity adjustment
eligibility criteria. Specifically, we finalized a policy to
discontinue the requirement that a code combination (that qualifies for
a complexity adjustment by satisfying the frequency and cost criteria
thresholds described above) also not create a 2 times rule violation in
the higher level or receiving APC.
After designating a single primary service for a claim, we evaluate
that service in combination with each of the other procedure codes
reported on the claim assigned to status indicator ``J1'' (or certain
add-on codes) to determine if there are paired code combinations that
meet the complexity adjustment criteria. For a new HCPCS code, we
determine initial C-APC assignment and qualification for a complexity
adjustment using the best available information, crosswalking the new
HCPCS code to a predecessor code(s) when appropriate.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we promote the claim including the complex
version of the primary service as described by the code combination to
the next higher cost C-APC within the clinical family, unless the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family. We do not create new APCs with a comprehensive geometric mean
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any claim including a
code combination for services
[[Page 33491]]
assigned to a C-APC would be the highest paying C-APC in the clinical
family (79 FR 66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70331), all add-on codes that can be
appropriately reported in combination with a base code that describes a
primary ``J1'' service are evaluated for a complexity adjustment.
To determine which combinations of primary service codes reported
in conjunction with an add-on code may qualify for a complexity
adjustment for CY 2026, we apply the frequency and cost criteria
thresholds discussed above, testing claims reporting one unit of a
single primary service assigned to status indicator ``J1'' and any
number of units of a single add-on code for the primary ``J1'' service.
If the frequency and cost criteria thresholds for a complexity
adjustment are met and reassignment to the next higher cost APC in the
clinical family is appropriate (based on meeting the criteria outlined
above), we make a complexity adjustment for the code combination; that
is, we reassign the primary service code reported in conjunction with
the add-on code to the next higher cost C-APC within the same clinical
family of C-APCs. As previously stated, we package payment for add-on
codes into the C-APC payment rate. If any add-on code reported in
conjunction with the ``J1'' primary service code does not qualify for a
complexity adjustment, payment for the add-on service continues to be
packaged into the payment for the primary service and is not reassigned
to the next higher cost C-APC. We list the proposed complexity
adjustments for ``J1'' and add-on code combinations for CY 2026, along
with all the other proposed complexity adjustments, in Addendum J to
this proposed rule (which is available via the internet on the CMS
website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>).
Addendum J to this proposed rule includes the cost statistics for
each code combination that would qualify for a complexity adjustment
(including primary code and add-on code combinations). Addendum J to
this proposed rule also contains summary cost statistics for each of
the paired code combinations that describe a complex code combination
that would qualify for a complexity adjustment and be reassigned to the
next higher cost C-APC within the clinical family. The combined
statistics for all proposed reassigned complex code combinations are
represented by an alphanumeric code with the first four digits of the
designated primary service followed by a letter. For example, the
proposed geometric mean cost listed in Addendum J for the code
combination described by complexity adjustment assignment 3320R, which
is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures),
includes all paired code combinations that will be reassigned to C-APC
5224 when CPT code 33208 is the primary code. Providing the information
contained in Addendum J to this proposed rule allows interested parties
the opportunity to better assess the impact associated with the
assignment of claims with each of the paired code combinations eligible
for a complexity adjustment.
(2) Comment Solicitation on C-APC Complexity Adjustment Criteria
We have received a variety of requests from interested parties as
well, as public comments in past rulemaking, related to our C-APC
complexity adjustment criteria. Interested parties and commenters have
requested that CMS modify the established C-APC complexity adjustment
eligibility criteria of 25 or more claims reporting the code
combination (frequency threshold) and a violation of the 2 times rule
in the originating C-APC (cost threshold) to allow additional code
combinations to qualify for complexity adjustments. Interested parties
and commenters have also requested expanding the qualifying code
combinations for complexity adjustments to allow clusters of
procedures, consisting of a ``J1'' code pair and multiple other
associated add-on codes, to be used in combination with that ``J1''
code pair to qualify. These interested parties and commenters have
noted these expanded combinations may allow for a more accurate
reflection of medical practice when multiple procedures are performed
together or there are certain complex procedures that include numerous
add-on codes.
For CY 2026, we are soliciting comments on potential refinements to
our C-APC complexity adjustment criteria. Under this solicitation, we
are seeking comment on expanding code combinations that qualify for
complexity adjustments, including any specifications related to
determining specific combination types and how they represent a
complex, costly subset of the primary service. We are seeking comment
on how CMS could identify service pairings or clusters of services for
complexity adjustments that are clinically appropriate but are
currently not evaluated for complexity adjustments. Additionally, if we
were to expand our complexity adjustment criteria to allow for clusters
of codes, we are seeking comment on what the appropriate cost and
frequency thresholds could be used to identify which code clusters
truly reflect complex and resource-intensive code combinations that are
commonly performed in the hospital outpatient department setting.
We are seeking comment on which services are clinically integral to
the provision of ``J1'' services that would qualify for a complexity
adjustment under an expanded evaluation framework. Specifically, we are
seeking comment on what criteria we could add, reflecting clinical
practice, that would determine the costly additional components that
are often associated with other high-cost packaged items and services.
Finally, we are seeking comment on how we might address the unintended
consequences of granular coding on the mechanics of the complexity
adjustment criteria and if highly specific coding truly reflects
clinical practice in hospital outpatient departments.
(3) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
Services that are assigned to New Technology APCs are typically new
procedures that do not have sufficient claims history to establish an
accurate payment for them. Beginning in CY 2002, we retain services
within New Technology APC groups until we gather sufficient claims data
to enable us to assign the service to an appropriate clinical APC. This
policy allows us to move a service from a New Technology APC in less
than 2 years if sufficient data are available. It also allows us to
retain a service in a New Technology APC for more than 2 years if
sufficient data upon which to base a decision for reassignment have not
been collected (82 FR 59277).
The C-APC payment policy packages payment for adjunctive and
secondary items, services, and procedures into the most costly primary
procedure under the OPPS at the claim level. Prior to CY 2019, when a
procedure assigned to a New Technology APC was included on the claim
with a primary procedure, identified by OPPS status indicator ``J1,''
payment for the new technology service was typically packaged into the
payment for the primary procedure.
[[Page 33492]]
Because the new technology service was not separately paid in this
scenario, the overall number of single claims available to determine an
appropriate clinical APC for the new service was reduced. This was
contrary to the objective of the New Technology APC payment policy,
which is to gather sufficient claims data to enable us to assign the
service to an appropriate clinical APC.
To address this issue and ensure that there are sufficient claims
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized
excluding payment for any procedure that is assigned to a New
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from
being packaged when included on a claim with a ``J1'' service assigned
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we
finalized that beginning in CY 2020, payment for services assigned to a
New Technology APC would be excluded from being packaged into the
payment for comprehensive observation services assigned status
indicator ``J2'' when they are included on a claim with a ``J2''
service (84 FR 61167).
