Rule2025-20907
Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots
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Published
November 25, 2025
Effective
January 1, 2026
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule with comment period revises 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. In addition, this final rule with comment period announces the closure of a teaching hospital and the opportunity to apply for available slots, and updates and refines 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, as well as summarizes comments received in response to a request for information on measure concepts regarding Well-Being and Nutrition for consideration in future years for the OQR, REHQR, and ASCQR programs.
Full Text
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<title>Federal Register, Volume 90 Issue 225 (Tuesday, November 25, 2025)</title>
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[Federal Register Volume 90, Number 225 (Tuesday, November 25, 2025)]
[Rules and Regulations]
[Pages 53448-54088]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-20907]
[[Page 53447]]
Vol. 90
Tuesday,
No. 225
November 25, 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, 413, et al.
45 CFR Part 180
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems; Quality Reporting Programs;
Overall Hospital Quality Star Rating; Hospital Price Transparency; and
Notice of Closure of a Teaching Hospital and Opportunity To Apply for
Available Slots; Direct-Interim-Final Rule
Federal Register / Vol. 90, No. 225 / Tuesday, November 25, 2025 /
Rules and Regulations
[[Page 53448]]
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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-FC]
RIN 0938-AV51
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems; Quality Reporting Programs;
Overall Hospital Quality Star Rating; Hospital Price Transparency; and
Notice of Closure of a Teaching Hospital and Opportunity To Apply for
Available Slots
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period revises 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. In addition, this final rule with comment
period announces the closure of a teaching hospital and the opportunity
to apply for available slots, and updates and refines 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, as well as summarizes comments received in
response to a request for information on measure concepts regarding
Well-Being and Nutrition for consideration in future years for the OQR,
REHQR, and ASCQR programs.
DATES:
Effective Date: The provisions of this rule are effective January
1, 2026.
Comment period: To be assured consideration, comments must be
received at one of the addresses provided below, by January 20, 2026.
Deadline for hospitals to submit applications for Available
Resident Slots: Application submissions for Round 26 are due no later
than February 19, 2026 (see section XXII.C. of this final rule with
comment period for further details on the application process).
ADDRESSES: In commenting, please refer to file code CMS-1834-FC.
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-FC, 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-FC, 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 410-786-7756 or <a href="/cdn-cgi/l/email-protection#155a60616574617c707b61454546557678663b7d7d663b727a63"><span class="__cf_email__" data-cfemail="7c3309080c1d08151912082c2c2f3c1f110f5214140f521b130a">[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#84e5f1f7ece5aaf3e5f7ecedeae3f0ebeac4e7e9f7aaececf7aae3ebf2"><span class="__cf_email__" data-cfemail="fb9a8e88939ad58c9a889392959c8f9495bb989688d5939388d59c948d">[email protected]</span></a> or Leone Kisler
at <a href="/cdn-cgi/l/email-protection#fc9099939299d297958f90998ebc9f918fd294948fd29b938a"><span class="__cf_email__" data-cfemail="660a03090803480d0f150a031426050b15480e0e1548010910">[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="d095bcb9a3b5fe92b1a2a2b9beb7b5a290b3bda3feb8b8a3feb7bfa6">[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#9adbcad9cafbf4fff6daf9f7e9b4f2f2e9b4fdf5ec"><span class="__cf_email__" data-cfemail="81c0d1c2d1e0efe4edc1e2ecf2afe9e9f2afe6eef7">[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#7f3e1d16181e1613513c1a0c1116143f1c120c5117170c51181009"><span class="__cf_email__" data-cfemail="9fdefdf6f8fef6f3b1dcfaecf1f6f4dffcf2ecb1f7f7ecb1f8f0e9">[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#4a072b3839222b64022f383e30282f382d0a29273964222239642d253c"><span class="__cf_email__" data-cfemail="8dc0ecfffee5eca3c5e8fff9f7efe8ffeacdeee0fea3e5e5fea3eae2fb">[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#195877706d78375b71786d7078597a746a3771716a377e766f"><span class="__cf_email__" data-cfemail="fbba95928f9ad5b9939a8f929abb989688d5939388d59c948d">[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#9dd3fce9f5fcf3b3cbf8effefce8e9f8eff8f3ddfef0eeb3f5f5eeb3faf2eb"><span class="__cf_email__" data-cfemail="c688a7b2aea7a8e890a3b4a5a7b3b2a3b4a3a886a5abb5e8aeaeb5e8a1a9b0">[email protected]</span></a>.
Blood and Blood Products, contact Gil Ngan via email at
<a href="/cdn-cgi/l/email-protection#7c3b151052321b1d123c1f110f5214140f521b130a"><span class="__cf_email__" data-cfemail="db9cb2b7f595bcbab59bb8b6a8f5b3b3a8f5bcb4ad">[email protected]</span></a>.
Cancer Hospital Payments, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#0b5868647f7f255f6a676a6c6a4b68667825636378256c647d"><span class="__cf_email__" data-cfemail="5704343823237903363b36303617343a24793f3f2479303821">[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#0e4967622040696f604e6d637d2066667d20696178"><span class="__cf_email__" data-cfemail="a4e3cdc88aeac3c5cae4c7c9d78accccd78ac3cbd2">[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#6c2900051f09422e0d1e1e05020b091e2c0f011f4204041f420b031a"><span class="__cf_email__" data-cfemail="094c65607a6c274b687b7b60676e6c7b496a647a2761617a276e667f">[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#4d1e2e22393963192c212c2a2c0d2e203e6325253e632a223b"><span class="__cf_email__" data-cfemail="4615252932326812272a27212706252b35682e2e3568212930">[email protected]</span></a>.
Graduate Medical Education (GME) Accreditation, contact
<a href="/cdn-cgi/l/email-protection#14505557547779673a7c7c673a737b62"><span class="__cf_email__" data-cfemail="6c282d2f2c0f011f4204041f420b031a">[email protected]</span></a>.
Hospital Outpatient Quality Reporting (OQR) Program policies,
contact Kimberly Go via email at <a href="/cdn-cgi/l/email-protection#753e1c18171007190c5b321a351618065b1d1d065b121a03"><span class="__cf_email__" data-cfemail="a8e3c1c5cacddac4d186efc7e8cbc5db86c0c0db86cfc7de">[email protected]</span></a>.
Hospital Outpatient Quality Reporting (OQR) Program measures,
contact Kristina Rabarison via email at
<a href="/cdn-cgi/l/email-protection#abe0d9c2d8dfc2c5ca85f9cac9cad9c2d8c4c5ebc8c6d885c3c3d885ccc4dd"><span class="__cf_email__" data-cfemail="bcf7ced5cfc8d5d2dd92eedddeddced5cfd3d2fcdfd1cf92d4d4cf92dbd3ca">[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#a9ecc5c0dacc87ebc8dbdbc0c7ceccdbe9cac4da87c1c1da87cec6df"><span class="__cf_email__" data-cfemail="1550797c66703b577467677c7b727067557678663b7d7d663b727a63">[email protected]</span></a>.
Hospital Price Transparency, contact Sarah Wheat via email at
<a href="/cdn-cgi/l/email-protection#3666445f555362445758454657445358554f7e5945465f42575a755e574451534576555b45185e5e4518515940"><span class="__cf_email__" data-cfemail="6232100b01073610030c11120310070c011b2a0d11120b16030e210a031005071122010f114c0a0a114c050d14">[email protected]</span></a>.
Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via
email at <a href="/cdn-cgi/l/email-protection#83c2e1eae4e2eaefadc0e6f0edeae8c3e0eef0adebebf0ade4ecf5"><span class="__cf_email__" data-cfemail="68290a010f090104462b0d1b060103280b051b4600001b460f071e">[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#d793969497b4baa4f9bfbfa4f9b0b8a1"><span class="__cf_email__" data-cfemail="7e3a3f3d3e1d130d5016160d50191108">[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#602e011408010e4e360512030115140512050e20030d134e0808134e070f16"><span class="__cf_email__" data-cfemail="fab49b8e929b94d4ac9f88999b8f8e9f889f94ba999789d4929289d49d958c">[email protected]</span></a>.
