Rule2026-22739
Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; and Quality Reporting Programs; including the Hospital Outpatient Quality Reporting Program and Ambulatory Surgical Center Quality Program; Request for Information on Strengthening the Standardization and Comparability of Hospital Price Transparency (HPT) Data; Prior Authorization; Accrediting Organization (AO) Deeming for Emergency Medical Treatment and Labor Act (EMTALA); and Notices of Closure of Teaching Hospitals and Opportunities To Apply for Available Slots
Primary source
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Published
November 6, 2026
Effective
January 1, 2027
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 2027 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 updates and refines the requirements for the Hospital Outpatient Quality Reporting Program and the Ambulatory Surgical Center Quality Reporting Program. There are no changes to the Rural Emergency Hospital Quality Reporting Program. We finalized the expansion of the prior authorization requirement to include additional Botulinum Toxin Injection services. We also finalized implementation of certain provisions of the Consolidated Appropriations Act, 2026, for off-campus outpatient departments of a provider. In addition, this final rule with comment period announces notices of closure of teaching hospitals and opportunities to apply for available slots. Additionally, we finalized the policy that hospital accrediting organizations (AOs) with deeming authority may assess compliance with certain Emergency Medical Treatment and Labor Act (EMTALA) administrative requirements under 42 CFR 489.20 during accreditation and reaccreditation surveys.
Full Text
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[Federal Register Volume 91, Number 214 (Friday, November 6, 2026)]
[Rules and Regulations]
[Pages 70284-70762]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22739]
[[Page 70283]]
Vol. 91
Friday,
No. 214
November 6, 2026
Part V
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 413, 416, et al.
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems; and Quality Reporting
Programs; including the Hospital Outpatient Quality Reporting Program
and Ambulatory Surgical Center Quality Program; Request for Information
on Strengthening the Standardization and Comparability of Hospital
Price Transparency (HPT) Data; Prior Authorization; Accrediting
Organization (AO) Deeming for Emergency Medical Treatment and Labor Act
(EMTALA); and Notices of Closure of Teaching Hospitals and
Opportunities To Apply for Available Slots; Final Rule
Federal Register / Vol. 91, No. 214 / Friday, November 6, 2026 /
Rules and Regulations
[[Page 70284]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 413, 416, 419, 427, and 488
[CMS-1850-FC]
RIN 0938-AV83
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems; and Quality Reporting
Programs; including the Hospital Outpatient Quality Reporting Program
and Ambulatory Surgical Center Quality Program; Request for Information
on Strengthening the Standardization and Comparability of Hospital
Price Transparency (HPT) Data; Prior Authorization; Accrediting
Organization (AO) Deeming for Emergency Medical Treatment and Labor Act
(EMTALA); and Notices of Closure of Teaching Hospitals and
Opportunities 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 2027
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 updates and refines the requirements for the Hospital Outpatient
Quality Reporting Program and the Ambulatory Surgical Center Quality
Reporting Program. There are no changes to the Rural Emergency Hospital
Quality Reporting Program. We finalized the expansion of the prior
authorization requirement to include additional Botulinum Toxin
Injection services. We also finalized implementation of certain
provisions of the Consolidated Appropriations Act, 2026, for off-campus
outpatient departments of a provider. In addition, this final rule with
comment period announces notices of closure of teaching hospitals and
opportunities to apply for available slots. Additionally, we finalized
the policy that hospital accrediting organizations (AOs) with deeming
authority may assess compliance with certain Emergency Medical
Treatment and Labor Act (EMTALA) administrative requirements under 42
CFR 489.20 during accreditation and reaccreditation surveys.
DATES:
Effective Date: The provisions of this rule are effective January
1, 2027.
Comment period: To be assured consideration, comments must be
received at one of the addresses provided below, by [January 4, 2027.
ADDRESSES: In commenting, please refer to file code CMS-1850-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="https://www.regulations.gov/docket/CMS-2026-2344">https://www.regulations.gov/docket/CMS-2026-2344</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-1850-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-1850-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 <a href="/cdn-cgi/l/email-protection#e0af959490819489858e94b0b0b3a0838d93ce888893ce878f96"><span class="__cf_email__" data-cfemail="a1eed4d5d1c0d5c8c4cfd5f1f1f2e1c2ccd28fc9c9d28fc6ced7">[email protected]</span></a>.
Accrediting Organization (AO) Deeming for Emergency Medical
Treatment and Labor Act (EMTALA), contact Melissa Daly via email at
<a href="/cdn-cgi/l/email-protection#80cde5ece9f3f3e1aec4e1ecf9c0e3edf3aee8e8f3aee7eff6"><span class="__cf_email__" data-cfemail="367b535a5f4545571872575a4f76555b45185e5e4518515940">[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#efaebfacbf8e818a83af8c829cc187879cc1888099"><span class="__cf_email__" data-cfemail="d697869586b7b8b3ba96b5bba5f8bebea5f8b1b9a0">[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#501132393731393c7e1335233e393b10333d237e3838237e373f26"><span class="__cf_email__" data-cfemail="93d2f1faf4f2faffbdd0f6e0fdfaf8d3f0fee0bdfbfbe0bdf4fce5">[email protected]</span></a>.
Ambulatory Surgical Center Quality Reporting Program measures,
contact Marsha Hertzberg via email at <a href="/cdn-cgi/l/email-protection#85c8e4f7f6ede4abcde0f7f1ffe7e0f7e2c5e6e8f6abededf6abe2eaf3"><span class="__cf_email__" data-cfemail="efa28e9d9c878ec1a78a9d9b958d8a9d88af8c829cc187879cc1888099">[email protected]</span></a>.
Ambulatory Surgical Center Quality Reporting Program policies,
contact Grace Snyder via email at Grace <a href="/cdn-cgi/l/email-protection#184b76617c7d6a587b756b3670706b367f776e"><span class="__cf_email__" data-cfemail="fba895829f9e89bb989688d5939388d59c948d">[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#eca28d98848d82c2ba899e8f8d9998899e8982ac8f819fc284849fc28b839a"><span class="__cf_email__" data-cfemail="632d02170b020d4d350611000216170611060d23000e104d0b0b104d040c15">[email protected]</span></a>.
Blood and Blood Products, contact Edna Ayah via email at
<a href="/cdn-cgi/l/email-protection#6025040e014e2119010820030d134e0808134e070f16"><span class="__cf_email__" data-cfemail="e0a5848e81cea1998188a0838d93ce888893ce878f96">[email protected]</span></a>.
Cancer Hospital Payments, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#e6b585899292c8b2878a878187a6858b95c88e8e95c8818990"><span class="__cf_email__" data-cfemail="3f6c5c504b4b116b5e535e585e7f5c524c1157574c11585049">[email protected]</span></a>.
CMS Web Posting of the OPPS and ASC Payment Files, contact Gina
Aughenbaugh via email at <a href="/cdn-cgi/l/email-protection#55123c3b347b1420323d303b373420323d153638267b3d3d267b323a23"><span class="__cf_email__" data-cfemail="15527c7b743b5460727d707b777460727d557678663b7d7d663b727a63">[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#20654c4953450e62415252494e47455260434d530e4848530e474f56"><span class="__cf_email__" data-cfemail="cb8ea7a2b8aee589aab9b9a2a5acaeb98ba8a6b8e5a3a3b8e5aca4bd">[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#1d4e7e72696933497c717c7a7c5d7e706e3375756e337a726b"><span class="__cf_email__" data-cfemail="a4f7c7cbd0d08af0c5c8c5c3c5e4c7c9d78accccd78ac3cbd2">[email protected]</span></a>.
Hospital Outpatient Quality Reporting Program measures, contact
Kristina Rabarison via email at <a href="/cdn-cgi/l/email-protection#763d041f05021f18175824171417041f05191836151b05581e1e0558111900"><span class="__cf_email__" data-cfemail="e3a8918a90978a8d82cdb1828182918a908c8da3808e90cd8b8b90cd848c95">[email protected]</span></a>.
Hospital Outpatient Quality Reporting Program policies, contact
Kimberly Go via email at <a href="/cdn-cgi/l/email-protection#81cae8ece3e4f3edf8afc6eec1e2ecf2afe9e9f2afe6eef7"><span class="__cf_email__" data-cfemail="054e6c68676077697c2b426a456668762b6d6d762b626a73">[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#6a2f0603190f44280b181803040d0f182a09071944020219440d051c"><span class="__cf_email__" data-cfemail="3471585d47511a765546465d5a535146745759471a5c5c471a535b42">[email protected]</span></a>.
Hospital Price Transparency, contact Sarah Wheat via email at
<a href="/cdn-cgi/l/email-protection#1242607b71774660737c61627360777c716b5a7d61627b66737e517a736075776152717f613c7a7a613c757d64"><span class="__cf_email__" data-cfemail="89d9fbe0eaecddfbe8e7faf9e8fbece7eaf0c1e6faf9e0fde8e5cae1e8fbeeecfac9eae4faa7e1e1faa7eee6ff">[email protected]</span></a>.
Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via
email at <a href="/cdn-cgi/l/email-protection#f5b4979c92949c99dbb690869b9c9eb5969886db9d9d86db929a83"><span class="__cf_email__" data-cfemail="6223000b05030b0e4c2107110c0b0922010f114c0a0a114c050d14">[email protected]</span></a>.
Medicare OPPS Drug Acquisition Cost Survey, contact Cory Duke via
email at <a href="/cdn-cgi/l/email-protection#4b08243932650f3e202e0b28263865232338652c243d"><span class="__cf_email__" data-cfemail="692a061b10472d1c020c290a041a4701011a470e061f">[email protected]</span></a> or Nate Vercauteren at
<a href="/cdn-cgi/l/email-protection#743a15001c151a5a221106171501001106111a341719075a1c1c075a131b02"><span class="__cf_email__" data-cfemail="ca84abbea2aba4e49cafb8a9abbfbeafb8afa48aa9a7b9e4a2a2b9e4ada5bc">[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#b4f1d8ddc7d19af6d5c6c6dddad3d1c6f4d7d9c79adcdcc79ad3dbc2"><span class="__cf_email__" data-cfemail="3570595c46501b775447475c5b525047755658461b5d5d461b525a43">[email protected]</span></a>.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at <a href="/cdn-cgi/l/email-protection#2172424e55550f75404d40464061424c520f4949520f464e57"><span class="__cf_email__" data-cfemail="6536060a11114b310409040204250608164b0d0d164b020a13">[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#db98b4a9a2f59faeb0be9bb8b6a8f5b3b3a8f5bcb4ad"><span class="__cf_email__" data-cfemail="0f4c607d76214b7a646a4f6c627c2167677c21686079">[email protected]</span></a> or Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#a3edcac0cccfc68deec2d1c0ccd0e3c0ced08dcbcbd08dc4ccd5"><span class="__cf_email__" data-cfemail="9dd3f4fef2f1f8b3d0fceffef2eeddfef0eeb3f5f5eeb3faf2eb">[email protected]</span></a>.
OPPS Brachytherapy, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#85d6e6eaf1f1abd1e4e9e4e2e4c5e6e8f6abededf6abe2eaf3"><span class="__cf_email__" data-cfemail="abf8c8c4dfdf85ffcac7cacccaebc8c6d885c3c3d885ccc4dd">[email protected]</span></a>.