(4) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399
(Unclassified Drugs or Biologicals) From the C-APC Policy
Section 1833(t)(15) of the Act, as added by section 621(a)(1) of
the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Pub. L. 108-173), provides for payment under the OPPS for new
drugs and biologicals until HCPCS codes are assigned. Under this
provision, we are required to make payment for a covered outpatient
drug or biological that is furnished as part of covered outpatient
department services but for which a HCPCS code has not yet been
assigned in an amount equal to 95 percent of average wholesale price
(AWP) for the drug or biological.
In the CY 2005 OPPS/ASC final rule with comment period (69 FR
65805), we implemented section 1833(t)(15) of the Act by instructing
hospitals to bill for a drug or biological that is newly approved by
the Food and Drug Administration (FDA) and that does not yet have a
HCPCS code by reporting the National Drug Code (NDC) for the product
along with the newly created HCPCS code C9399 (Unclassified drugs or
biologicals). We explained that when HCPCS code C9399 appears on a
claim, the Outpatient Code Editor (OCE) suspends the claim for manual
pricing by the Medicare Administrative Contractor (MAC). The MAC prices
the claim at 95 percent of the drug or biological's AWP, using Red Book
or an equivalent recognized compendium, and processes the claim for
payment. We emphasized that this approach enables hospitals to bill and
receive payment for a new drug or biological concurrent with its
approval by the FDA. The hospital does not have to wait for the next
quarterly release or for approval of a product specific HCPCS code to
receive payment for a newly approved drug or biological or to resubmit
claims for adjustment. We instructed that hospitals would discontinue
billing HCPCS code C9399 and the NDC upon implementation of a product
specific HCPCS code, status indicator, and appropriate payment amount
with the next quarterly update. We also note that HCPCS code C9399 is
paid in a similar manner in the ASC setting, as 42 CFR 416.171(b)
outlines that certain drugs and biologicals for which separate payment
is allowed under the OPPS are considered covered ancillary services for
which the OPPS payment rate, which is 95 percent of AWP for HCPCS code
C9399, applies. Since the implementation of the C-APC policy in 2015,
payment for drugs and biologicals described by HCPCS code C9399 had
been included in the C-APC payment when these products appear on a
claim with a primary C-APC service. Packaging payment for these drugs
and biologicals that appear on a hospital outpatient claim with a
primary C-APC service is consistent with our C-APC packaging policy
under which we make payment for all items and services, including all
non-pass-through drugs, reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service and representing components of a complete comprehensive
service, with certain limited exceptions (78 FR 74869). It was our
position that the total payment for the C-APC with which payment for a
drug or biological described by HCPCS code C9399 is packaged includes
payment for the drug or biological at 95 percent of its AWP.
However, we determined that in certain instances, drugs and
biologicals described by HCPCS code C9399 are not being paid at 95
percent of their AWPs when payment for them is packaged with payment
for a primary C-APC service. In order to ensure payment for new drugs
and biologicals described by HCPCS code C9399 at 95 percent of their
AWP, for CY 2023 and subsequent years, we finalized our proposal to
exclude any drug or biological described by HCPCS code C9399 from
packaging when the drug or biological is included on a claim with a
``J1'' service, which is the status indicator assigned to a C-APC, and
a claim with a ``J2'' service, which is the status indicator assigned
to comprehensive observation services. See Addendum J to this proposed
rule for the proposed CY 2026 C-APC payment policy exclusions.
In the CY 2023 OPPS/ASC final rule with comment period, we
finalized the proposal in section XI., ``CY 2023 OPPS Payment Status
and Comment Indicators'', to add a new definition to status indicator
``A'' to include unclassified drugs and biologicals that are reportable
with HCPCS code C9399 (87 FR 72051). The current definition, as
finalized in the CY 2023 OPPS/ASC final rule with comment period, can
be found in Addendum D1 of this proposed rule, would ensure the MAC
prices claims for drugs or biologicals billed with HCPCS code C9399 at
95 percent of the drug or biological's AWP and pays separately for the
drug or biological under the OPPS when it appears on the same claim as
a primary C-APC service.
(5) Exclusion of Cell and Gene Therapies From the C-APC Policy
As previously discussed in this section, and in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74865), the C-APC policy
packages payment for items and services that are typically integral,
ancillary, supportive, dependent, or adjunctive to the primary service
and provided during the delivery of the comprehensive service,
including diagnostic procedures, laboratory tests and other diagnostic
tests and treatments that assist in the delivery of the primary
procedure. In the CY 2014 OPPS/ASC final rule with comment period (78
FR 74861), we finalized defining a comprehensive APC as a
classification for the provision of a primary service and all
adjunctive services provided to support the delivery of the primary
service. Because a comprehensive APC treats all individually reported
codes as representing components of the comprehensive service, we make
a single prospective payment based on the cost of all individually
reported codes that represent the provision of a primary service and
all adjunctive services provided to support that delivery of the
primary service.
As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59201
through 59204), we generally treat all items and services reported on a
C-APC claim as integral, ancillary, supportive, dependent, and
adjunctive to the
[[Page 33493]]
primary service and representing components of a comprehensive service.
Historically, items packaged for payment provided in conjunction with
the primary C-APC service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and those drugs that are usually self-
administered (SADs), unless they function as supplies (78 FR 74868
through 74869 and 74909).
However, we recognized in the 2025 OPPS/ASC proposed rule (89 FR
59201 through 59204) that there are rare instances in which cell and
gene therapies appear on the same claim as a primary C-APC service and
therefore, have their payment packaged with payment for the primary C-
APC service. As stated in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 93932 through 93938), given the unique nature of these
therapies, we do not believe they function as integral, ancillary,
supportive, dependent, or adjunctive to any of the current primary C-
APC services. Additionally, we stated that when these products are
administered, they are the primary treatment being administered to a
patient and thus, are not integral, ancillary, supportive, dependent,
or adjunctive to any primary C-APC services.
Therefore, we finalized a policy for CY 2025 and subsequent years
(89 FR 93932 through 93938), to not package payment for cell and gene
therapies into C-APCs, when those cell and gene therapies are not
functioning as integral, ancillary, supportive, dependent, or
adjunctive to the primary C-APC service. For new cell and gene therapy
products that are not integral, ancillary, supportive, dependent, or
adjunctive to any C-APC primary service, we will continue to add their
product specific HCPCS codes, when created, to the C-APC exclusion
list. The current list of qualifying products can be found in Table 1.
We list all proposed C-APC exclusion categories for CY 2026 in
Addendum J to this proposed rule (which is available via the internet
on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>).
