ARTICLE SUMMARY:
The agency unveiled new inpatient and outpatient policies in late November. Excerpted from Pathways’ Picks December 3: Medicare Changes, Agentic AI at FDA, EUDAMED Awaits, and More.
In a separate recent Medicare rule, CMS established a new policy that could have significant long-term implications for reimbursement of inpatient procedures and devices. Under the November 21 regulation, hospitals must start, as of January 1, to report inpatient procedure reimbursement rates that it negotiates with Medicare Advantage-participating private insurers to CMS, and the agency has adopted a method to incorporate those “market-based” rates into its payment calculations beginning in FY 2029. The approach will replace the established method of calculating Medicare rates primarily based on hospital cost-to-charge ratios. The goal, CMS says, is “to reduce the Medicare program’s reliance on the hospital chargemaster, and to support the development of a market-based approach to payment under the Medicare FFS [fee-for-service] system.”
Outpatient pay roundup. The new requirement to report market-based inpatient rates came, for bureaucratic reasons, via CMS’ 2026 hospital outpatient prospective payment system (OPPS) rule, which was published November 21 and takes effect January 1. There were several other policies finalized in the OPPS notable for device makers:
- CMS approved separate, additional outpatient payments in 2026 for 13 pain management medical devices under a statutory program intended to encourage pain treatments that “replace, reduce, or avoid” opioid use. Five of the devices qualified last year for the policy, in which products are paid outside of the standard packaged service categories. The agency is continuing those payments, plus eight more devices, including infusion pumps, nerve blockers, cryotherapies, and compression devices, among others.
- In the proposed OPPS over the summer, CMS included a formal request-for comment on establishing appropriate reimbursement policies for AI-enabled “software as a service,” but the agency didn’t follow up with any new comprehensive payment frameworks for this class of product, despite frequent calls for more clarity and consistency by the medtech industry. “We received many comments on future payment methodologies for SaaS,” the agency writes. “We thank the commenters for their input and note we will consider the comments received for future rulemaking.” Meanwhile, on November 20, a bipartisan, industry-supported bill was introduced in the House that would establish a distinct outpatient-based payment pathway for “algorithm-based healthcare services.”
- The agency moved forward with its plans to remove mandates for performing certain procedures in more controlled healthcare settings. CMS finalized a proposal to completely phase out its list of procedures that can only be performed in the inpatient setting over the next three years. In 2026, CMS will expunge 285 procedures (mostly musculoskeletal) from the “inpatient only list.” The agency will also start to cover hundreds of new procedures when performed in standalone ambulatory surgical center settings in 2026.