[[Page 70285]]
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#9adfe8f3f9f1b4d9f2effbf4fddaf9f7e9b4f2f2e9b4fdf5ec"><span class="__cf_email__" data-cfemail="2f6a5d464c44016c475a4e41486f4c425c0147475c01484059">[email protected]</span></a> or Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#d182b2bea5a5ff85b0bdb0b6b091b2bca2ffb9b9a2ffb6bea7"><span class="__cf_email__" data-cfemail="eebd8d819a9ac0ba8f828f898fae8d839dc086869dc0898198">[email protected]</span></a>.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Nonyem Oguejiofor via email at
<a href="/cdn-cgi/l/email-protection#5b153435223e3675143c2e3e3132343d34291b38362875333328753c342d"><span class="__cf_email__" data-cfemail="d997b6b7a0bcb4f796beacbcb3b0b6bfb6ab99bab4aaf7b1b1aaf7beb6af">[email protected]</span></a>, Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#266549545f0862534d4366454b55084e4e5508414950"><span class="__cf_email__" data-cfemail="175478656e3953627c7257747a64397f7f6439707861">[email protected]</span></a>, or Nate Vercauteren via email at
<a href="/cdn-cgi/l/email-protection#2e604f5a464f4000784b5c4d4f5b5a4b5c4b406e4d435d0046465d00494158"><span class="__cf_email__" data-cfemail="b6f8d7c2ded7d898e0d3c4d5d7c3c2d3c4d3d8f6d5dbc598dedec598d1d9c0">[email protected]</span></a>.
OPPS New Technology Procedures/Services, contact the New Technology
APC mailbox at <a href="/cdn-cgi/l/email-protection#0a446f7d5e6f69624b5a496b7a7a6663696b7e636564794a69677924626279246d657c"><span class="__cf_email__" data-cfemail="95dbf0e2c1f0f6fdd4c5d6f4e5e5f9fcf6f4e1fcfafbe6d5f6f8e6bbfdfde6bbf2fae3">[email protected]</span></a>.
OPPS Packaged Items/Services, contact Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#30735f42491e74455b5570535d431e5858431e575f46"><span class="__cf_email__" data-cfemail="f6b599848fd8b2839d93b6959b85d89e9e85d8919980">[email protected]</span></a>.
OPPS Pass-Through Devices, contact the Device Pass-Through mailbox
at <a href="/cdn-cgi/l/email-protection#9fdbfae9f6fcfacfcbfeefeff3f6fcfeebf6f0f1ecdffcf2ecb1f7f7ecb1f8f0e9"><span class="__cf_email__" data-cfemail="9cd8f9eaf5fff9ccc8fdececf0f5fffde8f5f3f2efdcfff1efb2f4f4efb2fbf3ea">[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#baf7dbc8d3d4db94f1cfc9d2d4d3c8d5ccdbfad9d7c994d2d2c994ddd5cc"><span class="__cf_email__" data-cfemail="9ed3ffecf7f0ffb0d5ebedf6f0f7ecf1e8ffdefdf3edb0f6f6edb0f9f1e8">[email protected]</span></a> or Tonya
Gierke at <a href="/cdn-cgi/l/email-protection#93c7fcfdeaf2bdd4faf6e1f8f6d3f0fee0bdfbfbe0bdf4fce5"><span class="__cf_email__" data-cfemail="14407b7a6d753a537d71667f71547779673a7c7c673a737b62">[email protected]</span></a>.
Outpatient Department Prior Authorization Requirements, contact
Yuliya Cook via email at <a href="/cdn-cgi/l/email-protection#e3ba968f8a9a82cda08c8c88a3808e90cd8b8b90cd848c95"><span class="__cf_email__" data-cfemail="b4edc1d8ddcdd59af7dbdbdff4d7d9c79adcdcc79ad3dbc2">[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#fbabb3abab9a82969e958fab9497929882bb989688d5939388d59c948d"><span class="__cf_email__" data-cfemail="9dcdd5cdcdfce4f0f8f3e9cdf2f1f4fee4ddfef0eeb3f5f5eeb3faf2eb">[email protected]</span></a>.
Consideration of Potential Approaches for Separate IPPS Payment for
Domestic Procurement of Personal Protective Equipment and Essential
Medicines Issues, please contact <a href="/cdn-cgi/l/email-protection#80c4c1c3c0e3edf3aee8e8f3aee7eff6"><span class="__cf_email__" data-cfemail="0a4e4b494a69677924626279246d657c">[email protected]</span></a>.
Provider-Based Attestation Requirements, please contact
<a href="/cdn-cgi/l/email-protection#ffbcbebea0cdcfcdc9a0ac9a9c8b969091a0c9cdcdcabf9c928cd197978cd1989089"><span class="__cf_email__" data-cfemail="fab9bbbba5c8cac8cca5a99f998e939594a5ccc8c8cfba999789d4929289d49d958c">[email protected]</span></a>.
Rural Emergency Hospital Quality Reporting Program policies,
contact Grace Snyder via email at <a href="/cdn-cgi/l/email-protection#6522170406004b5904450d17000358" mailto:Snyder@cms.hhs.gov"><span class="__cf_email__" data-cfemail="adfec3d4c9c8dfedcec0de83c5c5de83cac2db">[email protected]</span></a>">Grace.<a href="/cdn-cgi/l/email-protection#25764b5c414057654648560b4d4d560b424a53"><span class="__cf_email__" data-cfemail="89dae7f0edecfbc9eae4faa7e1e1faa7eee6ff">[email protected]</span></a></a>.
Rural Emergency Hospital Quality Reporting Program measures,
contact Melissa Hager via email at <a href="/cdn-cgi/l/email-protection#b4f9d1d8ddc7c7d59afcd5d3d1c6f4d7d9c79adcdcc79ad3dbc2"><span class="__cf_email__" data-cfemail="357850595c4646541b7d54525047755658461b5d5d461b525a43">[email protected]</span></a>.
Skin Substitute Products, contact Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#85cbece6eae9e0abc8e4f7e6eaf6c5e6e8f6abededf6abe2eaf3"><span class="__cf_email__" data-cfemail="fcb2959f939099d2b19d8e9f938fbc9f918fd294948fd29b938a">[email protected]</span></a>.
Software as a Medical Service, contact Nicole Marcos via email at
<a href="/cdn-cgi/l/email-protection#206e49434f4c450e6d4152434f5360434d530e4848530e474f56"><span class="__cf_email__" data-cfemail="4806212b27242d6605293a2b273b082b253b6620203b662f273e">[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#d699a3a2a6b7a2bfb3b8a286868596b5bba5f8bebea5f8b1b9a0"><span class="__cf_email__" data-cfemail="eda298999d8c9984888399bdbdbead8e809ec385859ec38a829b">[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#9edfcdddcececddefdf3edb0f6f6edb0f9f1e8"><span class="__cf_email__" data-cfemail="5a1b09190a0a091a39372974323229743d352c">[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, in order 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 2026 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, 2027. 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)(2)(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. In addition,
this final rule with comment period updates and refines requirements
for the Hospital Outpatient Quality Reporting Program and the
Ambulatory Surgical Center Quality Reporting Program. There are no
changes to the Rural Emergency Hospital Quality Reporting Program. We
finalized the expansion of the prior authorization requirement to
include additional Botulinum Toxin Injection services. This final rule
with comment period also includes changes to implement certain
provisions of the Consolidated Appropriations Act, 2026, for off-campus
outpatient departments of a provider. Additionally, we are finalizing a
policy that hospital
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accreditation organizations (AOs) with deeming authority may assess
compliance with certain EMTALA administrative requirements under 42 CFR
489.20 during accreditation and reaccreditation surveys.
2. Summary of the Major Provisions
<bullet> OPPS Update: For CY 2027, we are increasing the payment
rates under the OPPS by an outpatient department (OPD) fee schedule
increase factor of 2.3 percent. This increase factor is based on the
inpatient hospital market basket percentage increase of 3.2 percent for
inpatient services paid under the hospital inpatient prospective
payment system (IPPS), reduced by the productivity adjustment of 0.9
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) 2027 will be approximately $114.4 billion, an increase of
approximately $11 billion compared to estimated CY 2026 OPPS payments.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals that fail to meet the hospital
outpatient quality reporting requirements by applying a reporting
factor of 0.9804 to the OPPS payments and copayments for all applicable
services. Under the final 340B remedy offset, payments for services at
hospitals subject to the 340B remedy offset will be reduced by 2.0
percentage points.
<bullet> ASC Payment Update: For CYs 2019 through 2023, we adopted
a policy to update the ASC payment system using the hospital market
basket update. In light of the impact of the COVID-19 public health
emergency (PHE) on healthcare utilization, we extended our policy to
update the ASC payment system using the hospital market basket update
an additional 2 years--through CYs 2024 and 2025. For CY 2026, we
extended this interim period an additional year--through CY 2026. In
this final rule, we are extending our utilization of the hospital
market basket update as the update factor for the ASC payment system
for one additional year (through CY 2027). Using the hospital market
basket update, for CY 2027, we are increasing payment rates under the
ASC payment system by 2.3 percent for ASCs that meet the quality
reporting requirements under the ASCQR Program. This increase is based
on a hospital market basket percentage increase of 3.2 percent reduced
by a final productivity adjustment of 0.9 percentage point. Based on
this update, we estimate that total payments to ASCs (including
beneficiary cost sharing and estimated changes in enrollment,
utilization, and case-mix) for CY 2027 will be approximately $9.9
billion, an increase of approximately $560 million compared to
estimated CY 2026 Medicare payments.
<bullet> Adjustment for Cost-of-Living in Alaska and Hawaii: For CY
2027, we are establishing a cost-of-living adjustment (COLA) for
outpatient hospital services provided in Alaska and Hawaii that applies
the same COLA factors as finalized in the FY 2027 IPPS/LTCH PPS final
rule for FY 2027 for hospitals located in these States.
<bullet> Device Pass-Through Payment Applications: For CY 2027, we
received 19 complete applications for device pass-through payments. We
sought public comment on 13 applications (six applicants withdrew) and
are approving device pass-through payment status for nine applications.
We are also denying device pass-through payment status for four
applications in this final rule with comment period.
<bullet> Changes to the List of ASC Covered Surgical Procedures and
Ancillary Services Lists: For CY 2027, we are continuing to expand the
ASC covered procedures list (CPL) by adding 618 codes to the ASC CPL
that were recommended by interested parties or were finalized for
removal from the IPO list for CY 2027.
<bullet> Changes to the Inpatient Only (IPO) List: We are
continuing to phase out the IPO list by removing 637 services from the
auditory, digestive, endocrine, female genital, hemic and lymphatic
systems, integumentary, male genital, maternity care and delivery,
mediastinum and diaphragm, respiratory and urinary clinical families
from the IPO list for CY 2027.
<bullet> Cross-Program Updates for the Hospital Outpatient Quality
Reporting and Ambulatory Surgical Center Quality Reporting Programs: We
are removing the Appropriate Follow-Up Interval for Normal Colonoscopy
in Average Risk Patients measure from the Hospital Outpatient Quality
Reporting and Ambulatory Surgical Center Quality Reporting Programs.