[GRAPHIC] [TIFF OMITTED] TP17JY25.000
[[Page 33494]]
(6) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135
of the Consolidated Appropriations Act, 2023 From the C-APC Policy
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled ``Access to Non-Opioid Treatments for Pain
Relief,'' amended section 1833(t)(16) and section 1833(i) of the Social
Security Act, respectively, to provide for temporary additional
payments for non-opioid treatments for pain relief (as that term is
defined in section 1833(t)(16)(G)(i) of the Act). In particular,
section 1833(t)(16)(G) provides that with respect to a non-opioid
treatment for pain relief furnished on or after January 1, 2025, and
before January 1, 2028, the Secretary shall not package payment for the
non-opioid treatment for pain relief into payment for a covered OPD
service (or group of services) and shall make an additional payment for
the non-opioid treatment for pain relief as specified in clause (ii) of
that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the
Act provide for the amount of additional payment and set a limitation
on that amount. As stated earlier in this section, our current policy
is to exclude from the packaged C-APC payment those items and services
that are required by statute to be separately paid.
Accordingly, in the CY 2025 OPPS/ASC final rule with comment
period, we finalized a policy to exclude the non-opioid treatments for
pain relief identified as satisfying the required criteria for payment
under section 4135 of the CAA, 2023 from the C-APC policy to ensure
payment is not packaged into any C-APC and that separate payment is
made in accordance with the statute (89 FR 93938 through 93939).
(7) C-APCs for CY 2026
For CY 2026 and subsequent years, we propose to continue to apply
the C-APC payment policy methodology. We refer readers to the CY 2017
OPPS/ASC final rule with comment period (81 FR 79583) for a discussion
of the C-APC payment policy methodology and revisions.
Each year, in accordance with section 1833(t)(9)(A) of the Act, we
review and revise the services within each APC group and the APC
assignments under the OPPS. As a result of our annual review of the
services and the APC assignments under the OPPS, we are not proposing
to convert any standard APCs to C-APCs in CY 2026; thus, we propose
that the number of C-APCs for CY 2026 would be the same as the number
for CY 2025, which is 72 C-APCs.
Table 2 lists the proposed C-APCs for CY 2026, all of which were
established in past rules. All C-APCs are displayed in Addendum J to
this proposed rule. Addendum J to this proposed rule also contains all
the data related to the C-APC payment policy methodology, including the
list of complexity adjustments and other information.
[[Page 33495]]
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[[Page 33496]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.002
c. Calculation of Composite APC Criteria-Based Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide necessary, high-quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service. Combining payment for multiple,
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with
[[Page 33497]]
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which may be low in volume and/or incorrectly coded. Under the
OPPS, we currently have composite policies for mental health services
and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66611 through 66614 and 66650
through 66652) for a full discussion of the development of the
composite APC methodology, and the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74163) and the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59241, 59242, and 59246 through 52950) for
further background.
(1) Mental Health Services Composite APC
For CY 2026, we propose to continue our longstanding policy of
limiting the aggregate payment for specified less resource-intensive
mental health services furnished on the same date to the payment for a
day of partial hospitalization services provided by a hospital, which
we consider to be the most resource-intensive of all outpatient mental
health services (88 FR 49572). We refer readers to the April 7, 2000,
OPPS final rule with comment period (65 FR 18452 through 18455) for the
initial discussion of this longstanding policy and the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74168) for further background.
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33580 and 33581 and 82 FR 59246 and 59247), we proposed
and finalized the policy for CY 2018 and subsequent years that, when
the aggregate payment for specified mental health services provided by
one hospital to a single beneficiary on a single date of service, based
on the payment rates associated with the APCs for the individual
services, exceeds the maximum per diem payment rate for partial
hospitalization services provided by a hospital, those specified mental
health services will be paid through composite APC 8010 (Mental Health
Services Composite). In addition, we set the payment rate for composite
APC 8010 for CY 2018 at the same payment rate for APC 5863, which was
the maximum partial hospitalization per diem payment rate for a
hospital, and finalized a policy that the hospital would continue to be
paid the payment rate for composite APC 8010. This policy applied in
CYs 2018 through 2023.
In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was
no longer the maximum partial hospitalization per diem payment rate for
a hospital due to the creation of APC 5864, which is four or more
hospital-based PHP services per day (88 FR 49572). We solicited comment
on whether APC 5864 would be appropriate to use as the daily mental
health cap, as we have historically set the daily mental health cap for
composite APC 8010 at the maximum partial hospitalization per diem
payment rate for a hospital (88 FR 49572). Based on public comments
received and our longstanding policy, in CY 2024 OPPS/ASC final rule,
we finalized APC 5864, four hospital-based PHP services per day, as the
daily mental health cap (88 FR 81566).
We continue to believe that the costs associated with administering
a partial hospitalization program represent the most resource intensive
of all outpatient mental health services. For CY 2026 and subsequent
years, we propose to continue this policy that when the aggregate
payment for specified mental health services provided by one hospital
to a single beneficiary on a single date of service, based on the
payment rates associated with the APCs for the individual services,
exceeds the per diem payment rate for 4 partial hospitalization
services provided in a day by a hospital (the payment amount for APC
5864), those specified mental health services would be paid through
composite APC 8010. In addition, we propose to continue to set the
payment rate for composite APC 8010 at the same payment rate that we
propose for APC 5864, which is a partial hospitalization per diem
payment rate for 4 partial hospitalization services furnished in a day
by a hospital.
Under the proposed policy, the Integrated OCE (I/OCE) would
continue to determine whether to pay for these specified mental health
services individually, or to make a single payment at the same payment
rate established for APC 5864 for all the specified mental health
services furnished by the hospital on that single date of service by
paying for the services through composite APC 5863.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital submits a claim for more than one imaging procedure within an
imaging family on the same date of service, to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 3.
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast.
The five multiple imaging composite APCs established in CY 2009 are:
<bullet> APC 8004 (Ultrasound Composite);
<bullet> APC 8005 (CT and CTA without Contrast Composite);
<bullet> APC 8006 (CT and CTA with Contrast Composite);
<bullet> APC 8007 (MRI and MRA without Contrast Composite); and
<bullet> APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
[[Page 33498]]
For CY 2026, we propose to continue to pay for all multiple imaging
procedures within an imaging family performed on the same date of
service using the multiple imaging composite APC payment methodology.
We continue to believe that this policy would reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session.
