Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 412, 413, 415, 416, and 419

Office of the Secretary

45 CFR Part 180

[CMS-1834-FC]

RIN 0938-AV51

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Final rule with comment period.

SUMMARY:

This final rule with comment period revises the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) payment system for calendar year 2026 based on our continuing experience with these systems. We also describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment systems. In addition, this final rule with comment period announces the closure of a teaching hospital and the opportunity to apply for available slots, and updates and refines the requirements for the Hospital Outpatient Quality Reporting Program, Rural Emergency Hospital Quality Reporting Program, Ambulatory Surgical Center Quality Reporting Program, Overall Hospital Quality Star Rating, and hospitals to make public their standard charge information and enforcement of hospital price transparency, as well as summarizes comments received in response to a request for information on measure concepts regarding Well-Being and Nutrition for consideration in future years for the OQR, REHQR, and ASCQR programs.

DATES:

Effective Date:

The provisions of this rule are effective January 1, 2026.

Comment period:

To be assured consideration, comments must be received at one of the addresses provided below, by January 20, 2026.

Deadline for hospitals to submit applications for Available Resident Slots:

Application submissions for Round 26 are due no later than February 19, 2026 (see section XXII.C. of this final rule with comment period for further details on the application process).

ADDRESSES:

In commenting, please refer to file code CMS-1834-FC.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1.

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov

. Follow the “Submit a comment” instructions.

2.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1834-FC, P.O. Box 8010, Baltimore, MD 21244-8010.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1834-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

Regulation coordination questions, contact Gina Aughenbaugh via email at 410-786-7756 or

OutpatientPPS@cms.hhs.gov

.

Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-99m) Derived from Domestically Produced Molybdenum-99, contact Au'Sha Washington via email at

ausha.washington@cms.hhs.gov

or Leone Kisler at

leone.kisler@cms.hhs.gov

.

Adjusting Payment under the OPPS for Services Predominantly Performed in the ASC or Physician Office Settings Request for Information, contact Elise Barringer via email at

Elise.Barringer@cms.hhs.gov

.

Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact the HOP Panel mailbox at

APCPanel@cms.hhs.gov

.

Ambulatory Surgical Center Covered Procedures List (ASC CPL), contact Abigail Cesnik via email at

Abigail.Cesnik@cms.hhs.gov

.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program measures, contact Marsha Hertzberg via email at

Marsha.Hertzberg@cms.hhs.gov

.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program policies, contact Anita Bhatia via email at

Anita.Bhatia@cms.hhs.gov

.

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

Nathan.Vercauteren@cms.hhs.gov

.

Blood and Blood Products, contact Gil Ngan via email at

Gil.Ngan@cms.hhs.gov

.

Cancer Hospital Payments, contact Scott Talaga via email at

Scott.Talaga@cms.hhs.gov

.

CMS Web Posting of the OPPS and ASC Payment Files, contact Gil Ngan via email at

Gil.Ngan@cms.hhs.gov

.

Composite APCs (Multiple Imaging and Mental Health) and Comprehensive APCs (C-APCs), contact Elise Barringer via email at

Elise.Barringer@cms.hhs.gov

.

Device-Intensive Status and No Cost/Full Credit and Partial Credit Devices, contact Scott Talaga via email at

Scott.Talaga@cms.hhs.gov

.

Graduate Medical Education (GME) Accreditation, contact

DAC@cms.hhs.gov

.

Hospital Outpatient Quality Reporting (OQR) Program policies, contact Kimberly Go via email at

Kimberly.Go@cms.hhs.gov

.

Hospital Outpatient Quality Reporting (OQR) Program measures, contact Kristina Rabarison via email at

Kristina.Rabarison@cms.hhs.gov

.

Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Elise Barringer via email at

Elise.Barringer@cms.hhs.gov

.

Hospital Price Transparency, contact Sarah Wheat via email at

PriceTransparencyHospitalCharges@cms.hhs.gov

.

Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via email at

Abigail.Cesnik@cms.hhs.gov

.

Market-Based Data Collection and Market-Based MS-DRG Relative Weight Methodology Issues, contact

DAC@cms.hhs.gov

.

Medical Review of Certain Inpatient Hospital Admissions under Medicare Part A for CY 2026 and Subsequent Years (2-Midnight Rule), contact Nate Vercauteren via email at

Nathan.Vercauteren@cms.hhs.gov

.

Medicare OPPS Drug Acquisition Cost Survey, contact Cory Duke via email at

Cory.Duke@cms.hhs.gov

or Gil Ngan at

Gil.Ngan@cms.hhs.gov

or Nate Vercauteren at

Nathan.Vercauteren@cms.hhs.gov

.

Method to Control Unnecessary Increases in the Volume of Outpatient Services, contact Elise Barringer via email at

Elise.Barringer@cms.hhs.gov

.

New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga via email at

Scott.Talaga@cms.hhs.gov

.

Non-Opioid Policy or Implementation of Section 4135 of the Consolidated Appropriations Act (CAA), 2023, contact Cory Duke via email at

Cory.Duke@cms.hhs.gov

or Nicole Marcos via email at

Nicole.Marcos@cms.hhs.gov

.

OPPS Brachytherapy, contact Cory Duke via email at

Cory.Duke@cms.hhs.gov

and Scott Talaga via email at

Scott.Talaga@cms.hhs.gov

.

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

Erick.Chuang@cms.hhs.gov

or Scott Talaga via email at

Scott.Talaga@cms.hhs.gov

.

OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Gil Ngan via email at

Gil.Ngan@cms.hhs.gov

, Cory Duke via email at

Cory.Duke@cms.hhs.gov

, or Nate Vercauteren via email at

Nathan.Vercauteren@cms.hhs.gov

.

OPPS New Technology Procedures/Services, contact the New Technology APC mailbox at

NewTechAPCapplications@cms.hhs.gov

.

OPPS Packaged Items/Services, contact Cory Duke via email at

Cory.Duke@cms.hhs.gov

.

OPPS Pass-Through Devices, contact the Device Pass-Through mailbox at

DevicePTapplications@cms.hhs.gov

.

OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova via email at

Marina.Kushnirova@cms.hhs.gov

or Tonya Gierke at

Tonya.Gierke@cms.hhs.gov

.

Overall Hospital Quality Star Rating policies, contact Tyson Nakashima Sr. via email

Tyson.Nakashima@cms.hhs.gov

.

Partial Hospitalization Program (PHP), Intensive Outpatient (IOP), and Community Mental Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at

PHPPaymentPolicy@cms.hhs.gov

.

Remote Services, contact Elise Barringer via email at

Elise.Barringer@cms.hhs.gov

or Nate Vercauteren via email at

Nathan.Vercauteren@cms.hhs.gov

.

Rural Emergency Hospital Quality Reporting (REHQR) Program policies, contact Anita Bhatia via email at

Anita.Bhatia@cms.hhs.gov

.

Rural Emergency Hospital Quality Reporting (REHQR) Program measures, contact Melissa Hager via email at

Melissa.Hager@cms.hhs.gov

.

Skin Substitute Products, contact Susan Janeczko via email at

Susan.Janeczko@cms.hhs.gov

, Cory Duke via email at

Cory.Duke@cms.hhs.gov

, or Nicole Marcos via email at

Nicole.Marcos@cms.hhs.gov

.

Software as a Service, contact Nicole Marcos via email at

Nicole.Marcos@cms.hhs.gov

.

Virtual Direct Supervision of Outpatient Therapeutic and Diagnostic Services in Hospitals and CAHs, contact Nate Vercauteren via email at

Nathan.Vercauteren@cms.hhs.gov

.

All Other Issues Related to Hospital Outpatient Payments Not Previously Identified, contact the OPPS mailbox at

OutpatientPPS@cms.hhs.gov

.

All Other Issues Related to the Ambulatory Surgical Center Payments Not Previously Identified, contact the ASC mailbox at

ASCPPS@cms.hhs.gov

.

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:

https://www.regulations.gov

. Follow the search instructions on that website to view public comments. CMS will not post on

Regulations.gov

public comments that make threats to individuals or institutions or suggest that the individual will take actions to harm the individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

Addenda Available Only Through the Internet on the CMS Website

In the past, a majority of the addenda referred to in our OPPS/ASC proposed and final rules were published in the

Federal Register

as part of the annual rulemakings. However, beginning with the calendar year (CY) 2012 OPPS/ASC proposed rule, the addenda no longer appear in the

Federal Register

as part of the annual OPPS/ASC proposed and final rules to decrease administrative burden and reduce costs associated with publishing lengthy tables. Instead, these addenda are published and available only on the CMS website. The addenda relating to the OPPS are available at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

. The addenda relating to the ASC payment system are available at

https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices

.

Current Procedural Terminology (CPT) Copyright Notice

Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2025 American Medical Association (AMA). All Rights Reserved. CPT is a registered trademark of the AMA. Applicable Federal Acquisition Regulations and Defense Federal Acquisition Regulations apply.

I. Summary and Background

A. Executive Summary of This Document

1. Purpose

In this final rule with comment period, we are updating the payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs), beginning January 1, 2026. Section 1833(t) of the Social Security Act (the Act) requires us to annually review and update the payment rates for services payable under the Hospital Outpatient Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires the Secretary of the Department of Health and Human Services (the Secretary) to review certain components of the OPPS not less often than annually, and to revise the groups, the relative payment weights, and the wage and other adjustments to take into account changes in medical practice, changes in technology, and the addition of new services, new cost data, and other relevant information and factors. In addition, under section 1833(i)(D)(v) of the Act, we annually review and update the ASC payment rates. This final rule with comment period also includes additional policy changes made in accordance with our experience with the OPPS and the ASC payment system and recent changes in our statutory authority. We describe these and various other statutory authorities in the relevant sections of this final rule with comment period. In addition, this final rule with comment period announces the closure of a teaching hospital and the opportunity to apply for available slots, and updates the requirements for the Hospital Outpatient Quality Reporting (OQR) Program, the Rural Emergency Hospital Quality Reporting (REHQR) Program, the Ambulatory Surgical Center Quality Reporting (ASCQR) Program, and Overall Hospital Quality Star Rating. Finally, we are updating and refining the requirements for hospitals to make public their standard charges and CMS enforcement of hospital price transparency (HPT) regulations.

2. Summary of the Major Provisions

•

OPPS Update:

For CY 2026, we are increasing the payment rates under the OPPS by an outpatient department (OPD) fee schedule increase factor of 2.6 percent. This increase factor is based on the final inpatient hospital market basket percentage increase of 3.3 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), reduced by a final productivity adjustment of 0.7 percentage point. Based on this update, we estimate that total payments to OPPS providers (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case mix) for calendar year (CY) 2026 will be approximately $101.0 billion, an increase of approximately $8.0 billion compared to estimated CY 2025 OPPS payments.

We are continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting requirements by applying a reporting factor of 0.9805 to the OPPS payments and copayments for all applicable services. We note that under the final 340B remedy offset, payments for services at hospitals subject to the 340B remedy offset will be reduced by 0.5 percentage points.

•

ASC Payment Update:

For CYs 2019 through 2023, we adopted a policy to update the ASC payment system using the hospital market basket update. In light of the impact of the COVID-19 public health emergency (PHE) on healthcare utilization, we extended our policy to update the ASC payment system using the hospital market basket update an additional 2 years—through CYs 2024 and 2025. In this final rule with comment period, we are extending our utilization of the hospital market basket update as the update factor for the ASC payment system for 1 additional year (through CY 2026). Using the hospital market basket update, for CY 2026, we are increasing payment rates under the ASC payment system by 2.6 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a final hospital market basket percentage increase of 3.3 percent reduced by a final productivity adjustment of 0.7 percentage point. Based on this final update, we estimate that total payments to ASCs (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2026 will be approximately $9.2 billion, an increase of approximately $450 million compared to estimated CY 2025 Medicare payments.

