Alan Condon
CMS pitches 2.4% outpatient pay bump for hospitals in 2026: 5 things to know
CMS has released its Outpatient Prospective Payment System proposed rule for 2026, which would raise Medicare outpatient payment rates next year.
Five things to know:
1. Payment update. CMS proposed increasing OPPS rates for hospitals that meet quality reporting requirements by 2.4% in 2026. The increase is based on the projected hospital market basket percentage increase of 3.2%, minus a 0.8 percentage point productivity adjustment. CMS also proposed a 2.4% pay increase for ambulatory surgery centers in 2026.
2. Inpatient-only list. CMS plans to phase out the IPO list over a 3-year period, beginning with removing 285 mostly musculoskeletal procedures from the list in 2026. The proposal would allow for these services to be paid by Medicare in the hospital outpatient setting when determined to be clinically appropriate — giving physicians greater flexibility in determining the most appropriate site of service, according to the agency.
3. ASC covered procedures list. CMS aims to revise the ASC CPL by updating its general criteria and shifting five exclusion criteria into a new, nonbinding section focused on physician-led safety considerations. As a result, 276 procedures would be added to the ASC CPL. Additionally, 271 codes slated for removal from the IPO list are proposed for inclusion.
4. 340B. In the 340B Final Remedy Rule, CMS finalized a change to the OPPS conversion factor for non-drug items and services starting in 2026. Initially, a 0.5% pay cut was set to remain in place until recouping $7.8 billion in overpayments made between 2018 and 2022 — a process estimated to extend through 2041. However, CMS now plans to up the pay cut to 2% in 2026, shortening the repayment timeline to 2031.
5. Hospital price transparency. CMS proposed several hospital price transparency updates following President Donald Trump’s recent executive order, including reducing the civil monetary penalty by 35% for hospitals that accept CMS’ noncompliance determination and waive their right to an administrative hearing. Beginning Jan. 1, 2026, CMS also proposes that hospitals:
Report the 10th, median and 90th percentile allowed amounts in machine-readable files when negotiated charges are based on percentages or algorithms.
Include the count of allowed amounts used to determine these percentiles.
Use EDI 835 electronic remittance advice transaction data to calculate and encode allowed amounts for algorithm-based negotiated charges.
Follow standardized methodology and lookback period requirements to ensure data consistency.
Attest to the completeness of payer-specific negotiated charges in dollar amounts and — when charges can’t be expressed in dollars — provide sufficient data for the public to derive them.
“We are building on our efforts to modernize Medicare payments by advancing site neutrality, simplifying hospital billing, and ensuring real prices — not estimates — are available to patients,” Chris Klomp, deputy administrator and director of CMS, said in a July 15 news release. “These changes help make hospital care more predictable, accountable and affordable.”
Click here to read 913-page proposed rule in full.
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Georgia system’s CFO exits after 1 year; interim CFO appointed
Brunswick, Ga.-based Southeast Georgia Health System appointed John Stanton as interim CFO following the departure of Stephen “Jan” Grigsby Jr.
Mr. Stanton stepped into the interim CFO role in April. He most recently served in a similar capacity at a hospital within Greenville, N.C.-based ECU Health, where he led a financial turnaround and integration into the broader health system, according to Southeast Georgia Health System.
Mr. Grigsby, served served as vice president and CFO at Southeast Georgia Health System for one year, recently took on the role of executive vice president and CFO at AnMed Health in Anderson, S.C. He began the new position in May.
Southeast Georgia Health System is a nonprofit system that operates multiple facilities, including hospital campuses in Brunswick and Camden, Ga., according to its website.
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‘No area of the state is growing more rapidly’: Alabama system plans 2 freestanding EDs
Huntsville (Ala.) Hospital Health System is planning a major expansion of its emergency services, with proposals for two new freestanding emergency departments and an expanded ED at one of its existing facilities.
The health system has submitted a letter of intent to the State of Alabama and intends to formally apply for a certificate of need later this summer. If approved, the two freestanding EDs will be built in Hampton Cove and north Huntsville — areas identified as high-growth communities.
Construction is expected to begin in spring 2026, following winter design completion.
The system is also expanding the emergency department at Madison Hospital, increasing capacity by 25% with six additional beds. That project is already underway.