For CY 2026, except where otherwise indicated, we propose to use
the costs derived from CY 2024 claims data to set the proposed CY 2026
payment rates. Therefore, for CY 2026, the proposed payment rates for
the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007,
and 8008) were based on proposed geometric mean costs calculated from
CY 2024 claims available for the CY 2026 OPPS/ASC proposed rule that
qualify for composite payment under the current policy (that is, those
claims reporting more than one procedure within the same family on a
single date of service). To calculate the proposed geometric mean
costs, we used the same methodology that we used to calculate the
geometric mean costs for these composite APCs since CY 2014, as
described in the CY 2014 OPPS/ASC final rule with comment period (78 FR
74918). The imaging HCPCS codes referred to as ``overlap bypass codes''
that we removed from the bypass list for purposes of calculating the
proposed multiple imaging composite APC geometric mean costs, in
accordance with our established methodology as stated in the CY 2014
OPPS/ASC final rule with comment period (78 FR 74918), are identified
by asterisks in Addendum N to this proposed rule (which is available
via the internet on the CMS website <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>) and are discussed in more detail in section II.A.1.a. of this
proposed rule.
For this proposed rule, we were able to identify approximately 0.98
million ``single session'' claims out of an estimated 2.2 million
potential claims for payment through composite APCs from our
ratesetting claims data, which represents approximately 44.0 percent of
all eligible claims, to calculate the proposed CY 2026 geometric mean
costs for the multiple imaging composite APCs. Table 3 lists the
proposed HCPCS codes that would be subject to the multiple imaging
composite APC policy and their respective families and approximate
composite APC final geometric mean costs for CY 2026.
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3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a bundle of specific services for a particular
beneficiary. The OPPS packages payments for multiple interrelated items
and services into a single payment to create incentives for hospitals
to furnish services most efficiently and to manage their resources with
maximum flexibility. Our packaging policies support our strategic goal
of using larger payment bundles in the OPPS to maximize hospitals'
incentives to provide care in the most efficient
[[Page 33503]]
manner. For example, where there are a variety of devices, drugs,
items, and supplies that could be used to furnish a service, some of
which are more costly than others, packaging encourages hospitals to
use the most cost-efficient item that meets the patient's needs, rather
than to routinely use a more expensive item, which may occur if
separate payment is provided for the item.
Packaging also encourages hospitals to effectively negotiate with
manufacturers and suppliers to reduce the purchase price of items and
services or to explore alternative group purchasing arrangements,
thereby encouraging the most economical health care delivery.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while scrutinizing the
services ordered by practitioners to maximize the efficient use of
hospital resources. Packaging payments into larger payment bundles
promotes the predictability and accuracy of payment for services over
time. Finally, packaging may reduce the importance of refining service-
specific payments because packaged payments include costs associated
with higher cost cases requiring many ancillary items and services and
lower cost cases requiring fewer ancillary items and services.
Packaging encourages efficiency and is an essential component of a
prospective payment system; therefore, packaging payments for items and
services that are typically integral, ancillary, supportive, dependent,
or adjunctive to a primary service has been a fundamental part of the
OPPS since its implementation in August 2000. As we continue to develop
larger payment groups that more broadly reflect services provided in an
encounter or episode of care, we have expanded the OPPS packaging
policies. Most, but not necessarily all, categories of items and
services currently packaged in the OPPS are listed in 42 CFR 419.2(b).
Our overarching goal is to make payments for all services under the
OPPS more consistent with those of a prospective payment system and
less like those of a per-service fee schedule, which pays separately
for each coded item. As a part of this effort, we have continued to
examine the payment for items and services provided under the OPPS to
determine which OPPS services can be packaged to further achieve the
objective of advancing the OPPS toward a more prospective payment
system.
b. Proposed CY 2026 Policy on Packaged Items and Services
For CY 2026, we examined the items and services currently provided
under the OPPS, reviewing categories of integral, ancillary,
supportive, dependent, or adjunctive items and services for which we
believe payment would be appropriately packaged into payment for the
primary service that they support. Specifically, we examined the HCPCS
code definitions (including CPT code descriptors) and hospital
outpatient department billing patterns to determine whether there were
categories of codes for which packaging would be appropriate according
to existing OPPS packaging policies or a logical expansion of those
existing OPPS packaging policies.
For CY 2026, we are not proposing any changes to the overall
packaging policy discussed. We propose to continue to conditionally
package the costs of selected newly identified ancillary services into
payment for a primary service where we believe that the packaged item
or service is integral, ancillary, supportive, dependent, or adjunctive
to the provision of care that was reported by the primary service HCPCS
code.
c. Payment for Diagnostic Radiopharmaceuticals
(1) Background on OPPS Packaging Policy for Diagnostic
Radiopharmaceuticals
Under the OPPS, we package several categories of nonpass-through
drugs, biologicals, and radiopharmaceuticals, regardless of the cost of
the products. Because the products are packaged according to the
policies in Sec. 419.2(b), we refer to them as ``policy-packaged''
drugs, biologicals, and radiopharmaceuticals. In particular, under
Sec. 419.2(b)(15), payment for drugs, biologicals, and, prior to CY
2025, all radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure are packaged with the payment for the
related procedure or service. Packaging costs into a single aggregate
payment for a service, encounter, or episode of care is a fundamental
principle that distinguishes a prospective payment system from a fee
schedule. In general, packaging the costs of supportive items and
services into the payment for the primary procedure or service with
which they are associated encourages hospital efficiencies and enables
hospitals to manage their resources with maximum flexibility.
In the CY 2008 OPPS/ASC final rule with comment period, we
finalized the packaging status of diagnostic radiopharmaceuticals as
part of our overall enhanced packaging approach for the CY 2008 OPPS
and subsequent years (72 FR 66635 through 66641). Importantly, we noted
that we believe diagnostic radiopharmaceuticals are always intended to
be used with a diagnostic nuclear medicine procedure and function as
supplies when used in a diagnostic test or procedure, making it
appropriate to package the payment for the diagnostic
radiopharmaceutical into the payment for the related nuclear medicine
procedure. Higher cost diagnostic radiopharmaceuticals were one
specific type of product that, prior to CY 2025, was policy packaged
under the category described by Sec. 419.2(b)(15). Since we
implemented this policy in CY 2008, interested parties raised concerns
regarding policy packaging of diagnostic radiopharmaceuticals.