•

Device Pass-Through Payment Applications:

For CY 2026, we received eight complete applications for device pass-through payments. We sought public comment on seven applications and make final determinations on these applications in this final rule with comment period.

•

Changes to the List of ASC Covered Surgical Procedures and Ancillary Services Lists:

For CY 2026, we are expanding the ASC covered procedures list (CPL) by revising the criteria under § 416.166 to modify the general standard criteria and to eliminate five of the general exclusion criteria, moving them into a new section as nonbinding physician considerations for patient safety. We also are adding 276 procedures to the ASC CPL based on these criteria changes and adding an additional 271 codes to the ASC CPL that we are finalizing for removal from the IPO list for CY 2026.

•

Changes to the Inpatient Only (IPO) List:

For CY 2026, we are phasing out the IPO list over 3 years, beginning with the removal of 285 mostly musculoskeletal services for CY 2026.

•

Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-99m) Derived from Domestically Produced Molybdenum-99 (Mo-99):

In the CY 2025 OPPS/ASC final rule with comment period, we finalized that for CY 2026 the add-on payment for radiopharmaceuticals produced without the use of Tc-99m derived from non-Highly Enriched Uranium sources would be replaced with an add-on payment for radiopharmaceuticals that use Tc-99m derived from domestically produced Mo-99. For CY 2026, we are finalizing a $10 per dose amount for this add-on payment, and that at least 50 percent of the Mo-99 used in the Tc-99m generator that produces a dose of Tc-99m must be domestically produced for the dose to qualify for the add-on payment. We are also codifying our definition for domestically produced Mo-99, and to establish new HCPCS C-code C9176 (Tc-99m from domestically produced non-HEU Mo-99, [minimum 50 percent], full cost recovery add-on, per study dose).

•

Cross-Program Updates for the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs:

We are finalizing the removal of: (1) the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) measure from the Hospital OQR and ASCQR Program measure sets beginning with the CY 2024 reporting period/CY 2026 payment determination; (2) the Hospital Commitment to Health Equity (HCHE) measure from the Hospital OQR and REHQR Program measure sets, and the Facility Commitment to Health Equity (FCHE) measure from the ASCQR Program measure set beginning with the CY 2025 reporting period/CY 2027 payment or program determination; and (3) the Screening for Social Drivers of Health (SDOH) measure and the Screen Positive Rate for SDOH measure from the Hospital OQR, REHQR, and ASCQR Program measure sets beginning with the CY 2025 reporting period. Additionally, we received comments regarding measure concepts related to well-being and nutrition for future consideration in the Hospital OQR, REHQR, and ASCQR Programs. We are finalizing our proposal to update and codify the Extraordinary Circumstance Exception (ECE) policy to clarify that CMS has the discretion to grant an extension in response to an ECE request for the Hospital OQR, REHQR, and ASCQR Programs.

•

Hospital Outpatient Quality Reporting (OQR) Program:

In addition to the cross-program measure and policy updates, we are finalizing: (1) adoption of the Emergency Care Access & Timeliness eCQM with 1 year of voluntary reporting for the CY 2027 reporting period followed by mandatory reporting for the CY 2028 reporting period/CY 2030 payment determination and subsequent years; (2) removal of the Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients and the Left Without Being Seen measures beginning with the CY 2028 reporting period/2030 payment determination; and (3) modification of the Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital Level—Outpatient) measure (Excessive Radiation eCQM) from mandatory reporting beginning with the CY 2027 reporting period to continue voluntary reporting in the CY 2027 reporting period and subsequent years.

•

Rural Emergency Hospital Quality Reporting (REHQR) Program:

In addition to the cross-program measure and policy updates, we are finalizing the: (1) adoption of the Emergency Care Access & Timeliness eCQM beginning with the CY 2027 reporting period/CY 2029 program determination; and (2) related eCQM data submission and reporting requirements, including that REHs will be provided the option of reporting either the Emergency Care Access and Timeliness eCQM or the Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients measure beginning with the CY 2027 reporting period/CY 2029 program determination.

•

Ambulatory Surgical Center Quality Reporting (ASCQR) Program:

We are not finalizing the adoption of the Patient Understanding of Key Information Related to Recovery After a Facility-Based Outpatient Procedure or Surgery, Patient Reported Outcome-Based Performance Measure (Information Transfer PRO-PM) at this time.

•

Overall Hospital Quality Star Rating Modification to Emphasize the Safety of Care Measure Group:

We proposed to update the methodology that will be used to calculate the Overall Hospital Quality Star Rating through implementation of a 2-stage methodologic update. We are finalizing our proposed updates to the methodology to emphasize the

importance of the Safety of Care measure group, particularly to address the issue of hospitals receiving a high Star Rating despite performing in the lowest quartile of the Safety of Care measure group. The first-stage methodology update is a narrow but focused transitional step that limits hospitals to a maximum of four out of five stars (based on at least three Safety of Care measure scores) if they performed in the lowest quartile of the Safety of Care measure group in the 2026 Overall Hospital Quality Star Rating. The second stage of the methodology update replaces the first stage update and reduces the Star Rating of any hospital in the lowest quartile of Safety of Care (based on at least three Safety of Care measure scores) by one star, to a minimum 1-star rating for the 2027 Overall Hospital Quality Star Rating and later years. These changes will prioritize safety for both patients and healthcare workers and reflect CMS' fundamental commitment to ensuring high-quality, safe care as a central component of health system performance.

•

Partial Hospitalization and Intensive Outpatient Programs:

We finalizing changes to our methodology used to calculate the CY 2026 Community Mental Health Center (CMHC) Partial Hospitalization Program (PHP), and Intensive Outpatient Program (IOP) costs based on 40 percent of the corresponding proposed hospital-based PHP and IOP costs. This change will resolve a cost inversion in CMHC cost data that resulted in higher geometric mean costs for 3-service days than for 4-service days. It also stabilizes rates for CMHCs by basing them on data from a much larger set of providers while preserving the adjustment for the structural differences between CMHC and hospital costs.

•

Notice of Intent to Conduct a Medicare OPPS Drugs Acquisition Cost Survey:

Section 1833(t)(14)(D)(ii) of the Act requires the Secretary to periodically conduct surveys of hospital acquisition costs for each specified covered outpatient drug for use in setting the payment rates for such drugs. Additionally, on April 18, 2025, President Trump signed Executive Order (E.O.) 14273, “Lowering Drug Prices by Once Again Putting Americans First”. Section 5 of the E.O., “Appropriately Accounting for Acquisition Costs of Drugs in Medicare”, which directs the Secretary of HHS to publish in the

Federal Register

a plan to conduct a survey under section 1833(t)(14)(D)(ii) of the Act so he can determine the hospital acquisition cost for covered outpatient drugs at hospital outpatient departments. Accordingly, we will be conducting a survey, with the survey submission window opening by early CY 2026, of the acquisition costs for each separately payable drug acquired by all hospitals paid under the OPPS. We intend for the survey to be completed in time for the survey results to be used to inform policymaking beginning with the CY 2027 OPPS/ASC proposed rule.

•

Two-Midnight Rule Medical Review Activities Exemptions:

For CY 2026, we are continuing our existing policy exempting procedures that are removed from the IPO list under the OPPS from certain medical review activities related to the two-midnight policy. Under this policy, procedures removed from the IPO list are exempted from site-of-service claim denials, Medicare review contractor referrals to the Recovery Audit Contractor (RAC) for persistent noncompliance with the 2-midnight rule, and RAC reviews for “patient status” (that is, site-of-service) until claims data demonstrates that the procedures are more commonly billed in the outpatient setting than the inpatient setting. We are also revising 42 CFR 412.3(d)(2) for clarity.

•

Virtual Direct Supervision of Pulmonary Rehabilitation (PR), Coronary Rehabilitation (CR), Intensive Coronary Rehabilitation and Diagnostic Services.

For CY 2026, we are revising § 410.27(a)(1)(iv)(B)(

1

) and § 410.28(e)(2)(iii) to make the availability of the direct supervision of CR, ICR, PR services and diagnostic services via audio-video real-time communications technology (excluding audio-only) permanent, except for diagnostic services that have a global period indicator of 010 or 090.

•

Prospective Adjustment to Payments for Non-Drug Items and Services to Offset the Increased Payments for Non-Drug Items and Services Made in CY 2018 Through CY 2022 as a Result of the 340B Payment Policy.

For CY 2026, we are applying the previously finalized reduction to the OPPS conversion factor under § 419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non-drug items and services for hospitals for whom this adjustment applies of 0.5 percent. The Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 (88 FR 77150) codified a 0.5 percent reduction in the OPPS conversion factor applicable to non-drug items and services, excluding hospitals that enrolled in Medicare after January 1, 2018.

•

Payment for Skin Substitute Products under the OPPS.

For CY 2026, we are finalizing a policy for CMS to separately pay for the provision of certain groups of skin substitute products as supplies when they are used during a covered application procedure paid under the PFS in the non-facility setting or under the OPPS. We are finalizing a policy to group skin substitutes that are not drugs or biologicals using three FDA regulatory categories (PMAs, 510(k)s, and 361 HCT/Ps) to set payment rates. To effectuate this categorization into a payment policy under the OPPS, we are creating three new APCs for HCPCS codes that describe skin substitute products organized by clinical and resource similarity. These three APCs will divide skin substitutes by their FDA regulatory pathway. Specifically, we are creating: APC 6000 (PMA Skin Substitute Products); APC 6001 (510(k) Skin Substitute Products); and APC 6002 (361 HCT/P Skin Substitute Products). This will result in an initial payment rate of $127.14 for each of the new APCs. We are implementing this policy in both the non-facility, ambulatory surgical center setting, and outpatient hospital settings.

• Method to Control Unnecessary Increases in the Volume of Outpatient Services Furnished in Excepted Off-Campus Provider-Based Departments (PBDs):

For CY 2026, we are finalizing a policy to use our authority under section 1833(t)(2)(F) of the Act to apply the Physician Fee Schedule equivalent rate for any HPCPCs codes assigned to the drug administration services APCs, when provided at an off-campus PBD excepted from section 1833(t)(21) of the Act. We are finalizing a policy to exempt rural Sole Community Hospitals from this method to control the unnecessary volume of drug administration services.

• Final Market-Based MS-DRG Relative Weight Data Collection and Change in Methodology for Calculating MS-DRG Relative Weights Under the Inpatient Prospective Payment System:

As discussed in section XX. of this final rule with comment period, in order to reduce the Medicare program's reliance on the hospital chargemaster, and to support the development of a market-based approach to payment under the Medicare FFS system, we are finalizing a policy that hospitals will be required to report certain market-based payment rate information on their Medicare cost report for cost reporting periods ending on or after January 1, 2026, to be used in a finalized change to the methodology for calculating the IPPS MS-DRG relative weights to reflect

relative market-based pricing. Specifically, we are finalizing a requirement for facilities to report market-based rate information on the Medicare cost report; the hospital will be required to report the median of the payer-specific negotiated charges by MS-DRG that the hospital has disclosed for all of its MAOs on the most recent version of the machine-readable file (MRF) that the hospital is required to disclose under the hospital price transparency regulations at 45 CFR part 180. We also are finalizing a change to the methodology for calculating the IPPS MS-DRG relative weights to incorporate this market-based rate information, beginning in FY 2029. This finalized MS-DRG relative weight methodology will utilize the finalized median payer-specific negotiated charge information, collected on the cost report, for calculating the MS-DRG relative weights.

• Graduate Medical Education (GME) Accreditation:

In order to ensure that accreditation for approved medical residency programs is in compliance with applicable laws prohibiting race-based and other unlawful discrimination and to improve the accreditation process, we are finalizing that accrediting organizations may not use accreditation criteria that promote or encourage discrimination on the basis of race, color, national origin, sex, age, disability, or religion, including the use of those characteristics or intentional proxies for those characteristics as a selection criterion for employment, program participation, resource allocation, or similar activities, opportunities, or benefits. The effective date of this policy will be January 1, 2026.

