TL/DR –
A new proposed rule could see hospitals receive an additional $8 billion in Medicare reimbursement for outpatient services, a 2.4% increase. The rule also proposes stricter price transparency disclosures and an expansion of site-neutral payment policies. However, hospital groups have criticized the increase as insufficient and have raised concerns about steps towards site neutrality, which would reduce the higher reimbursement hospitals currently receive from the federal insurance program for outpatient care compared to non-hospital facilities.
Hospitals to get $8 Billion Medicare Reimbursement Increase for Outpatient Services
U.S. hospitals could receive an $8 billion increase in Medicare reimbursements for outpatient services in 2026 due to a new rule that proposes a 2.4% rate hike. However, the American Hospital Association (AHA) deems this increase insufficient and has expressed concerns over the push for site neutrality in the regulation. Site neutrality might reduce the current higher reimbursements from the federal insurance program that hospitals enjoy for providing care in outpatient settings compared to non-hospital facilities.
The new proposal also recommends stricter price transparency regulations, a priority for the Trump administration. Alongside, the CMS aims to accelerate the timeline for reclaiming past overpayments to hospitals under the 340B drug discount program. It also anticipates a $480 million increase in pay rates for ambulatory surgery centers, a 2.4% rise compared to 2025.
Expansion of Site-Neutral Payment Policies
The Trump administration is suggesting an expansion of certain site-neutral payment policies. Medicare currently reimburses hospital outpatient departments more than independent physician offices and ambulatory surgery centers for similar care provision. The CMS has proposed to phase out the inpatient only list, a list of surgeries that must be performed in hospitals, over three years, starting with the removal of 285 procedures, mostly musculoskeletal, for 2026.
If approved, off-campus provider-based departments (PBDs) will also be reimbursed at physician rates for drug administration services, saving an estimated $280 million. However, the AHA has voiced its opposition to both policies, stating they ignore key differences between hospital outpatient departments and other care facilities.
Enhancements to Price Transparency
Proposed changes to price transparency require hospitals to post the 10th, 50th, and 90th percentile of charges agreed with payers starting January 2026. This will better reflect the variance in actual prices that hospitals receive for services. Data used to determine these charges will also need to be disclosed. Although the government has attempted to hold hospitals accountable for price transparency, compliance has been low, with only 21.1% of hospitals fully complying with price transparency regulations.
Update on 340B Drug Discount Program
The new proposal includes a change to a previous regulation related to the 340B drug discount program, which gives providers serving many low-income patients a discount on outpatient drugs. The CMS plans to recover $7.8 billion from hospitals for overpayments on other services during 2018-2022. The CMS proposes to increase the offset percentage from 0.5% to 2%, effective next year, to recover the full amount by 2031.
Additional Provisions
The CMS suggests removing some health equity and COVID-19 vaccination metrics from Medicare’s quality reporting program. Hospitals ranking low on care safety measures will have their overall hospital quality star ratings capped at 4 stars in 2026.
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