In the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222),
we stated that we continue to believe diagnostic radiopharmaceuticals
are always intended to be used with a diagnostic nuclear medicine
procedure and function as supplies when used in a diagnostic test or
procedure, generally making it appropriate to package payment for them
with payment for the related nuclear medicine procedure. However, we
stated there are certain situations in which the packaged payment
amount attributed to the diagnostic radiopharmaceutical used in an
imaging procedure assigned to a nuclear medicine APC may not adequately
account for the cost of a diagnostic radiopharmaceutical that has a
significantly higher cost, but lower utilization relative to the other
diagnostic radiopharmaceuticals that may be used with the procedure.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948
through 93963) we finalized a policy to pay separately for any
diagnostic radiopharmaceutical with a per day cost greater than $630
for CY 2025. We propose to use the same methodology that was finalized
in the CY 2025 OPPS/ASC final rule with comment period in order to
calculate the per day costs for diagnostic radiopharmaceuticals for CY
2026 and future years (89 FR 93953 through 93955). We noted that any
diagnostic radiopharmaceutical with a per day cost at or below that
threshold will continue to be policy packaged under our longstanding
policy at Sec. 419.2(b)(15). Additionally, we finalized the policy
that starting in CY 2026 and for subsequent years, we will update the
threshold amount of $630 by a forecast of the Producer Price Index
(PPI) for Pharmaceuticals for Human
[[Page 33504]]
Use, Prescription (Bureau of Labor Statistics (BLS) series code
WPUSI07003) from IHS Global, Inc (IGI) (89 FR 93955).
In the CY 2025 OPPS/ASC final rule with comment period, we also
finalized a policy to pay for nonpass-through, separately payable
diagnostic radiopharmaceuticals with per day costs above the designated
threshold based on our authority under section 1833(t)(14)(A)(iii)(II)
of the Act. As we found that the ASP data we had was not usable for the
purpose of paying for diagnostic radiopharmaceuticals, we finalized a
policy to pay for qualifying nonpass-through diagnostic
radiopharmaceuticals with claims data based on mean unit cost data
derived from hospital claims. Additionally, we finalized corresponding
modifications to the regulation text at Sec. 419.2(b)(15) and Sec.
419.41 to codify our finalized payment policy for diagnostic
radiopharmaceuticals and our existing policy for therapeutic
radiopharmaceuticals. For additional information regarding the policy
finalized for CY 2025, reference 89 FR 93948 through 93963.
(2) Proposed Diagnostic Radiopharmaceutical Packaging Threshold
For CY 2026, we propose to continue the policy finalized in CY
2025. Specifically, we propose to continue to calculate the per day
cost of diagnostic radiopharmaceuticals based on the methodology
described in section V.B.1.b. of this proposed rule, which relies on
the methodology finalized in the CY 2006 OPPS final rule with comment
period (70 FR 68636 through 68638).
As finalized in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93955), starting in the OPPS/ASC rulemaking for CY 2026 and for
subsequent years, we stated we would update the proposed threshold
amount of $630 by a forecast of the PPI for Pharmaceuticals for Human
Use, Prescription (BLS series code WPUSI07003) from IHS Global, Inc
(IGI) by using most recently available four-quarter moving average PPI
levels to trend from the third quarter of the year 2 years prior to the
applicable calendar year to the third quarter of the year prior to the
applicable calendar year (for example, from the third quarter of 2024
to the third quarter of 2025 for CY 2026). We propose a technical
refinement to this policy. We propose to use the most recently
available four-quarter moving average PPI levels to trend the CY 2025
final threshold forward from the third quarter of the CY 2025 to the
third quarter of the payment year (CY 2026) and round the resulting
dollar amount to the nearest $5 increment. We believe using the most
recently available four-quarter moving average PPI levels more
appropriately updates the packaging threshold from CY 2025 for payment
in CY 2026. For CY 2027 and subsequent updates, we therefore, propose
to trend the CY 2025 threshold of $630 forward using the four-quarter
moving average PPI levels for Pharmaceuticals for Human Use,
Prescription for CY 2025 (third quarter) forward using the PPI for
Pharmaceuticals for Human Use, Prescription for the applicable payment
year (third quarter). This is the same as the update factor used for
the OPPS drug packaging threshold, where we originally used the four-
quarter moving average PPI levels for Pharmaceutical Preparations,
Prescription (BLS series code WPUSI07003, formerly BLS series code
32541DRX) to trend the $50 threshold forward from the third quarter of
CY 2005 (when the Pub. L. 108-173 mandated threshold became effective)
to the third quarter of the applicable payment year (71 FR 68085 and
68086).
Therefore, for CY 2026, we propose to update the CY 2025 $630
threshold amount by the four-quarter moving average PPI levels for
Pharmaceuticals for Human Use, Prescription to trend the $630 threshold
forward. Specifically, we propose to use the most recently available
forecast of the four-quarter moving average PPI levels for
Pharmaceutical for Human Use, Prescription from the third quarter of
2025 to the third-quarter of 2026, and to round the resulting dollar
amount to the nearest $5 increment. Based on this methodology, we
trended the $630 threshold forward and rounded the resulting dollar
amount ($654.23) to the nearest $5 increment, which yields a proposed
figure of $655 per day for CY 2026. Consistent with our methodology and
practices listed in section V.B.1.b. of this proposed rule, we also
propose that if more recent data are subsequently available (for
example, a more recent estimate of the PPI for Pharmaceuticals for
Human Use, Prescription), we would use such data, if appropriate, to
determine the CY 2026 diagnostic radiopharmaceutical packaging
threshold in the final rule.
(3) Amount of Separate Payment for Diagnostic Radiopharmaceuticals
Exceeding the Threshold
As discussed in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93955 through 93959), once we determine that the per day cost of
a nonpass-through diagnostic radiopharmaceutical exceeds the cost
threshold, proposed to be $655 per day for CY 2026, we will then assign
that radiopharmaceutical to an APC, making it a specified covered
outpatient drug (SCOD) per section 1833(t)(14)(B) of the Act. We
propose to continue our current policy for CY 2026, and propose to pay
for those nonpass-through, separately payable diagnostic
radiopharmaceuticals based on our authority under section
1833(t)(14)(A)(iii)(II) of the Act. While, under this authority, we
would ordinarily use the ASP methodology under section 1847A of the
Act, we continue to find that the ASP data we have is not usable for
payment purposes. We continue to believe that arithmetic Mean Unit Cost
(MUC) would be an appropriate proxy for the average price for a
diagnostic radiopharmaceutical for a given year, as it is calculated
based on the average costs for a particular year and is directly
reflective of the actual cost data that hospitals submit to CMS.
Therefore, we propose to continue our current policy and propose for CY
2026 to pay qualifying diagnostic radiopharmaceuticals with per day
costs above the diagnostic radiopharmaceutical packaging threshold,
based on their arithmetic MUC, which would be derived from calendar
year 2024 claims data.
