Welcome to another round of PYA Washington Updates from PYA’s Washington Update Task Force. It’s been a busy couple of weeks in Washington, even with the Thanksgiving holiday.
Key regulatory developments from CMS and Congress highlight shifting expectations for providers, plans, and policymakers.
2026 Hospital Outpatient Prospective Payment System (OPPS) Final Rule
On Friday, November 21, the Centers for Medicare & Medicaid Services (CMS) released the 2026 OPPS final rule. CMS approved a 2.6% increase to OPPS conversion factor (vs. the proposed 2.4% increase), from $89.169 to $91.415. CMS had proposed a 2% reduction for hospitals subject to the 340B remedy offset (all hospitals except those that enrolled in Medicare after January 1, 2018) but opted for a 0.5% reduction in response to numerous comments that the 2% reduction was too much too soon. Thus, the conversion factor for most hospitals will be $90.967 rather than $91.415, representing a 2% increase over 2026. CMS is warning providers to expect a 2% reduction in 2027.
Other OPPS highlights: (1) Year 1 of the three-year phase-out of the Inpatient Only (IPO) list, with 285 procedures (mostly musculoskeletal services) leaving the list for 2026; (2) significant expansion of the ASC Covered Procedures list, including 271 procedures previously listed on the IPO and another 289 procedures previously excluded under more restrictive criteria; (3) payment for 61 HCPCS codes assigned to drug administration APCs (5691-94) furnished in exempt off-campus hospital outpatient departments will now be at the Medicare Physician Fee Schedule (MPFS) equivalent payment rate (40% of the OPPS rate); and (4) deep cuts in reimbursement for skin substitutes. In short, hospitals will have very little for which to be thankful in the OPPS final rule.
PYA is offering an on-demand webinar taking a deep dive into the OPPS final rule. The webinar also addresses the 2026 End-Stage Renal Disease Prospective Payment System final rule, which was published earlier in November.
CY 2027 Medicare Advantage (MA) and Part D Proposed Rule
Even before it wrapped up the rulemaking process for 2026, CMS started the process for 2027 with the release of the CY 2027 Medicare Advantage and Part D proposed rule two days before Thanksgiving. Most importantly, CMS is proposing several significant changes to the Star Ratings system, including removal of the EHO4all reward (also known as the Health Equity Index) from the 2027 Star Ratings and continuation of the existing reward factor, which was scheduled to end with the 2027 ratings. CMS also proposes to remove 12 measures from the Star Ratings, beginning with the 2027 measurement year. CMS estimates these changes will increase payments to MA plans $5 billion in 2028 and $2.3 billion in 2029. In the name of reducing regulatory burden, CMS proposes to eliminate several requirements relating to health equity as well as the requirement for MA plans to send mid-year notices about unused supplemental benefits.
CMS is also inviting public feedback through requests for information on (1) how to refine risk adjustment and align quality incentives, and (2) how to incorporate “tools and policies that improve overall health, happiness, and satisfaction in life that could include aspects of emotional well-being, social connection, purpose, and fulfillment, in addition to tools that would achieve optimal nutrition and improve preventive care in Medicare Advantage, including possible incentives for MAOs to support beneficiaries seeking to improve their nutrition.”
Of note is what’s not included in the proposed rule: any proposed solutions to MA plans’ overuse of prior authorization. Apparently, CMS believes the promises made by several MA plans back in June to reduce prior authorization requirements were sufficient to address this issue.
2026 Home Health Prospective Payment System Final Rule
On Black Friday, November 28, CMS released the 2026 Home Health PPS final rule, cutting reimbursement by 1.3% as compared to 2025. This cut is significantly less than the 6.4% cut CMS proposed in July. CMS finalized its proposed recalibration of Patient-Driven Groupings Model (PDGM) case-mix weights, as well as updates to the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups. Read more details about the final rule.
ACCESS
On Monday, December 1, the CMS Innovation Center announced a new voluntary alternative payment model, Advancing Chronic Care with Effective, Scalable Solutions, ACCESS. The model will test Outcome-Aligned Payments (OAPs), recurring payments to Medicare Part B providers who manage patients with specified chronic conditions, with full payment tied to achieving measurable health outcomes. The CMS Innovation Center intends to release the formal Request for Applications detailing program requirements by the end of the year. Applications will be due April 1, 2026, with the first performance year beginning July 1, 2026.
Rescission of Nursing Facility Staffing Rule
On Tuesday, December 2, the Trump administration announced it is rescinding the controversial Biden-era rule requiring a minimum number of healthcare staff in nursing homes. According to a press release, the administration took this action “after determining the final rule imposed by the Biden administration disproportionately burdened facilities, especially those serving rural and tribal communities, and jeopardized [patients’] access to care.”
HHS Artificial Intelligence (AI) Strategy
On Thursday, December 4, the Department of Health and Human Services (HHS) released its Artificial Intelligence Strategy. The strategy focuses on the following: (1) “strengthening governance, risk management, and public trust through clear roles, comprehensive inventories of AI use cases, transparent risk-management practices, and respect for Americans’ rights to their health information”; (2) developing a OneHHS AI-integrated Commons to provide shared data resources (where legally permissible), computing power, models, and testbed environments; (3) equipping the HHS workforce with the necessary skills and fit-for-purpose AI tools; (4) embedding the principles of Gold-Standard Science into AI development and deployment; and (5) supporting an outcomes-first approach to integrating AI to modernize care and public health infrastructure.
The Subsidy Debate Continues
On December 4, Senate Democrats unveiled their legislation to extend Affordable Care Act (ACA) enhanced premium tax credits for three years. As you’ll recall, the Democratic senators who voted with the Republicans to end the shutdown extracted a promise from Senate Majority Leader Thune to have a vote on extending the subsidies. Apparently, that vote will happen the week of December 8. Congressional Republicans have not produced their own plan to address the subsidy cliff. Most, but not all, GOP lawmakers remain opposed to the ACA and renewing the enhanced premium tax credits.
PYA Webinar Series: 2026 Medicare Physician Fee Schedule Final Rule
On Wednesday, December 3, PYA presented the first of a two-part webinar series on the 2026 MPFS final rule. Access the slides and a recording of the webinar here. On Wednesday, December 10, we’ll present Part 2. Register for the webinar.
Please do not hesitate to contact us if you have any questions regarding these latest developments. You can also continue to check PYA’s website for updates.