<bullet> Hospital Outpatient Quality Reporting Program: In addition
to finalizing the cross-program proposal to remove the Appropriate
Follow-Up Interval for Normal Colonoscopy in Average Risk Patients
measure, we are updating and refining validation and validation
reconsideration procedures, including policies applicable to electronic
clinical quality measures (eCQMs).
<bullet> Rural Emergency Hospital Quality Reporting Program: We are
not making any updates to the Rural Emergency Hospital Quality
Reporting Program in this final rule with comment period.
<bullet> Ambulatory Surgical Center Quality Reporting Program: We
are finalizing the cross-program measure proposal to remove the
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk
Patients measure.
<bullet> Expansion of Category for Hospital Outpatient Department
Prior Authorization Process: We added Botulinum Toxin Injection codes
to the existing category of services subject to the Hospital Outpatient
Department prior authorization process for dates of service on or after
July 1, 2027.
<bullet<ls-thn-eq> Partial Hospitalization and Intensive Outpatient
Programs: We are updating the Partial Hospitalization Program (PHP) and
Intensive Outpatient Program (IOP) payment rates for CY 2027 using the
methodology we finalized in CY 2026.
<bullet<ls-thn-eq> Payment Adjustment for 340B-Acquired Drugs Based
on Results of the Medicare OPPS Drug 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, from January 1, 2026
through April 7, 2026, we conducted a survey of the acquisition costs
for each separately payable drug acquired by all hospitals paid under
the OPPS. Taking the survey results into account, for CY 2027 we are
paying ASP minus 28 percent for 340B acquired drugs. Statute requires
that this policy be implemented in a budget neutral manner, so this
will increase OPPS payments for non-drug services by an equivalent
amount, which is estimated to be a 7.50 percent increase to non-drug
service payments for this final rule with comment period.
<bullet<ls-thn-eq> Prospective Adjustment to Payments for Non-Drug
Items and Services to Offset the Increased Payments for Non-Drug Items
and
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Services Made in CY 2018 Through CY 2022 as a Result of the 340B
Payment Policy: The Remedy for the 340B-Acquired Drug Payment Policy
for Calendar Years 2018-2022 (88 FR 77150) codified an annual 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, until we estimated that the reduction had fully offset
the additional $7.8 billion in non-drug services payments made as part
of the prior 340B drug payment policy. This reduction was effective
January 1, 2026. For CY 2027, we are increasing the annual percent
reduction to the OPPS conversion factor used to determine the payment
amounts for non-drug items and services for hospitals for whom this
adjustment applies from 0.5 percent to 2 percent.
<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 2027, we are using our
authority under section 1833(t)(2)(F) of the Act to apply the Physician
Fee Schedule equivalent rate for any Healthcare Common Procedure Coding
System (HCPCS) codes assigned to the imaging without contrast APCs when
provided at an off-campus PBD excepted from section 1833(t)(21) of the
Act. We will exempt rural Sole Community Hospitals from this method to
control the unnecessary volume of imaging without contrast services.
<bullet<ls-thn-eq> Payment for Software as a Medical Service
(SaMS): Recently, there have been rapid developments in the use of
software-based technologies to diagnose disease and support clinical
decision-making in outpatient and physician office settings. For CY
2027, we are finalizing terminology for this group of services to be
designated as Software as a Medical Service (SaMS) for Medicare payment
purposes. As an interim policy as we continue to consider a longer-term
payment methodology for this group of services, we are finalizing
assignment of SaMS technologies to new technology APCs with payment
rates that closely align with current CY 2026 payment rates. We are
finalizing the creation of new status indicator (SI) ``O1'' (Software
as a Medical Service, paid under OPPS; separate APC payment) and
assigning the relevant HCPCS codes to this new (SI).
Similarly, for CY 2027, we are moving payment for stand-alone
algorithmic analyses performed on data from prior laboratory tests,
such as secondary genomic sequencing analyses, from the Clinical
Laboratory Fee Schedule (CLFS) as ``diagnostic laboratory tests'' to
the OPPS as ``other diagnostic tests'' as provided in section
1861(s)(3) of the Act.
3. Summary of Costs and Benefits
In section XXVI. of this final rule with comment period, we provide
a detailed analysis of the regulatory and Federalism impacts that the
changes will have on affected entities and beneficiaries. Key estimated
impacts are described below.
a. Impacts of all OPPS Changes
Table 112 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 2027 compared to all estimated
OPPS payments in CY 2026. We estimate that the finalized policies in
this final rule with comment period will result in a 1.7 percent
increase in OPPS payments to providers for services. We estimate that
total OPPS payments for CY 2027, 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 $1.78 billion compared to CY
2026 payments due to the OPD update, excluding changes in enrollment,
utilization, and case-mix. However, for providers subject to the 340B
remedy offset, the 340B remedy offset is estimated to reduce payments
by $1.6 billion in CY 2027.
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
29.0 percent increase in CY 2027 payments to CMHCs relative to their CY
2026 payments.
b. Impacts of the Updated Wage Index
We estimate that our update of the wage indexes based on the fiscal
year (FY) 2027 IPPS final rule wage indexes will result in no change
for urban hospitals under the OPPS and a 0.3 percent increase for rural
hospitals. These wage indexes include continued utilization 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 2027, we will continue to provide additional payments to
cancer hospitals so that a cancer hospital's payment-to-cost ratio
(PCR) after the additional payments is equal to the weighted average
PCR for the other OPPS hospitals using the most recently submitted or
settled cost report data. Section 16002(b) of the 21st Century Cures
Act requires that this weighted average PCR be reduced by 1.0
percentage point. For CY 2027, we are targeting PCR of 0.88 to
determine the CY 2027 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 0.88 for each
cancer hospital.
There are no significant impacts of our CY 2027 payment policies
for hospitals that are eligible for the rural sole community hospital
adjustment, as we are maintaining the current policy in the CY 2027
OPPS.
d. Impacts of the OPD Fee Schedule Increase Factor
For the CY 2027 OPPS/ASC, we are establishing an OPD fee schedule
increase factor of 2.3 percent and applying that increase factor to the
conversion factor for CY 2026. 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 2.0
percent and that rural hospitals will experience an increase in
payments of 5.6 percent. Classifying hospitals by teaching status, we
estimate non-teaching hospitals will experience an increase in payments
of 6.5 percent, minor teaching hospitals will experience an increase in
payments of 3.5 percent, and major teaching hospitals will experience a
decrease in payments of 2.0 percent. We also classified hospitals by
the type of ownership. We estimate that hospitals with voluntary
ownership will experience an increase of 2.1 percent in payments, while
hospitals with government ownership will experience a decrease of 1.1
percent in payments. We estimate that hospitals with proprietary
ownership will experience an increase of 10.5 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
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percentage change in estimated total payments by specialty groups under
the final CY 2027 payment rates, compared to estimated CY 2026 payment
rates, ranges between an increase of 35 percent and a decrease of 5
percent.
f. Impact of the Changes to the Hospital Outpatient Quality Reporting
Program
Across 3,000 hospitals participating in the Hospital Outpatient
Quality Reporting Program, we estimate that our finalized changes will
reduce total information collection burden by 17,439 hours for a cost
savings of $997,143 beginning with the CY 2029 reporting period/CY 2031
payment determination.
g. Impact of the Changes to the Ambulatory Surgical Center Quality
Reporting Program
Across 5,149 ASCs participating in the Ambulatory Surgical Center
Quality Reporting Program, we estimate that our finalized changes will
reduce total information collection burden by 16,753 hours for a cost
savings of $957,937 beginning with the CY 2027 reporting period/CY 2029
payment determination.
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. 115-141), 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; the Consolidated Appropriations Act (CAA),
2023 (Pub. L. 117-328), enacted December 29, 2022; and the Consolidated
Appropriations Act, 2026 (CAA, 2026; Pub. L. 119-75), enacted on
February 3, 2026.
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 with comment
period. 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
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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
generally 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 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>.
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3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 24, 2026. 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 24, 2026, 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 Final Rule With
Comment Period
We received approximately 48 timely pieces of correspondence on the
CY 2026 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 25, 2025 (90 FR 53448).
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 for each APC
group; this methodology was implemented on August 1, 2000.
For the CY 2027 OPPS, we proposed to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2027, and
before January 1, 2028 (CY 2027), using CY 2025 claims data and the
same basic methodology that we described in the CY 2026 OPPS/ASC final
rule with comment period (90 FR 53455 through 53457). That is, we
proposed to recalibrate the relative payment weights for each APC using
a database constructed from claims and cost report data for hospital
outpatient department (HOPD) services.
For the purpose of recalibrating the proposed APC relative payment
weights for CY 2027, we began with approximately 147 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, 2025 and before January 1, 2026, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 74
million final action claims to develop the proposed CY 2027 OPPS
payment weights (91 FR 41740). For exact numbers of claims used and
additional details on the claims accounting process, we refer readers
to the claims accounting narrative under ``Downloads'' for the CY 2027
OPPS/ASC proposed rule 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 N to the CY 2027 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
2027. Bypass codes allow the ratesetting process to use multiple-
procedure claims to develop ``pseudo'' single claims, which are then
used to develop OPPS payment rates. The proposed list of bypass codes
contains codes that are reported on claims for services in CY 2025 and,
therefore, includes codes that were in effect in CY 2025 and used for
billing. We proposed to retain these deleted bypass codes on the
proposed CY 2027 bypass list because these codes existed in CY 2025 and
were covered HOPD services in that period, and CY 2025 claims data were
used to calculate proposed CY 2027 payment rates (91 FR 41740). 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 2027 OPPS/ASC proposed rule. HCPCS
codes that we proposed to add for CY 2027 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 2027 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 2027, 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, 2025, and before January 1, 2026. 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 2027, 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
[[Page 70291]]
crosswalk (91 FR 41740). To calculate the APC costs on which the
proposed CY 2027 APC payment rates are based, we calculated hospital-
specific departmental CCRs for each hospital for which we had CY 2025
claims data by comparing these claims data to the most recently
available hospital cost reports, which, in most cases, are from CY
2024. For the proposed CY 2027 OPPS payment rates, we used the set of
claims processed during CY 2025. 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 2025 (the year
of claims data we used to calculate the proposed CY 2027 OPPS payment
rates) and updates to the National Uniform Billing Committee (NUBC)
2025 Data specifications Manual (91 FR 41740 through 41741). 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/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a> and included with every
proposed and final OPPS rule.
In accordance with our longstanding policy, similar to our
finalized policy for CY 2026 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 2027 and future
years, we proposed not to include the nonstandard cost centers reported
in this way in the OPPS ratesetting database construction (91 FR
41741).
We did not receive any public comments on the general CCR process,
and therefore, we are finalizing our proposal for CY 2027 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. We are also finalizing the proposed
methodology regarding the treatment of nonstandard cost centers.