Although we propose to base payment for qualifying
radiopharmaceuticals on their arithmetic MUC for CY 2026, we continue
to encourage manufacturers to submit ASP information for diagnostic
radiopharmaceuticals, if possible. While we propose to continue to use
MUC to pay for separately payable diagnostic radiopharmaceuticals in CY
2026, manufacturers can begin, or continue, to report ASP data for
potential future use in paying for diagnostic radiopharmaceuticals. For
CY 2026, ASP reporting is voluntary for diagnostic radiopharmaceuticals
paid under the OPPS. We encourage interested parties to submit comments
regarding potential issues that may arise that prevent appropriate ASP
reporting for diagnostic radiopharmaceuticals. We refer readers to the
CY 2025 OPPS/ASC final rule with comment period as it discusses some of
the known concerns regarding ASP reporting for diagnostic
radiopharmaceuticals (89 FR 93948 through 93963). We reiterate our
stance from the CY 2025 OPPS/ASC final rule with comment period, that
if we were to use average sales price as the basis of calculating a
payment, we believe there must be more consistent, validated, and
universal reporting in order for ASP to
[[Page 33505]]
be a viable payment methodology (89 FR 93961).
We also reiterate, as we stated in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 93957), that there could be potential value
in the use of ASP data for payment purposes for diagnostic
radiopharmaceuticals when reported correctly and by all manufacturers
who manufacture a product that is described by a given HCPCS code. We
continue to believe that the use of ASP information for OPPS payment
could provide an opportunity to improve payment accuracy for separately
payable diagnostic radiopharmaceuticals by applying an established
methodology that has already been successfully implemented under the
OPPS for other separately payable drugs and biologicals, as well as
therapeutic radiopharmaceuticals.
In order to facilitate potential future payment for diagnostic
radiopharmaceuticals on ASP, we are seeking comment from interested
parties on how CMS can ensure more consistent, validated, and universal
reporting in order for ASP to be a viable payment methodology utilized
in future rulemaking. For example, we are seeking comment on how CMS
may update its past guidance, Submission of OPPS ASP Data for Nonpass-
Through Separately Payable Therapeutic Radiopharmaceuticals and
Radiopharmaceuticals with Pass-Through Status,\6\ in order to reflect
current clinical practices and to reflect ASP reporting for diagnostic
radiopharmaceuticals.
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\6\ <a href="https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf">https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf</a>.
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Additionally, as discussed in section V.B.5. of this proposed rule
(Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes but Without OPPS Hospital Claims
Data), we propose to set the payment rate for new diagnostic
radiopharmaceuticals that exceed the diagnostic radiopharmaceutical
packaging threshold and with HCPCS codes, but which do not have pass-
through status and are without claims data at ASP plus 6 percent. If
ASP data for these diagnostic radiopharmaceuticals are not available,
we propose to pay WAC plus 3 percent during the product's initial sales
period, consistent with our policy described in section V.B.2. of this
proposed rule. If the WAC also is unavailable, we propose to make
payment for new diagnostic radiopharmaceuticals at 95 percent of the
products' most recent AWP. Following the initial sales period, a
payment rate of WAC plus 6 percent would apply, if ASP data for these
diagnostic radiopharmaceuticals remain unavailable. We believe the
volume of products in this category will typically be very low;
however, in these rare situations, we believe it would continue to be
appropriate to use ASP, WAC plus 3 or 6 percent, or 95 percent of AWP
until a MUC is available. As stated in the CY 2025 OPPS/ASC final rule
with comment period, we stated we believe it would be appropriate to
use this payment hierarchy until a MUC is available. There is typically
only one manufacturer for a diagnostic radiopharmaceutical that is new
and described by a HCPCS code, but without claims data, so CMS does not
have to ensure all manufacturers are reporting ASP for that particular
HCPCS code prior to establishing a separate payment amount based on
ASP. Additionally, although reporting of ASP is not a condition of CMS
approving a HCPCS application, CMS has the opportunity to actively
engage with the manufacturer, or sponsor of a HCPCS application, during
the HCPCS application process. This allows for ongoing dialogue and
education regarding the unique ASP reporting requirements that may be
associated with a particular product, including how to ensure the
reported ASP aligns with the dose descriptor for the newly assigned
HCPCS code (89 FR 93958). We believe the hierarchy previously specified
is appropriate to determine the payment for a diagnostic
radiopharmaceutical that is new and described by a HCPCS code, but
without claims data, as it is consistent with the typical hierarchy
associated with payment for drugs and biologicals paid under the OPPS
as discussed in section V.A. and V.B. of this proposed rule.
(4) Qualifying Diagnostic Radiopharmaceuticals Above the Diagnostic
Radiopharmaceutical Packaging Threshold
The HCPCS codes that describe diagnostic radiopharmaceuticals with
per day costs that exceed the proposed diagnostic radiopharmaceutical
packaging threshold are proposed to be assigned to a status indicator
of ``K'', indicating separate payment to be paid based on that HCPCS
code's arithmetic MUC. A proposed APC and a proposed payment rate would
be assigned as shown in Addendum B to this proposed rule. HCPCS codes
that describe diagnostic radiopharmaceuticals with per day costs that
are at or below the proposed diagnostic radiopharmaceutical packaging
threshold are proposed to continue to be assigned to a status indicator
of ``N'', indicating packaged payment.
The proposed list of diagnostic radiopharmaceuticals that we
calculated as having per day costs that exceed $655 and their proposed
status indicators can be found in Table 4.
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Proposed definitions of status indicators can be found in Addendum
D1 to this proposed rule. Addenda to this proposed rule can be found on
the CMS OPPS web page.
4. Proposed Implementation of Section 4135 of the Consolidated
Appropriations Act (CAA), 2023
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief,
amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to
provide for temporary additional payments for non-opioid treatments for
pain relief (as that term is defined in section 1833(t)(16)(G)(i) of
the Act). In particular, section 1833(t)(16)(G) of the Act provides
that with respect to a non-opioid treatment for pain relief furnished
on or after January 1, 2025, and before January 1, 2028, the Secretary
shall not package payment for the non-opioid treatment for pain relief
into payment for a covered OPD service (or group of services) and shall
make an additional payment for the non-opioid treatment for pain relief
as specified in clause (ii) of that section. Clauses (ii) and (iii) of
section 1833(t)(16)(G) of the Act provide for the amount of additional
payment and set a limitation on that amount, respectively.
The required additional payments began on January 1, 2025, based on
the policy finalized in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94343 through 94361). In section XIII.F. of this proposed
rule, we propose to continue for CY 2026 the policy finalized in the CY
2025 OPPS/ASC final rule with comment period. We also propose non-
opioid treatments for pain relief that would qualify under this policy
for CY 2026 and seek public comment on those product evaluations.
5. Calculation of OPPS Scaled Payment Weights
We established a policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68283) of using geometric mean-based APC costs to
calculate relative payment weights under the OPPS. In the CY 2025 OPPS/
ASC final rule with comment period (89 FR 93964 through 93965), we
applied this policy and calculated the relative
[[Page 33507]]
payment weights for each APC for CY 2025 that were shown in Addenda A
and B of the CY 2025 OPPS/ASC final rule with comment period (which
were made available via the internet on the CMS website) using the APC
costs discussed in sections II.A.1. and II.A.2. of the CY 2025 OPPS/ASC
final rule with comment period (89 FR 93921 through 93947). For CY
2026, as we did for CY 2025, we propose to continue to apply the policy
established in CY 2013 and calculate relative payment weights for each
APC for CY 2026 using geometric mean-based APC costs.