• Final Updates to Requirements for Hospitals to Make Public a List of Their Standard Charges:

We are finalizing our proposals with modifications to the HPT regulations to enhance clarity and standardization in hospital disclosure of standard charges. Specifically, we are finalizing with modification revisions to 45 CFR 180.20 to add definitions for “tenth (10th) percentile allowed amount”, “median allowed amount”, and “ninetieth (90th) percentile allowed amount”, which are values a hospital will encode when a payer-specific negotiated charge is based on a percentage or algorithm, to more accurately reflect the distribution of actual amounts that a hospital has received for an item or service. In tandem with that, we are finalizing revisions to § 180.50 to remove the requirement for hospitals to disclose the estimated allowed amount, and, instead, require hospitals to disclose the 10th percentile, median, and 90th percentile allowed amounts, as well as the count of allowed amounts, in MRFs when payer-specific negotiated charges are based on percentages or algorithms. We are also finalizing with modification our proposal to require that hospitals use electronic data interchange (EDI) 835 electronic remittance advice (ERA) transaction data or an alternative, equivalent source of remittance data to calculate and encode the allowed amounts. We are finalizing our proposals to require that hospitals comply with specific instructions regarding the methodology that must be used to calculate such allowed amounts (including a lookback period), with some modifications. Additionally, we are finalizing, with modifications, our proposals to require hospitals to encode the attestation statement and the name of the hospital chief executive officer, president, or senior official designated to oversee the encoding of true, accurate, and complete data in the MRF. To advance the comparability of HPT data with other healthcare data, we are finalizing our proposal to require that hospitals encode their organizational, or Type 2, National Provider Identifier(s) (NPIs) in the MRFs. These policies are effective as of January 1, 2026, but we will delay enforcement of the requirements until April 1, 2026.

Finally, to encourage faster resolution and payment of CMPs, and in exchange for a hospital's admission of having violated HPT requirements, we are finalizing with clarifying edits our proposal to update § 180.90 to reduce the amount of a CMP by 35 percent, under certain conditions, when a hospital waives its right to an ALJ hearing, beginning January 1, 2026. These changes aim to improve transparency in hospital pricing, facilitate efficient enforcement of the HPT requirements, and empower consumers with actionable pricing information.

3. Summary of Costs and Benefits

In section XXVI. of this final rule with comment period, we set forth a detailed analysis of the regulatory and Federalism impacts that the final changes will have on affected entities and beneficiaries. Key estimated impacts are described below.

a. Impacts of all OPPS Changes

Table 167 in section XXVI.C. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2026 compared to all estimated OPPS payments in CY 2025. We estimate that the final policies in this final rule with comment period will result in a 2.4 percent increase in OPPS payments to providers for services. We estimate that total OPPS payments for CY 2026, including beneficiary cost-sharing, to the approximately 3,600 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $1.77 billion compared to CY 2025 payments due to the OPD update, excluding changes in enrollment, utilization, and case-mix. However, for providers subject to the 340B remedy offset, the 340B remedy offset is estimated to reduce payments by $275 million in CY 2026.

We estimated the isolated impact of our OPPS policies on CMHCs because CMHCs have historically only been paid for partial hospitalization services under the OPPS. Beginning CY 2024, they are also paid for IOP services under the OPPS. Based on our policy to calculate CMHC PHP and IOP costs based on 40 percent of the corresponding proposed hospital-based PHP and IOP costs, we estimate a 2.2 percent increase in CY 2026 payments to CMHCs relative to their CY 2025 payments.

b. Impacts of the Updated Wage Indexes

We estimate that our update of the wage indexes based on the fiscal year (FY) 2026 IPPS final rule wage indexes will result in a 0.1 percent increase for urban hospitals under the OPPS and a 0.2 percent increase for rural hospitals. These wage indexes include continued implementation of the Office of Management and Budget (OMB) labor market area delineations based on 2020 Decennial Census data, with updates, as discussed in section II.C. of this final rule with comment period.

c. Impacts of the Rural Adjustment and the Cancer Hospital Payment Adjustment

For CY 2026, we are continuing to provide additional payments to cancer hospitals so that a cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. Section 16002(b) of the 21st Century Cures Act requires that this weighted average PCR be reduced by 1.0 percentage point. In light of the COVID-19 PHE impact on claims and cost data used to calculate the target PCR, we maintained the CY 2021 target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, we finalized a policy to reduce the target PCR by 1.0 percentage point each calendar year

until the target PCR equals the PCR of non-cancer hospitals using the most recently submitted or settled cost report data. For CY 2025, we finalized a target PCR of 0.87. For CY 2026, we are finalizing a target PCR of 0.87, the same PCR of non-cancer hospitals using the most recently submitted or settled cost report data, to determine the CY 2026 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments would be the additional payments needed to result in a PCR equal to 0.87 for each cancer hospital.

d. Impacts of the OPD Fee Schedule Increase Factor

For the CY 2026 OPPS/ASC, we are establishing an OPD fee schedule increase factor of 2.6 percent and applying that increase factor to the conversion factor for CY 2025. As a result of the OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that urban hospitals will experience an increase in payments of approximately 2.8 percent and that rural hospitals will experience an increase in payments of 2.4 percent. Classifying hospitals by teaching status, we estimate non-teaching hospitals will experience an increase in payments of 2.7 percent, minor teaching hospitals will experience an increase in payments of 2.9 percent, and major teaching hospitals will experience an increase in payments of 2.6 percent. We also classified hospitals by the type of ownership. We estimate that hospitals with voluntary ownership will experience an increase of 2.8 percent in payments, while hospitals with government ownership will experience an increase of 2.3 percent in payments. We estimate that hospitals with proprietary ownership will experience an increase of 3.4 percent in payments.

e. Impacts of the ASC Payment Update

For impact purposes, the surgical procedures on the ASC covered surgical procedure list are aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The percentage change in estimated total payments by specialty groups under the final CY 2026 payment rates, compared to estimated CY 2025 payment rates, ranges between an increase of 2 percent and an increase of 12 percent.

f. Impacts of the Market-Based MS-DRG Relative Weight Data Collection and Change in Methodology for Calculating MS-DRG Relative Weights Under the Inpatient Prospective Payment System

In section XX. of this final rule, we are finalizing a methodology for estimating the MS-DRG relative weights beginning in FY 2029 based on the median payer-specific negotiated charge information we are finalizing to collect on the cost report. We note that the estimated total annual burden hours for this data collection are as follows: 3,038 hospitals times 20 hours per hospital equals 60,760 annual burden hours and $4,857,458.20. We refer readers to section XXIII.E. of this final rule with comment period for further analysis of this assessment.

g. Impacts of Hospital Price Transparency

We finalizing a policy to require hospitals to report four new data elements when the payer-specific negotiated charge is based on a percentage or algorithm—the median allowed amount (which would replace the estimated allowed amount data element), the 10th percentile allowed amount, the 90th percentile allowed amount, and the count of allowed amounts. We are also finalizing new attestation language that hospitals must include in the machine-readable file (MRF) and requiring hospitals to encode the name of the chief executive officer, president or senior official designated to oversee the encoding of true, accurate and complete data in the MRF. Additionally, we are finalizing our proposal to require hospitals to add their National Provider Identifiers (NPIs) to the MRF. The policy will advance the comparability of standard charge information across hospitals and of the hospital price transparency (HPT) data with other healthcare data, including health plan transparency data from the Transparency in Coverage (TiC) MRFs. These new policies include a one-time burden of $1,461.80 per hospital, and a total national cost of $10,840,708.80 ($1,461.80 × 7,416 hospitals). As discussed in detail in sections XIX. and XXIII. of this final rule with comment period, we believe that the benefits to the public (and to hospitals themselves) outweigh the burden imposed on hospitals.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Act was enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act, authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR parts 410 and 419.

The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following Acts made additional changes to the OPPS: the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA, Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016; the Consolidated Appropriations Act, 2018 (Pub. L. 115-

141), enacted on March 23, 2018; the Substance Use Disorder- Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (Pub. L. 115-271), enacted on October 24, 2018; the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94), enacted on December 20, 2019; the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. 116-136), enacted on March 27, 2020; the Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020; the Inflation Reduction Act, 2022 (Pub. L. 117-169), enacted on August 16, 2022; and the Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-238), enacted December 29, 2022.

Under the OPPS, we generally pay for hospital Part B services on a rate-per-service basis that varies according to the APC group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current Procedural Terminology (CPT) codes) to identify and group the services within each APC. The OPPS includes payment for most hospital outpatient services, except those identified in section I.C of this final rule. Section 1833(t)(1)(B) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by CMHCs), and certain inpatient hospital services that are paid under Medicare Part B.

The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the hospital inpatient wage index value for the locality in which the hospital or CMHC is located.

All services and items within an APC group are comparable clinically and with respect to resource use, as required by section 1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of the Act, subject to certain exceptions, items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost (or mean cost, if elected by the Secretary) for an item or service within the same APC group (referred to as the “2 times rule”). In implementing this provision, we generally use the cost of the item or service assigned to an APC group.

For new technology items and services, special payments under the OPPS may be made in one of two ways. section 1833(t)(6) of the Act provides for temporary additional payments, which we refer to as “transitional pass-through payments”, for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not eligible for transitional pass-through payments, and for which we lack sufficient clinical information and cost data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017, by an off-campus outpatient department of a provider (as defined in subparagraph (B) of paragraph (21)). We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22.

Under § 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals are:

• Critical access hospitals (CAHs);

• Hospitals located in Maryland and paid under Maryland's All-Payer or Total Cost of Care Model;

• Hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico;

• Indian Health Service (IHS) hospitals; and

• 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

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

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—

• May advise on the clinical integrity of Ambulatory Payment Classification (APC) groups and their associated weights;

• May advise on the appropriate supervision level for hospital outpatient services;

• May advise on OPPS APC rates for ASC covered surgical procedures;

• Continues to be technical in nature;

• Is governed by the provisions of the FACA;

• Has a Designated Federal Official (DFO); and

• 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

https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html

.

3. Panel Meetings and Organizational Structure

The Panel has held many meetings, with the last meeting taking place on August 25, 2025. The recommendations of the Panel for the most recent meeting are available on the CMS website at

https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment

. 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:

https://mearis.cms.gov

.

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:

• 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

• Data Subcommittee, which is responsible for studying the data issues confronting the Panel and for recommending options for resolving them.

Each of these workgroup subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 25, 2025, meeting that these subcommittees continue. We accepted this recommendation.

For discussions of earlier Panel meetings and recommendations, we refer readers to previously published OPPS/ASC proposed and final rules, the CMS website mentioned earlier in this section, and the FACA database at

https://facadatabase.gov

.

F. Public Comments Received on the CY 2026 OPPS/ASC Proposed

We received approximately 3,039 timely pieces of correspondence on the CY 2026 OPPS/ASC proposed rule that appeared in the

Federal Register

on July 17, 2025 (90 FR 33476). We received comments from elected officials, providers and suppliers, practitioners, and advocacy groups. We provide summaries of the public comments, and our responses are set forth in the various sections of this final rule with comment period under the appropriate headings. We note that we received some public comments that were outside the scope of the CY 2026 OPPS/ASC proposed rule. Out-of-scope-public comments are not addressed in this CY 2026 OPPS/ASC final rule with comment period.

G. Public Comments Received on the CY 2025 OPPS/ASC Final Rule With Comment Period

We received approximately 29 timely pieces of correspondence on the CY 2025 OPPS/ASC final rule with comment period that appeared in the

Federal Register

on November 27, 2024 (89 FR 93912).