Medicare OPPS Drug Acquisition Cost Survey, contact Cory Duke
via email at <a href="/cdn-cgi/l/email-protection#33705c414a1d7746585673505e401d5b5b401d545c45"><span class="__cf_email__" data-cfemail="8ccfe3fef5a2c8f9e7e9ccefe1ffa2e4e4ffa2ebe3fa">[email protected]</span></a> or Gil Ngan at
<a href="/cdn-cgi/l/email-protection#12557b7e3c5c75737c52717f613c7a7a613c757d64"><span class="__cf_email__" data-cfemail="95d2fcf9bbdbf2f4fbd5f6f8e6bbfdfde6bbf2fae3">[email protected]</span></a> or Nate Vercauteren at
<a href="/cdn-cgi/l/email-protection#6c220d18040d02423a091e0f0d1918091e09022c0f011f4204041f420b031a"><span class="__cf_email__" data-cfemail="4c022d38242d22621a293e2f2d3938293e29220c2f213f6224243f622b233a">[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#f9bc95908a9cd7bb988b8b90979e9c8bb99a948ad791918ad79e968f"><span class="__cf_email__" data-cfemail="b2f7dedbc1d79cf0d3c0c0dbdcd5d7c0f2d1dfc19cdadac19cd5ddc4">[email protected]</span></a>.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at <a href="/cdn-cgi/l/email-protection#bfecdcd0cbcb91ebded3ded8deffdcd2cc91d7d7cc91d8d0c9"><span class="__cf_email__" data-cfemail="396a5a564d4d176d5855585e58795a544a1751514a175e564f">[email protected]</span></a>.
Non-Opioid Policy or Implementation of Section 4135 of the
Consolidated Appropriations Act (CAA), 2023, contact Cory Duke via
email at <a href="/cdn-cgi/l/email-protection#9eddf1ece7b0daebf5fbdefdf3edb0f6f6edb0f9f1e8"><span class="__cf_email__" data-cfemail="23604c515a0d6756484663404e500d4b4b500d444c55">[email protected]</span></a> or Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#99d7f0faf6f5fcb7d4f8ebfaf6ead9faf4eab7f1f1eab7fef6ef"><span class="__cf_email__" data-cfemail="f9b7909a96959cd7b4988b9a968ab99a948ad791918ad79e968f">[email protected]</span></a>.
OPPS Brachytherapy, contact Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#9ad9f5e8e3b4deeff1ffdaf9f7e9b4f2f2e9b4fdf5ec"><span class="__cf_email__" data-cfemail="da99b5a8a3f49eafb1bf9ab9b7a9f4b2b2a9f4bdb5ac">[email protected]</span></a> and Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#1b4878746f6f354f7a777a7c7a5b78766835737368357c746d"><span class="__cf_email__" data-cfemail="88dbebe7fcfca6dce9e4e9efe9c8ebe5fba6e0e0fba6efe7fe">[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#9cd9eef5fff7b2dff4e9fdf2fbdcfff1efb2f4f4efb2fbf3ea"><span class="__cf_email__" data-cfemail="b7f2c5ded4dc99f4dfc2d6d9d0f7d4dac499dfdfc499d0d8c1">[email protected]</span></a> or Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#beedddd1caca90eadfd2dfd9dffeddd3cd90d6d6cd90d9d1c8"><span class="__cf_email__" data-cfemail="0350606c77772d57626f62646243606e702d6b6b702d646c75">[email protected]</span></a>.
[[Page 53449]]
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Gil Ngan via email at <a href="/cdn-cgi/l/email-protection#185f717436567f7976587b756b3670706b367f776e"><span class="__cf_email__" data-cfemail="b9fed0d597f7ded8d7f9dad4ca97d1d1ca97ded6cf">[email protected]</span></a>, Cory
Duke via email at <a href="/cdn-cgi/l/email-protection#de9db1aca7f09aabb5bb9ebdb3adf0b6b6adf0b9b1a8"><span class="__cf_email__" data-cfemail="2b68445952056f5e404e6b48465805434358054c445d">[email protected]</span></a>, or Nate Vercauteren via
email at <a href="/cdn-cgi/l/email-protection#6826091c000906463e0d1a0b091d1c0d1a0d06280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="7a341b0e121b14542c1f08191b0f0e1f081f143a19170954121209541d150c">[email protected]</span></a>.
OPPS New Technology Procedures/Services, contact the New
Technology APC mailbox at <a href="/cdn-cgi/l/email-protection#d29cb7a586b7b1ba938291b3a2a2bebbb1b3a6bbbdbca192b1bfa1fcbabaa1fcb5bda4"><span class="__cf_email__" data-cfemail="97d9f2e0c3f2f4ffd6c7d4f6e7e7fbfef4f6e3fef8f9e4d7f4fae4b9ffffe4b9f0f8e1">[email protected]</span></a>.
OPPS Packaged Items/Services, contact Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#0d4e627f7423497866684d6e607e2365657e236a627b"><span class="__cf_email__" data-cfemail="febd918c87d0ba8b959bbe9d938dd096968dd0999188">[email protected]</span></a>.
OPPS Pass-Through Devices, contact the Device Pass-Through
mailbox at <a href="/cdn-cgi/l/email-protection#8cc8e9fae5efe9dcd8edfcfce0e5efedf8e5e3e2ffccefe1ffa2e4e4ffa2ebe3fa"><span class="__cf_email__" data-cfemail="f3b796859a9096a3a79283839f9a9092879a9c9d80b3909e80dd9b9b80dd949c85">[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#3f725e4d56515e11744a4c5751564d50495e7f5c524c1157574c11585049"><span class="__cf_email__" data-cfemail="6c210d1e05020d4227191f0402051e031a0d2c0f011f4204041f420b031a">[email protected]</span></a> or
Tonya Gierke at <a href="/cdn-cgi/l/email-protection#e9bd86879088c7ae808c9b828ca98a849ac781819ac78e869f"><span class="__cf_email__" data-cfemail="df8bb0b1a6bef198b6baadb4ba9fbcb2acf1b7b7acf1b8b0a9">[email protected]</span></a>.
Overall Hospital Quality Star Rating policies, contact Tyson
Nakashima Sr. via email <a href="/cdn-cgi/l/email-protection#d98da0aab6b7f797b8b2b8aab1b0b4b899bab4aaf7b1b1aaf7beb6af"><span class="__cf_email__" data-cfemail="cc98b5bfa3a2e282ada7adbfa4a5a1ad8cafa1bfe2a4a4bfe2aba3ba">[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#77273f2727160e1a12190327181b1e140e37141a04591f1f0459101801"><span class="__cf_email__" data-cfemail="015149515160786c646f75516e6d68627841626c722f6969722f666e77">[email protected]</span></a>.
Remote Services, contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#bbfed7d2c8de95f9dac9c9d2d5dcdec9fbd8d6c895d3d3c895dcd4cd"><span class="__cf_email__" data-cfemail="66230a0f150348240714140f0801031426050b15480e0e1548010910">[email protected]</span></a> or Nate Vercauteren via email at
<a href="/cdn-cgi/l/email-protection#c38da2b7aba2aded95a6b1a0a2b6b7a6b1a6ad83a0aeb0edababb0eda4acb5"><span class="__cf_email__" data-cfemail="b9f7d8cdd1d8d797efdccbdad8cccddccbdcd7f9dad4ca97d1d1ca97ded6cf">[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#7b3a15120f1a5539131a0f121a3b18160855131308551c140d"><span class="__cf_email__" data-cfemail="72331c1b06135c301a13061b1332111f015c1a1a015c151d04">[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#c68ba3aaafb5b5a7e88ea7a1a3b486a5abb5e8aeaeb5e8a1a9b0"><span class="__cf_email__" data-cfemail="347951585d4747551a7c55535146745759471a5c5c471a535b42">[email protected]</span></a>.