For CY 2012 and CY 2013, outpatient clinic visits were assigned to
one of five levels of clinic visit APCs, with APC 0606 representing a
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75043), we finalized a policy that created
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for
assessment and management of a patient), representing all clinic visits
under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital
Clinic Visits). We also finalized a policy to use CY 2012 claims data
to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on
the total geometric mean cost of the levels one through five CPT
Evaluation or Assessment and Management (E/M) codes for clinic visits
previously recognized under the OPPS (CPT codes 99201 through 99205 and
99211 through 99215). In addition, we finalized a policy to no longer
recognize a distinction between new and established patient clinic
visits.
For CY 2016, we deleted APC 0634 and reassigned the outpatient
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and
Related Services) (80 FR 70372). For CY 2026, as we did for CY 2025, we
propose to continue to standardize all the relative payment weights to
APC 5012. We believe that standardizing relative payment weights to the
geometric mean of the APC to which HCPCS code G0463 is assigned
maintains consistency in calculating unscaled weights that represent
the cost of some of the most frequently provided OPPS services. For CY
2026, as we did for CY 2025, we propose to assign APC 5012 a relative
payment weight of 1.00 and to divide the geometric mean cost of each
APC by the geometric mean cost for APC 5012 to derive the unscaled
relative payment weight for each APC. The choice of the APC on which to
standardize the relative payment weights does not affect payments made
under the OPPS because we scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2026 is neither
greater than nor less than the estimated aggregate weight that would
have been calculated without the changes. To comply with this
requirement concerning the APC changes, we propose to compare the
estimated aggregate weight using the CY 2025 scaled relative payment
weights to the estimated aggregate weight using the proposed CY 2026
unscaled relative payment weights.
For CY 2025, we multiplied the CY 2025 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2024 claims to calculate the total relative
payment weight for each service. We then added together the total
relative payment weight for each of these services to calculate an
estimated aggregate weight for the year. For CY 2026, we propose to
apply the same process using the estimated CY 2026 unscaled relative
payment weights rather than scaled relative payment weights. We propose
to calculate the weight scalar by dividing the CY 2025 estimated
aggregate weight by the unscaled CY 2026 estimated aggregate weight.
For a detailed discussion of the weight scalar calculation, we
refer readers to the OPPS claims accounting document available on the
CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>. Click on the
link labeled ``Hospital Outpatient Prospective Payment System Proposed
Rule'' for 2026, which can be found under the heading ``Hospital
Outpatient Regulations and Notices'' and open the claims accounting
document link, which is labeled ``2026 Proposed Rule OPPS Claims
Accounting (PDF).''
We propose to compare the estimated unscaled relative payment
weights in CY 2026 to the estimated total relative payment weights in
CY 2025 using CY 2024 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we propose to adjust the calculated CY 2026 unscaled
relative payment weights for purposes of budget neutrality. We propose
to adjust the estimated CY 2026 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4624 to ensure that
the proposed CY 2026 relative payment weights are scaled to be budget
neutral. The proposed CY 2026 relative payment weights listed in
Addenda A and B to this proposed rule (which are available via the
internet on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>)
are scaled and incorporate the recalibration adjustments discussed in
sections II.A.1. and II.A.2. of this proposed rule.
Section 1833(t)(14) of the Act provides the methodology for payment
rates for certain specified covered outpatient drugs (SCODs). Section
1833(t)(14)(H) of the Act provides that additional expenditures
resulting from this paragraph shall not be taken into account in
establishing the conversion factor, weighting, and other adjustment
factors for 2004 and 2005 under paragraph (9) but shall be taken into
account for subsequent years. Therefore, the cost of those SCODs (as
discussed in section V.B.2. of this proposed rule) is included in the
budget neutrality calculations for the CY 2026 OPPS.
B. Proposed Conversion Factor Update
1. OPD Fee Schedule Increase Factor
Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges of the Act
(or an amount that is computed and applied with respect to covered OPD
services). In the FY 2026 IPPS/Long Term Care Hospital (LTCH) PPS
proposed rule (90 FR 18266), consistent with current law, based on IHS
Global, Inc.'s fourth quarter 2024 forecast, the proposed FY 2026 IPPS
market basket percentage increase was 3.2 percent. We note that under
our regular process for the CY 2026 OPPS/ASC final rule with comment
period, we would use the market basket update for the FY 2026 IPPS/LTCH
PPS final rule. If that forecast is different than the IPPS market
basket percentage increase used for this proposed rule, the CY 2026
OPPS/ASC final rule with comment period OPD fee schedule increase
factor would reflect that updated forecast of the market basket
percentage increase.
For CY 2026, we propose to use the estimate of the hospital
inpatient market basket percentage increase of 3.2
[[Page 33508]]
percent as one component to calculate the OPD fee schedule increase
factor.
2. Productivity Adjustment
Section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and
subsequent years, the OPD fee schedule increase factor under
subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``productivity adjustment''). In the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51689 through 51692), we finalized our methodology for
calculating and applying the productivity adjustment. The U.S.
Department of Labor's Bureau of Labor Statistics (BLS) publishes the
official measures of private nonfarm business productivity for the U.S.
economy. We note that previously the productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as
private nonfarm business multifactor productivity. Beginning with the
November 18, 2021, release of productivity data, BLS replaced the term
multifactor productivity (MFP) with total factor productivity (TFP).
BLS noted that this is a change in terminology only and will not affect
the data or methodology. As a result of the BLS name change, the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is now published by BLS as private nonfarm business total factor
productivity. However, as mentioned, the data and methods are
unchanged. Please see <a href="http://www.bls.gov">www.bls.gov</a> for the BLS historical published TFP
data. A complete description of IHS Global, Inc.'s (IGI) TFP projection
methodology is available on the CMS website at <a href="https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information">https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information</a>. In addition, we note
that beginning with the FY 2022 IPPS/LTCH PPS final rule, we refer to
this adjustment as the productivity adjustment rather than the MFP
adjustment to more closely track the statutory language in section
1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues
to rely on the same underlying data and methodology. In the FY 2026
IPPS/LTCH PPS proposed rule (90 FR 18266), the proposed productivity
adjustment for FY 2026 was 0.8 percentage point.