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction

a. Database Source and Methodology

Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often than annually and revise the relative payment weights for Ambulatory Payment Classifications (APCs). In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000, for each APC group.

For the CY 2026 OPPS, we proposed to recalibrate the APC relative payment weights for services furnished on or after January 1, 2026, and before January 1, 2027 (CY 2026), using the same basic methodology that we described in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93921 through

93922), using CY 2024 claims data. That is, we proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services to construct a database for calculating APC group weights.

For the purpose of recalibrating the proposed APC relative payment weights for CY 2026, we began with approximately 143 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2024, and before January 1, 2025, before applying our exclusionary criteria and other methodological adjustments. After the application of those data processing changes, we used approximately 76 million final action claims to develop the proposed CY 2026 OPPS payment weights. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for the CY 2026 OPPS/ASC proposed rule on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

Addendum N to the CY 2026 OPPS/ASC proposed rule (which is available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

) includes the proposed list of bypass codes for CY 2026. The proposed list of bypass codes contains codes that are reported on claims for services in CY 2024 and, therefore, includes codes that were in effect in CY 2024 and used for billing. We proposed to retain these deleted bypass codes on the proposed CY 2026 bypass list because these codes existed in CY 2024 and were covered HOPD services in that period, and CY 2024 claims data were used to calculate proposed CY 2026 payment rates. Keeping these deleted bypass codes on the bypass list potentially allows us to create more “pseudo” single procedure claims for ratesetting purposes. “Overlap bypass codes” that are members of the proposed multiple imaging composite APCs are identified by asterisks (*) in the third column of Addendum N to the CY 2026 OPPS/ASC proposed rule. HCPCS codes that we proposed to add for CY 2026 are identified by asterisks (*) in the fourth column of Addendum N.

We did not receive any public comments on our general proposal to recalibrate the relative payment weights for each APC based on claims and cost report data for HOPD services or on our proposed bypass code process. We are finalizing as proposed the “pseudo” single claims process and the CY 2026 proposed list of bypass codes, finalized in Addendum N to this final rule with comment period (which is available via the internet on the CMS website). For this final rule with comment period, for the purpose of recalibrating the final APC relative payment weights for CY 2026, we used approximately 81 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2024, and before January 1, 2025. For the exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this final rule with comment period on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

b. Calculation and Use of Cost-to-Charge Ratios (CCRs)

For CY 2026, we proposed to continue to use the hospital-specific overall ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk. To calculate the APC costs on which the proposed CY 2026 APC payment rates are based, we calculated hospital-specific departmental CCRs for each hospital for which we had CY 2024 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2023. For the proposed CY 2026 OPPS payment rates, we used the set of claims processed during CY 2024. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. To ensure the completeness of the revenue code-to-cost center crosswalk, we reviewed changes to the list of revenue codes for CY 2024 (the year of claims data we used to calculate the proposed CY 2026 OPPS payment rates) and updates to the National Uniform Billing Committee (NUBC) 2024 Data specifications Manual. That crosswalk is available for review and continuous comment on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

In accordance with our longstanding policy, similar to our finalized policy for CY 2025 OPPS ratesetting, we proposed to calculate CCRs for the standard cost centers—cost centers with a predefined label—and nonstandard cost centers—cost centers defined by a hospital—accepted by the electronic cost report database. In general, the most detailed level at which we calculate CCRs is the hospital-specific departmental level.

While we generally view the use of additional cost data as improving our OPPS ratesetting process, we have historically not included cost report lines for certain nonstandard cost centers in the OPPS ratesetting database construction when hospitals have reported these nonstandard cost centers on cost report lines that do not correspond to the cost center number. We believe it is important to further investigate the accuracy of these cost report data before including such data in the ratesetting process. Further, we believe it is appropriate to gather additional information from the public as well before including the data in OPPS ratesetting. For CY 2026, we proposed not to include the nonstandard cost centers reported in this way in the OPPS ratesetting database construction.

We did not receive any public comments on the general CCR process and therefore, we are finalizing our proposal for CY 2026 to continue to use the hospital-specific overall ancillary and departmental CCRs to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk and we are also finalizing the proposed methodology.

2. Final Data Development and Calculation of Costs Used for Ratesetting

In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2026. The Hospital OPPS page on the CMS website on which this final rule is posted (

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient

) 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

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient

, includes information about obtaining the “OPPS Limited Data Set,” which now includes the additional variables

previously available only in the OPPS Identifiable Data Set, including International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) diagnosis codes and revenue code payment amounts. This file is derived from the CY 2024 claims that are used to calculate the final payment rates for the CY 2026 OPPS/ASC final rule with comment period.

Previously, the OPPS established the scaled relative weights on which payments are based using APC median costs, a process described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we finalized the use of geometric mean costs to calculate the relative weights on which the CY 2013 OPPS payment rates were based. While this policy changed the cost metric on which the relative payments are based, the data process in general remained the same under the methodologies that we used to obtain appropriate claims data and accurate cost information in determining estimated service cost.

We used the methodology described in sections II.A.2.a. through II.A.2.c. of this final rule with comment period to calculate the costs we used to establish the final relative payment weights used in calculating the OPPS payment rates for CY 2026 shown in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

). We refer readers to section II.A.4. of this final rule with comment period for a discussion of the conversion of APC costs to scaled payment weights.

We note that under the OPPS, CY 2019 was the first year in which the claims data used for setting payment rates (CY 2017 data) contained lines with the modifier “PN,” which indicates nonexcepted items and services furnished and billed by off-campus provider-based departments (PBDs) of hospitals. Because nonexcepted items and services are not paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58832), we finalized a policy to remove those claim lines reported with modifier “PN” from the claims data used in ratesetting for the CY 2019 OPPS and subsequent years. For the CY 2026 OPPS, we proposed to continue to remove claim lines with modifier “PN” from the ratesetting process.

We did not receive any public comments on our proposal to continue to remove claim lines reported with modifier “PN” from the ratesetting process and are finalizing as proposed.

For details of the claims accounting process used in this CY 2026 OPPS/ASC final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for this final rule with comment period on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

a. Calculation of Single Procedure APC Criteria-Based Costs

(1) Blood and Blood Products

Since the implementation of the OPPS in August 2000, we have made separate payments for blood and blood products through APCs rather than packaging payment for them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs.

We proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology (88 FR 49562), which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers and past public comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. To address the differences in CCRs and to better reflect hospitals' costs, our methodology simulates blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers and applies this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports. We proposed to calculate the costs upon which the proposed payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific, simulated, blood-specific CCR for hospitals that did not report costs and charges for a blood cost center.

We stated in the CY 2026 OPPS/ASC proposed rule (90 FR 33487) that we continue to believe that the hospital-specific, simulated, blood-specific CCR methodology takes into account the unique charging and cost accounting structure of each hospital, as it better responds to the absence of a blood-specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-specific CCR across hospitals. This methodology also yields more accurate estimated costs for these products and results in payment rates for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and for these blood products in general.

For a more detailed discussion of payments for blood and blood products through APCs, we refer readers to:

• The CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for a more comprehensive discussion of the blood-specific CCR methodology;

• 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

• The CY 2015 OPPS/ASC final rule with comment period (79 FR 66795 and 66796) for additional discussion of our policy not to make separate payments for blood and blood products when they appear on the same claims as services assigned to a C-APC.

We did not receive public comments on this provision, and therefore, we are finalizing without modification our proposal to calculate the costs upon which the payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital specific, simulated, blood-specific CCR for hospitals that did not report costs and charges for a blood cost center. We are also finalizing without modification our proposal to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. Please refer to Addendum B to this final rule with comment period (which is available via

the internet on the CMS website) for the final CY 2026 payment rates for blood and blood products.

(2) Brachytherapy Sources

Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy—cancer treatment through solid source radioactive implants—consisting of a seed or seeds (or radioactive source) (“brachytherapy sources”) separately from other services or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 and 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for several reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges adjusted to cost, also would provide hospitals with incentives for efficiency in the provision of brachytherapy services to Medicare beneficiaries. Moreover, this approach is consistent with our payment methodology for most items and services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 through 70325) for further discussion of the history of OPPS payment for brachytherapy sources.

For CY 2026, except where otherwise indicated, we proposed to continue our policy and use the costs derived from CY 2024 claims data to set the proposed CY 2026 payment rates for brachytherapy sources because we proposed to use CY 2024 data to set the proposed payment rates for most other items and services that would be paid under the CY 2026 OPPS. With the exception of the proposed payment rate for brachytherapy source C2645 (Brachytherapy planar source, palladium-103, per square millimeter) and the proposed payment rates for low-volume brachytherapy APCs discussed in section III.D. of the CY 2026 OPPS/ASC proposed rule, we proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the CY 2026 OPPS/ASC proposed rule. We also proposed for CY 2026 and subsequent years to continue the other payment policies for brachytherapy sources that we finalized and first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). For CY 2026 and subsequent years, we proposed to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not otherwise specified, per source) and C2699 (Brachytherapy source, non-stranded, not otherwise specified, per source), at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per-source basis (as opposed to, for example, per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). For CY 2026 and subsequent years, we also proposed to continue the policy we implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding payment for new brachytherapy sources for which we have no claims data, for the same reasons we discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until January 1, 2010, by section 142 of Pub. L. 110-275). Specifically, this policy is intended to enable us to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other relevant information regarding the expected costs of the sources to hospitals. The proposed CY 2026 payment rates for brachytherapy sources are included in Addendum B to the OPPS/ASC proposed rule (which is available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

) 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

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for the brachytherapy source's APC—APC 2648 (Brachytx planar, p-103) (82 FR 49233 through 49244). For CY 2019, in the absence of sufficient claims data, we continued to establish a payment rate for C2645 at $4.69 per mm

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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

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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

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for HCPCS code C2645 for CY 2020. Similarly, in the absence of sufficient claims data to establish an APC payment rate, in the CY 2021, CY 2022, CY 2023, CY 2024, and CY 2025 OPPS/ASC final rules with comment period (85 FR 85879 through 85880, 86 FR 63469, 87 FR 71760-71761, 88 FR 81553, and 89 FR 93925), we finalized our policy to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2019 payment rate of $4.69 per mm

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for HCPCS code C2645 for CYs 2021 through 2025.

There were no CY 2024 claims available that reported HCPCS code C2645 for the CY 2026 OPPS/ASC proposed rule. Therefore, in the absence of claims data, we proposed to continue to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate of $4.69 per mm

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for HCPCS code C2645, which we proposed to be assigned to APC 2648 (Brachytx planar, p-103), for CY 2026.

Additionally, for CY 2022 and subsequent calendar years, we adopted a Universal Low Volume APC policy for clinical and brachytherapy APCs. As discussed in further detail in section X.C. of the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 through 63747), we adopted this policy to mitigate wide variation in payment rates that occur from year to year for APCs with low utilization. Such volatility in payment rates from year to

year can result in even lower utilization and potential barriers to access. Brachytherapy APCs that have fewer than 100 single claims used for ratesetting purposes are designated as Low Volume APCs unless an alternative payment rate is applied, such as the use of our equitable adjustment authority under section 1833(t)(2)(E) of the Act in the case of APC 2648 (Brachytx planar, p-103), for which HCPCS code C2645 (Brachytherapy planar source, palladium-103, per square millimeter) is the only code assigned as discussed previously in this section.

For CY 2026, we proposed to designate six brachytherapy APCs as Low Volume APCs as these APCs met our criteria to be designated as Low Volume APCs.