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 2027. The
Hospital OPPS page on the CMS website on which this final rule with
comment period 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 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 2025 claims that
are used to calculate the final payment rates for the CY 2027 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 proposed relative payment weights used in
calculating the OPPS payment rates for CY 2027 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 2027 OPPS, we
proposed to continue to remove claim lines with modifier ``PN'' from
the ratesetting process (91 FR 41741).
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 2027
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,
[[Page 70292]]
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 (90 FR 53457),
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 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 (91 FR 41742).
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 received one public comment on these proposals. The following is
a summary of the comment we received and our response.
Comment: A commenter supported CMS's proposal to continue to pay
for blood and blood derived products in the HOPD rather than packaging
the payment.
Response: We appreciate the commenter's support of our proposal.
After consideration of the public comment, we are finalizing our
proposal to continue separate payment for blood and blood derived
products in the HOPD for CY 2027.
We refer readers to Addendum B 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>) for the final CY 2027 payment
rates for blood and blood products (which are generally identified with
status indicator ``R'').
(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 2013 OPPS/ASC
final rule with comment period (77 FR 68240 and 68241). For purposes of
setting payment rates, 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 2027, except where otherwise indicated, we proposed to
continue our policy and use the costs derived from CY 2025 claims data
to set the proposed CY 2027 payment rates for brachytherapy sources
because we proposed to use CY 2025 data to set the proposed payment
rates for most other items and services that would be paid under the CY
2027 OPPS (91 FR 41742). With the exception of the proposed payment
rates for brachytherapy sources A9527 (Iodine i-125, sodium iodide
solution, therapeutic, per millicurie), C2636 (Brachytherapy linear
source, non-stranded, palladium-103, per 1 mm), C2645 (Brachytherapy
planar source, palladium-103, per square millimeter) and the proposed
payment rates for low-volume brachytherapy APCs discussed in section
III.D. of this final rule with comment period, 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 this final rule with comment period.
We also proposed for CY 2027 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 2027 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, nonstranded,
not otherwise specified, per source), at a rate equal to the lowest
stranded or nonstranded prospective payment rate for such sources,
[[Page 70293]]
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 2027 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 2027 payment rates for brachytherapy sources
are included in Addendum B to this proposed rule (which is available
via the internet on the CMS website at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices">https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices</a>) and identified with status indicator ``U (Brachytherapy
Sources, Paid under OPPS; separate APC payment).''
For CY 2018, we assigned status indicator ``U'' to HCPCS code C2645
(Brachytherapy planar source, palladium-103, per square millimeter) in
the absence of claims data and established a payment rate using
external data (invoice price) at $4.69 per mm\2\ for the brachytherapy
source's APC--APC 2648 (Brachytx planar, p-103) (82 FR 59233 through
59234). 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 (84 FR 61157 through
61158). Similarly, in the absence of sufficient claims data to
establish an APC payment rate, in the CY 2021, CY 2022, CY 2023, CY
2024, CY 2025, and CY 2026 OPPS/ASC final rules with comment period (85
FR 85879 through 85880, 86 FR 63469, 87 FR 71760 through 71761, 88 FR
81553, 89 FR 93925, and 90 FR 53458), 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 2026.
There were no CY 2025 claims available that reported HCPCS code
C2645 for the CY 2027 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
2026 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
2027 (91 FR 41743). Similarly, there were no CY 2025 claims available
for the proposed rule that reported HCPCS A9527 (Iodine i-125, sodium
iodide solution, therapeutic, per millicurie), which is assigned to APC
2632, or HCPCS code C2636 (Brachytherapy linear source, non-stranded,
palladium-103, per 1 mm), which is assigned to APC 2636. While both APC
2632 and 2636 have historically been designated as Low Volume APCs,
which uses up to 4 years of claims data, we are concerned that 4 years
of historical claims data would only yield 2 claims for each APC, and
that may not be reliable for ratesetting for these APCs for CY 2027.
Therefore, we proposed to use our equitable adjustment authority under
section 1833(t)(2)(E) of the Act, which states in part 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 2026 payment rates for APC 2632 and APC 2636 for CY
2027. Specifically, for CY 2027, we proposed a payment rate of $396.32
per millicurie for APC 2632 and a payment rate of $89.40 per 1 mm for
APC 2636 (91 FR 41743).
Additionally, for CY 2022 and subsequent calendar years, we adopted
a Universal Low Volume APC policy for clinical and brachytherapy APCs.
As discussed in further detail in section X.C. of the CY 2022 OPPS/ASC
final rule with comment period (86 FR 63743 through 63747), we adopted
this policy to mitigate wide variation in payment rates that occur from
year to year for APCs with low utilization. Such volatility in payment
rates from year to year can result in even lower utilization and
potential barriers to access. Brachytherapy APCs that have fewer than
100 single claims used for ratesetting purposes are designated as Low
Volume APCs unless an alternative payment rate is applied, such as the
use of our equitable adjustment authority under section 1833(t)(2)(E)
of the Act in the case of APCs 2632, 2636, and 2648 as detailed above.
For CY 2027, we proposed to designate five brachytherapy APCs as
Low Volume APCs as these APCs met our criteria to be designated as Low
Volume APCs (91 FR 41743).
We invited 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="127d67666273667b777c6662626152717f613c7a7a613c757d64">[email protected]</a>.
We did not receive public comments on the proposed brachytherapy
payment policies discussed above, and therefore, we are finalizing them
as proposed. With the exception for brachytherapy APCs designated as
Low Volume APCs and APCs 2632, 2636, and 2648, we will continue our
policy and use the costs derived from CY 2025 claims data to set the
final CY 2027 payment rates for brachytherapy sources. We will continue
to pay for the stranded and nonstranded not otherwise specified (NOS)
codes, HCPCS code C2698 (Brachytherapy source, 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
2026 payment rate of $4.69 per mm\2\ for HCPCS code C2645, the CY 2026
payment rate of $396.32 per millicurie for APC 2632, and the CY 2026
payment rate of $89.40 per 1 mm for APC 2636 for CY 2027. 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.
[[Page 70294]]
b. Comprehensive APCs (C-APCs) for CY 2027
(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 costliest 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 through 66811). We have gradually added new C-APCs since
the policy was implemented beginning in CY 2015, with the number of C-
APCs now totaling 74 (80 FR 70332; 81 FR 79584 through 79585; 83 FR
58844 through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR
63474; 87 FR 71769; 88 FR 81562; 89 FR 93926; and 90 FR 53448).
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 through 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 characteristics of each procedure
to establish clinical similarity within each APC.
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\1\ Status indicator ``J1'' denotes Hospital Part B Services
Paid Through a Comprehensive APC. Further information can be found
in CY 2027 Addendum D1 to this final rule with comment period.
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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:
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\2\ Status indicator ``J2'' denotes Hospital Part B Services
That May Be Paid Through a Comprehensive APC. Further information
can be found in CY 2027 Addendum D1 to this final rule with comment
period.
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<bullet> Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T;'' \3\
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\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.
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<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
[[Page 70295]]
<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>.
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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 self-administered drugs (SADs), unless they
function as packaged supplies (78 FR 74868, 74869, and 74909 and 79 FR
66800). We refer readers to Section 50.2M, Chapter 15 of the Medicare
Benefit Policy Manual for a description of our policy on SADs treated
as hospital outpatient supplies, including lists of SADs that function
as supplies and those that do not function as supplies.\5\
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\5\ <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf</a>.
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We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line-
item charges for services included on the C-APC claim are converted to
line-item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all the items and services included in the C-APC service
payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described previously). We apply our standard data
trims, which exclude claims with extremely high primary units or
extreme costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof, we
identify one ``J1'' service as the primary service for the claim based
on our cost-based ranking of primary services. We then assign these
multiple ``J1'' procedure claims to the C-APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services on a claim map to different C-APCs, we designate the ``J1''
service assigned to the C-APC with the highest comprehensive geometric
mean cost as the primary service for that claim. If the reported
multiple ``J1'' services on a claim map to the same C-APC, we designate
the most costly service (at the HCPCS code level) as the primary
service for that claim. This process results in initial assignments of
claims for the primary services assigned to status indicator ``J1'' to
the most appropriate C-APCs based on both single and multiple procedure
claims reporting these services and clinical and resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form- or version of the
primary service according to the following criteria:
<bullet> Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
<bullet> Violation of the 2 times rule, as stated in section
1833(t)(2) of the Act and section III.B.2. of this 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
[[Page 70296]]
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 previously) 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 previously, 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 2027, we apply the frequency and cost criteria
thresholds discussed previously, 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
previously), we make a complexity adjustment for the code combination;
that is, we reassign the primary service code reported in conjunction
with the add-on code to the next higher cost C-APC within the same
clinical family of C-APCs. As previously stated, we package payment for
add-on codes into the C-APC payment rate. If any add-on code reported
in conjunction with the ``J1'' primary service code does not qualify
for a complexity adjustment, payment for the add-on service continues
to be packaged into the payment for the primary service and is not
reassigned to the next higher cost C-APC. We list the proposed
complexity adjustments for ``J1'' and add-on code combinations for CY
2027, along with all the other proposed 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 proposed reassigned complex code combinations are represented
by an alphanumeric code with the first four digits of the designated
primary service followed by a letter. For example, the 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
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 we 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 2027 are listed in Table 1.
BILLING CODE 4169-69-P
[[Page 70297]]
[GRAPHIC] [TIFF OMITTED] TR06NO26.035
BILLING CODE 4169-69-C
Response: We reviewed each of the requested code combinations
suggested by commenters, listed in Table 1, against our complexity
adjustment criteria. The following code combination met our cost and
frequency criteria, qualifying for a complexity adjustment for CY 2027:
<bullet> Primary HCPCS code 37187 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 2027. 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 addressed the application of the C-APC
complexity adjustment policy to the new lower extremity
revascularization (LER) CPT code set. Commenters noted that CPT codes
37220 through 37235 were discontinued effective January 1, 2026, and
replaced by CPT codes 37254 through 37299. Commenters stated that CMS
used claims data from the predecessor codes to inform both C-APC
assignment and complexity adjustment eligibility for the new LER
[[Page 70298]]
codes for CY 2026 and continues to use predecessor-code information to
establish C-APC assignments for the new codes for CY 2027. However,
commenters noted that the CY 2027 proposed rule complexity adjustment
analysis reflected combinations involving the discontinued predecessor
codes rather than the corresponding new LER codes. Commenters
recommended that CMS apply the predecessor-code crosswalk methodology
to the new LER codes for purposes of determining CY 2027 complexity
adjustment eligibility under the OPPS and ASC payment systems.
Commenters stated that doing so would ensure that a change in coding
structure does not result in the loss of complexity-adjusted payment
for clinically comparable and resource-intensive procedure combinations
and would provide continuity until sufficient claims data are available
for the new codes.
Response: We thank the commenters for their comments and bringing
to our attention the application of the complexity adjustment policy to
the new LER code set. As discussed in prior rulemaking (79 FR 66802),
for a new HCPCS code, we determine the initial C-APC assignment and
qualification for a complexity adjustment using the best available
information, crosswalking the new HCPCS code to a predecessor code or
codes when appropriate. Consistent with this policy, for this final
rule we used the applicable predecessor-code information to evaluate
the new LER codes for purposes of determining complexity adjustment
eligibility for CY 2027. The results of our CY 2027 complexity
adjustment evaluation, including the applicable LER code combinations
and their complexity adjustment determinations, are reflected in
Addendum J to this final rule. We refer readers to Addendum J for the
final CY 2027 complexity adjustment assignments.
