Medicare is set to make major changes to hospital outpatient payments in 2026 that could send an additional $8 billion to hospitals but also shake up how and what gets reimbursed. The updated rule, proposed this week, is designed to encourage fairness and boost price transparency—a move some hope will curb costs, but which hospitals say could seriously tighten their margins.
What’s Changing in Medicare’s Proposed Rule?
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Pay Increase: Hospitals and ambulatory surgery centers (ASCs) are looking at a 2.4% reimbursement bump next year.
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Site-Neutral Payments: Medicare wants to align payments for outpatient services, meaning hospitals would be paid similar rates to independent physician offices for the same procedures.
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Expanded Transparency: Hospitals will be required to publish real prices negotiated with insurers—not just estimates—beyond previous requirements.
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Shorter Refund Timeline: The rule would speed up the process of recouping overpayments tied to the 340B drug discount program.
Why Hospitals Are Pushing Back
Hospital organizations argue the 2.4% payment increase won’t keep up with rapidly rising costs for labor, supplies, and continuing pandemic pressures. Many are especially concerned about site-neutrality—where Medicare would pay similar rates for outpatient care, whether it happens at a hospital, surgery center, or independent medical office. Hospitals have long received higher reimbursements to account for operating emergency departments and providing expensive, around-the-clock services.
More Details on Site Neutrality
Currently, Medicare reimburses hospitals more for outpatient care than it does for similar services at ambulatory surgery centers or physician offices. The proposal would gradually shift payments, so that certain outpatient drug administration services performed off-campus receive the same rate as at a doctor’s office. Medicare plans to phase out the “inpatient only” list, opening the door for more surgeries to be covered in outpatient settings over the next three years.
Changes in Price Transparency
CMS aims to require hospitals to post:
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The 10th, 50th (median), and 90th percentile of payer-negotiated rates for services.
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Supporting data and methods used for price calculations.
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Attestations that information is accurate and comprehensive.
This push is intended to help patients and insurers grasp the real range of prices charged for healthcare—and potentially use competition to drive costs down.
Who Gains, Who Loses?
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Patients: May benefit from more transparent prices and, eventually, lower out-of-pocket costs for common outpatient services.
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Hospitals: Could see tighter revenue, especially for outpatient departments and rural facilities that previously relied on higher Medicare rates.
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Ambulatory Surgery Centers: Stand to welcome more volume as payments between hospital and non-hospital facilities even out.
Looking Ahead
If finalized, these rules signal a continued shift away from complex, site-specific payments toward a system that prioritizes consistency and transparency. Supporters expect the changes to curb wasteful spending and empower patients, while hospital leaders warn it could put additional strain on safety-net facilities.