Skin Substitute Products, contact Susan Janeczko via email at
<a href="/cdn-cgi/l/email-protection#174462647679395d767972746d7c7857747a64397f7f6439707861"><span class="__cf_email__" data-cfemail="174462647679395d767972746d7c7857747a64397f7f6439707861">[email protected]</span></a>, Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#3c7f534e4512784957597c5f514f1254544f125b534a"><span class="__cf_email__" data-cfemail="b6f5d9c4cf98f2c3ddd3f6d5dbc598dedec598d1d9c0">[email protected]</span></a>, or Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#d698bfb5b9bab3f89bb7a4b5b9a596b5bba5f8bebea5f8b1b9a0"><span class="__cf_email__" data-cfemail="d997b0bab6b5bcf794b8abbab6aa99bab4aaf7b1b1aaf7beb6af">[email protected]</span></a>.
Software as a Service, contact Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#ffb1969c90939ad1b29e8d9c908cbf9c928cd197978cd1989089"><span class="__cf_email__" data-cfemail="7937101a16151c5734180b1a160a391a140a5711110a571e160f">[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#d59bb4a1bdb4bbfb83b0a7b6b4a0a1b0a7b0bb95b6b8a6fbbdbda6fbb2baa3"><span class="__cf_email__" data-cfemail="ce80afbaa6afa0e098abbcadafbbbaabbcaba08eada3bde0a6a6bde0a9a1b8">[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#baf5cfcecadbced3dfd4ceeaeae9fad9d7c994d2d2c994ddd5cc"><span class="__cf_email__" data-cfemail="eca399989c8d9885898298bcbcbfac8f819fc284849fc28b839a">[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#abeaf8e8fbfbf8ebc8c6d885c3c3d885ccc4dd"><span class="__cf_email__" data-cfemail="f1b0a2b2a1a1a2b1929c82df999982df969e87">[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.
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, 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 final rule with comment period, 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.
I. Summary and Background
A. Executive Summary of This Document
1. Purpose
In this final rule with comment period, we are updating 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
final rule with comment period 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 final rule with comment period. In addition, this
final rule with comment period announces the closure of a teaching
hospital and the opportunity to apply for available slots, and updates
the requirements for the Hospital Outpatient Quality Reporting (OQR)
Program, the Rural Emergency Hospital Quality Reporting (REHQR)
Program, the Ambulatory Surgical Center Quality Reporting (ASCQR)
Program, and Overall Hospital Quality Star Rating. Finally, we are
updating and refining the requirements for hospitals to make public
their standard charges and CMS enforcement of hospital price
transparency (HPT) regulations.
2. Summary of the Major Provisions
<bullet> OPPS Update: For CY 2026, we are increasing the payment
rates under the OPPS by an outpatient department (OPD) fee schedule
increase factor of 2.6 percent. This increase factor is based on the
final inpatient hospital market basket percentage increase of 3.3
percent for inpatient services paid under the hospital inpatient
prospective payment system (IPPS), reduced by a final productivity
adjustment of 0.7 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 $101.0 billion, an
increase of approximately $8.0 billion compared to estimated CY 2025
OPPS payments.
[[Page 53450]]
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 final 340B remedy offset, payments for
services at hospitals subject to the 340B remedy offset will be reduced
by 0.5 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 final rule
with comment period, we are extending 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 are increasing payment rates under the
ASC payment system by 2.6 percent for ASCs that meet the quality
reporting requirements under the ASCQR Program. This increase is based
on a final hospital market basket percentage increase of 3.3 percent
reduced by a final productivity adjustment of 0.7 percentage point.
Based on this final 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 $450 million
compared to estimated CY 2025 Medicare payments.
<bullet> Device Pass-Through Payment Applications: For CY 2026, we
received eight complete applications for device pass-through payments.
We sought public comment on seven applications and make final
determinations on these applications in this final rule with comment
period.
<bullet> Changes to the List of ASC Covered Surgical Procedures and
Ancillary Services Lists: For CY 2026, we are expanding the ASC covered
procedures list (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 are
adding 276 procedures to the ASC CPL based on these criteria changes
and adding an additional 271 codes to the ASC CPL that we are
finalizing for removal from the IPO list for CY 2026.
<bullet> Changes to the Inpatient Only (IPO) List: For CY 2026, we
are phasing 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
are finalizing 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 are also codifying our definition
for domestically produced Mo-99, and to establish new HCPCS C-code
C9176 (Tc-99m from domestically produced non-HEU Mo-99, [minimum 50
percent], full cost recovery add-on, per study dose).
<bullet> Cross-Program Updates for the Hospital Outpatient Quality
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR),
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs: We
are finalizing the removal of: (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 received comments regarding measure concepts related to well-being
and nutrition for future consideration in the Hospital OQR, REHQR, and
ASCQR Programs. We are finalizing our proposal 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 measure and policy updates, we are
finalizing: (1) adoption of the Emergency Care Access & Timeliness eCQM
with 1 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) removal of 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;
and (3) modification of 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 measure and policy updates,
we are finalizing the: (1) adoption of the Emergency Care Access &
Timeliness eCQM beginning with the CY 2027 reporting period/CY 2029
program determination; and (2) related eCQM data submission and
reporting requirements, including that REHs will 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: We are not finalizing the adoption of 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) at this time.
<bullet> Overall Hospital Quality Star Rating Modification to
Emphasize the Safety of Care Measure Group: We proposed to update the
methodology that will be used to calculate the Overall Hospital Quality
Star Rating through implementation of a 2-stage methodologic update. We
are finalizing our proposed updates to the methodology to emphasize the
[[Page 53451]]
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 is a narrow but focused transitional step that
limits 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 replaces the first stage update and reduces 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> Partial Hospitalization and Intensive Outpatient Programs:
We finalizing changes to our methodology used 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 will 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 also stabilizes 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> Notice of Intent to Conduct a Medicare OPPS Drugs
Acquisition Cost 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 are continuing our existing policy exempting procedures
that are removed from the 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, Medicare review contractor referrals to the
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 are also revising 42 CFR 412.3(d)(2) for clarity.
<bullet> Virtual Direct Supervision of Pulmonary Rehabilitation
(PR), Coronary Rehabilitation (CR), Intensive Coronary Rehabilitation
and Diagnostic Services. For CY 2026, we are revising 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> 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 are applying the previously finalized
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
of 0.5 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.
<bullet> Payment for Skin Substitute Products under the OPPS. For
CY 2026, we are finalizing a policy for CMS 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 are
finalizing a policy 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 are creating 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 are
creating: APC 6000 (PMA Skin Substitute Products); APC 6001 (510(k)
Skin Substitute Products); and APC 6002 (361 HCT/P Skin Substitute
Products). This will result in an initial payment rate of $127.14 for
each of the new APCs. We are 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 are finalizing a
policy 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 are
finalizing a policy to exempt rural Sole Community Hospitals from this
method to control the unnecessary volume of drug administration
services.
<bullet<ls-thn-eq> Final 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 this final rule with comment period, 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 are finalizing a policy that hospitals will 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 finalized change to the
methodology for calculating the IPPS MS-DRG relative weights to reflect
[[Page 53452]]
relative market-based pricing. Specifically, we are finalizing a
requirement for facilities to report market-based rate information on
the Medicare cost report; the hospital will be required to report the
median of the payer-specific negotiated charges by 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 are finalizing 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 finalized MS-
DRG relative weight methodology will utilize the finalized 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 prohibiting race-based
and other unlawful discrimination and to improve the accreditation
process, we are finalizing that accrediting organizations may not use
accreditation criteria that promote or encourage discrimination on the
basis of race, color, national origin, sex, age, disability, or
religion, including the use of those characteristics or intentional
proxies for those characteristics as a selection criterion for
employment, program participation, resource allocation, or similar
activities, opportunities, or benefits. The effective date of this
policy will be January 1, 2026.