Comment: One commenter reviewed the proposed complexity adjustment
evaluations and identified certain code combinations that met the
applicable cost and frequency criteria for a complexity adjustment but
that the commenter believed were not assigned to the appropriate next
higher-paying C-APC within the applicable clinical family. The
commenter requested that CMS review these combinations and assign
qualifying combinations to the appropriate higher-level C-APC
consistent with the complexity adjustment methodology.
Response: We thank the commenter 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: Several commenters encouraged CMS to modify or further
refine the C-APC complexity adjustment methodology, including
recommendations previously submitted in response to the CY 2026 OPPS/
ASC proposed rule request for information. These prior recommendations
included modifying the cost threshold used to determine eligibility for
a complexity adjustment, expanding the methodology to evaluate clusters
of a primary ``J1'' service and multiple associated add-on codes rather
than only code pairs, expanding the types of codes eligible for
consideration, and allowing qualifying code combinations involving a
primary service already assigned to the highest level C-APC within a
clinical family to receive an adjustment. Commenters generally stated
that the current methodology may not adequately recognize certain
complex and resource-intensive combinations of services, particularly
as additional higher-cost procedures transition to the outpatient
setting.
Commenters recommended a variety of changes, including modifying
the cost threshold used to determine eligibility, particularly for
higher-cost APCs and APCs with wider cost bands; harmonizing the
methodology for evaluating different types of code combinations; and
evaluating clusters of services in addition to code pairs. Several
commenters also recommended expanding the types of codes eligible for
complexity adjustment consideration to include certain packaged HCPCS
device codes. These commenters stated that a primary J1 procedure
furnished with a costly packaged device may represent a more resource-
intensive encounter in the same manner as combinations currently
eligible for a complexity adjustment, and, therefore, recommended that
CMS evaluate J1 procedure and device code combinations when applicable
cost and frequency criteria are met. Some commenters specifically cited
arthroscopic rotator cuff repair furnished with a graft augmentation
device as an example of a procedure and device combination they
believed should be eligible for consideration.
Commenters also recommended establishing a mechanism to provide
additional payment when an otherwise qualifying combination involves a
primary procedure already assigned to the highest-level or only APC in
a clinical family, providing greater stability for qualifying
combinations, such as maintaining complexity adjustments for a
specified period before reevaluation, extending adjustments to
clinically similar combinations or related code families, and
increasing transparency regarding the claims accounting, inclusion and
exclusion criteria, and other aspects of the complexity adjustment
methodology. Commenters urged CMS to consider these and other
refinements to improve payment accuracy and ensure that the C-APC
methodology appropriately accounts for the resources associated with
complex outpatient procedures.
Response: We thank the commenters for their thoughtful and detailed
recommendations regarding potential refinements to the C-APC complexity
adjustment methodology. We appreciate commenters' continued engagement
on these issues, including their perspectives on how the complexity
adjustment methodology could better account for complex and resource-
intensive combinations of services as clinical practice evolves and
additional procedures are furnished in the hospital outpatient setting.
We recognize the importance of appropriately accounting for differences
in resource use under the C-APC payment methodology while maintaining a
methodology that is consistent, transparent, and based on reliable
claims data. We appreciate the specific recommendations regarding the
complexity adjustment cost threshold, the types and combinations of
services considered for complexity adjustments, the treatment of
packaged device codes and clusters of services, payment for qualifying
combinations at the highest level of a clinical family, payment
stability, and other aspects of the methodology. We will take these
comments and recommendations into consideration as we continue to
evaluate the C-APC complexity adjustment methodology and consider
whether refinements may be appropriate in future rulemaking.
After consideration of public comments, we are finalizing the C-APC
complexity adjustment methodology and criteria for CY 2027 as proposed.
We are also finalizing the specific C-APC complexity adjustments
identified in the proposed rule, with the addition
[[Page 70299]]
of the code combination of CPT codes 37187 and 37248, which was
suggested by commenters and which we determined meets our complexity
adjustment criteria.
(2) 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).
(3) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399
(Unclassified Drugs or Biologicals) From the C-APC Policy
Section 1833(t)(15) of the Act, as added by section 621(a)(1) of
the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Pub. L. 108-173), provides for payment under the OPPS for new
drugs and biologicals until HCPCS codes are assigned. Under this
provision, we are required to make payment for a covered outpatient
drug or biological that is furnished as part of covered outpatient
department services but for which a HCPCS code has not yet been
assigned in an amount equal to 95 percent of average wholesale price
(AWP) for the drug or biological.
In the CY 2005 OPPS/ASC final rule with comment period (69 FR
65805), we implemented section 1833(t)(15) of the Act by instructing
hospitals to bill for a drug or biological that is newly approved by
the Food and Drug Administration (FDA) and that does not yet have a
HCPCS code by reporting the National Drug Code (NDC) for the product
along with the newly created HCPCS code C9399 (Unclassified drugs or
biologicals). We explained that when HCPCS code C9399 appears on a
claim, the Outpatient Code Editor (OCE) suspends the claim for manual
pricing by the Medicare Administrative Contractor (MAC). The MAC prices
the claim at 95 percent of the drug or biological's AWP, using Red Book
or an equivalent recognized compendium, and processes the claim for
payment. We emphasized that this approach enables hospitals to bill and
receive payment for a new drug or biological concurrent with its
approval by the FDA. The hospital does not have to wait for the next
quarterly release or for approval of a product-specific HCPCS code to
receive payment for a newly approved drug or biological or to resubmit
claims for adjustment. We instructed that hospitals would discontinue
billing HCPCS code C9399 and the NDC upon implementation of a product-
specific HCPCS code, status indicator, and appropriate payment amount
with the next quarterly update. We also note that HCPCS code C9399 is
paid in a similar manner in the ASC setting, as 42 CFR 416.171(b)
outlines that certain drugs and biologicals for which separate payment
is allowed under the OPPS are considered covered ancillary services for
which the OPPS payment rate, which is 95 percent of AWP for HCPCS code
C9399, applies.
Since the implementation of the C-APC policy in 2015, payment for
drugs and biologicals described by HCPCS code C9399 had been included
in the C-APC payment when these products appear on a claim with a
primary C-APC service. Packaging payment for these drugs and
biologicals that appear on a hospital outpatient claim with a primary
C-APC service is consistent with our C-APC packaging policy under which
we make payment for all items and services, including all non-pass-
through drugs, reported on the hospital outpatient claim as being
integral, ancillary, supportive, dependent, and adjunctive to the
primary service and representing components of a complete comprehensive
service, with certain limited exceptions (78 FR 74869). It was our
position that the total payment for the C-APC with which payment for a
drug or biological described by HCPCS code C9399 is packaged includes
payment for the drug or biological at 95 percent of its AWP.
However, we determined that in certain instances, drugs and
biologicals described by HCPCS code C9399 are not being paid at 95
percent of their AWPs when payment for them is packaged with payment
for a primary C-APC service. In order to ensure payment for new drugs
and biologicals described by HCPCS code C9399 at 95 percent of their
AWP, for CY 2023 and subsequent years, we finalized our proposal to
exclude any drug or biological described by HCPCS code C9399 from
packaging when the drug or biological is included on a claim with a
``J1'' service, which is the status indicator assigned to a C-APC, and
a claim with a ``J2'' service, which is the status indicator assigned
to comprehensive observation services. See Addendum J to this final
rule with comment period for the final CY 2027 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 of status
indicator ``A'', including the finalized changes from the CY 2023 OPPS/
ASC final rule with comment period, can be found in Addendum D1 to this
final rule with comment period. This change ensures 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
[[Page 70300]]
appears on the same claim as a primary C-APC service.
(4) 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 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 2027 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 our proposal to continue
excluding qualifying cell and gene therapies from C-APC packaging when
those therapies are not integral, ancillary, supportive, dependent, or
adjunctive to the primary C-APC service. Commenters stated that cell
and gene therapies are generally the primary treatment being furnished
to the patient and that separate payment appropriately recognizes the
unique clinical and resource characteristics of these therapies.
Commenters also stated that
[[Page 70302]]
continuation of the policy would support appropriate payment and
beneficiary access, including access to cell and gene therapies
furnished in the outpatient setting. Several commenters encouraged CMS
to continue adding qualifying cell and gene therapy product-specific
HCPCS codes to the C-APC exclusion list as new codes are created.
Response: We thank commenters for their support. We continue to
believe that, when cell and gene therapies do not function as integral,
ancillary, supportive, dependent, or adjunctive to a primary C-APC
service, packaging payment for these therapies under the C-APC policy
would not appropriately reflect the role of these products in the
outpatient encounter. As discussed in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 93932 through 93938), when these products
are administered under these circumstances, they are the primary
treatment being administered to the patient. Therefore, we are
continuing our policy of excluding qualifying cell and gene therapies
from C-APC packaging. Consistent with our existing policy, we will
continue to review new cell and gene therapy products and add product-
specific HCPCS codes to the C-APC exclusion list, as appropriate, when
those codes are created.
Comment: One commenter recommended that CMS establish additional
mechanisms to facilitate the identification of qualifying cell and gene
therapies and provide greater transparency regarding their exclusion
from C-APC packaging. Specifically, the commenter recommended adding a
checkbox to the MEARIS HCPCS Level II code application to allow
applicants to identify products that may qualify for the exclusion,
establishing and publishing a formal off-cycle process through which
interested parties could request additions to the exclusion list, and
creating a new OPPS status indicator to identify products that are
excluded from C-APC packaging but no longer have pass-through payment
status. The commenter stated that these changes could help ensure that
qualifying products are identified when their pass-through payment
status expires and allow interested parties to more readily confirm
whether a particular product is excluded from C-APC packaging.
Response: We thank the commenter for these recommendations. As
discussed in prior rulemaking, under our existing policy, 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 also review products through our regular quarterly
update processes to identify qualifying cell and gene therapies that
should be excluded from C-APC packaging. We appreciate the commenter's
recommendations regarding additional mechanisms for identifying and
communicating the C-APC exclusion status of qualifying products and
will take these suggestions into consideration for potential future
rulemaking and other appropriate associated processes.
Comment: Several commenters recommended that CMS expand the C-APC
exclusion policy beyond cell and gene therapies to include other drugs
and biologicals that commenters stated similarly constitute the primary
treatment furnished during an outpatient encounter rather than an
integral, ancillary, supportive, dependent, or adjunctive service.
Commenters specifically discussed certain oncology therapies
administered through procedures or novel delivery mechanisms, including
bladder cancer diagnostics and therapies, and bispecific T-cell engager
therapies that may be furnished with observation services. Commenters
stated that, in these circumstances, the associated procedure or
observation service facilitates the administration or monitoring of the
drug, while the drug or biological itself is the primary therapeutic
intervention.
