The American Hospital Association (AHA) expressed its disappointment over the Centers for Medicare and Medicaid Services (CMS) changes to hospital price transparency regulations.
On November 21, CMS updated Medicare payment policies and rates for hospital outpatients and Ambulatory Surgical Center (ASC) services in 2026.
One of the several provisions includes an increase in outpatient payment rates by 2.6 percent for hospitals that meet applicable quality reporting requirements.
This is based on a 3.3 percent increase in the hospital market basket, which is used by CMS to set Medicare payment rates. Those rates will be reduced by a 0.7 percentage point productivity adjustment.
In response, the AHA said the agency is “exacerbating the challenging financial pressures under which hospitals are operating to serve their patients and communities.”
Why It Matters
CMS said these updates will improve the quality of care for Medicare beneficiaries while reducing unnecessary spending, improving choices and boosting hospital price transparency.
CMS Deputy Administrator and Director of the Center for Medicare Chris Klomp said these changes will deliver predictability, accountability and affordability in hospital care.
"We continue to advance Medicare payment reform by advancing policies that help prevent services from unnecessarily being performed in hospitals when they can be safely provided in less intensive settings, streamlining hospital billing systems, and ensuring patients receive transparent, accurate pricing information,” he said in a statement.
According to CMS, these payment policies impact about 4,000 hospitals and 6,000 ASCs. CMS believes these updates will improve access to outpatient care and deliver $11 billion in savings for both Medicare programs and beneficiaries over the next ten years.
What To Know
Part of the CMS update includes an expansion of a 2029 policy to control unnecessary volume increase of clinic visits service furnished in excepted off-campus provider-based departments (PBDs) to include drug administration services. CMS estimates that this move will reduce Outpatient Prospective Payment System (OPPS) spending by $290 million.
Another update would phase out the Inpatient Only List (IPO) over the next three years to “give beneficiaries more choices on where to obtain care with the potential for lower out-of-pocket expenses.”
With the evolving nature of medicine, CMS believes more procedures can be performed on an outpatient basis with shorter recovery times. This policy, CMS said, allows for these services to be paid by Medicare in the hospital outpatient setting when determined to be clinically appropriate. As a result, CMS said physicians will have greater flexibility in determining the most appropriate site of service.
In a statement, AHA Senior Vice President of Public Policy and Development Ashley Thompson said the organization opposes the elimination of “site-neutral” cuts and the inpatient-only list.
According to the AHA, this proposal will pay for drug administration services at off-campus hospital outpatient departments at the site-neutral rate of 40 percent of the OPPS rate. Rural sole community hospitals, AHA said, would be exempt from this payment reduction.
Additionally, the AHA said CMS’s move to eliminate the IPO list will weaken the criteria for excluding services from coverage in ambulatory surgical centers, adding 547 procedures to the ASC-covered procedures list.
“Both policies ignore the important differences between hospital outpatient departments and other sites of care,” Thompson said. “The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex and more often disabled or residing in rural or low-income areas than the patients seen in independent physician offices.”
CMS will also maintain its 340B recoupment policy, which will reduce OPPS hospital payments by 0.5 percent annually starting January 1, 2026. Originally, CMS planned to increase the annual offset percentage for non-drug items and services to two percent next year, but decided against the proposed accelerated recoupment timelines based on feedback. The agency said it does plan for increased reductions in 2027.
Thompson said the AHA is aligned with CMS's decision, noting that an accelerated 340B remedy recoupment would harm hospitals that relied on the previous timeline. But she added that the AHA is concerned that the accelerated timeline is both a bad policy and unlawful.
The AHA also remains concerned about another CMS proposal to finalize a new drug acquisition cost survey into early 2026 for all hospitals paid under the OPPS for separately payable drugs.
“We remain concerned with the burdensome drug acquisition cost survey finalized by the agency, especially if the agency uses the results of the survey next year to drastically reduce Medicare payments to the hospitals that serve our nation’s most vulnerable communities,” she said.
What People Are Saying
Health and Human Services Secretary Robert F. Kennedy Jr. said in a statement: “This final rule from CMS closes the loopholes hospitals exploit to hide real prices and advances President Trump’s demand for radical hospital price transparency. We are also confronting addiction head-on by expanding access to non-opioid treatments and implementing common-sense payment policies that make care more affordable and accessible for seniors.”
CMS Administrator Dr. Mehmet Oz said in a statement: “We are strengthening Medicare’s foundation by protecting beneficiaries, eliminating fraud, and advancing medical innovation —all while maintaining strict provider accountability and responsible use of taxpayer funds. These comprehensive reforms expand patient choice and establish the price transparency Americans need for confident healthcare decisions.”
Newsweek reached out to CMS for comment.
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