<bullet<ls-thn-eq> Final Updates to Requirements for Hospitals to
Make Public a List of Their Standard Charges: We are finalizing our
proposals with modifications to the HPT regulations to enhance clarity
and standardization in hospital disclosure of standard charges.
Specifically, we are finalizing with modification revisions to 45 CFR
180.20 to add definitions for ``tenth (10th) percentile allowed
amount'', ``median allowed amount'', and ``ninetieth (90th) percentile
allowed amount'', which are values a hospital will encode when a payer-
specific negotiated charge is based on a percentage or algorithm, to
more accurately reflect the distribution of actual amounts that a
hospital has received for an item or service. In tandem with that, we
are finalizing revisions to Sec. 180.50 to remove the requirement for
hospitals to disclose the estimated allowed amount, and, instead,
require hospitals to disclose the 10th percentile, median, and 90th
percentile allowed amounts, as well as the count of allowed amounts, in
MRFs when payer-specific negotiated charges are based on percentages or
algorithms. We are also finalizing with modification our proposal to
require that hospitals use electronic data interchange (EDI) 835
electronic remittance advice (ERA) transaction data or an alternative,
equivalent source of remittance data to calculate and encode the
allowed amounts. We are finalizing our proposals to require that
hospitals comply with specific instructions regarding the methodology
that must be used to calculate such allowed amounts (including a
lookback period), with some modifications. Additionally, we are
finalizing, with modifications, our proposals to require hospitals to
encode the attestation statement and the name of the hospital chief
executive officer, president, or senior official designated to oversee
the encoding of true, accurate, and complete data in the MRF. To
advance the comparability of HPT data with other healthcare data, we
are finalizing our proposal to require that hospitals encode their
organizational, or Type 2, National Provider Identifier(s) (NPIs) in
the MRFs. These policies are effective as of January 1, 2026, but we
will delay enforcement of the requirements until April 1, 2026.
Finally, to encourage faster resolution and payment of CMPs, and in
exchange for a hospital's admission of having violated HPT
requirements, we are finalizing with clarifying edits our proposal to
update Sec. 180.90 to reduce the amount of a CMP by 35 percent, under
certain conditions, when a hospital waives its right to an ALJ hearing,
beginning January 1, 2026. These changes aim to improve transparency in
hospital pricing, facilitate efficient enforcement of the HPT
requirements, and empower consumers with actionable pricing
information.
3. Summary of Costs and Benefits
In section XXVI. of this final rule with comment period, we set
forth a detailed analysis of the regulatory and Federalism impacts that
the final changes will have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of all OPPS Changes
Table 167 in section XXVI.C. of this final rule with comment period
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 final policies in this
final rule with comment period will result in a 2.4 percent increase in
OPPS payments to providers for services. We estimate that total OPPS
payments for CY 2026, including beneficiary cost-sharing, to the
approximately 3,600 facilities paid under the OPPS (including general
acute care hospitals, children's hospitals, cancer hospitals, and
CMHCs) will increase by approximately $1.77 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 $275 million 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 policy to
calculate CMHC PHP and IOP costs based on 40 percent of the
corresponding proposed hospital-based PHP and IOP costs, we estimate a
2.2 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 final rule wage indexes will result in a 0.1
percent increase for urban hospitals under the OPPS and a 0.2 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 final rule with comment
period.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
For CY 2026, we are continuing 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
[[Page 53453]]
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 are finalizing 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 2.6 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 will experience an increase in payments of
approximately 2.8 percent and that rural hospitals will experience an
increase in payments of 2.4 percent. Classifying hospitals by teaching
status, we estimate non-teaching hospitals will experience an increase
in payments of 2.7 percent, minor teaching hospitals will experience an
increase in payments of 2.9 percent, and major teaching hospitals will
experience an increase in payments of 2.6 percent. We also classified
hospitals by the type of ownership. We estimate that hospitals with
voluntary ownership will experience an increase of 2.8 percent in
payments, while hospitals with government ownership will experience an
increase of 2.3 percent in payments. We estimate that hospitals with
proprietary ownership will experience an increase of 3.4 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 final CY 2026
payment rates, compared to estimated CY 2025 payment rates, ranges
between an increase of 2 percent and an increase of 12 percent.
f. Impacts of the 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 final rule, we are finalizing a methodology
for estimating the MS-DRG relative weights beginning in FY 2029 based
on the median payer-specific negotiated charge information we are
finalizing to collect on the cost report. We note that the estimated
total annual burden hours for this data collection 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 XXIII.E. of this
final rule with comment period for further analysis of this assessment.
g. Impacts of Hospital Price Transparency
We finalizing a policy 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 are also finalizing new attestation language that hospitals
must include in the machine-readable file (MRF) and requiring 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 are finalizing our proposal
to require hospitals to add their National Provider Identifiers (NPIs)
to the MRF. The policy will advance the comparability of standard
charge information across hospitals and of the hospital price
transparency (HPT) data with other healthcare data, including health
plan transparency data from the Transparency in Coverage (TiC) MRFs.
These new policies include a one-time burden of $1,461.80 per hospital,
and a total national cost of $10,840,708.80 ($1,461.80 x 7,416
hospitals). As discussed in detail in sections XIX. and XXIII. of this
final rule with comment period, 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 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-
[[Page 53454]]
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 final 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 (REHs).
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, requires that we consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
annually review (and
[[Page 53455]]
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 25, 2025. 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 two subcommittee
workgroups to provide preparatory meeting and subject support to the
larger panel. The two 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; and
<bullet> Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them.
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 25, 2025, meeting that these
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 2026 OPPS/ASC Proposed
We received approximately 3,039 timely pieces of correspondence on
the CY 2026 OPPS/ASC proposed rule that appeared in the Federal
Register on July 17, 2025 (90 FR 33476). We received comments from
elected officials, providers and suppliers, practitioners, and advocacy
groups. We provide summaries of the public comments, and our responses
are set forth in the various sections of this final rule with comment
period under the appropriate headings. We note that we received some
public comments that were outside the scope of the CY 2026 OPPS/ASC
proposed rule. Out-of-scope-public comments are not addressed in this
CY 2026 OPPS/ASC final rule with comment period.
G. 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 (89 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 proposed 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
[[Page 53456]]
93922), using CY 2024 claims data. That is, we proposed 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 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 the CY
2026 OPPS/ASC 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 the CY 2026 OPPS/ASC 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 proposed
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 the CY
2026 OPPS/ASC proposed rule. HCPCS codes that we proposed to add for CY
2026 are identified by asterisks (*) in the fourth column of Addendum
N.
We did not receive any public comments on our general proposal to
recalibrate the relative payment weights for each APC based on claims
and cost report data for HOPD services or on our proposed bypass code
process. We are finalizing as proposed the ``pseudo'' single claims
process and the CY 2026 proposed list of bypass codes, finalized in
Addendum N to this final rule with comment period (which is available
via the internet on the CMS website). For this final rule with comment
period, for the purpose of recalibrating the final APC relative payment
weights for CY 2026, we used approximately 81 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. For the 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 final rule with comment period 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>.
b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2026, we proposed 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 proposed 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 proposed
not to include the nonstandard cost centers reported in this way in the
OPPS ratesetting database construction.
We did not receive any public comments on the general CCR process
and therefore, we are finalizing our proposal for CY 2026 to continue
to use the hospital-specific overall ancillary and departmental CCRs to
convert charges to estimated costs through application of a revenue
code-to-cost center crosswalk and we are also finalizing the proposed
methodology.