Commenters expressed concern that, following expiration of
transitional pass-through payment status or other temporary separate
payment, packaging these therapies into a C-APC could result in payment
that does not adequately reflect hospitals' acquisition costs,
potentially creating financial disincentives to furnish the therapies
and affecting beneficiary access. Some commenters also asserted that
the costs of relatively low-volume, high-cost therapies may not be
adequately reflected in C-APC rates because those rates are based on
claims that include substantially higher volumes of lower-cost
services. Commenters recommended various approaches, including
establishing an exclusion for directly administered oncology therapies
furnished via a procedure, excluding bispecific T-cell engager
therapies, applying the rationale underlying the cell and gene therapy
exclusion to other similarly situated drugs and biologicals, or
soliciting public comment on such approaches in future rulemaking.
Response: We thank commenters for their feedback, analyses, and
recommendations regarding the application of the C-APC packaging policy
to other drugs and biologicals. As we have previously stated, the C-APC
policy generally packages payment for items and services that are
integral, ancillary, supportive, dependent, or adjunctive to the
primary C-APC service, and historically this has included drugs and
biologicals furnished in conjunction with a primary C-APC service,
except where an applicable packaging exclusion applies. We established
the cell and gene therapy exclusion based on our consideration of the
unique nature of those therapies and our determination that, under the
circumstances described in our policy, they do not function as
integral, ancillary, supportive, dependent, or adjunctive to the
primary C-APC service.
We acknowledge commenters' assertions that certain other drugs and
biologicals may similarly represent the primary therapeutic
intervention in an outpatient encounter. However, we do not believe
that the fact that a drug or biological may be characterized as the
primary therapeutic intervention alone provides sufficient basis to
establish a categorical exclusion from the C-APC packaging policy. The
recommendations described by commenters encompass different types of
therapies, methods of administration, associated services, and clinical
circumstances and would represent a broader expansion of the C-APC
packaging exclusions beyond the specific category of cell and gene
therapies considered in prior rulemaking. We believe additional
consideration and data would be necessary to determine whether, and
under what circumstances, an exclusion for other classes of drugs or
biologicals that are not supportive of a primary C-APC service but may
nonetheless appear on the same claim as the primary C-APC procedure
would be appropriate under the C-APC methodology.
We strongly believe in the principles of our prospective payment
system and the C-APC policy; therefore, we want to ensure that any
potential changes to our C-APC packaging policy maintain these
principles.
We appreciate commenters' concerns regarding other therapies that
may be furnished in conjunction with a C-APC service and their
recommendations regarding potential alternative approaches to payment
for such therapies. We are not expanding the C-APC exclusion policy to
additional categories of drugs or biologicals for CY 2027. We will take
commenters' feedback and recommendations into consideration as we
continue to
[[Page 70303]]
evaluate the C-APC methodology in future rulemaking.
Comment: A commenter asked CMS to add HCPCS codes J1413 (Injection,
delandistrogene moxeparvovec-rokl, per therapeutic dose), J3401
(Beremagene geperpavec-svdt for topical administration, containing
nominal 5 x 10[supcaret]9 pfu/mL vector genomes, per 0.1 mL), and J9029
(Intravesical instillation, nadofaragene firadenovec-vncg, per
therapeutic dose) to the list of cell and gene therapies excluded from
C-APC packaging for CY 2027. The commenter noted that these products
currently have drug pass-through payment status that expires December
31, 2026, and stated that they should be excluded from C-APC packaging
beginning January 1, 2027, consistent with our existing policy for
qualifying cell and gene therapies.
Response: We thank the commenter for recommending the addition of
HCPCS codes J1413, J3401, and J9029 to the cell and gene therapy C-APC
exclusion list. These HCPCS codes have been added to the table of cell
and gene therapies excluded from C-APC packaging for CY 2027. We note
that these products currently have drug pass-through payment status
through December 31, 2026, and therefore are already excluded from C-
APC packaging through the end of CY 2026. Beginning January 1, 2027,
following expiration of their drug pass-through payment status, we will
exclude HCPCS codes J1413, J3401, and J9029 from C-APC packaging
consistent with our policy finalized in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 93932 through 93938).
We note that we did not propose to alter the substance of our
existing policy excluding qualifying cell and gene therapies from C-APC
packaging. After consideration of the public comments received, we are
continuing this policy without modification for CY 2027. We are also
finalizing the list of qualifying cell and gene therapy products for CY
2027 in Table 3, including the additions discussed in response to
comments, consistent with the policy finalized in the CY 2025 OPPS/ASC
final rule with comment period (89 FR 93932 through 93938).
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(5) 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 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)(iv) of the Act). In particular, section 1833(t)(16)(G)
of the Act provides that with respect to a non-opioid treatment for
pain relief furnished on or after January 1, 2025, and before January
1, 2028, the Secretary shall not package payment for the non-opioid
treatment for pain relief into payment for a covered OPD service (or
group of services) and shall make an additional payment for the non-
opioid treatment for pain relief as specified in clause (ii) of that
section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act
provide for the amount of additional payment and set a limitation on
that amount. 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).
(6) C-APCs for CY 2027
For CY 2027 and subsequent years, we proposed to continue to apply
the C-APC payment policy methodology (91 FR 41749). 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 2027; thus, we proposed that
the number of C-APCs for CY 2027 (see Table 4) would be the same as the
number for CY 2026, which is 74 C-APCs (91 FR 8384).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Some commenters expressed concerns with the C-APC
methodology for surgical insertion procedures for brachytherapy
treatment, stating that these concerns may affect beneficiary access to
brachytherapy in the HOPD setting. Commenters stated that the C-APC
methodology lacks appropriate charge capture mechanisms to accurately
reflect the services associated with the C-APC, that there is
significant variation in clinical practice and billing patterns
reflected in the hospital claims data used for ratesetting, and that C-
APC payment rates do not accurately or fully reflect the services and
costs associated with the primary procedure. Commenters urged CMS to
explore alternatives to the current methodology, including
discontinuing the C-APC payment policy for brachytherapy insertion
codes. Alternatively, one commenter recommended that CMS continue to
pay for brachytherapy insertion codes assigned status indicator ``J1''
under the C-APC payment methodology but exclude certain preparation and
planning services from C-APC packaging and make separate payment for
those services. Another commenter requested that CMS provide education
or guidance clarifying whether services assigned status indicator
``J1'' that are furnished over multiple patient encounters, such as
certain brachytherapy services, may be reported separately for each
encounter.
Response: We appreciate the commenters' concerns and
recommendations regarding the application of the C-APC methodology to
surgical insertion procedures for brachytherapy treatment. We continue
to believe that application of the C-APC methodology to these surgical
insertion procedures is appropriate and appropriately accounts for the
costs associated with furnishing these services, particularly because
the brachytherapy sources used in these procedures are excluded from C-
APC packaging and instead are separately payable. Therefore, we are not
adopting the commenters' recommendations to discontinue the C-APC
payment policy for brachytherapy insertion procedures or to exclude
designated preparation and planning services from C-APC packaging and
make separate payment for those services. We will consider whether
additional provider education regarding the reporting of services
furnished over multiple patient encounters may be appropriate. We will
continue to examine these concerns and consider whether modifications
to the C-APC methodology are warranted in future rulemaking.
After consideration of public comments we received, we are
finalizing the C-APCs as proposed. Table 4 lists the final C-APCs for
CY 2027. All C-APCs are displayed in Addendum J to this CY 2027 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 2027.
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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 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 2027, 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 through 33581 and 82 FR 59246 through 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 partial hospitalization program (PHP) services per day
(88 FR 49572). We solicited comment on whether APC
[[Page 70309]]
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 with comment
period, we finalized APC 5864, four hospital-based PHP services per
day, as the daily mental health cap (88 FR 81566).
We continue to believe that the costs associated with administering
a PHP represent the most resource intensive of all outpatient mental
health services. For CY 2027 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 (91 FR 41752).
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 8010.
Comment: Commenters expressed concerns regarding the Mental Health
Services Composite APC policy and requested that CMS evaluate the
effects and adequacy of the policy. One commenter stated that because
the payment rate for APC 8010 is based on the payment rate for the
highest PHP APC, the PHP service-count tier effectively establishes a
payment ceiling for other hospital outpatient mental health services.
The commenter expressed concern that the policy may discourage
hospitals from furnishing multiple clinically appropriate mental health
services on the same date of service, including for beneficiaries in
rural areas who may travel significant distances for care and for whom
consolidation of services may be appropriate. The commenter requested
that CMS analyze how frequently the composite payment applies and
whether it disproportionately affects beneficiaries receiving
consolidated same-day care or those traveling significant distances to
receive care.
Another commenter requested that CMS evaluate whether APC 8010
appropriately recognizes and pays for hospital outpatient services
furnished to beneficiaries with substance use disorder (SUD). The
commenter stated that it is unclear to what extent addiction treatment
services are included in determining whether the Mental Health Services
Composite APC payment applies or are reflected in the utilization and
cost data underlying the payment rate. The commenter also recommended
that CMS evaluate other APCs that may include addiction treatment
services.
Response: We thank the commenters for their recommendations
regarding the Mental Health Services Composite APC policy. As discussed
in prior rulemaking, the Mental Health Services Composite APC policy
establishes a payment limit for specified less resource-intensive
mental health services furnished to a beneficiary on the same date of
service (90 FR 53475). When the aggregate payment for those specified
services exceeds the payment rate for the highest-paying PHP APC,
payment is made through APC 8010 at the rate for the highest-paying PHP
APC. We continue to believe it is appropriate to apply this payment
limit because a day of care under a PHP represents a highly intensive
level of outpatient mental health care, and we do not believe that
payment for the specified individual mental health services furnished
on the same date of service should exceed payment for such a day of
care.
We appreciate the commenters' recommendations that we further
evaluate how the Mental Health Services Composite APC policy operates
in practice. As part of our ongoing review of OPPS payment policies, we
can examine how frequently payment through APC 8010 occurs and the
combinations of services to which it applies. We will consider what the
available data show about same-day care for beneficiaries in rural
areas and the treatment of services furnished to beneficiaries with SUD
under this policy. We will consider whether the findings warrant
further discussion or proposals in future rulemaking.
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 2027.
In addition, we are finalizing setting the payment rate for composite
APC 8010 for CY 2027 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)
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559
through 68569) we finalized a policy that effective January 1, 2009, we
would provide a single payment each time a hospital submitted 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. 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).
[[Page 70310]]
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
For CY 2027, 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
(91 FR 41753). 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 2027, except where otherwise indicated, we proposed to use
the costs derived from CY 2025 claims data to set the proposed CY 2027
payment rates. Therefore, for CY 2027, 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 2025 claims available for the CY 2027 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) (91 FR 41753). 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 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 2027.
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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 our payments into larger bundles promotes
predictability and accuracy. 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
under the OPPS more consistent with a prospective payment system and
less like 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 2027 Policy on Packaged Items and Services
For CY 2027, 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 2027, we did not propose any changes to the current overall
packaging policy discussed previously in section II.A.3.a. of this
final rule with comment period. 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 (91 FR 41758).
We received public comments on our proposal to continue
conditionally packaging selected newly identified ancillary services.
The following is a summary of the comments we received and our
responses.