We did not receive public comments on this provision, and therefore, we are finalizing as proposed. Except for brachytherapy APCs designated as Low Volume APCs and APC 2648, we will continue our policy and use the costs derived from CY 2024 claims data to set the final CY 2026 payment rates for brachytherapy sources. We will continue to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not otherwise specified, per source) and C2699 (Brachytherapy source, non-stranded, not otherwise specified, per source), at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per-source basis. Further, we will use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate of $4.69 per mm2 for HCPCS code C2645, which we are assigning to APC 2648 (Brachytx planar, p1-103), for CY 2026. We refer readers to section III.D. of this final rule with comment period for information on the brachytherapy APCs we are finalizing to designate as Low Volume APCs.

The final CY 2026 payment rates for brachytherapy sources are included in Addendum B to this final rule with comment period (which is available via the internet on the CMS website) and are identified with status indicator “U.” We continue to invite interested parties to submit recommendations for new codes to describe new brachytherapy sources. Such recommendations should be directed via email to

outpatientpps@cms.hhs.gov.

b. Comprehensive APCs (C-APCs) for CY 2026

(1) Background

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), we finalized a comprehensive payment policy that packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. The policy was finalized in CY 2014, but the effective date was delayed until January 1, 2015, to allow additional time for further analysis, opportunity for public comment, and systems preparation. The comprehensive APC (C-APC) policy was implemented effective January 1, 2015, with modifications and clarifications in response to public comments received regarding specific provisions of the C-APC policy (79 FR 66798 through 66810).

A C-APC is defined as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. We established C-APCs as a category broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 (79 FR 66809 and 66810). We have gradually added new C-APCs since the policy was implemented beginning in CY 2015, with the number of C-APCs now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844 through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87 FR 71769; 88 FR 81562; and 89 FR 93926).

Under our C-APC policy, we designate a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator “J1”. When such a primary service is reported on a hospital outpatient claim, taking into consideration the few exceptions that are discussed below, we make payment for all other items and services reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service (hereinafter collectively referred to as “adjunctive services”) and representing components of a complete comprehensive service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services are packaged into the payments for the primary services. This results in a single prospective payment for each of the primary, comprehensive services based on the costs of all reported services at the claim level. One example of a primary service would be a partial mastectomy, and an example of a secondary service packaged into that primary service would be a radiation therapy procedure.

Services excluded from the C-APC policy under the OPPS include services that are not covered OPD services, services that cannot, by statute, be paid for under the OPPS, and services that are required by statute to be separately paid. This includes certain mammography and ambulance services that are not covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also are required by statute to receive separate payment under section 1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which also require separate payment under section 1833(t)(6) of the Act; self-administered drugs (SADs) that are not otherwise packaged as supplies because they are not covered under Medicare Part B under section 1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 and 79 FR 66800 and 66801). A list of services excluded from the C-APC policy is included in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

). 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,”

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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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Status indicator “J1” denotes Hospital Part B Services Paid Through a Comprehensive APC. Further information can be found in CY 2026 Addendum D1.

In the CY 2016 OPPS/ASC final rule with comment period, we expanded the C-APC payment methodology to qualifying extended assessment and management encounters through the “Comprehensive Observation Services” C-APC (C-APC 8011). Services within this APC are assigned status indicator “J2.”

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Specifically, we make a payment through C-APC 8011 for a claim that:

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Status indicator “J2” denotes Hospital Part B Services That May Be Paid Through a Comprehensive APC. Further information can be found in CY 2026 Addendum D1.

• Does not contain a procedure described by a HCPCS code to which we have assigned status indicator “T;”

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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.

• Contains 8 or more units of services described by HCPCS code G0378 (Hospital observation services, per hour);

• 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

• 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)

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for further instructions on reporting these services in the context of a C-APC service.

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https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r3523cp.pdf.

Items included in the packaged payment provided in conjunction with the primary service also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and SADs, unless they function as packaged supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer readers to Section 50.2M, Chapter 15 of the Medicare Benefit Policy Manual for a description of our policy on SADs treated as hospital outpatient supplies, including lists of SADs that function as supplies and those that do not function as supplies.

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https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.

We define each hospital outpatient claim reporting a single unit of a single primary service assigned to status indicator “J1” as a single “J1” unit procedure claim (78 FR 74871 and 79 FR 66801). Line-item charges for services included on the C-APC claim are converted to line-item costs, which are then summed to develop the estimated APC costs. These claims are then assigned one unit of the service with status indicator “J1” and later used to develop the geometric mean costs for the C-APC relative payment weights. (We note that we use the term “comprehensive” to describe the geometric mean cost of a claim reporting “J1” service(s) or the geometric mean cost of a C-APC, inclusive of all the items and services included in the C-APC service payment bundle.) Charges for services that would otherwise be separately payable are added to the charges for the primary service. This process differs from our traditional cost accounting methodology only in that all such services on the claim are packaged (except certain services as described above). We apply our standard data trims, which exclude claims with extremely high primary units or extreme costs.

The comprehensive geometric mean costs are used to establish resource similarity and, along with clinical similarity, dictate the assignment of the primary services to the C-APCs. We

establish a ranking of each primary service (single unit only) to be assigned to status indicator “J1” according to its comprehensive geometric mean costs. For the minority of claims reporting more than one primary service assigned to status indicator “J1” or units thereof, we identify one “J1” service as the primary service for the claim based on our cost-based ranking of primary services. We then assign these multiple “J1” procedure claims to the C-APC to which the service designated as the primary service is assigned. If the reported “J1” services on a claim map to different C-APCs, we designate the “J1” service assigned to the C-APC with the highest comprehensive geometric mean cost as the primary service for that claim. If the reported multiple “J1” services on a claim map to the same C-APC, we designate the most costly service (at the HCPCS code level) as the primary service for that claim. This process results in initial assignments of claims for the primary services assigned to status indicator “J1” to the most appropriate C-APCs based on both single and multiple procedure claims reporting these services and clinical and resource homogeneity.

Complexity Adjustments.

We use complexity adjustments to provide increased payment for certain comprehensive services. We apply a complexity adjustment by promoting qualifying paired “J1” service code combinations or paired code combinations of “J1” services and certain add-on codes (as described further below) from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. We apply this type of complexity adjustment when the paired code combination represents a complex, costly form or version of the primary service according to the following criteria:

• Frequency of 25 or more claims reporting the code combination (frequency threshold); and

• Violation of the 2 times rule, as stated in section 1833(t)(2) of the Act and section III.B.2. of this final rule with comment period, in the originating C-APC (cost threshold).

These criteria identify paired code combinations that occur commonly and exhibit materially greater resource requirements than the primary service. The CY 2017 OPPS/ASC final rule with comment period (81 FR 79582) included a revision to the complexity adjustment eligibility criteria. Specifically, we finalized a policy to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds described above) also not create a 2 times rule violation in the higher level or receiving APC.

After designating a single primary service for a claim, we evaluate that service in combination with each of the other procedure codes reported on the claim assigned to status indicator “J1” (or certain add-on codes) to determine if there are paired code combinations that meet the complexity adjustment criteria. For a new HCPCS code, we determine initial C-APC assignment and qualification for a complexity adjustment using the best available information, crosswalking the new HCPCS code to a predecessor code(s) when appropriate.

Once we have determined that a particular code combination of “J1” services (or combinations of “J1” services reported in conjunction with certain add-on codes) represents a complex version of the primary service because it is sufficiently costly, frequent, and a subset of the primary comprehensive service overall according to the criteria described above, we promote the claim including the complex version of the primary service as described by the code combination to the next higher cost C-APC within the clinical family, unless the primary service is already assigned to the highest cost APC within the C-APC clinical family or assigned to the only C-APC in a clinical family. We do not create new APCs with a comprehensive geometric mean cost that is higher than the highest geometric mean cost (or only) C-APC in a clinical family just to accommodate potential complexity adjustments. Therefore, the highest payment for any claim including a code combination for services assigned to a C-APC would be the highest paying C-APC in the clinical family (79 FR 66802).

We package payment for all add-on codes into the payment for the C-APC. However, certain primary service add-on combinations may qualify for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70331), all add-on codes that can be appropriately reported in combination with a base code that describes a primary “J1” service are evaluated for a complexity adjustment.

To determine which combinations of primary service codes reported in conjunction with an add-on code may qualify for a complexity adjustment for CY 2026, we apply the frequency and cost criteria thresholds discussed above, testing claims reporting one unit of a single primary service assigned to status indicator “J1” and any number of units of a single add-on code for the primary “J1” service. If the frequency and cost criteria thresholds for a complexity adjustment are met and reassignment to the next higher cost APC in the clinical family is appropriate (based on meeting the criteria outlined above), we make a complexity adjustment for the code combination; that is, we reassign the primary service code reported in conjunction with the add-on code to the next higher cost C-APC within the same clinical family of C-APCs. As previously stated, we package payment for add-on codes into the C-APC payment rate. If any add-on code reported in conjunction with the “J1” primary service code does not qualify for a complexity adjustment, payment for the add-on service continues to be packaged into the payment for the primary service and is not reassigned to the next higher cost C-APC. We list the final complexity adjustments for “J1” and add-on code combinations for CY 2026, along with all the other final complexity adjustments, in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

).

Addendum J to this final rule with comment period includes the cost statistics for each code combination that would qualify for a complexity adjustment (including primary code and add-on code combinations). Addendum J to this final rule with comment period also contains summary cost statistics for each of the paired code combinations that describe a complex code combination that would qualify for a complexity adjustment and be reassigned to the next higher cost C-APC within the clinical family. The combined statistics for all final reassigned complex code combinations are represented by an alphanumeric code with the first four digits of the designated primary service followed by a letter. For example, the final geometric mean cost listed in Addendum J for the code combination described by complexity adjustment assignment 3320R, which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), includes all paired code combinations that will be reassigned to C-APC 5224 when CPT code 33208 is the primary code. Providing the information contained in Addendum J to this final rule with comment period allows interested parties the

opportunity to better assess the impact associated with the assignment of claims with each of the paired code combinations eligible for a complexity adjustment.

We received public comments on these proposals. The following is a summary of the comments received and our responses.

Comment:

We received support from commenters for a variety of existing and proposed complexity adjustments.

Response:

We thank the commenters for their support.

Comment:

Multiple commenters requested that CMS apply a complexity adjustment to additional code combinations. The specific C-APC complexity adjustment code combinations requested by the commenters for CY 2026 are listed in Table 1.

BILLING CODE 4120-01-P

ER25NO25.000

ER25NO25.001

ER25NO25.002

ER25NO25.003

BILLING CODE 4120-01-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 combinations met our cost and frequency criteria, qualifying for a complexity adjustment for CY 2026:

• Primary HCPCS code 93454 with secondary HCPCS code 0523T.

• Primary HCPCS code 93460 with secondary HCPCS code 0523T.

• Primary HCPCS code 28740 with secondary HCPCS code 20902.

• Primary HCPCS 28750 code with secondary HCPCS code 20900.

• Primary HCPCS code 28750 with secondary HCPCS code 28308.

• Primary HCPCS 22513 code with secondary HCPCS code 22515.

• Primary HCPCS 22514 code with secondary HCPCS code 22515.

• Primary HCPCS 43255 code with secondary HCPCS code 43245.

• Primary HCPCS 37187 code with secondary HCPCS code 37248.

All the remaining code combinations listed failed to meet our cost or frequency criteria and do not qualify for complexity adjustments for CY 2026. Addendum J to this final rule with comment period includes the cost statistics for each code combination that was evaluated for a complexity adjustment.

Comment:

Several commenters brought to our attention that some qualifying complexity adjustments pairings were promoted up two APC levels. Commenters requested that we clarify that code pairings that qualify for a complexity adjustment are only promoted to an APC one level higher. Other commenters flagged code pairings that qualified for complexity adjustments but were not mapped to the next highest APC in their clinical family. Other commenters found that some code pairings in Addendum J which qualified for complexity adjustments in the “Complexity Adjustment Evaluation” tab were not listed in the “Complexity Adjustments” tab.