2. Final Data Development and Calculation of Costs Used for Ratesetting
In this section of this final rule with comment period, 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 final 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 final 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
[[Page 53457]]
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 final payment rates for the CY 2026 OPPS/ASC final rule
with comment period.
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 final rule with comment period to calculate the costs
we used to establish the final relative payment weights used in
calculating the OPPS payment rates for CY 2026 shown in Addenda A and B
to this final rule with comment period (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 final rule with comment
period 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
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
proposed to continue to remove claim lines with modifier ``PN'' from
the ratesetting process.
We did not receive any public comments on our proposal to continue
to remove claim lines reported with modifier ``PN'' from the
ratesetting process and are finalizing as proposed.
For details of the claims accounting process used in this CY 2026
OPPS/ASC final rule with comment period, we refer readers to the claims
accounting narrative under supporting documentation for this final rule
with comment period 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 proposed 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
proposed 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 stated in the CY 2026 OPPS/ASC proposed rule (90 FR 33487) that
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.
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.
We did not receive public comments on this provision, and
therefore, we are finalizing without modification our proposal to
calculate the costs upon which the 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 are also
finalizing without modification our proposal to continue to establish
payment rates for blood and blood products using our blood-specific CCR
methodology, 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. Please refer to Addendum B to
this final rule with comment period (which is available via
[[Page 53458]]
the internet on the CMS website) for the final CY 2026 payment rates
for blood and blood products.
(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 proposed 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 proposed 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 the CY 2026 OPPS/ASC
proposed rule, we proposed to base the payment rates for brachytherapy
sources on the geometric mean unit costs for each source, consistent
with the methodology that we proposed for other items and services paid
under the OPPS, as discussed in section II.A.2. of the CY 2026 OPPS/ASC
proposed rule. We also proposed for CY 2026 and subsequent years to
continue the other payment policies for 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
proposed 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 proposed 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 the OPPS/ASC 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 were no CY 2024 claims available that reported HCPCS code
C2645 for the CY 2026 OPPS/ASC proposed rule. Therefore, in the absence
of claims data, we proposed 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
proposed 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
[[Page 53459]]
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 proposed to designate six brachytherapy APCs as Low
Volume APCs as these APCs met our criteria to be designated as Low
Volume APCs.
We did not receive public comments on this provision, and
therefore, we are finalizing as proposed. Except for brachytherapy APCs
designated as Low Volume APCs and APC 2648, we will continue our policy
and use the costs derived from CY 2024 claims data to set the final CY
2026 payment rates for brachytherapy sources. We will continue 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. Further, we will 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 mm2 for HCPCS code C2645, which
we are assigning to APC 2648 (Brachytx planar, p1-103), for CY 2026. We
refer readers to section III.D. of this final rule with comment period
for information on the brachytherapy APCs we are finalizing to
designate as Low Volume APCs.
The final CY 2026 payment rates for brachytherapy sources are
included in Addendum B to this final rule with comment period (which is
available via the internet on the CMS website) and are identified with
status indicator ``U.'' We continue to 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="670812131706130e02091317171427040a14490f0f1449000811">[email protected]</a>.
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
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 final rule with
comment period (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
[[Page 53460]]
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 final rule with comment period.
---------------------------------------------------------------------------
<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
1 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 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\
---------------------------------------------------------------------------
\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>.
---------------------------------------------------------------------------
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
[[Page 53461]]
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 final rule with
comment period, 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 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 final complexity adjustments
for ``J1'' and add-on code combinations for CY 2026, along with all the
other final complexity adjustments, in Addendum J to this final rule
with comment period (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 final rule with comment period 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 final rule with comment period 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 final 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 final 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 final rule with comment period allows interested parties the
[[Page 53462]]
opportunity to better assess the impact associated with the assignment
of claims with each of the paired code combinations eligible for a
complexity adjustment.
We received public comments on these proposals. The following is a
summary of the comments received and our responses.
Comment: We received support from commenters for a variety of
existing and proposed complexity adjustments.
Response: We thank the commenters for their support.
Comment: Multiple commenters requested that CMS apply a complexity
adjustment to additional code combinations. The specific C-APC
complexity adjustment code combinations requested by the commenters for
CY 2026 are listed in Table 1.
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Response: We reviewed each of the requested code combinations
suggested by commenters, listed in Table 1, against our complexity
adjustment criteria. The following code combinations met our cost and
frequency criteria, qualifying for a complexity adjustment for CY 2026:
<bullet> Primary HCPCS code 93454 with secondary HCPCS code 0523T.
<bullet> Primary HCPCS code 93460 with secondary HCPCS code 0523T.
<bullet> Primary HCPCS code 28740 with secondary HCPCS code 20902.
<bullet> Primary HCPCS 28750 code with secondary HCPCS code 20900.
<bullet> Primary HCPCS code 28750 with secondary HCPCS code 28308.
<bullet> Primary HCPCS 22513 code with secondary HCPCS code 22515.
<bullet> Primary HCPCS 22514 code with secondary HCPCS code 22515.
<bullet> Primary HCPCS 43255 code with secondary HCPCS code 43245.
<bullet> Primary HCPCS 37187 code with secondary HCPCS code 37248.
All the remaining code combinations listed failed to meet our cost
or frequency criteria and do not qualify for complexity adjustments for
CY 2026. Addendum J to this final rule with comment period includes the
cost statistics for each code combination that was evaluated for a
complexity adjustment.
Comment: Several commenters brought to our attention that some
qualifying complexity adjustments pairings were promoted up two APC
levels. Commenters requested that we clarify that code pairings that
qualify for a complexity adjustment are only promoted to an APC one
level higher. Other commenters flagged code pairings that qualified for
complexity adjustments but were not mapped to the next highest APC in
their clinical family. Other commenters found that some code pairings
in Addendum J which qualified for complexity adjustments in the
``Complexity Adjustment Evaluation'' tab were not listed in the
``Complexity Adjustments'' tab.
Response: We thank the commenters for bringing this to our
attention. It has been our longstanding policy to promote coding
pairings that qualify for complexity adjustments to the next highest
APC in their clinical family. In Addendum J to this final rule with
comment period, all code pairings that qualify for complexity
adjustments are mapped to the next highest APC in their clinical
family. All code pairings that qualify for complexity adjustments can
be found in both ``Complexity Adjustment Evaluation'' tab and the
``Complexity Adjustments'' tab of Addendum J.
Comment: We received requests to evaluate HCPCS code pairings for
complexity adjustments that were not any combination of ``J1'' or add-
on codes. Commenters requested that CMS evaluate codes with status
indicators ``S'', which indicates a code is paid separately and is not
subject to multiple procedure discounting. Commenters specifically
requested that CMS consider G0390 (trauma activation with critical
care) and G0257 (emergency/unscheduled dialysis) because the commenters
believe that complexity adjustments do not currently recognize the cost
of trauma cases.
Response: As stated in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66770 through 67034), 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 identified by OPPS status
indicator ``J1.'' We use complexity adjustments to provide increased
payment for certain
[[Page 53467]]
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 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. If a code pairing is not ``J1'' plus ``J1'' or ``J1''
plus an add-on code, it would not be evaluated for a complexity
adjustment. In the CY 2026 OPPS/ASC proposed rule, we did solicit
comments on revising our complexity adjustment methodology, which is
summarized below in section II.B.2. of this final rule with comment
period. Additionally, the assigned status indicators for HCPCS codes
are open for public comment through our annual rulemaking process if
commenters feel that any code may need to be reevaluated.
Comment: Commenters requested that CMS provide additional
information so that other interested parties are able to replicate
Addendum J in its entirety. Commenters specifically requested
additional clarity around the treatment of add-on codes.
Response: We refer commenters to the claims accounting narrative
under supporting documentation for this CY 2026 OPPS/ASC final rule
with comment period on the CMS website. The claims accounting narrative
provides a detailed overview of how we processed the CY 2024 claims
data to produce the proposed prospective CY 2026 OPPS payment rates.