Comment: Several commenters requested that CMS unpackage payments
in certain scenarios. For example, several commenters stated that
unpackaging payment could support patient access and innovations,
including increased access to certain drugs, biologicals, and services.
A commenter, a manufacturer of a contrast agent, suggested that CMS
consider unpackaging their product, a contrast agent, and believed CMS
should unpackage high cost and low volume cancer drugs. This commenter
believed CMS's historic reasoning for unpackaging and paying separately
for diagnostic radiopharmaceuticals applies equally or even more to
their product, since the cost of their product is significantly greater
than the amount reported for the policy packaged drugs offset
associated with the assigned APC for the procedure used to administer
the contrast agent. 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. The
commenter cited recent proposed FDA changes to increase patient access
to this diagnostic agent and associated diagnostic test, as well as the
recent introduction of the Facilitating Access to Innovation in Cancer
Care (FAIC) Act, as support for their recommendation.
Response: We thank the commenters for their perspectives on
packaging within the OPPS, including specific examples showing that a
product's cost, such as a drug, may exceed the offset amount associated
with the procedure in which the product is utilized. We note that our
decision to unpackage certain diagnostic radiopharmaceuticals was based
on evidence that packaged payment was creating an access barrier for a
narrow set of high-cost, low-utilization products. We continue to
believe that packaging is a fundamental component of a prospective
payment system, which distinguishes it 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, therefore, do not find it
appropriate to revise our longstanding ``policy'' packaged drug
policies or our comprehensive-APC payment policies to facilitate
separate payment for these products. We appreciate the input from
commenters, and we will continue to monitor our packaging policies.
Additionally, we received specific recommendations regarding C-APC
packaging, including the C-APC packaging of certain cancer treatments
and of Cell and Gene Therapies and associated products. We address
these recommendations in section II.A.2.b.(4) of this final rule with
comment period. The packaging of non-opioid treatments for pain relief
is addressed in section XIII.F. of this final rule with comment period.
[[Page 70316]]
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.
c. Final Payment for Diagnostic Radiopharmaceuticals
(1) Background on OPPS Packaging Policy for Diagnostic
Radiopharmaceuticals
Under the OPPS, we package several categories of non-passthrough
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.
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. Accordingly, prior to CY 2025, diagnostic
radiopharmaceuticals were policy packaged under Sec. 419.2(b)(15),
regardless of cost, including higher-cost products.
In the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222)
and CY 2025 OPPS/ASC final rule with comment period (89 FR 93950), 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.
Additionally, 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. To calculate those per-day costs, we
also finalized, for CY 2026 and subsequent years, a policy of applying
a methodology similar to that used to determine the per day costs of
drugs and biologicals (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) (89 FR 93962 through 93963). 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 that, for non-passthrough, separately payable diagnostic
radiopharmaceuticals with per day costs above the designated threshold,
payment would be determined based on our authority under section
1833(t)(14)(A)(iii)(II) of the Act. Because we found that the ASP data
we had was not usable for the purpose of paying for diagnostic
radiopharmaceuticals, we finalized a policy to use mean unit cost data
derived from hospital claims to determine the payment amount for
qualifying non-passthrough diagnostic radiopharmaceuticals.
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. In the CY 2026
OPPS/ASC final rule with comment period, we finalized a technical
refinement to the diagnostic radiopharmaceutical packaging threshold
methodology and finalized the CY 2026 diagnostic radiopharmaceutical
packaging threshold of $655. For additional information regarding the
policy finalized, please reference the CY 2025 OPPS/ASC final rule with
comment period (89 FR 93948 through 93963) and the CY 2026 OPPS/ASC
final rule with comment period (90 FR 53482 through 53488).
(2) Final Diagnostic Radiopharmaceutical Packaging Threshold
For CY 2027, we proposed to continue the policy finalized in CY
2025 OPPS/ASC final rule with comment period (89 FR 93948 through
93963). 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 this final rule with comment period,
which relies on the methodology finalized in the CY 2006 OPPS final
rule with comment period (70 FR 68636 through 68638).
As finalized in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93955), starting in the OPPS/ASC rulemaking for CY 2026 and for
subsequent years, we stated we would update the proposed threshold
amount of $630 by a forecast of the PPI for Pharmaceuticals for Human
Use, Prescription (BLS series code WPUSI07003) from IHS Global, Inc
(IGI) by using most recently available four-quarter moving average PPI
levels to trend from the third quarter of the year 2 years prior to the
applicable calendar year to the third quarter of the year prior to the
applicable calendar year (for example, from the third quarter of 2024
to the third quarter of 2025 for CY 2026). In the CY 2026 OPPS/ASC
final rule with comment period, we finalized a technical refinement to
this policy 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 (90 FR 53482 through 53483). We believed using the most
recently available four-quarter moving average PPI levels more
appropriately updated the packaging threshold from CY 2025 for payment
in CY 2026. For CY 2026 and subsequent updates, we finalized to trend
the CY 2025 threshold of $630 forward using the four-quarter moving
average PPI levels for Pharmaceuticals
[[Page 70317]]
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 53482 through 53488).
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 2027, 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 (91 FR 41759). Specifically, we proposed using 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 2027, 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 ($667.44) to the nearest $5 increment, which
yielded a proposed figure of $665 per day for CY 2027. Consistent with
our methodology and practices listed in section V.B.1.b. of this final
rule with comment, we also proposed that if more recent data
subsequently became 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 2027 diagnostic
radiopharmaceutical packaging threshold in the final rule.
We received public comments on these proposals. The following is a
summary of the comments received and our responses.
Comment: Most comments were supportive of continued separate
payment for diagnostic radiopharmaceuticals above a certain per day
cost threshold. Most commenters were supportive of the proposed update
methodology and the corresponding updated per day cost threshold of
$665. Some commenters also recommended CMS continue to monitor the
effects of this policy.
Response: We thank the commenters for their support of our
proposal. We will continue to consider updates to this policy as
necessary.
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, from the third quarter of 2025 to the
third quarter of 2027, 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 2027 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 ($634.80) to the nearest $5 increment, which yields a final
diagnostic radiopharmaceutical packaging threshold figure of $635 per
day for CY 2027.
(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 non-passthrough diagnostic radiopharmaceutical exceeds the cost
threshold, proposed to be $665 per day for CY 2027, 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 2027 and proposed to pay
for those non-passthrough, separately payable diagnostic
radiopharmaceuticals based on our authority under section
1833(t)(14)(A)(iii)(II) of the Act. While, under this authority, we
would ordinarily use the ASP methodology under section 1847A of the
Act, we continue to find that the ASP data we had was not usable for
payment purposes. We continue to believe that arithmetic mean unit cost
(MUC) would be an appropriate proxy for the average price for a
diagnostic radiopharmaceutical for a given year, as it is calculated
based on the average costs for a particular year and is directly
reflective of the actual cost data that hospitals submit to CMS.
Therefore, we proposed to continue our current policy and propose for
CY 2027 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 2025 claims data.
Although we proposed to base payment for qualifying
radiopharmaceuticals on their arithmetic MUC for CY 2027, we continue
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
2027, we note that manufacturers can begin, or continue, to report ASP
data for potential future use in paying for diagnostic
radiopharmaceuticals. For CY 2027, 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) as well as the CY 2026 OPPS/ASC final rule with
comment period (90 FR 53482 through 53488). 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 believe there must be more consistent, validated, and universal
reporting in order for ASP to be a viable payment methodology (89 FR
93961).
As we stated in the CY 2025 and CY 2026 OPPS/ASC final rules with
comment period (89 FR 93957 and 90 FR 53484), 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. Previously, to facilitate potential
future payment for diagnostic radiopharmaceuticals based on ASP, we
sought comment from
[[Page 70318]]
interested parties on how CMS could 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 could update its past guidance, Submission of OPPS
ASP Data for Non-passthrough Separately Payable Therapeutic
Radiopharmaceuticals and Radiopharmaceuticals with Pass-Through
Status,\6\ to reflect current clinical practices and to reflect ASP
reporting for diagnostic radiopharmaceuticals.
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\6\ <a href="https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf">https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf</a>.
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Additionally, as discussed in section V.B.5. of the proposed rule
(Proposed Payment for Non-passthrough Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes but Without OPPS Hospital Claims
Data), we proposed to continue our policy for determining the payment
rate for new diagnostic radiopharmaceuticals that exceed the diagnostic
radiopharmaceutical packaging threshold and have HCPCS codes, but which
do not have pass-through status and are without claims data. Under this
policy, we proposed to pay these products at ASP plus 6 percent (91 FR
41868). If ASP data for these diagnostic radiopharmaceuticals are 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 proposed rule (91 FR 41865). If the WAC also is
unavailable, we proposed to make payment for new diagnostic
radiopharmaceuticals at 95 percent of the products' most recent AWP (91
FR 41867). Following the initial sales period, a payment rate of WAC
plus 6 percent would apply if ASP data for these diagnostic
radiopharmaceuticals remained unavailable. We continue to believe the
volume of products in this category would typically be very low;
however, in these rare situations, we continue to believe it would
continue to be appropriate to use ASP plus 6 percent, WAC plus 3 or 6
percent, or 95 percent of AWP until a MUC is available. As we stated in
the CY 2025 OPPS/ASC final rule with comment period (89 FR 93955
through 93962), it is appropriate to use this payment hierarchy until a
MUC is available. There is typically only one manufacturer for a
diagnostic radiopharmaceutical that is new and described by a HCPCS
code, but without claims data, so CMS does not have to ensure all
manufacturers are reporting ASP for that particular HCPCS code prior to
establishing a separate payment amount based on ASP.
Additionally, although reporting of ASP is not a condition of CMS
approving a HCPCS application, CMS has the opportunity to actively
engage with the manufacturer, or sponsor of a HCPCS application, during
the HCPCS application process. This allows for ongoing dialogue and
education regarding the unique ASP reporting requirements that may be
associated with a particular product, including how to ensure the
reported ASP aligns with the dose descriptor for the newly assigned
HCPCS code (89 FR 93958). We continue to believe the hierarchy
previously specified is appropriate to determine the payment for a
diagnostic radiopharmaceutical that is new and described by a HCPCS
code, but without claims data, as it is consistent with the typical
hierarchy associated with payment for drugs and biologicals paid under
the OPPS as discussed in sections V.A. and V.B. of this final rule with
comment period.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters were generally in favor of separate payment for
diagnostic radiopharmaceuticals. Commenters supported the separate
payment, rather than packaged payment, to ensure patient access to
these products. Many commenters were appreciative of the transitionary
MUC based payment approach, but recommended CMS promptly move to an ASP
based payment either for CY 2027 or CY 2028.
Commenters discussed a variety of reasons why MUC is less preferred
over ASP based payments. For example, commenters explained that MUC is
dependent on individual hospital reporting and that reporting practices
may vary from hospital to hospital. Additionally, commenters explained
that cost to charge ratios, charge compression, and varied revenue code
use, among other concerns, may inappropriately lower a diagnostic
radiopharmaceutical's MUC, thus leading to inadequate payment in their
view. Many commenters explained how volatile MUC is relative to ASP,
and many of these same commenters discussed that ASP data is much more
current than MUC data.
