CMS Issues 2026 Hospital Outpatient Prospective Payment System Final Rule: Key Takeaways for Pharma

Among other things, the HOPPS final rule finalizes CMS’ plan to conduct a survey of the acquisition costs for each separately payable drug purchased by all hospitals reimbursed under HOPPS, adjust certain payment rates, and cease Medicare Part B reimbursement for drugs sold by manufacturers without Medicaid National Drug Rebate Agreements (NDRAs).

In addition to the updates discussed below, CMS has finalized the following for 2026:

• A 2.6% increase to the HOPPS payment rates for hospitals that meet applicable quality reporting requirements (representing a slight change from the 2.4% increase in the proposed rule).
• The packaging threshold, used by CMS to determine if a covered outpatient drug will be paid for in an Ambulatory Payment Code or is separately reimbursable, will be set at (1) $140 for drugs, biologicals, and therapeutic pharmaceuticals (same as 2025), and (2) $655 for high-cost diagnostic radiopharmaceuticals (up from $630 for 2025).
• Separately reimbursed drugs and biologics administered in the hospital outpatient setting will be reimbursed at average sales price (ASP) +6% (4.3% after sequestration), or at wholesale acquisition cost (WAC) +3% if there is no established ASP.

Below are the key updates impacting pharmaceutical manufacturers.

Drug Acquisition Cost Survey

Section 1833(t)(14)(D)(ii) of the Social Security Act requires CMS to conduct periodic surveys of hospital acquisition costs for each specified covered outpatient drug (SCOD) for use in setting the payment rates for such drugs.

In line with the proposed rule, discussed here, the final rule lays out CMS’ intent to survey hospitals paid under the HOPPS for their drug acquisition costs, including for SCODs, and drugs and biologicals CMS historically treats as SCODs. The survey will be conducted from January 1, 2026, through March 31, 2026, during which CMS states that it will survey hospitals “only about drugs that are separately paid under the [H]OPPS and will ask hospitals to report the total acquisition cost, net of all rebates and discounts, of each drug by National Drug Code (NDC) purchased during the 1-year timeframe of July 1, 2024 through June 30, 2025.” CMS states that it will additionally ask hospitals to incorporate all rebates and discounts in their acquisition cost for each NDC, including discounts directly applicable to an individual NDC; discounts that are not necessarily linked to a single NDC, but could be a discount linked to a certain invoice; and discounts linked to purchases made over a certain time period, such as prompt pay discounts, wholesaler discounts, or other discounts.

In the final rule, CMS notes its understanding that “certain discounts may depend on whether an eligible patient receives the drug,” e.g., drugs acquired through the 340B program. As such, CMS is requesting that hospitals separately list their acquisition costs for drug NDCs acquired through the 340B program and those drug NDCs acquired outside of the 340B program, “to ensure that all discounts are accurately captured and represent the hospital’s acquisition costs.”

As we noted when discussing the proposed rule, CMS previously paid reduced Medicare reimbursement for 340B-acquired drugs under HOPPS, but after lengthy litigation, the rule was invalidated. In part, because CMS had not conducted a survey of hospitals’ acquisition costs to support the decreased reimbursement. The planned survey seems intended, at least in part, to support potentially decreased Medicare reimbursement for 340B-acquired drugs in the future. As explained previously, this is also consistent with the April 15, 2025, executive order’s goal of aligning Medicare payments with actual acquisition costs.

Notably, CMS stated that a hospital’s lack of response to “this required survey is still meaningful data to CMS which can be taken into consideration to inform future payment rates in future rulemaking.”

Finally, to facilitate conducting the survey, CMS announced that it will launch the Outpatient Prospective Payment System (OPPS) Drug Acquisition Cost Survey via the Fee-for-Service Data Collection System on January 1, 2026. CMS will be hosting a webinar to provide additional information offered on December 9 and 11, 2025.

Part B Drugs Without Medicaid NDRAs

As we explained previously, the Medicaid Drug Rebate Program statute technically states that, for payment to be available under Medicare Part B for covered outpatient drugs of a manufacturer, the manufacturer must have entered into a Medicaid NDRA. See 42 U.S.C. § 1396r-8(a)(1). However, CMS has never enforced this provision related to Medicare Part B covered and reimbursed drugs sold by manufacturers that did not have NDRAs.

In line with the proposed rule, CMS has now finalized its decision to cease Medicare Part B payment for HCPCS codes describing products whose manufacturers did not promptly enter into a Medicaid NDRA for their covered outpatient drugs. CMS stated that, as of the time of writing of the final rule, the manufacturers of the single source drugs, biologicals, and radiopharmaceuticals listed in Table 116 in the final rule do not currently have a Medicaid NDRA in effect. As such, effective April 1, 2026, Medicare Part B payment will no longer be available for these products unless the manufacturers execute NDRAs as required. The affected products will be marked with special codes (E1 for OPPS and B5 for ASC) to show that Medicare will not pay for them on outpatient claims because the drug manufacturers have not executed NDRAs.

CMS states that it will closely monitor for continued compliance with Medicaid NDRA obligations and will adjust Medicare Part B payment status accordingly. Notably, CMS explains that, if a manufacturer comes into compliance and enters into an NDRA, Medicare Part B payment will be reinstated retroactive to the date that the signed and completed NDRA was received and accepted by CMS. Finally, CMS states that, for clarity and transparency, it will indicate on the CMS ASP Pricing Files and the OPPS Addendum B which drugs are non-payable under Medicare Part B due to the manufacturer’s lack of effectuation of a Medicaid NDRA.

Conclusion

As noted, when we addressed the proposed rule, the 2026 final HOPPS rule reflects the continued focus by CMS on drug pricing transparency, compliance, and cost containment. ArentFox Schiff attorneys are available to help you analyze the impact of these changes and ensure compliance with new requirements. Please contact us for further guidance on the implications of the HOPPS final rule.