Response:

We thank the commenters for bringing this to our attention. It has been our longstanding policy to promote coding pairings that qualify for complexity adjustments to the next highest APC in their clinical family. In Addendum J to this final rule with comment period, all code pairings that qualify for complexity adjustments are mapped to the next highest APC in their clinical family. All code pairings that qualify for complexity adjustments can be found in both “Complexity Adjustment Evaluation” tab and the “Complexity Adjustments” tab of Addendum J.

Comment:

We received requests to evaluate HCPCS code pairings for complexity adjustments that were not any combination of “J1” or add-on codes. Commenters requested that CMS evaluate codes with status indicators “S”, which indicates a code is paid separately and is not subject to multiple procedure discounting. Commenters specifically requested that CMS consider G0390 (trauma activation with critical care) and G0257 (emergency/unscheduled dialysis) because the commenters believe that complexity adjustments do not currently recognize the cost of trauma cases.

Response:

As stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66770 through 67034), under our C-APC policy, we designate a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator “J1.” We use complexity adjustments to provide increased payment for certain

comprehensive services. We apply a complexity adjustment by promoting qualifying paired “J1” service code combinations or paired code combinations of “J1” services and certain add-on codes from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. If a code pairing is not “J1” plus “J1” or “J1” plus an add-on code, it would not be evaluated for a complexity adjustment. In the CY 2026 OPPS/ASC proposed rule, we did solicit comments on revising our complexity adjustment methodology, which is summarized below in section II.B.2. of this final rule with comment period. Additionally, the assigned status indicators for HCPCS codes are open for public comment through our annual rulemaking process if commenters feel that any code may need to be reevaluated.

Comment:

Commenters requested that CMS provide additional information so that other interested parties are able to replicate Addendum J in its entirety. Commenters specifically requested additional clarity around the treatment of add-on codes.

Response:

We refer commenters to the claims accounting narrative under supporting documentation for this CY 2026 OPPS/ASC final rule with comment period on the CMS website. The claims accounting narrative provides a detailed overview of how we processed the CY 2024 claims data to produce the proposed prospective CY 2026 OPPS payment rates.

After consideration of public comments, we are finalizing the C-APC complexity adjustment policy for CY 2026 as proposed. We are also finalizing the proposed complexity adjustments, with the addition of nine new code combinations suggested by commenters that meet our complexity adjustment criteria. We have made additional updates to the claims accounting narrative, specifically the section on Comprehensive APCs, in order to provide additional clarity on the claims accounting process used for determining complexity adjustments. We have also updated Addendum J to provide additional transparency on this issue.

(2) Comment Solicitation on C-APC Complexity Adjustment Criteria

In response to a variety of requests from interested parties, as well as public comments in past rulemaking, related to our C-APC complexity adjustment criteria, in the CY 2026 OPPS/ASC proposed rule (90 FR 33491) we included a comment solicitation on C-APC adjustment criteria. Interested parties and commenters have requested that CMS modify the established C-APC complexity adjustment eligibility criteria of 25 or more claims reporting the code combination (frequency threshold) and a violation of the 2 times rule in the originating C-APC (cost threshold) to allow additional code combinations to qualify for complexity adjustments. Interested parties and commenters have also requested expanding the qualifying code combinations for complexity adjustments to allow clusters of procedures, consisting of a “J1” code pair and multiple other associated add-on codes, to be used in combination with that “J1” code pair to qualify. These interested parties and commenters have noted these expanded combinations may allow for a more accurate reflection of medical practice when multiple procedures are performed together or there are certain complex procedures that include numerous add-on codes.

For CY 2026, we solicited comments on potential refinements to our C-APC complexity adjustment criteria. Under this solicitation, we sought comment on expanding code combinations that qualify for complexity adjustments, including any specifications related to determining specific combination types and how they represent a complex, costly subset of the primary service. We sought comment on how CMS could identify service pairings or clusters of services for complexity adjustments that are clinically appropriate but are currently not evaluated for complexity adjustments. Additionally, if we were to expand our complexity adjustment criteria to allow for clusters of codes, we sought comment on what the appropriate cost and frequency thresholds could be used to identify which code clusters truly reflect complex and resource-intensive code combinations that are commonly performed in the hospital outpatient department setting.

We sought comment on which services are clinically integral to the provision of “J1” services that would qualify for a complexity adjustment under an expanded evaluation framework. Specifically, we sought comment on what criteria we could add, reflecting clinical practice, that would determine the costly additional components that are often associated with other high-cost packaged items and services. Finally, we sought comment on how we might address the unintended consequences of granular coding on the mechanics of the complexity adjustment criteria and if highly specific coding truly reflects clinical practice in hospital outpatient departments.

We received public comments on this comment solicitation. The following is a summary of the comments we received and our responses.

Comment:

We received a number of comments on C-APC complexity adjustment criteria. Commenters shared their ideas on how to refine the complexity adjustment criteria and methodology, on the mechanics of how complexity adjustments are evaluated, and how the data is presented to the public.

Many commenters expressed their need for additional information so that interested parties would be able to accurately replicate Addendum J. To that end, commenters requested that CMS provide sufficient detail in the CY 2026 OPPS final rule with comment period Claims Accounting Narrative such that Addendum J could be fully replicated in its entirety. Other commenters suggested that CMS detail the step-by-step claims accounting process used to count claims for the purpose of evaluating complexity adjustment eligibility.

Some commenters requested that CMS include the full list of add-on codes eligible for evaluation for the complexity adjustment, along with the method CMS used to determine whether or not a code was eligible for complexity adjustment evaluation. Commenters also requested that CMS provide additional information and greater transparency on the methodology used to evaluate the complexity adjustment frequency criteria for “J1” and add-on codes. Specifically, commenters suggested that CMS should evaluate the total costs of “J1 + N” code combinations in the same manner as single J1 procedures and “J1 + J1” code combinations. Commenters indicated that this would be consistent with how CMS evaluates the cost of single frequency “J1” procedures and “J1 + J1” procedure code combinations.

Many comments suggested CMS could modify the methodology used when determining the cost threshold for a code combination to qualify for a complexity adjustment. Commenters recommended that CMS use the “lower of” methodology to determine the eligibility cost threshold:

• Current methodology using the two times rule, OR

• The lowest GMC of significant procedures in the APC to which the code combination would be eligible for complexity adjustment.

Commenters contended that the current methodology may be appropriate for lower cost APCs where the differences between the APC levels

and procedures are less significant. However, for higher-cost APCs, they say that using the two-times rule becomes problematic, and in some instances, the threshold is higher than the cost of any single procedure in the higher paying APC. By adopting the recommended methodology, commenters explained that more code combinations would be eligible for complexity adjustments. Commenters went on to say that the purpose of complexity adjustments is to ensure appropriate payment under the C-APC methodology, and therefore it is critical that CMS employ a methodology that reflects a more appropriate eligibility cost threshold consistent with the single “J1” procedures included in each APC.

Nearly all commenters on this issue agreed that CMS should expand its review of procedure combinations to include clusters of “J1” primary service and add-on codes, rather than only code pairs. Commenters asserted that this would better reflect medical practice when multiple procedures are performed together. Some commenters even suggested that CMS consider procedure combinations that include clusters of “J1” and add-on codes, and certain select HCPCS device codes. Commenters had specific suggestions on how using code clusters could work. One commenter suggested using clusters but maintaining cost and frequency thresholds, further suggesting using eligibility for Transitional Pass-Through payment as one criterion by which to identify instances where a code cluster would be appropriate for an expanded complexity adjustment. Other commenters suggested that CMS could limit the evaluation of code clusters to those nominated by the public on an annual basis.

Multiple commenters requested that CMS revise the complexity adjustment policy by allowing promotion of qualifying code combinations, even when the primary code is already assigned to the highest level of APCs within a clinical family (for example, creating a new APC level to accommodate these higher cost cases). Other commenters asserted that in order to maintain stability and predictability of payments associated with complex procedures, CMS should allow established qualifying codes to maintain the complexity adjusted payment for three calendar years before they are required to go through the eligibility review. Further, commenters said that APC reassignment for codes that qualify for 3 consecutive years should be made permanent.

In response to our request for comments on whether highly specific coding truly reflects clinical practice in hospital outpatient departments, commenters asserted that CMS' broad C-APC packaging policy, including the current eligibility criteria for complexity adjustments, has discouraged complete and accurate hospital reporting of packaged costs. Commenters explained that since hospitals receive the same C-APC payment for furnishing multiple packaged services, there is no incentive to report costs that do not drive reimbursement. Commenters asserted that this underreporting of packaged costs, coupled with CMS' claims edits for device-intensive procedures, leads to underpayment for APCs that rely heavily on packaged items, especially those with expensive routine supplies.

We also received a variety of other comments on ways to expand the scope of the complexity adjustment methodology, including establishing a provisional complexity adjustment process for code combinations involving newly removed IPO list procedures, reviewing bilateral procedure claims with high-cost implantable supplies, evaluating non-J1 procedure codes such as status indicators “S” and “T” for significant cost variation, and waiving the Administrative Procedures Act requirements for public comment to adopt suggested changes in the CY 2026 OPPS/ASC final rule for January 1, 2026.

Response:

We sincerely thank commenters for their interest and engagement on this important issue. Given the wide array of information presented through this public comment process, we will take the technical recommendations, alternate methodological approaches, and other detailed feedback provided into consideration for future notice and comment rulemaking. We welcome ongoing dialogue and engagement from interested parties regarding suggestions for potential future C-APC complexity adjustment criteria revisions.

(3) Exclusion of Procedures Assigned to New Technology APCs From the C-APC Policy

Services that are assigned to New Technology APCs are typically new procedures that do not have sufficient claims history to establish an accurate payment for them. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected (82 FR 59277).

The C-APC payment policy packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. Prior to CY 2019, when a procedure assigned to a New Technology APC was included on the claim with a primary procedure, identified by OPPS status indicator “J1,” payment for the new technology service was typically packaged into the payment for the primary procedure. Because the new technology service was not separately paid in this scenario, the overall number of single claims available to determine an appropriate clinical APC for the new service was reduced. This was contrary to the objective of the New Technology APC payment policy, which is to gather sufficient claims data to enable us to assign the service to an appropriate clinical APC.

To address this issue and ensure that there are sufficient claims data for services assigned to New Technology APCs, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58847), we finalized excluding payment for any procedure that is assigned to a New Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from being packaged when included on a claim with a “J1” service assigned to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we finalized that beginning in CY 2020, payment for services assigned to a New Technology APC would be excluded from being packaged into the payment for comprehensive observation services assigned status indicator “J2” when they are included on a claim with a “J2” service (84 FR 61167).

(4) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399 (Unclassified Drugs or Biologicals) From the C-APC Policy

Section 1833(t)(15) of the Act, as added by section 621(a)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173), provides for payment under the OPPS for new drugs and biologicals until HCPCS codes are assigned. Under this provision, we are required to make payment for a covered outpatient drug or biological that is furnished as part of covered outpatient department services but for which a HCPCS code has not yet been assigned in an amount equal to 95 percent of average wholesale price (AWP) for the drug or biological.

In the CY 2005 OPPS/ASC final rule with comment period (69 FR 65805), we implemented section 1833(t)(15) of the Act by instructing hospitals to bill for a drug or biological that is newly approved by the Food and Drug Administration (FDA) and that does not yet have a HCPCS code by reporting the National Drug Code (NDC) for the product along with the newly created HCPCS code C9399 (Unclassified drugs or biologicals). We explained that when HCPCS code C9399 appears on a claim, the Outpatient Code Editor (OCE) suspends the claim for manual pricing by the Medicare Administrative Contractor (MAC). The MAC prices the claim at 95 percent of the drug or biological's AWP, using Red Book or an equivalent recognized compendium, and processes the claim for payment. We emphasized that this approach enables hospitals to bill and receive payment for a new drug or biological concurrent with its approval by the FDA. The hospital does not have to wait for the next quarterly release or for approval of a product specific HCPCS code to receive payment for a newly approved drug or biological or to resubmit claims for adjustment. We instructed that hospitals would discontinue billing HCPCS code C9399 and the NDC upon implementation of a product specific HCPCS code, status indicator, and appropriate payment amount with the next quarterly update. We also note that HCPCS code C9399 is paid in a similar manner in the ASC setting, as 42 CFR 416.171(b) outlines that certain drugs and biologicals for which separate payment is allowed under the OPPS are considered covered ancillary services for which the OPPS payment rate, which is 95 percent of AWP for HCPCS code C9399, applies.