A few commenters presented research comparing MUC to ASP amounts
for certain products based on the commenters' calculations. According
to the commenters' analyses, several of these products had MUCs below
the ASP, and a smaller number of these products had MUCs above ASP.
Commenters believed that the volatility of MUC made it an inferior
payment methodology compared to ASP. These commenters recommended CMS
transition to the more accurate ASP based payment methodology for these
products. Further, commenters explained additional benefits of ASP over
MUC in their view.
Several commenters stated that they already report ASP, they might
have received ASP based payments while on OPPS pass-through status, and
that they recommended that CMS continue to pay those products based on
ASP. These commenters also contended that MUC put their products at a
competitive disadvantage once off of pass-through status, compared to
products paid under OPPS pass-through status. These commenters stated
that ASP is the correct methodology for diagnostic
radiopharmaceuticals, and that MUC should not be used as a proxy for
ASP. In addition, other commenters contended that MUC is not a
methodology that the statute contemplated for payment of these products
and that the best reading of the law requires CMS to use ASP for these
products. Commenters also suggested that CMS can use its authority to
require ASP to be reported for diagnostic radiopharmaceuticals, while
other commenters believed ASP was already required to be reported.
A few commenters also recommended compendia-based payment
methodologies, such as WAC, as an alternative payment methodology to
MUC if CMS found that ASP was unavailable.
Response: We thank commenters for their support of our proposal to
continue to pay diagnostic radiopharmaceuticals separately. We
appreciate those comments that explained the value of ASP-based payment
rates rather than MUC-based payment rates, including data comparing the
two payment methodologies for certain products. As we have stated in
previous rulemaking cycles, we recognize the complexities of ASP
reporting for radiopharmaceuticals given the unique nature of the
products. CMS will continue to assess the appropriateness of an ASP
based payment methodology; however, we continue to believe that there
must be more consistent, validated, and universal reporting of ASP data
for diagnostic radiopharmaceuticals. For those currently reporting ASP,
we encourage continued reporting. We encourage manufacturers to share
their best practices for ASP reporting to
[[Page 70319]]
facilitate industry-wide adoption of consistent ASP reporting.
As we have stated in prior rulemaking, while the number of products
reporting ASP has slightly increased, we continue to have concerns
regarding the accuracy of the reported data. For several diagnostic
radiopharmaceuticals that have reported their ASP, their reported ASP
exceeds the calculated arithmetic MUCs by several thousand percent. One
of these radiopharmaceuticals would be estimated to be among the top 10
highest paid HCPCS codes in all of the OPPS if CMS adopted this payment
rate. Based on the claims data and claims volume for these diagnostic
radiopharmaceuticals, these extremely high ASP data appear to be
erroneously reported. Of the non-passthrough diagnostic
radiopharmaceuticals, including those above and below the threshold, we
estimate that currently less than 20 percent of diagnostic
radiopharmaceuticals are submitting ASP to CMS. As previously
mentioned, even when the ASP is reported, in some instances CMS
strongly questions the validity of the data and the ability to use it
to inform payment in certain instances. Based on this, among other
factors, we continue to believe that an ASP-based methodology is
inappropriate for setting CY 2027 payment for separately paid
diagnostic radiopharmaceuticals.
We find that the ASP data we have are not usable for the purpose of
paying for diagnostic radiopharmaceuticals. Instead, we are paying
based on mean unit cost data derived from hospital claims, which we
believe would appropriately pay for the average price of non-
passthrough separately payable diagnostic radiopharmaceuticals for the
applicable year under section 1833(t)(14)(A)(iii)(II). We believe MUC
is an appropriate proxy for the average price and average cost 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.
Historic hospital claims data is used as the basis for the vast
majority of OPPS payments, making payment for diagnostic
radiopharmaceuticals based on cost data consistent with the rest of the
OPPS. This approach is also consistent with our authority under section
1833(t)(14)(A)(iii)(II) of the Act to calculate and adjust the average
price as necessary, particularly when, as previously discussed, we
continue to find that the ASP data available to us is not usable for
payment purposes for diagnostic radiopharmaceuticals. We will continue
to explore our authority regarding requiring ASP reporting for
diagnostic radiopharmaceuticals under the OPPS.
In response to comments suggesting we adopt WAC or AWP based
payment methodologies, we continue to believe that neither WAC nor AWP
is an appropriate proxy to provide OPPS payment for average
radiopharmaceutical acquisition costs and associated handling costs
when manufacturers are not required to submit ASP data. This is because
payment based on WAC or AWP for separately payable drugs and
biologicals is usually temporary for a calendar quarter until a
manufacturer is able to submit the required ASP data in accordance with
the quarterly ASP submission timeframes for reporting under section
1847A of the Act. WAC and AWP reported to compendia may not be
reflective of a patient ready dose.
The absence of an ASP reporting requirement and inappropriate or no
reporting of ASP could result in payment for a separately payable
diagnostic radiopharmaceutical based on WAC or AWP indefinitely, a
result which we believe would be inappropriate, as these pricing
metrics do not capture all of the pricing discounts that may be
reflected in the ASP.
We appreciate the insight from commenters regarding their concerns
with CMS continuing to use arithmetic MUC as the payment methodology
for diagnostic radiopharmaceuticals. We are taking these comments into
consideration for future rulemaking and for future guidance
development.
In regard to concerns regarding the MUC data received by CMS, we
remind readers that we rely on providers to accurately report the use
of HCPCS codes in accordance with code descriptors and CPT and CMS
instructions, to report services accurately on claims, and to report
charges and costs accurately for the services on their Medicare
hospital cost reports.
Comment: Some commenters expressed hesitations with using ASP based
payments for diagnostic radiopharmaceuticals. A commenter stated that
manufacturers do not universally report ASP currently because they are
not required to do so. A commenter suggested that voluntary ASP
reporting may not capture complete market dynamics and could result in
payment rates that do not accurately reflect acquisition costs,
particularly if the data are incomplete, inconsistently reported, or
from a limited subset of manufacturers. Some commenters recommended CMS
maintain MUC as a payment option for diagnostic radiopharmaceuticals,
as it is difficult, or impossible, for some forms of diagnostic
radiopharmaceuticals to report ASP for reasons outside of the
manufacturer's control. For example, diagnostic radiopharmaceuticals
from multi-dose generators and multi-dose vial cold kits could be
products in which a manufacturer is unable to report ASP.
Response: We appreciate the information presented by these
commenters. The information in these comments will be used to help
inform any potential changes in future policy and any additional ASP
reporting guidance. These comments reinforce our concerns regarding the
use of ASP for all diagnostic radiopharmaceuticals. For CY 2027, non-
passthrough diagnostic radiopharmaceuticals with claims data will
continue to be paid based on arithmetic MUC.
Comments: Many commenters appreciated the CMS mention of an ASP
Reporting Framework for Diagnostic Radiopharmaceuticals and encouraged
CMS to release such guidance prior to the end of CY 2026. Many
commenters offered to collaborate with CMS on such guidance and
welcomed the opportunity to provide feedback.
Response: We thank the commenters for their support. We will
continue to consider additional ASP reporting guidance for diagnostic
radiopharmaceuticals and we welcome input from interested parties on
the framework's content.
After consideration of public comments, we are finalizing our
proposal without modification. In summary, for CY 2027 we are paying
separately for any diagnostic radiopharmaceutical with a per-day cost
greater than $635 using the methodology described. Any diagnostic
radiopharmaceutical with a per-day cost at or below that threshold
would continue to be policy packaged under our longstanding policy
codified at Sec. 419.2(b)(15).
As discussed in section V.B.5. of this final rule with comment
period, we proposed and are finalizing a policy to set the payment rate
for new diagnostic radiopharmaceuticals with HCPCS codes that exceed
the diagnostic radiopharmaceutical packaging threshold, but which do
not have pass-through status and are without claims data, at ASP plus 6
percent. If ASP data for these diagnostic radiopharmaceuticals are not
available, we are finalizing a policy to pay WAC plus 3 percent during
the product's initial sales period, consistent with our
[[Page 70320]]
policy described in section V.B.2. of this final rule with comment
period. If the WAC also is unavailable, we are finalizing a policy to
make payment for new diagnostic radiopharmaceuticals at 95 percent of
the products' most recent AWP. Following the initial sales period, we
are finalizing a payment rate of WAC plus 6 percent would apply, if ASP
data for these diagnostic radiopharmaceuticals remain unavailable.
Additionally, we refer readers to section V.B.8. of this final rule
with comment period for discussion of payment for 340B drugs, including
diagnostic radiopharmaceuticals acquired through the 340B program.
(4) Qualifying Diagnostic Radiopharmaceuticals Above the Diagnostic
Radiopharmaceutical Packaging Threshold
The HCPCS codes that describe diagnostic radiopharmaceuticals with
per day costs that exceed the proposed diagnostic radiopharmaceutical
packaging threshold were proposed to be assigned to a status indicator
of ``K'', indicating separate payment to be paid based on that HCPCS
code's arithmetic MUC. The proposed APC and the proposed payment rate
were assigned as shown in Addendum B to the proposed rule. HCPCS codes
that describe diagnostic radiopharmaceuticals with per day costs that
are at or below the proposed diagnostic radiopharmaceutical packaging
threshold were proposed to continue to be assigned to a status
indicator of ``N'', indicating packaged payment.
The proposed list of diagnostic radiopharmaceuticals that we
calculated as having per day costs that exceeded $665 and their
proposed status indicators can be found in Table 6.
[GRAPHIC] [TIFF OMITTED] TR06NO26.046
The proposed definitions of status indicators can be found in
Addendum D1 to the proposed rule. Addenda to the proposed rule can be
found on the CMS OPPS web page at https://www.cms.gov/medicare/payment/
prospective-
[[Page 70321]]
payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-
notices/cms-1850-p?utm.
Based on the policy finalized in this section to continue paying
separately at arithmetic MUC for non-passthrough diagnostic
radiopharmaceutical with a HCPCS code and claims data, and with a per
day cost greater than $635 using the methodology previously described,
the HCPCS codes that describe diagnostic radiopharmaceuticals with per
day costs that exceed the finalized diagnostic radiopharmaceutical
packaging threshold are assigned to a status indicator of ``K'',
indicating separate payment to be paid based on that HCPCS code's
arithmetic MUC. A final APC and payment rate are assigned as shown in
Addendum B to this final rule with comment period. HCPCS codes that
describe diagnostic radiopharmaceuticals with per day costs that are at
or below the proposed diagnostic radiopharmaceutical packaging
threshold are assigned to a status indicator of ``N'', indicating
packaged payment. The finalized list of diagnostic radiopharmaceuticals
that we calculated as having per day costs that exceed $635 and their
final status indicators can be found in Table 7.
[GRAPHIC] [TIFF OMITTED] TR06NO26.047
Finalized definitions of status indicators can be found in Addendum
D1 to this final rule with comment period. Addenda to this rule can be
found on the CMS OPPS web page.
4. Implementation of Section 4135 of the Consolidated Appropriations
Act (CAA), 2023
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief,
amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to
provide for temporary additional payments for non
[…truncated; see source link]Indexed from Federal Register on November 6, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.