After consideration of public comments, we are finalizing the C-APC
complexity adjustment policy for CY 2026 as proposed. We are also
finalizing the proposed complexity adjustments, with the addition of
nine new code combinations suggested by commenters that meet our
complexity adjustment criteria. We have made additional updates to the
claims accounting narrative, specifically the section on Comprehensive
APCs, in order to provide additional clarity on the claims accounting
process used for determining complexity adjustments. We have also
updated Addendum J to provide additional transparency on this issue.
(2) Comment Solicitation on C-APC Complexity Adjustment Criteria
In response to a variety of requests from interested parties, as
well as public comments in past rulemaking, related to our C-APC
complexity adjustment criteria, in the CY 2026 OPPS/ASC proposed rule
(90 FR 33491) we included a comment solicitation on C-APC 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 solicited comments on potential refinements to our
C-APC complexity adjustment criteria. Under this solicitation, we
sought 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 sought 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 sought 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 sought 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
sought 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 sought 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.
We received public comments on this comment solicitation. The
following is a summary of the comments we received and our responses.
Comment: We received a number of comments on C-APC complexity
adjustment criteria. Commenters shared their ideas on how to refine the
complexity adjustment criteria and methodology, on the mechanics of how
complexity adjustments are evaluated, and how the data is presented to
the public.
Many commenters expressed their need for additional information so
that interested parties would be able to accurately replicate Addendum
J. To that end, commenters requested that CMS provide sufficient detail
in the CY 2026 OPPS final rule with comment period Claims Accounting
Narrative such that Addendum J could be fully replicated in its
entirety. Other commenters suggested that CMS detail the step-by-step
claims accounting process used to count claims for the purpose of
evaluating complexity adjustment eligibility.
Some commenters requested that CMS include the full list of add-on
codes eligible for evaluation for the complexity adjustment, along with
the method CMS used to determine whether or not a code was eligible for
complexity adjustment evaluation. Commenters also requested that CMS
provide additional information and greater transparency on the
methodology used to evaluate the complexity adjustment frequency
criteria for ``J1'' and add-on codes. Specifically, commenters
suggested that CMS should evaluate the total costs of ``J1 + N'' code
combinations in the same manner as single J1 procedures and ``J1 + J1''
code combinations. Commenters indicated that this would be consistent
with how CMS evaluates the cost of single frequency ``J1'' procedures
and ``J1 + J1'' procedure code combinations.
Many comments suggested CMS could modify the methodology used when
determining the cost threshold for a code combination to qualify for a
complexity adjustment. Commenters recommended that CMS use the ``lower
of'' methodology to determine the eligibility cost threshold:
<bullet> Current methodology using the two times rule, OR
<bullet> The lowest GMC of significant procedures in the APC to
which the code combination would be eligible for complexity adjustment.
Commenters contended that the current methodology may be
appropriate for lower cost APCs where the differences between the APC
levels
[[Page 53468]]
and procedures are less significant. However, for higher-cost APCs,
they say that using the two-times rule becomes problematic, and in some
instances, the threshold is higher than the cost of any single
procedure in the higher paying APC. By adopting the recommended
methodology, commenters explained that more code combinations would be
eligible for complexity adjustments. Commenters went on to say that the
purpose of complexity adjustments is to ensure appropriate payment
under the C-APC methodology, and therefore it is critical that CMS
employ a methodology that reflects a more appropriate eligibility cost
threshold consistent with the single ``J1'' procedures included in each
APC.
Nearly all commenters on this issue agreed that CMS should expand
its review of procedure combinations to include clusters of ``J1''
primary service and add-on codes, rather than only code pairs.
Commenters asserted that this would better reflect medical practice
when multiple procedures are performed together. Some commenters even
suggested that CMS consider procedure combinations that include
clusters of ``J1'' and add-on codes, and certain select HCPCS device
codes. Commenters had specific suggestions on how using code clusters
could work. One commenter suggested using clusters but maintaining cost
and frequency thresholds, further suggesting using eligibility for
Transitional Pass-Through payment as one criterion by which to identify
instances where a code cluster would be appropriate for an expanded
complexity adjustment. Other commenters suggested that CMS could limit
the evaluation of code clusters to those nominated by the public on an
annual basis.
Multiple commenters requested that CMS revise the complexity
adjustment policy by allowing promotion of qualifying code
combinations, even when the primary code is already assigned to the
highest level of APCs within a clinical family (for example, creating a
new APC level to accommodate these higher cost cases). Other commenters
asserted that in order to maintain stability and predictability of
payments associated with complex procedures, CMS should allow
established qualifying codes to maintain the complexity adjusted
payment for three calendar years before they are required to go through
the eligibility review. Further, commenters said that APC reassignment
for codes that qualify for 3 consecutive years should be made
permanent.
In response to our request for comments on whether highly specific
coding truly reflects clinical practice in hospital outpatient
departments, commenters asserted that CMS' broad C-APC packaging
policy, including the current eligibility criteria for complexity
adjustments, has discouraged complete and accurate hospital reporting
of packaged costs. Commenters explained that since hospitals receive
the same C-APC payment for furnishing multiple packaged services, there
is no incentive to report costs that do not drive reimbursement.
Commenters asserted that this underreporting of packaged costs, coupled
with CMS' claims edits for device-intensive procedures, leads to
underpayment for APCs that rely heavily on packaged items, especially
those with expensive routine supplies.
We also received a variety of other comments on ways to expand the
scope of the complexity adjustment methodology, including establishing
a provisional complexity adjustment process for code combinations
involving newly removed IPO list procedures, reviewing bilateral
procedure claims with high-cost implantable supplies, evaluating non-J1
procedure codes such as status indicators ``S'' and ``T'' for
significant cost variation, and waiving the Administrative Procedures
Act requirements for public comment to adopt suggested changes in the
CY 2026 OPPS/ASC final rule for January 1, 2026.
Response: We sincerely thank commenters for their interest and
engagement on this important issue. Given the wide array of information
presented through this public comment process, we will take the
technical recommendations, alternate methodological approaches, and
other detailed feedback provided into consideration for future notice
and comment rulemaking. We welcome ongoing dialogue and engagement from
interested parties regarding suggestions for potential future C-APC
complexity adjustment criteria revisions.
(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. 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.
[[Page 53469]]
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 for the 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, 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 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 CY 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 proposed list of qualifying products can be found in Table 2.
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We list all final C-APC exclusion categories for CY 2026 in
Addendum J to this final rule with comment period (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>). Comments on our proposed exclusions are below.
Comment: Commenters generally supported and thanked CMS for
proposing to continue the exclusion of Cell and Gene Therapies from C-
APC packaging in order to support innovation and patient access.
Response: We thank commenters for their support.
Comment: A few commenters had suggestions on potential
modifications and expansions for this policy. For example, one
commenter suggested excluding drugs that are the primary therapy and
exceed a cost threshold that aligns with the drug's cost relative to
the total C-APC claim cost from comprehensive packaging. Bladder cancer
drugs were one example suggested for exclusion as C-APC packaging of
their product would be cost prohibitive.
Response: We thank commenters for their feedback, analysis, and
recommendations on potential future approaches for structuring C-APC
payment. We are not expanding our C-APC exclusion policy at this time
to include additional classes of drugs, but we will take this
information into consideration for future rulemaking.
Comment: A few commenters asked for CMS to add HCPCS code Q2056
(Ciltacabtagene autoleucel, up to 100 million autologous b-cell
maturation antigen (bcma) directed car-positive t cells, including
leukapheresis and dose preparation procedures, per therapeutic dose) to
this list of Cell and Gene Therapies excluded from C-APC packaging for
CY 2026. Commenters noted that this product's pass-through status
expired June 30, 2025, and that it was previously indicated as a cell
and gene therapy that would be excluded from C-APC packaging. Several
commenters asked CMS to be vigilant with adding new products as they
are approved and to introduce a formal process for the public to alert
CMS that there is a new cell and gene therapy HCPCS code that should be
excluded from payment.