“No area of the state is growing more rapidly than the Huntsville community,” Jeff Samz, president and CEO of Huntsville Hospital Health, said in a July 14 news release. “We’re committed to doing whatever it takes to address current needs and to prepare for even more growth in the future.”
Each freestanding ED is expected to cost $30 million, including construction and equipment. Specific locations for the proposed sites have not yet been disclosed.
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Providers slam ‘outdated’, ‘underfunded’ Medicare pay model
The American Medical Group Association is renewing its call for comprehensive reform of the Medicare physician fee schedule, warning that temporary congressional actions to mitigate payment reductions are unsustainable and mask deeper structural flaws in the system.
While recent legislation will temporarily avert a cut to the Medicare conversion factor in 2026, AMGA emphasized that such stopgap measures highlight the ongoing instability of the physician payment model. Without intervention, the conversion factor was once again set to decline — continuing a trend that health systems say threatens the financial sustainability of group practices and hampers the progress being made from volume to value-based care.
“Health systems and medical groups continue to bear the brunt of an outdated and underfunded reimbursement model,” AMGA President and CEO Jerry Penso, MD, said in a July 14 news release. “Without systematic reform, Medicare’s current fee-for-service framework will remain misaligned with the shift toward high-value care.”
Under CMS’ proposed 2026 physician fee schedule, two separate conversion factors will apply for the first time, as required by statute:
$33.59 for qualifying alternative payment model participants — a 3.83% increase from the current rate.
$33.42 for non-qualifying participants — a 3.62% increase.
These figures include a one-time 2.5% statutory boost and technical adjustments for relative value units, yet AMGA argues they still fall short of reversing the long-term erosion in Medicare reimbursement. Since 2001, physician payment updates have failed to keep pace with inflation and rising practice costs, according to the trade group.
AMGA has urged Congress and CMS to move beyond short-term fixes and partner with stakeholders to build a more sustainable and predictable payment system. The group’s recommendations include:
Annual conversion factor updates that reflect inflation and real-world practice expenses.
Stronger incentives for participation in high-value care models.
Reduced regulatory burden on providers.
Alignment of Medicare policy with modern, team-based care delivery models.
“CMS and Congress must take this opportunity to modernize the PFS and build a payment foundation that supports innovation, sustainability and improved outcomes,” Dr. Penso said.
AMGA said it is closely reviewing CMS’ proposed rule and plans to submit formal comments.
AMGA is a trade group that represents more than 400 health systems and medical groups. More than 175,000 physicians practice in its member organizations, according to its website.
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CMS pitches 3.6% bump in Medicare physician pay rule: 8 things to know
CMS on July 14 released its annual proposed changes to the physician fee schedule for 2026, which will see two separate conversion factors apply, as required by statute.
Eight things to know:
1. One conversion factor will be used for qualifying alternative payment model participants and another for non-QPs. QPs are clinicians who meet thresholds for participation in advanced APMs that promote quality and cost accountability, according to CMS.
2. For 2026, CMS proposed that the QP conversion factor will increase by 0.75%, and the non-QP factor will increase by 0.25%.
3. Additional changes include a one-time 2.5% statutory increase and an estimated 0.55% adjustment for proposed changes to work relative value units. As a result, the proposed QP conversion factor will be $33.59 — a $1.24 increase (3.83%) from $32.35 — and the non-QP rate will be $33.42, up $1.17 or 3.62%.
4. The proposal also includes required updates to the geographic practice cost indices and malpractice RVUs.
5. CMS has also proposed a 2.5% cut to the work RVUs and intraservice time for non-time-based services in 2026. This cut, based on the past five years of the Medicare Economic Index productivity factor, would not apply to time-based services such as evaluation and management services, care management, behavioral health, telehealth, or maternity care, according to the agency. CMS also plans to prioritize empirical time studies over survey data in future valuations, aiming for more accurate and objective service pricing.
6. CMS is proposing to streamline how services are added to the Medicare telehealth services list by removing the distinction between provisional and permanent status. Reviews would focus only on whether a service can be provided via real-time, two-way audio-video.
7. The agency also plans to permanently remove frequency limits on subsequent inpatient visits, nursing facility visits and critical care consults.
8. Finally, CMS proposes ending the temporary policy that allows teaching physicians to supervise residents virtually in all settings. Beginning in 2026, the previous rule would return — requiring in-person presence during key parts of care in metropolitan areas, while keeping the rural exception.
Click here to view the full 1,803-page proposed rule.
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