Since the implementation of the C-APC policy in 2015, payment for drugs and biologicals described by HCPCS code C9399 had been included in the C-APC payment when these products appear on a claim with a primary C-APC service. Packaging payment for these drugs and biologicals that appear on a hospital outpatient claim with a primary C-APC service is consistent with our C-APC packaging policy under which we make payment for all items and services, including all non-pass-through drugs, reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service and representing components of a complete comprehensive service, with certain limited exceptions (78 FR 74869). It was our position that the total payment for the C-APC with which payment for a drug or biological described by HCPCS code C9399 is packaged includes payment for the drug or biological at 95 percent of its AWP.

However, we determined that in certain instances, drugs and biologicals described by HCPCS code C9399 are not being paid at 95 percent of their AWPs when payment for them is packaged with payment for a primary C-APC service. In order to ensure payment for new drugs and biologicals described by HCPCS code C9399 at 95 percent of their AWP, for CY 2023 and subsequent years, we finalized our proposal to exclude any drug or biological described by HCPCS code C9399 from packaging when the drug or biological is included on a claim with a “J1” service, which is the status indicator assigned to a C-APC, and a claim with a “J2” service, which is the status indicator assigned to comprehensive observation services. See Addendum J for the CY 2026 C-APC payment policy exclusions.

In the CY 2023 OPPS/ASC final rule with comment period, we finalized the proposal in section XI., “CY 2023 OPPS Payment Status and Comment Indicators”, to add a new definition to status indicator “A” to include unclassified drugs and biologicals that are reportable with HCPCS code C9399 (87 FR 72051). The current definition, as finalized in the CY 2023 OPPS/ASC final rule with comment period, can be found in Addendum D1, would ensure the MAC prices claims for drugs or biologicals billed with HCPCS code C9399 at 95 percent of the drug or biological's AWP and pays separately for the drug or biological under the OPPS when it appears on the same claim as a primary C-APC service.

(5) Exclusion of Cell and Gene Therapies From the C-APC Policy

As previously discussed in this section, and in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74865), the C-APC policy packages payment for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to the primary service and provided during the delivery of the comprehensive service, including diagnostic procedures, laboratory tests and other diagnostic tests and treatments that assist in the delivery of the primary procedure. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861), we finalized defining a comprehensive APC as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Because a comprehensive APC treats all individually reported codes as representing components of the comprehensive service, we make a single prospective payment based on the cost of all individually reported codes that represent the provision of a primary service and all adjunctive services provided to support that delivery of the primary service.

As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59201 through 59204), we generally treat all items and services reported on a C-APC claim as integral, ancillary, supportive, dependent, and adjunctive to the primary service and representing components of a comprehensive service. Historically, items packaged for payment provided in conjunction with the primary C-APC service also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and those drugs that are usually self-administered (SADs), unless they function as supplies (78 FR 74868 through 74869 and 74909).

However, we recognized in the CY 2025 OPPS/ASC proposed rule (89 FR 59201 through 59204) that there are rare instances in which cell and gene therapies appear on the same claim as a primary C-APC service and therefore, have their payment packaged with payment for the primary C-APC service. As stated in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938), given the unique nature of these therapies, we do not believe they function as integral, ancillary, supportive, dependent, or adjunctive to any of the current primary C-APC services. Additionally, we stated that when these products are administered, they are the primary treatment being administered to a patient and thus, are not integral, ancillary, supportive, dependent, or adjunctive to any primary C-APC services.

Therefore, we finalized a policy for CY 2025 and subsequent years (89 FR 93932 through 93938), to not package payment for cell and gene therapies into C-APCs, when those cell and gene therapies are not functioning as integral, ancillary, supportive, dependent, or adjunctive to the primary C-APC service. For new cell and gene therapy products that are not integral, ancillary, supportive, dependent, or adjunctive to any C-APC primary service, we will continue to add their product specific HCPCS codes, when created, to the C-APC exclusion list. The proposed list of qualifying products can be found in Table 2.

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We list all final C-APC exclusion categories for CY 2026 in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

). Comments on our proposed exclusions are below.

Comment:

Commenters generally supported and thanked CMS for proposing to continue the exclusion of Cell and Gene Therapies from C-APC packaging in order to support innovation and patient access.

Response:

We thank commenters for their support.

Comment:

A few commenters had suggestions on potential modifications and expansions for this policy. For example, one commenter suggested excluding drugs that are the primary therapy and exceed a cost threshold that aligns with the drug's cost relative to the total C-APC claim cost from comprehensive packaging. Bladder cancer drugs were one example suggested for exclusion as C-APC packaging of their product would be cost prohibitive.

Response:

We thank commenters for their feedback, analysis, and recommendations on potential future approaches for structuring C-APC payment. We are not expanding our C-APC exclusion policy at this time to include additional classes of drugs, but we will take this information into consideration for future rulemaking.

Comment:

A few commenters asked for CMS to add HCPCS code Q2056 (Ciltacabtagene autoleucel, up to 100 million autologous b-cell maturation antigen (bcma) directed car-positive t cells, including leukapheresis and dose preparation procedures, per therapeutic dose) to this list of Cell and Gene Therapies excluded from C-APC packaging for CY 2026. Commenters noted that this product's pass-through status expired June 30, 2025, and that it was previously indicated as a cell and gene therapy that would be excluded from C-APC packaging. Several commenters asked CMS to be vigilant with adding new products as they are approved and to introduce a formal process for the public to alert CMS that there is a new cell and gene therapy HCPCS code that should be excluded from payment.

Response:

We thank commenters for recommending the addition of HCPCS code Q2056 to the cell and gene therapy C-APC exclusion list. This HCPCS code has been added to the table of cell and gene therapies excluded from C-APC packaging for CY 2026. We want to clarify for commenters, that although HCPCS code Q2056 was omitted from the CY 2026 OPPS/ASC proposed rule table, the code was excluded from C-APC packaging effective July 1, 2025,

after its drug pass-through status expired. Per our finalized policy in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938), for new cell and gene therapy products that are not integral, ancillary, supportive, dependent, or adjunctive to any C-APC primary service, we will continue to add their product specific HCPCS codes, when created, to the C-APC exclusion list. We review products that are updated through the quarterly process to determine if there are qualifying cell and gene therapies that should be excluded from C-APC packaging. We welcome readers to contact us if they have a suggestion of a new qualifying cell and gene therapy that should be excluded from C-APC packaging.

We note that we did not make a proposal to alter the substance of the overall policy excluding cell and gene therapies from the C-APC packaging; consistent with public comments received, we are continuing this policy for CY 2026. In response to comments, the finalized list of qualifying products can be found in Table 3 consistent with our finalized policy in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938).

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(6) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135 of the Consolidated Appropriations Act, 2023 From the C-APC Policy

The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), was signed into law on December 29, 2022. Section 4135(a) and (b) of the CAA, 2023, titled “Access to Non-Opioid Treatments for Pain Relief,” amended section 1833(t)(16) and section 1833(i) of the Social Security Act, respectively, to provide for temporary additional payments for non-opioid treatments for pain relief (as that term is defined in section 1833(t)(16)(G)(i) of the Act). In particular, section 1833(t)(16)(G) provides that with respect to a non-opioid treatment for pain relief furnished on or after January 1, 2025,

and before January 1, 2028, the Secretary shall not package payment for the non-opioid treatment for pain relief into payment for a covered OPD service (or group of services) and shall make an additional payment for the non-opioid treatment for pain relief as specified in clause (ii) of that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act provide for the amount of additional payment and set a limitation on that amount. As stated earlier in this section, our current policy is to exclude from the packaged C-APC payment those items and services that are required by statute to be separately paid.

Accordingly, in the CY 2025 OPPS/ASC final rule with comment period, we finalized a policy to exclude the non-opioid treatments for pain relief identified as satisfying the required criteria for payment under section 4135 of the CAA, 2023 from the C-APC policy to ensure payment is not packaged into any C-APC and that separate payment is made in accordance with the statute (89 FR 93938 through 93939).

(7) C-APCs for CY 2026

For CY 2026 and subsequent years, we proposed to continue to apply the C-APC payment policy methodology. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583) for a discussion of the C-APC payment policy methodology and revisions.

Each year, in accordance with section 1833(t)(9)(A) of the Act, we review and revise the services within each APC group and the APC assignments under the OPPS. As a result of our annual review of the services and the APC assignments under the OPPS, we did not propose to convert any standard APCs to C-APCs in CY 2026; thus, we proposed that the number of C-APCs for CY 2026 would be the same as the number for CY 2025, which is 72 C-APCs.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment:

A few commenters requested that CMS reconsider our packaging policies for C-APC 8011 (Comprehensive Observation Services). They requested that CMS remove the rule that the presence of a SI “T”

6

procedure on a claim excludes payment of C-APC 8011 and instead package the payment of the SI “T” procedure into C-APC 8011, as is already done with SI “Q”

7

procedures. Commenters stated that this requirement violates the basic tenet of the packaging concept in that when observation services are ordered and furnished, the observation services become the primary service provided to such patients and the SI “T” procedure is provided ancillary to that primary service. Commenters cited scenarios in which hospitals provide significant, resource-intensive services to a patient but are paid significantly less than if a SI “T” procedure was not done.

6

Status Indicator “T” is defined as a “Procedure or Service, Multiple Procedure Reduction Applies” the OPPS payment status is “Paid under OPPS; separate APC payment.” Definitions to all OPPS payment status indicators are available in Addenda D1 to this final rule with comment period.

7

Status Indicator “Q” is defined as a “STV-Packaged Codes” the OPPS payment status is “Paid under OPPS; Addendum B displays APC assignments when services are separately payable. (1) Packaged APC payment if billed on the same claim as a HCPCS code assigned status indicator “S,” “T,” or “V.” (2) Composite APC payment if billed with specific combinations of services based on OPPS composite-specific payment criteria. Payment is packaged into a single payment for specific combinations of services. (3) In other circumstances, payment is made through a separate APC payment.” Definitions to all OPPS payment status indicators are available in Addenda D1 to this final rule with comment period.

Response:

We thank the commenters for bringing this to our attention. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70334 through70336), in response to commenters' concerns regarding packaging payment for potentially high-cost surgical procedures into the payment for an observation C-APC, we finalized a policy that claims reporting procedures assigned status indicator “T” do not qualify for payment through C-APC 8011, regardless of whether the procedure assigned status indicator “T” was furnished before or after observation services (described by HCPCS code G0378) were provided. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79562), we stated that services that would otherwise qualify for C-APC 8011 are not considered to be observation services when they are associated with a surgical procedure (assigned to status indicator “T”). Instead, they are considered to be perioperative recovery, which is always packaged in with the surgical procedure (81 FR 79583). We will continue to review the impacts of this issue and may revisit it in future rulemaking.

