CMS update scraps inpatient-only procedure list, reduces drug administration payments

 Hospital groups and patient advocacy organizations clashed over potential benefits and harms of the latest Medicare payment policies and rates for hospital outpatient and ambulatory surgical center (ASC) services for 2026.

The update is designed to curb unnecessary spending, improve care quality, and expand patient access, according to a press release from the Centers for Medicare & Medicaid Services (CMS).

Under the final rule, outpatient facilities and ASCs that meet quality reporting requirements will see a 2.6% boost in payment, a slight increase over the 2.4% boost in the proposed rule.

"There's a big focus here on how to get patients out of expensive sites into lower-cost sites" of care, said Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform.

Miller said hospitals are usually paid about double what ASCs are paid, and ASCs are paid about double what physician's offices are paid. With a site-neutral approach, clinicians are reimbursed at the same rate regardless of where a procedure is performed.

The rule eliminates the Inpatient Only List over a 3-year period. The list catalogues more complex procedures that historically Medicare reimbursed only when performed among admitted hospital patients.

Due to the "evolving nature of the practice of medicine," CMS explained in a fact sheet, the agency will remove 285 "mostly" musculoskeletal procedures (out of more than 1,700) that can be performed in hospital outpatient settings with less recovery time, and offer patients options with lower out-of-pocket costs.

The rule also moved reimbursement for pricey physician-administered drugs, such as chemotherapy, from the ambulatory payment classification to Physician Fee Schedule rates for drugs administered in hospital outpatient clinics.

The change saves the government $290 million -- $220 million to Medicare, and $70 million to Medicare enrollees, due to reduced coinsurance, the fact sheet noted. The rule overall is estimated to produce $11 billion in savings for Medicare and beneficiaries over the next decade, CMS said.

Anthony Wright, executive director of Families USA, applauded the payment changes.

"Families USA has long supported same service, same price payment reforms, including those finalized in this rule that save Medicare billions of dollars and lower costs for our nation's seniors," Wright said in a press release.

Meanwhile, the American Hospital Association (AHA) opposed the elimination of the Inpatient Only List, and argued that the rule's site-neutral cuts would increase financial pressures on hospitals.

"The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than the patients seen in independent physician offices," said Ashley Thompson, AHA's senior vice president for public policy analysis and development, in a press release.

Miller noted that "we actually are paying too much now for too many patients," but "you can't take all the patients" to lower-cost settings. ASCs aren't equipped for patients who are at risk for heart attack, for example, whereas a hospital outpatient clinic -- which has emergency facilities down the hall -- is, he said.

Plus, if outpatient clinics see only the most complex patients, and aren't paid the same rate as before, they will not be able to cover the fixed costs of being in a hospital. This could lead clinics to cut such services and reduce patient access, Miller added.

He called for moving "appropriate" patients to lower-cost settings and adjusting the payment for higher-acuity patients to ensure that it is adequate.

In the final rule, CMS also made changes to the Overall Hospital Star Rating system that would block hospitals in the lowest quartile of Safety of Care measures from receiving a 5-star rating.

Updates to quality reporting programs "remove burdensome health equity and COVID vaccine reporting requirements," CMS noted in its press release, adding that it "also received public input on potential quality measures focused on nutrition, wellness, and preventive health that will help future policy decisions."

The American College of Emergency Physicians (ACEP) praised the change.

"By requiring hospitals to more accurately track and publicly report how long admitted patients are boarded in the [emergency department], CMS is shining a needed spotlight on a problem that has for too long been invisible in national quality reporting," ACEP said in a press release.

Finally, the rule mandates that hospitals post real prices instead of estimates in a "consumer-friendly format."

For physicians to be able to tell patients, "Here's where I think you can go and get this test or this imaging study ... in a quality way and at a lower cost," is helpful, noted Miller. Without knowing that, "all you can say is 'good luck.'"

https://www.medpagetoday.com/publichealthpolicy/medicare/118751