2026 Proposed Payments: Outpatient Settings and Physician Offices

THIS YEAR, several pieces of legislation being debated will significantly impact practices’ revenue streams, operations and clinical services. Therefore, it will be imperative to work in sync with finance/revenue cycle teams to determine strategies for negotiating. The outpatient prospective payment system (OPPS) and physician fee schedule (PFS) are the two predominant fee schedules for services in outpatient arenas and follow a calendar year schedule beginning Jan. 1. The following proposed OPPS/PFS rules have been released for comment and will be finalized later this fall. Paying attention to them will provide insight into your strategic planning moving forward into a year that will be reeling under budget cuts passed by congress.

Changes for 2026

Changes for determining payment rates are included, as well as requirements for quality reporting programs for hospital outpatient, rural emergency hospitals, ambulatory surgery centers (ASCs) and overall hospital quality star rating. Hospital price transparency is emphasized, and several requests for information have been introduced.

Proposed 2026 increased fee payment rates rose 2.4 percent but are reduced by two percent for hospitals failing to meet quality reporting requirements. ASC payments increase by 2.4 percent when quality requirements are met. (Note: The cancer hospital payment adjustment policy provides individual estimated percent increases in 2026 OPPS payments to each cancer hospital.) Following are highlights of 2026 OPPS/ASC proposed rules:

Controlling unnecessary increases in outpatient services volume in excepted off-campus PBDs. This applies the PFS equivalent rate for any healthcare common procedural coding system codes assigned to drug administration services ambulatory payment classification when provided at an off-campus providerbased department (PBD) excepted from section 1833(t)(21) of the Act (i.e., site neutral payments). Rural sole community hospitals would be exempted.

Drugs, biologicals and radiopharmaceuticals. The proposed packaging threshold is $140 per day based on average sales price (ASP). Passthrough payments will continue to be paid at ASP+6%. SI G status will expire for 28 products on Dec. 31, 2025, 52 products will expire during 2026 and 41 products with SI G status will continue throughout 2026. SI K separately payable products also remain at ASP+6%. Biosimilars are exempted from the OPPS daily threshold when their reference products are separately paid to allow for separate payment even if it’s below the threshold for as long as the reference product remains separately paid. IRA requires qualifying biosimilar payment at ASP+8%. See actual payment rates posted on the CMS website in the Addendum B1 or quarterly ASP tables.²

Non-opioid policy for pain relief. Payment for non-opioids is available in both OPPS and ASC settings. Actual payment amounts are published in the quarterly ASP pricing files, as well as in Addendum B.

Medicare PFS. This proposed PFS rule impacts several aspects of pharmacy, as well as the overall financial health of the healthcare system and how various segments must adhere to it. The final rule will be published late fall following the comment period and revisions, if any.

Proposed shift to prevention and wellness: physician pay. Physicians and collaborative agreement services provided by pharmacists are also affected. Reimbursements for nearly 9,000 billing codes mostly associated with specialty care decline 2.5 percent due to different data sets used to calculate their value. Primarily, this affects billing code rates associated with services such as surgery, diagnostic imaging, outpatient care, pain management and orthopedics. Specialties such as radiologists, cardiologists and gastroenterologists may see lower payments for a substantial number of common codes. With a goal of boosting primary care, there is less of a pay difference since the proposal exempts billing codes frequently used. It wouldn’t apply to services that can’t be performed more speedily with practice, such as visits, behavioral health, certain maternity care and telehealth. Quality measures are affected, too. Ten not directly improving patient health outcomes are deleted, while five new are added to focus on the prevention of chronic disease. The Medicare Diabetes Prevention Program then allows more Medicare beneficiaries (at no cost) to access coaching, peer support and practical training in strategies to delay or prevent the onset of type 2 diabetes for people with prediabetes.

Chronic disease management: a new five-year payment model launching Jan. 1, 2027. The mandatory Ambulatory Specialty Model (ASM) is focused on specialty care for beneficiaries with heart failure and low back pain. It aims to enhance the quality of care and reduce low-value care by improving upstream chronic disease management. Participants will be accountable for their performance, generating savings. ASM rewards specialists who detect signs of worsening chronic conditions early, enhance patients’ function, reduce avoidable hospitalizations and use technology that allows them to communicate and share data electronically with patients and their primary care providers.³

Medicare telehealth services. Proposed permanent adoption of pandemicera waivers defining direct supervision includes virtual presence via audio/video real-time communications technology. It extends its waiver allowing federally qualified health centers and rural health clinics to bill for telehealth services through 2026, and streamlines how services are added to the Medicare telehealth services list by removing distinctions between provisional and permanent status. Reviews will focus only on whether a service can be provided via real-time, two-way audio-video. A temporary policy allowing teaching physicians to supervise residents virtually in all settings ends, requiring in-person presence during key parts of care in metropolitan areas, while keeping the rural exception.

Autologous cell-based immunotherapy and gene therapy payment. Preparatory procedures for tissue procurement required for manufacturing autologous cell-based immunotherapy or gene therapy are included in the payment of the product itself. Effective Jan. 1, 2026, any preparatory procedures for tissue procurement required for manufacturing an autologous cell-based immunotherapy or gene therapy that were paid for by the manufacturer will be included in the calculation of the manufacturer’s ASP.

Drugs payable under Medicare Part B. For ASP, categories are drugs given incident to a physician’s service, covered durable medical equipment and other drugs specified by statute (e.g., certain vaccines). Payment limits for most separately payable drugs is based on ASP+6%. Payment limits are published in the ASP pricing file or Not Otherwise Classified pricing file. The calculation of ASP involves a number of factors, including price concessions and bona fide service fees, both of which are under review. Refer to pages 423-440 in the published rule for details.

For maximum fair price (MFP), the Medicare Drug Price Negotiation Program requires negotiation of MFP for certain high-expenditure, single-source drugs payable under Medicare Part B and covered under Part D. CMS reached agreement on a negotiated price for all 10 selected drugs covered under Part D for 2026, the initial price applicability year. Units of selected drugs sold at MFP are included in the calculation of the manufacturer’s ASP. Other pricing metrics could include wholesale acquisition cost less than ASP for a single source drug or biological; ASP widely available at market. price or average manufacturer price (AMP); and selected drugs 106 percent of MFP. Payment limits are published on the ASP drug pricing file, updated quarterly.²

Skin substitute reimbursement. The proposed 2026 PFS would pay for skin substitutes as incident-to-supplies at a flat rate of $125.38 per square cm to reduce spending and curtail potential fraud and abuse. If approved as a biological, payment typically is ASP+6%. If approved as a device or regulated under 361 (human cells and tissues), payment is “incident to” supply.

Meshing PFS with IRA. This rulemaking proposes to update policies in both Medicare Part B and Part D. In Part B, it proposes to describe the identification of payment amount benchmark quarter in certain instances along with the calculation of Part B rebate amounts. In Part D, it clarifies the calculation of a Part D rebate amount, and proposes methodology for removing units of a Part D 340B rebatable drug by using prescriber and contract pharmacy national provider identifiers to determine 340B claim eligibility. It also establishes a 340B data repository for Part D claims where 340B covered entities would need to submit claims-level data beginning on or after Jan. 1, 2026. Third-party administrators could submit some data elements on behalf of covered entities. A voluntary start would transition to a mandatory reporting structure.