Response: We thank commenters for recommending the addition of
HCPCS code Q2056 to the cell and gene therapy C-APC exclusion list.
This HCPCS code has been added to the table of cell and gene therapies
excluded from C-APC packaging for CY 2026. We want to clarify for
commenters, that although HCPCS code Q2056 was omitted from the CY 2026
OPPS/ASC proposed rule table, the code was excluded from C-APC
packaging effective July 1, 2025,
[[Page 53471]]
after its drug pass-through status expired. Per our finalized policy in
the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932
through 93938), 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. We review products
that are updated through the quarterly process to determine if there
are qualifying cell and gene therapies that should be excluded from C-
APC packaging. We welcome readers to contact us if they have a
suggestion of a new qualifying cell and gene therapy that should be
excluded from C-APC packaging.
We note that we did not make a proposal to alter the substance of
the overall policy excluding cell and gene therapies from the C-APC
packaging; consistent with public comments received, we are continuing
this policy for CY 2026. In response to comments, the finalized list of
qualifying products can be found in Table 3 consistent with our
finalized policy in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93932 through 93938).
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(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,
[[Page 53472]]
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 proposed 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 did not propose to
convert any standard APCs to C-APCs in CY 2026; thus, we proposed that
the number of C-APCs for CY 2026 would be the same as the number for CY
2025, which is 72 C-APCs.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters requested that CMS reconsider our
packaging policies for C-APC 8011 (Comprehensive Observation Services).
They requested that CMS remove the rule that the presence of a SI ``T''
\6\ procedure on a claim excludes payment of C-APC 8011 and instead
package the payment of the SI ``T'' procedure into C-APC 8011, as is
already done with SI ``Q'' \7\ procedures. Commenters stated that this
requirement violates the basic tenet of the packaging concept in that
when observation services are ordered and furnished, the observation
services become the primary service provided to such patients and the
SI ``T'' procedure is provided ancillary to that primary service.
Commenters cited scenarios in which hospitals provide significant,
resource-intensive services to a patient but are paid significantly
less than if a SI ``T'' procedure was not done.
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\6\ 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 final rule with comment period.
\7\ Status Indicator ``Q'' is defined as a ``STV-Packaged
Codes'' the OPPS payment status is ``Paid under OPPS; Addendum B
displays APC assignments when services are separately payable. (1)
Packaged APC payment if billed on the same claim as a HCPCS code
assigned status indicator ``S,'' ``T,'' or ``V.'' (2) Composite APC
payment if billed with specific combinations of services based on
OPPS composite-specific payment criteria. Payment is packaged into a
single payment for specific combinations of services. (3) In other
circumstances, payment is made through a separate APC payment.''
Definitions to all OPPS payment status indicators are available in
Addenda D1 to this final rule with comment period.
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Response: We thank the commenters for bringing this to our
attention. In the CY 2016 OPPS/ASC final rule with comment period (80
FR 70334 through70336), in response to commenters' concerns regarding
packaging payment for potentially high-cost surgical procedures into
the payment for an observation C-APC, we finalized a policy that claims
reporting procedures assigned status indicator ``T'' do not qualify for
payment through C-APC 8011, regardless of whether the procedure
assigned status indicator ``T'' was furnished before or after
observation services (described by HCPCS code G0378) were provided. In
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79562), we
stated that services that would otherwise qualify for C-APC 8011 are
not considered to be observation services when they are associated with
a surgical procedure (assigned to status indicator ``T''). Instead,
they are considered to be perioperative recovery, which is always
packaged in with the surgical procedure (81 FR 79583). We will continue
to review the impacts of this issue and may revisit it in future
rulemaking.
Comment: Some commenters expressed concerns with the C-APC
methodology for surgical insertion codes for brachytherapy treatment,
stating that these concerns impact beneficiary access to brachytherapy
in the HOPD setting. These commenters stated that the C-APC methodology
lacks the appropriate charge capture mechanisms to accurately reflect
the services associated with the C-APC, that there are significant
variations in the clinical practice and billing patterns in the
hospital claims data used for ratesetting, and that the C-APC rates do
not accurately or fully reflect the services and costs associated with
the primary procedure. Commenters urged the agency to explore
alternatives, including that CMS discontinue the C-APC policy for all
brachytherapy insertion codes. Alternatively, one commenter suggested
that CMS could continue to pay for ``J1'' brachytherapy insertion codes
under the C-APC payment methodology but exclude and make separate
payment for designated preparation and planning services in addition to
the C-APC payment. Another commenter called for education on whether
services, like brachytherapy, that are assigned to a ``J1'' indicators
and delivered over multiple patient encounters may be reported per
encounter.
Response: We appreciate the comments on the C-APC methodology.
However, we believe that the current C-APC methodology is appropriately
applied to surgical insertion for Brachytherapy treatment and is
accurately capturing costs, particularly as the brachytherapy sources
used for these procedures are excluded from C-APC packaging and are
separately payable. We will evaluate if provider education may be
appropriate in this circumstance. We will continue to examine these
concerns and will determine if any modifications to this policy are
warranted in future rulemaking.
After consideration of the public comments we received, we are
finalizing the C-APCs as proposed. Table 4 lists the final C-APCs for
CY 2026. All C-APCs are displayed in Addendum J to this CY 2026 OPPS/
ASC final rule with comment period (which is available via the internet
on the CMS website). Addendum J to this final rule with comment period
also contains all the data related to the C-APC payment policy
methodology, including the list of complexity adjustments and other
information for CY 2026.
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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
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to manage their resources with 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 proposed 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 the 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).
In the CY 2026 OPPS/ASC proposed rule, we stated that 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
proposed 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 four 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 proposed to continue to set the payment rate for composite
APC 8010 at the same payment rate that we proposed for APC 5864, which
is a partial hospitalization per diem payment rate for four 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.
We did not receive public comments on this provision, and
therefore, we are finalizing our proposal regarding APC 8010 without
modification. 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 four 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 for CY 2026.
In addition, we are finalizing setting the payment rate for composite
APC 8010 for CY 2026 at the same payment rate that we set for APC 5864,
which is the maximum partial hospitalization per diem payment rate for
a hospital.
(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 5.
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
[[Page 53476]]
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).
For CY 2026, we proposed 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. In the CY 2026 OPPS/ASC proposed rule, we stated that 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 proposed 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 final rule with comment period
(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 final rule with comment period.
We did not receive any public comments on this policy. We are
finalizing without modification our proposal to continue the use of
multiple imaging composite APCs to pay for the provision of more than
one imaging procedure from the same imaging family on the same date.
Table 5 lists the final 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. 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 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. Final 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 did not propose any changes to the overall
packaging policy discussed. We proposed 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 (90 FR 33503).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters expressed broad support for unpackaging
payments. One commenter believed that CMS packaging policies may
encourage efficiencies and help lower costs, but they believed that
packaging policies could penalize hospitals that provide complex care
to sicker patients. Similarly, commenters believed that unpackaging
payment could support patient access and innovations, including to
certain drugs, biologicals, and services. Specifically, one commenter
suggested that CMS consider unpackaging their product, a contrast
agent, and believed CMS's reasoning in the CY 2026 OPPS/ASC proposed
rule for unpackaging and paying separately for diagnostic
radiopharmaceuticals applies equally or even more to their product,
since the cost of their product is over 500 times greater than the
amount reported for the policy packaged drugs offset associated with
the Level II Urology APC. The commenter believed lack of separate
payment was a barrier to beneficiary access and recommended CMS pay for
products like theirs when the product costs exceeded a certain
threshold.
