CMS’ 2026 Hospital Outpatient Prospective Payment System rule moves Medicare further toward site-neutral payment, as part of an effort to narrow long-standing payment gaps between hospital outpatient departments and ASCs.
In the 2026 final rule, CMS also finalized site-neutral payment for certain drug administration services delivered in excepted off-campus provider-based departments by paying the Physician Fee Schedule-equivalent rate instead of the higher OPPS rate. The agency estimated the change would reduce OPPS spending by about $290 million in 2026, including about $220 million in Medicare savings and about $70 million in beneficiary savings from lower coinsurance.
CMS also plans to phase out the inpatient-only list over three years and will remove 285 primarily musculoskeletal procedures from the list next year. CMS will also add 560 codes to the ASC covered procedure list. By reducing the IPO list, CMS is giving beneficiaries and physicians greater flexibility in choosing lower-cost outpatient settings when clinically appropriate.
For ASC operators and physician groups, these shifts added momentum to a growing wave of outpatient expansion.
“If reimbursement suddenly shifted to site-neutral payments, private practices would immediately redirect as many appropriate cases as possible from hospitals to their own ASCs, since the financial disadvantage of performing cases outside the hospital would disappear overnight,” Brian Curtin, MD, an orthopedic surgeon at OrthoCarolina Hip and Knee Center, told Becker’s. “Hospitals losing their pricing advantage would give private practices a stronger competitive position. Much lower out-of-pocket costs for patients would make ASC-based care more attractive, fueling higher demand from patients and payouts alike.”
In an April report the Paragon Health Institute offers 12 potential policy reforms that could cut down on record high healthcare costs over the last decade — driven largely by high hospital expenditures.
Hospitals currently receive about 60% higher Medicare payments for similar services due to facility-fee differences — a structure lawmakers say incentivizes hospital acquisition of physician practices. New site-neutrality reforms are expected to lower hospital payments, rather than boost ASC payments to HOPD levels.
Many see the shift to site-neutral payments as key to the larger shift towards value-based care, with private practice physicians and ASC leaders frequently identifying the payer landscape as the biggest hurdle towards implementing those initiatives.
“Site-neutral payments I think are the lower hanging fruit. That’s an easier problem to solve once we neutralize the payments for procedures done agnostic of their site,” Nikhil Shetty, MD, COO of Midwest Interventional Spine Specialists in Munster, Ind., told Becker’s. “I think we can see big cost savings right then and there. From there we can then move toward a value-based system where we take care of a patient with a bundle payment across a series of related events to a related healthcare issue where we eliminate unnecessary services, coordinate care and reduce complications.”
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