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September 25, 2025 – We’ve enjoyed a buffet of comments on regs (and eggs) recently. In our last post, we discussed comments on the calendar year (CY) 2026 Physician Fee Schedule (PFS) proposed rule, and this week, we’re taking a look at comments on the CY 2026 Outpatient Prospective Payment System (OPPS) proposed rule, which were due last week. The Centers for Medicare & Medicaid Services (CMS) issues the OPPS reg annually to update payment rates for hospital outpatient services, and this year’s rule focused on “site neutral” and “site neutral lite” policies. As we discussed in a previous Regs & Eggs blog post, site neutrality means paying the same rate for the same services regardless of where they are performed. “Site neutral lite” policies aren’t site neutral in the true sense of the term but aim to provide more flexibility to perform services in less expensive care settings. Like the imaging services cap and other site neutral payment policies in play, these policies blur the lines between Medicare fee-for-service payment systems, which have traditionally stayed siloed.
So how did stakeholders respond to these site neutral and site neutral lite policies? To help me cover some of the major comments, I’m bringing in my colleague Marla Kugel and Deborah Godes.
To no one’s surprise, stakeholders submitted many comments on CMS’s proposal to apply the PFS-equivalent payment rate for drug administration services when furnished at an off-campus provider-based department (PBD). This proposal would expand CMS’s current policy implemented in 2019 to apply the PFS-equivalent payment rate to clinic visits delivered at off-campus PBDs. Hospitals and hospital associations strongly opposed the proposal, citing a range of reasons why the proposal was flawed and could impact access to services in rural areas. Hospitals argued that CMS does not have the authority to implement this budget neutral policy, especially to create savings to the Medicare program as opposed to conducting the policy in a budget neutral manner. Hospital stakeholders pushed back on this proposal being implemented to reduce volume. They pointed out that the rise in volume in off-campus PBDs is not increasing for all drug administrative services, and in many cases not at the pace the services are increasing in physician office settings. Stakeholders also stated that the level of intensity of the services and the complexity of the patients being treated are higher in off-campus PBDs than in office settings, and therefore the services should continue to be paid at a higher rate.
Some commenters supported CMS’s push to promote site neutral policies, arguing that this proposal would reduce unnecessary spending (citing CMS’s estimates that the policy would save Medicare $210 million in OPPS spending and would save Medicare enrollees $70 million in out-of-pocket payments in 2026). They stated that the policy would reduce the incentives for physician groups and hospitals to consolidate, which could further drive up costs and not necessarily improve patient outcomes. They urged CMS to expand this policy to include other services that are typically performed in physician offices, such as imaging services.
CMS proposed to eliminate the inpatient only (IPO) list beginning in CY 2026 with a three-year transitional period, the same timeline proposed in CY 2021 rulemaking. For CY 2026, CMS proposed to remove 285 codes from the IPO list, most of which are musculoskeletal procedures. Many commenters opposed this proposal, citing safety concerns related to moving certain procedures out of the inpatient setting. Removing all 1,731 codes currently on the IPO list and assigning them to existing or new ambulatory payment classifications (APCs) is a burden that some hospital stakeholders stated that CMS should not take on, especially since many of the procedures could never be done in the outpatient department. Most years, only a handful of codes are removed from the IPO list, usually at the request of physician specialty groups. CMS could gauge the appropriateness of the request based on the established set of criteria. Removing these criteria under the current proposal and the lack of a consistent, data-driven methodology caused some stakeholders to question whether CMS has the resources to determine all of the appropriate APC assignments while taking into account all stakeholder feedback.
Some hospital stakeholders also pointed out that CMS proposed to make the change without any controls on Medicare Advantage policy to ensure the outpatient facility does not become the only place of service where procedures are covered. They argued that CMS was not fully transparent on how it determined the APC assignments for the 285 codes proposed for removal from the IPO list for CY 2026, and stakeholders expressed concerns about continued ambiguity with respect to how these services will be reimbursed. Another issue stakeholders noted is limiting a beneficiary’s qualification to post-discharge skilled nursing facility care.
The Medicare Payment Advisory Commission (MedPAC), the advisory committee to Congress on Medicare, advised CMS to proceed with caution and study the effects of moving the 285 mostly musculoskeletal services before eliminating the rest of the IPO list, in case reimbursement rates play into site-of-service decision-making instead of pure clinical judgement.
Those in support of the proposal stated that it would help increase competition by allowing more services to be delivered in different sites of care. Some stakeholders stated that this proposal would expand access to care in rural areas, since some beneficiaries may be unable to travel to a hospital that provides inpatient care to receive a particular service.
For CY 2026, CMS proposed to revise criteria currently in place for the ambulatory surgical center (ASC) covered procedures list to allow 276 procedures to be added to the list. CMS also proposed to add the 271 codes that it proposed to remove from the IPO list in CY 2026. Hospital stakeholders opposed this change for many of the same reasons that they opposed dissolving the IPO list. Another major issue according to commenters is the impact that the proposal would have on beneficiary cost-sharing. While the Hospital Outpatient Department (HOPD) out-of-pocket costs are capped at the inpatient deductible, there is no such cap for ASC services. Thus, cost-sharing could in fact be higher for some beneficiaries if this proposal were finalized.
Stakeholders in support of the proposal commented that it would actually reduce overall costs and, like the IPO proposal, augment care options for patients in rural areas.
CMS proposed to move away from the longstanding policy of packaging skin substitutes with their accompanying administration procedure. Since 2014, CMS has divided skin substitutes into high-cost and low-cost groups to ensure “adequate resource homogeneity among APC assignments.” Providers have been instructed to bill high-cost skin substitutes with HCPCS codes 15271 through 15278, and to bill low-cost skin substitutes with HCPCS codes C5271 through C5278. The cost of the skin substitute is packaged into the cost of the procedure and reflected in the APC payment rate for the administration codes. The proposed per unit payment rate is $125.38, based on a volume-weighted average sales price of products used in the hospital outpatient setting in the fourth quarter of 2024.
Hospital and other wound care stakeholders stated that the proposal would put patient access to needed products at risk across care settings. This proposal is aimed at reducing unnecessary spending on high-priced skin substitutes billed by physicians, but stakeholders noted that CMS has already dealt with that issue on the HOPD side by bundling the payment for the skin substitute into the APC payment for the application procedure. MedPAC called this issue out in its comment letter as well, requesting that CMS leave the OPPS skin substitute policy as is and let packaging continue.
Like us, CMS is now reviewing these comments. The agency must publish the CY 2026 OPPS final rule on or around November 1, 2025, 60 days prior to the start of the calendar year. If you have thoughts on these issues or other key areas you are tracking on the OPPS rule, we would love to hear them!
Until next week, this is Jeffrey (and Marla and Deborah) saying, enjoy reading regs with your eggs.
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