CMS Finalizes 2.6% Increase in Medicare Hospital Outpatient Payment Rates for CY 2026

The Centers for Medicare & Medicaid Services finalized a 2.6% increase in Medicare hospital outpatient payment rates for calendar year 2026 on November 21, affecting approximately 4,000 hospitals and 6,000 ambulatory surgical centers nationwide. According to CMS officials, the increase reflects a 3.3% hospital market basket update minus a 0.7% productivity adjustment and applies to facilities meeting quality reporting requirements.

The final rule, published by CMS on November 21, 2025, sets Medicare payment policy for hospital outpatient and ambulatory surgical center (ASC) services for calendar year 2026, officials said. The same 2.6% update factor was finalized for ASC payment rates, which will affect approximately 6,000 ambulatory surgical centers nationwide, CMS officials said.

The 2.6% increase in hospital outpatient payment rates reflects a 3.3% hospital market basket update offset by a 0.7% productivity adjustment, and applies only to facilities that meet quality reporting requirements, according to CMS documents.

The payment changes will be effective for discharges on or after January 1, 2026. The final rule continues the existing outlier payment methodology but lowers the fixed-dollar outlier threshold by 22.2%, from $127.74 to $111.24, according to the CMS fact sheet. Outlier payments will remain at 50% of costs exceeding 1.75 times the ambulatory payment classification (APC) payment when the thresholds are met. Both the 1.75 multiplier and fixed-dollar threshold are required for outlier eligibility, CMS noted.

CMS also finalized revisions to the cost methodology for Community Mental Health Center (CMHC) partial hospitalization program (PHP) and intensive outpatient program (IOP) APCs. The new methodology incorporates 40% of hospital-based PHP costs to address inverted costs identified under the previous approach, officials said. This change applies to the calendar year 2026 geometric mean per diem costs and subsequent years, based on finalized hospital-based PHP costs for 2026.

Payment rates for mental health APCs showed mixed adjustments. APC 5853, representing CMHC PHP three services, increased 14.83% from $111.24 to $127.74, while APCs 5852 and 5854, representing CMHC IOP four or more services and CMHC PHP four or more services respectively, decreased by 0.56%. Hospital PHP APCs 5861 and 5864 increased by 18.64% and 2.42%, respectively, according to the final rule.

A new HCPCS C-code, C9176, was established for technetium-99m (Tc-99m) sourced from domestically produced non-highly enriched uranium molybdenum-99 (Mo-99). CMS set the payment rate for this add-on at $10 per study dose to ensure full cost recovery, officials said. To qualify, at least 50% of Mo-99 used must be domestically produced. The American Society of Nuclear Cardiology (ASNC) had advocated for this add-on payment in recognition of progress in domestic Mo-99 production, CMS noted.

The final rule did not adopt the previously proposed 2% offset for non-drug items, instead retaining a 0.5% adjustment for calendar year 2026, according to CMS. The inpatient-only list will continue its phase-out over three years and remains exempt from the two-midnight policy, officials said. Payment rates for certain services showed notable changes: stress tests (HCPCS 93017) under APC 5722 declined from $311.40 to $220.60, while cardiac PET/CT codes 78433 and 78432 adjusted to $2,250.50 and $1,550.50 respectively.

CMS extended the deadline for the OPPS Drug Acquisition Cost Survey to April 7, 2026, to allow for additional data collection, officials confirmed. The agency published the final rule in response to annual statutory requirements governing updates to the Outpatient Prospective Payment System and ASC payment policies.

The finalized payment rates and policies will impact approximately 4,000 hospitals and 6,000 ambulatory surgical centers nationwide, according to CMS. The agency released a fact sheet and press release alongside the final rule to provide further details on the payment changes and policy updates for calendar year 2026.