Response: We thank the commenters for their perspectives on
packaging within the OPPS, including specific examples of cost
exceeding offset amounts. We continue to believe that our packaging
policies are 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. We will take the information commenters provided
into consideration as appropriate for possible future rulemaking.
Comment: Several commenters recommended CMS reassess its policy
packaging principles regarding laboratory testing, with a particular
emphasis on screening tests and antimicrobial stewardship, including
those tests used in the emergency department setting. These commenters
explained the public health threat of antibiotic-resistant infections,
including the patient and financial impacts. Specifically, these
commenters discussed that current APC assignments do not reflect
substantial investments in the reagents, instruments, and analytic
software that are required for these tests. Therefore, they requested
CMS exclude these products from packaging through a narrowly defined
exception, similar to preventative services.
Response: We thank the commenters for their feedback on these
issues, including the importance of antimicrobial stewardship. We note
that these costs are generally accounted for through packaging under
our policies outlined in 42 CFR 419.2(b). As previously discussed in
this section, 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
[[Page 53482]]
enables hospitals to manage their resources with maximum flexibility.
Our overarching goal is to make payments for 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. At this time, we do not believe that unpackaging the
tests as suggested by commenters helps us to achieve this goal.
However, we will take these comments into consideration for any future
modifications to our broader packaging policies.
Additionally, we received specific recommendations regarding C-APC
packaging of Cell and Gene Therapies and associated products, which are
addressed in section II.b.4. of this final rule with comment period,
and the packaging of non-opioid treatments for pain relief, which are
addressed in section XIII.F. of this final rule with comment period.
Commenters also made recommendations on our packaging policies in the
context of our diagnostic radiopharmaceutical proposal, which is
discussed in the next section.
After consideration of public comments, we are finalizing our
proposal 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, as proposed
for CY 2026.
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 proposed 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 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) Diagnostic Radiopharmaceutical Packaging Threshold
For CY 2026, we proposed to continue the policy finalized in CY
2025 (90 FR 33504). Specifically, we proposed to continue to calculate
the per day cost of diagnostic radiopharmaceuticals based on the
methodology described in section V.B.1.b. of the CY 2026 OPPS/ASC
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
[[Page 53483]]
to the applicable calendar year (for example, from the third quarter of
2024 to the third quarter of 2025 for CY 2026). We proposed a technical
refinement to this policy. We proposed 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 believed 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 proposed 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)
(90 FR 3362324). 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 proposed 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 proposed 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 the CY 2026 OPPS/ASC proposed
rule, we also proposed 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.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Most commenters were supportive of our proposal to
maintain a per day cost threshold in order to determine which
diagnostic radiopharmaceuticals should be paid separately under this
policy. In general, commenters believed this threshold would help
distinguish between older, lower-cost diagnostic radiopharmaceuticals
and newer, higher-cost precision diagnostic radiopharmaceuticals.
Similarly, most commenters were supportive of the proposed update
methodology and the corresponding updated per day cost threshold of
$655.
Response: We thank commenters for their support.
Comment: Some commenters offered feedback on the threshold CMS
proposed for CY 2026. Specifically, a few commenters requested that CMS
maintain the CY 2025 per day cost threshold of $630 and not update the
cost threshold according to the proposed methodology for CY 2026. These
commenters believed the policy was too new to warrant an increase in
the payment threshold, and commenters noted that these products had
unique cost structures, utilization patterns, and roles in patient
care. Some requested CMS delay any changes in the threshold until the
policy has been in place for at least 2 years. Some commenters were not
convinced that the proposed update factor is appropriate or
representative of diagnostic radiopharmaceuticals, but generally did
not provide an alternative update methodology. Some commenters believed
that incorporating radiopharmaceutical-specific cost data would be more
appropriate. A commenter also recommended CMS ensure no unintended
consequences of this policy occur, such as manufacturers purposefully
pricing their products just above the payment threshold.
Response: We thank commenters for their feedback. We will monitor
the effects of this policy and will consider proposing modifications in
future rulemaking if appropriate. We do not believe it is appropriate
to maintain the same threshold that was finalized in CY 2025. We
continue to believe it is appropriate to subject the diagnostic
radiopharmaceutical packaging threshold to the same update factor that
is used for the OPPS drug packaging threshold as supported by the
majority of commenters. Updating the threshold by the PPI for
Pharmaceuticals for Human Use (Prescription) is consistent with our
longstanding policy to update the OPPS drug packaging threshold
annually. This PPI update factor provides aggregate changes in the
selling prices of pharmaceuticals, which makes it an appropriate factor
with which to update the diagnostic radiopharmaceutical packaging
threshold to ensure that as diagnostic radiopharmaceuticals' costs
change over time, the threshold continues to identify products with
costs that significantly exceed the otherwise applicable APC payment
amounts as determined in this final rule with comment period and that
therefore should be eligible for separate payment. We appreciate the
recommendation to consider an update factor more specific to diagnostic
radiopharmaceuticals, which we will consider for future rulemaking.
Comment: A commenter requested that CMS consider unpackaging all
radiopharmaceuticals regardless of their cost to ensure proper payment
and avoid perverse incentives. They believed that this action would
lead to an overall reduction in industry costs by eliminating the
incentive for manufacturers to price products above the threshold.
Response: We thank the commenter for their concern regarding the
avoidance of perverse financial incentives. The threshold amount was
originally designed to ensure payment only for those products with
costs that significantly exceed their packaged payment. We continue to
believe a threshold is an appropriate method to ensure targeted payment
as it continues the packaging of most diagnostic radiopharmaceuticals.
As previously mentioned in this section, packaging 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. However,
we will continue to monitor this policy for any unintended
consequences.
After consideration of public comments, we are finalizing our
policy as proposed. We are finalizing our proposal 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
threshold forward. Specifically, we are using the most recently
available forecast of the four-quarter moving average PPI levels for
Pharmaceutical for Human Use,
[[Page 53484]]
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.
We also proposed, and are now finalizing, a policy that if more
recent data were to subsequently become 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. Based on this methodology, using the most recent data available
for this final rule with comment period, we trended the $630 threshold
forward and rounded the resulting dollar amount ($656.65) to the
nearest $5 increment, which yields a final diagnostic
radiopharmaceutical packaging threshold figure of $655 per day for CY
2026.
(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
proposed to continue our current policy for CY 2026, and proposed 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 continued to find that the ASP data we had was not usable for
payment purposes. We continued 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 proposed to continue our current policy and proposed for
CY 2026 to pay for 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 proposed to base payment for qualifying
radiopharmaceuticals on their arithmetic MUC for CY 2026, we continued
to encourage manufacturers to submit ASP information for diagnostic
radiopharmaceuticals, if possible. While we proposed to continue to use
MUC to pay for separately payable diagnostic radiopharmaceuticals in CY
2026, we noted that 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 encouraged
interested parties to submit comments regarding potential issues that
may arise that prevent appropriate ASP reporting for diagnostic
radiopharmaceuticals. We referred 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 reiterated 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 believed there
must be more consistent, validated, and universal reporting in order
for ASP to be a viable payment methodology (89 FR 93961).
We also reiterated, 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 for
therapeutic radiopharmaceuticals.
To facilitate potential future payment for diagnostic
radiopharmaceuticals based on ASP, we sought 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 sought 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,\8\ to reflect current
clinical practices and to reflect ASP reporting for diagnostic
radiopharmaceuticals.
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\8\ <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 the CY 2026 OPPS/
ASC proposed rule (Proposed Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals with HCPCS Codes but Without OPPS
Hospital Claims Data), we proposed 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 (90 FR 33624). If ASP data for these diagnostic
radiopharmaceuticals were not available, we proposed to pay WAC plus 3
percent during the product's initial sales period, consistent with our
policy described in section V.B.2. of the CY 2026 OPPS/ASC proposed
rule. If the WAC also is unavailable, we proposed 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
[…truncated; see source link]Indexed from Federal Register on November 25, 2025.
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