Therefore, we propose that the productivity adjustment for the CY
2026 OPPS/ASC would be 0.8 percentage point. We also propose that if
more recent data subsequently become available after the publication of
the CY 2026 OPPS/ASC proposed rule (for example, a more recent estimate
of the market basket percentage increase and/or the productivity
adjustment), we would use such data, if appropriate, to determine the
CY 2026 hospital inpatient market basket update and the productivity
adjustment for the final rule, which are components in calculating the
OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and
1833(t)(3)(F) of the Act.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we proposed for CY 2026 an OPD fee schedule increase factor of
2.4 percent for the CY 2026 OPPS/ASC (which is the proposed estimate of
the hospital inpatient market basket percentage increase of 3.2
percent, less the proposed 0.8 percentage point productivity
adjustment).
3. Other Conversion Factor Adjustments
To set the OPPS conversion factor for 2026, we propose to increase
the CY 2025 conversion factor of $89.169 by 2.4 percent. In accordance
with section 1833(t)(9)(B) of the Act, we propose to further adjust the
conversion factor for CY 2026 to ensure that any revisions made to the
wage index and rural adjustment are made on a budget neutral basis. We
propose to apply an overall budget neutrality factor of 1.0116 for wage
index changes by comparing proposed total estimated payments from our
simulation model using the proposed FY 2026 IPPS wage indexes to those
payments using the CY 2025 OPPS wage indexes. We further propose to
calculate an additional budget neutrality factor of 0.9955 to account
for our proposed policy to cap wage index reductions for hospitals at 5
percent on an annual basis and the CY 2026 proposed transitional
exception.
For CY 2026, we propose to maintain the current rural adjustment
policy, as discussed in section II.E. of this proposed rule with
comment period. Therefore, the proposed budget neutrality factor for
the rural adjustment is 1.0000.
We propose to calculate a CY 2026 budget neutrality adjustment
factor for the cancer hospital payment adjustment. We previously
finalized transitioning from the target PCR of 0.89 for CYs 2020
through 2023 (which included the 1.0 percentage point reduction as
required by section 16002(b) of the 21st Century Cures Act) and
incrementally reducing the target PCR by an additional 1.0 percentage
point for each calendar year, beginning with CY 2024, until the target
PCR equals the PCR of non-cancer hospitals calculated using the most
recent data minus 1.0 percentage point as required by section 16002(b)
of the 21st Century Cures Act. Based on the most recent data available
for this proposed rule, the target PCR now equals the PCR of non-cancer
hospitals. We propose a CY 2026 target PCR equal to 0.87 for the cancer
hospital payment adjustment, which includes the 1.0 percentage point
reduction as required by section 16002(b) of the 21st Century Cures
Act. We note that this proposed target PCR is the same as the final
target PCR established in the CY 2025 OPPS (89 FR 93979). Therefore, we
propose to apply a budget neutrality adjustment factor of 1.0000 to the
conversion factor for the cancer hospital payment adjustment.
For the CY 2026 OPPS/ASC proposed rule, we estimate that proposed
pass-through spending for drugs, biologicals, and devices for CY 2026
will equal approximately $587 million, which represents 0.59 percent of
total projected CY 2026 OPPS spending. Therefore, we state that the
proposed conversion factor would be adjusted by the difference between
the 0.37 percent estimate of pass-through spending for CY 2025 and the
0.59 percent estimate of proposed pass-through spending for CY 2026,
resulting in a proposed decrease to the conversion factor for CY 2026
of 0.22 percentage point.
We propose that estimated payments for outliers would be 1.0
percent of total OPPS payments for CY 2026. We estimate for the
proposed rule that outlier payments will be approximately 0.92 percent
of total OPPS payments in CY 2025; the 1.00 percent for proposed
outlier payments in CY 2026 would constitute a 0.08 percentage point
increase in payment in CY 2026 relative to CY 2025.
For CY 2026, we propose to use a conversion factor of $91.747 in
the calculation of the national unadjusted payment rates for those
items and services for which payment rates are calculated using
geometric mean costs; that is, the proposed OPD fee schedule
[[Page 33509]]
increase factor of 1.024 (2.4 percent for CY 2026), the required
proposed wage index budget neutrality adjustment of approximately
1.0116, the proposed 5 percent annual cap for individual hospital wage
index reductions adjustment and the proposed transitional exception of
approximately 0.9955, the proposed cancer hospital payment adjustment
of 1.0000, and the proposed adjustment factor of 0.9978 (a decrease of
0.22 percentage point) for the difference in pass-through spending, and
a 0.08 percentage point increase in projected OPPS spending for the
projected increase in outlier payments, which resulted in a proposed
conversion factor for CY 2026 of $91.747
For CY 2026, we also propose that hospitals that fail to meet the
reporting requirements of the Hospital OQR Program would continue to be
subject to a further reduction of 2.0 percentage points to the OPD fee
schedule increase factor. For hospitals that fail to meet the
requirements of the Hospital OQR Program, we propose to make all other
adjustments discussed above and apply an adjustment factor of 0.9805 to
the proposed CY 2026 conversion factor of $91.747. We propose that the
hospitals that fail to meet the requirements of the Hospital OQR
Program will use a reduced OPD fee schedule update factor of 0.4
percent (that is, the proposed OPD fee schedule increase factor of 2.4
percent further reduced by 2.0 percentage points).
For CY 2026, as previously discussed in section V.B.7. of this
proposed rule, we propose to reduce payments for non-drug items and
services for hospitals for whom the annual reduction to payment amounts
under Sec. 419.32(b)(1)(iv)(B)(12) applies with a 2 percentage point
reduction to the OPD fee schedule increase factor, explained in more
detail in section XIV.D. of this proposed rule. This would result in a
proposed reduced conversion factor for CY 2026 of approximately $89.958
for this group of hospitals. The calculations we performed to determine
the CY 2026 proposed conversion factor are shown in Table 5.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
C. Proposed Wage Index Changes
Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion
of the OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.A.5. of this proposed rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). We propose to continue this policy for
the CY 2026 OPPS/ASC. We refer readers to section II.C. of this
proposed rule for a description and an example of how the wage index
for a particular hospital is used to determine payment for the
hospital.
As discussed in the claims accounting narrative included with the
supporting documentation for this proposed rule (which is available via
the internet on the CMS website (<a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>)),
for estimating APC costs, we would standardize 60 percent of estimated
claims costs for geographic area wage variation using the same FY 2026
pre-reclassified wage index that we use under the IPPS to standardize
costs. This standardization process removes the effects of differences
in area wage levels from the determination of a national unadjusted
OPPS payment rate and copayment amount.
Under Sec. Sec. 419.41(c)(1) and 419.43(c) (published in the OPPS
April 7, 2000, final rule with comment period (65 FR 18495 and 18545)),
the OPPS ado
[…truncated; see source link]Indexed from Federal Register on July 17, 2025.
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