Comment:

Some commenters expressed concerns with the C-APC methodology for surgical insertion codes for brachytherapy treatment, stating that these concerns impact beneficiary access to brachytherapy in the HOPD setting. These commenters stated that the C-APC methodology lacks the appropriate charge capture mechanisms to accurately reflect the services associated with the C-APC, that there are significant variations in the clinical practice and billing patterns in the hospital claims data used for ratesetting, and that the C-APC rates do not accurately or fully reflect the services and costs associated with the primary procedure. Commenters urged the agency to explore alternatives, including that CMS discontinue the C-APC policy for all brachytherapy insertion codes. Alternatively, one commenter suggested that CMS could continue to pay for “J1” brachytherapy insertion codes under the C-APC payment methodology but exclude and make separate payment for designated preparation and planning services in addition to the C-APC payment. Another commenter called for education on whether services, like brachytherapy, that are assigned to a “J1” indicators and delivered over multiple patient encounters may be reported per encounter.

Response:

We appreciate the comments on the C-APC methodology. However, we believe that the current C-APC methodology is appropriately applied to surgical insertion for Brachytherapy treatment and is accurately capturing costs, particularly as the brachytherapy sources used for these procedures are excluded from C-APC packaging and are separately payable. We will evaluate if provider education may be appropriate in this circumstance. We will continue to examine these concerns and will determine if any modifications to this policy are warranted in future rulemaking.

After consideration of the public comments we received, we are finalizing the C-APCs as proposed. Table 4 lists the final C-APCs for CY 2026. All C-APCs are displayed in Addendum J to this CY 2026 OPPS/ASC final rule with comment period (which is available via the internet on the CMS website). Addendum J to this final rule with comment period also contains all the data related to the C-APC payment policy methodology, including the list of complexity adjustments and other information for CY 2026.

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c. Calculation of Composite APC Criteria-Based Costs

As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals to provide necessary, high-quality care as efficiently as possible. For CY 2008, we developed composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Combining payment for multiple, independent services into a single OPPS payment in this way enables hospitals

to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. An additional advantage to the composite APC model is that we can use data from correctly coded multiple procedure claims to calculate payment rates for the specified combinations of services, rather than relying upon single procedure claims which may be low in volume and/or incorrectly coded. Under the OPPS, we currently have composite policies for mental health services and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66611 through 66614 and 66650 through 66652) for a full discussion of the development of the composite APC methodology, and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241, 59242, and 59246 through 52950) for further background.

(1) Mental Health Services Composite APC

For CY 2026, we proposed to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization services provided by a hospital, which we consider to be the most resource-intensive of all outpatient mental health services (88 FR 49572). We refer readers to the April 7, 2000, OPPS final rule with comment period (65 FR 18452 through 18455) for the initial discussion of this longstanding policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) for further background.

In the CY 2018 OPPS/ASC proposed rule and final rule with comment period (82 FR 33580 and 33581 and 82 FR 59246 and 59247), we proposed and finalized the policy for CY 2018 and subsequent years that, when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for partial hospitalization services provided by a hospital, those specified mental health services will be paid through composite APC 8010 (Mental Health Services Composite). In addition, we set the payment rate for composite APC 8010 for CY 2018 at the same payment rate for APC 5863, which was the maximum partial hospitalization per diem payment rate for a hospital, and finalized a policy that the hospital would continue to be paid the payment rate for composite APC 8010. This policy applied in CYs 2018 through 2023.

In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was no longer the maximum partial hospitalization per diem payment rate for a hospital due to the creation of APC 5864, which is four or more hospital-based PHP services per day (88 FR 49572). We solicited comment on whether APC 5864 would be appropriate to use as the daily mental health cap, as we have historically set the daily mental health cap for composite APC 8010 at the maximum partial hospitalization per diem payment rate for a hospital (88 FR 49572). Based on public comments received and our longstanding policy, in the CY 2024 OPPS/ASC final rule, we finalized APC 5864, four hospital-based PHP services per day, as the daily mental health cap (88 FR 81566).

In the CY 2026 OPPS/ASC proposed rule, we stated that we continue to believe that the costs associated with administering a partial hospitalization program represent the most resource intensive of all outpatient mental health services. For CY 2026 and subsequent years, we proposed to continue this policy that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the per diem payment rate for four partial hospitalization services provided in a day by a hospital (the payment amount for APC 5864), those specified mental health services would be paid through composite APC 8010. In addition, we proposed to continue to set the payment rate for composite APC 8010 at the same payment rate that we proposed for APC 5864, which is a partial hospitalization per diem payment rate for four partial hospitalization services furnished in a day by a hospital.

Under the proposed policy, the Integrated OCE (I/OCE) would continue to determine whether to pay for these specified mental health services individually, or to make a single payment at the same payment rate established for APC 5864 for all the specified mental health services furnished by the hospital on that single date of service by paying for the services through composite APC 5863.

We did not receive public comments on this provision, and therefore, we are finalizing our proposal regarding APC 8010 without modification. When the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for four partial hospitalization services provided in a day by a hospital (the payment amount for APC 5864), those specified mental health services would be paid through composite APC 8010 for CY 2026. In addition, we are finalizing setting the payment rate for composite APC 8010 for CY 2026 at the same payment rate that we set for APC 5864, which is the maximum partial hospitalization per diem payment rate for a hospital.

(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

Effective January 1, 2009, we provide a single payment each time a hospital submits a claim for more than one imaging procedure within an imaging family on the same date of service, to reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). We utilize three imaging families based on imaging modality for purposes of this methodology: (1) ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy and their respective families are listed in Table 5.

While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included under the policy do not involve contrast, both CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are:

• APC 8004 (Ultrasound Composite);

• APC 8005 (CT and CTA without Contrast Composite);

• APC 8006 (CT and CTA with Contrast Composite);

• APC 8007 (MRI and MRA without Contrast Composite); and

• APC 8008 (MRI and MRA with Contrast Composite).

We define the single imaging session for the “with contrast” composite APCs as having at least one or more imaging

procedures from the same family performed with contrast on the same date of service. For example, if the hospital performs an MRI without contrast during the same session as at least one other MRI with contrast, the hospital will receive payment based on the payment rate for APC 8008, the “with contrast” composite APC.

We make a single payment for those imaging procedures that qualify for payment based on the composite APC payment rate, which includes any packaged services furnished on the same date of service. The standard (noncomposite) APC assignments continue to apply for single imaging procedures and multiple imaging procedures performed across families. For a full discussion of the development of the multiple imaging composite APC methodology, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569).

For CY 2026, we proposed to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology. In the CY 2026 OPPS/ASC proposed rule, we stated that we continue to believe that this policy would reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session.

For CY 2026, except where otherwise indicated, we proposed to use the costs derived from CY 2024 claims data to set the proposed CY 2026 payment rates. Therefore, for CY 2026, the proposed payment rates for the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on proposed geometric mean costs calculated from CY 2024 claims available for the CY 2026 OPPS/ASC proposed rule that qualify for composite payment under the current policy (that is, those claims reporting more than one procedure within the same family on a single date of service). To calculate the proposed geometric mean costs, we used the same methodology that we used to calculate the geometric mean costs for these composite APCs since CY 2014, as described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The imaging HCPCS codes referred to as “overlap bypass codes” that we removed from the bypass list for purposes of calculating the proposed multiple imaging composite APC geometric mean costs, in accordance with our established methodology as stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918), are identified by asterisks in Addendum N to this final rule with comment period (which is available via the internet on the CMS website

https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices

) and are discussed in more detail in section II.A.1.a. of this final rule with comment period.

We did not receive any public comments on this policy. We are finalizing without modification our proposal to continue the use of multiple imaging composite APCs to pay for the provision of more than one imaging procedure from the same imaging family on the same date. Table 5 lists the final HCPCS codes that would be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC final geometric mean costs for CY 2026.

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3. Changes to Packaged Items and Services

a. Background and Rationale for Packaging in the OPPS

Like other prospective payment systems, the OPPS relies on the concept of averaging to establish a payment rate for services. The payment may be more or less than the estimated cost of providing a specific service or a bundle of specific services for a particular beneficiary. The OPPS packages payments for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility. Our packaging policies support our strategic goal of using larger payment bundles in the OPPS to maximize hospitals' incentives to provide care in the most efficient manner. For example, where there are a variety of devices, drugs, items, and supplies that could be used to furnish a service, some of which are more costly than others, packaging encourages hospitals to use the most cost-efficient item that meets the patient's needs, rather than to routinely use a more expensive item, which may occur if separate payment is provided for the item.

Packaging also encourages hospitals to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care delivery. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Packaging payments into larger payment bundles promotes the predictability and accuracy of payment for services over time. Finally, packaging may reduce the importance of refining service-specific payments because packaged payments include costs associated with higher cost cases requiring many ancillary items and services and lower cost cases requiring fewer ancillary items and services. Packaging encourages efficiency and is an essential component of a prospective payment system; therefore, packaging payments for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service has been a fundamental part of the OPPS since its implementation in August 2000. As we continue to develop larger payment groups that more broadly reflect services provided in an encounter or episode of care, we have expanded the OPPS packaging policies. Most, but not necessarily all, categories of items and services currently packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching goal is to make payments for all services under the OPPS more consistent with those of a prospective payment system and less like those of a per-service fee schedule, which pays separately for each coded item. As a part of this effort, we have continued to examine the payment for items and services provided under the OPPS to determine which OPPS services can be packaged to further achieve the objective of advancing the OPPS toward a more prospective payment system.

b. Final CY 2026 Policy on Packaged Items and Services

For CY 2026, we examined the items and services currently provided under the OPPS, reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and services for which we believe payment would be appropriately packaged into payment for the primary service that they support. Specifically, we examined the HCPCS code definitions (including CPT code descriptors) and hospital outpatient department billing patterns to determine whether there were categories of codes for which packaging would be appropriate according to existing OPPS packaging policies or a logical expansion of those existing OPPS packaging policies.

For CY 2026, we did not propose any changes to the overall packaging policy discussed. We proposed to continue to conditionally package the costs of selected newly identified ancillary services into payment for a primary service where we believe that the packaged item or service is integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was reported by the primary service HCPCS code (90 FR 33503).

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment:

Several commenters expressed broad support for unpackaging payments. One commenter believed that CMS packaging policies may encourage efficiencies and help lower costs, but they believed that packaging policies could penalize hospitals that provide complex care to sicker patients. Similarly, commenters believed that unpackaging payment could support patient access and innovations, including to certain drugs, biologicals, and services. Specifically, one commenter suggested that CMS consider unpackaging their product, a contrast agent, and believed CMS's reasoning in the CY 2026 OPPS/ASC proposed rule for unpackaging and paying separately for diagnostic radiopharmaceuticals applies equally or even more to their product, since the cost of their product is over 500 times greater than the amount reported for the policy packaged drugs offset associated with the Level II Urology APC. The commenter believed lack of separate payment was a barrier to beneficiary access and recommended CMS pay for products like theirs when the product costs exceeded a certain threshold.

Response:

We thank the commenters for their perspectives on packaging within the OPPS, including specific examples of cost exceeding offset amounts. We continue to believe that our packaging policies are a fundamental principle that distinguishes a prospective payment system from a fee schedule. In general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and enables hospitals to manage their resources with maximum flexibility. We will take the information commenters provided into consideration as appropriate for possible future rulemaking.

Comment:

Several commenters recommended CMS reassess its policy packaging principles regarding laboratory testing, with a particular emphasis on screening tests and antimicrobial stewardship, including those tests used in the emergency department setting. These commenters explained the public health threat of antibiotic-resistant infections, including the patient and financial impacts. Specifically, these commenters discussed that current APC assignments do not reflect substantial investments in the reagents, instruments, and analytic software that are required for these tests. Therefore, they requested CMS exclude these products from packaging through a narrowly defined exception, similar to preventative services.

Response:

We thank the commenters for their feedback on these issues, including the importance of antimicrobial stewardship. We note that these costs are generally accounted for through packaging under our policies outlined in 42 CFR 419.2(b). As previously discussed in this section, in general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and

enables hospitals to manage their resources with maximum flexibility. Our overarching goal is

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