The 2026 Outpatient Prospective Payment System (OPPS) final rule (the Final Rule), released by the Centers for Medicare and Medicaid Services (CMS) on 21 November 2025 places hospitals, especially 340B covered entities, in a quandary. Under OPPS, hospitals are currently paid for separately payable drugs at average sales price (ASP) plus 6%. CMS has previously sought to reduce that reimbursement, specifically targeting 340B covered entities, but the American Hospital Association (AHA) and others successfully overturned that policy at the Supreme Court (American Hospital Association v. Becerra). The Final Rule reflects CMS’s next attempt to achieve the same result. Specifically, while the Supreme Court faulted CMS’s payment cuts to 340B covered entities due to the lack of a statutorily mandated drug acquisition cost survey, CMS has now finalized plans to conduct such a survey. The question for hospitals is whether to complete that survey. CMS does not reference statutory tools that permit it to penalize hospitals that opt not to complete the survey but instead has resorted to saber-rattling, devising other ways to potentially reduce reimbursement to nonresponding hospitals not explicitly found within the statute itself. Thus, hospitals need to compare the consequences of volunteering to take the survey, on the one hand, with the probable consequences of declining to take the survey, on the other, and then decide if they will complete it or forego it.
CMS’s Policy Is Governed by the Applicable Statute
When CMS determines the rate for separately payable drugs in its annual rulemaking, the OPPS statute gives CMS two options for setting these rates:
- The agency can conduct a survey of hospitals’ drug acquisition costs and set reimbursement rates taking the survey into account; for this option, reimbursement rates may vary by hospital group.
- Absent a survey meeting specific statutory requirements, CMS must set reimbursement rates based on “the average price” charged by manufacturers for the drug as calculated and adjusted by CMS; for this option, reimbursement rates may not vary across different hospital groups.
If CMS chooses to conduct a drug acquisition cost survey, the statute requires the survey include “a large sample of hospitals that is sufficient to generate a statistically significant estimate of the average hospital acquisition cost for each [covered drug].” CMS may then vary reimbursement rates by hospital group based on “relevant characteristics,” upon “taking into account the hospital acquisition cost survey data.”
Reduced OPPS Reimbursement Rates for 340B Hospitals
Historically, CMS has not conducted the required OPPS survey, and, prior to 2018, CMS reimbursed all hospitals for OPPS drugs based on ASP plus 6%. On 13 November 2017 however, CMS issued the 2018 OPPS final rule, reducing the reimbursement rate for OPPS-covered drugs to ASP minus 22.5% for 340B covered entities. CMS did not conduct a survey in implementing the new 340B-specific reimbursement rates, resulting in a challenge by AHA and others. On 15 June 2022, in American Hospital Association v. Becerra, the US Supreme Court unanimously held that the 340B covered entity-specific rate was unlawful because CMS was required to conduct a valid acquisition cost survey before targeting 340B hospitals for reduced reimbursement. American Hospital Association v. Becerra, 596 U.S. 724 (2022). To remedy the unlawful cuts, CMS paid a lump sum to bring previously adjudicated claims to the lawful ASP plus 6% reimbursement rate and has reimbursed all 340B hospital claims at ASP plus 6% moving forward.
OPPS Survey Confirmed for Calendar Year 2026
The 2026 OPPS Final Rule confirms that CMS intends to vary OPPS drug reimbursement across certain hospital groups by conducting the survey mandated by statute. CMS indicates it is not limiting the survey to varying reimbursement based on 340B status alone and includes examples of other characteristics that may be used to vary reimbursement (i.e., hospital size, location, urban vs. rural status, and teaching hospital status). CMS intends for the survey to be completed in time to inform reimbursement rates for the 2027 OPPS rule.
CMS is aware that hospitals are considering whether to respond to the survey. CMS agrees that the statute itself does not mandate specific consequences on hospitals for failing to respond but nevertheless believes that the statute implicitly imposes the obligation on hospitals to complete the survey. To avoid a situation where hospitals rationally decide not to take on the burden of completing the survey, CMS resorts to what could only be described as threatening nonresponders. CMS claims that the lack of a response is still “meaningful data” that can drive payment decisions. For example, CMS might take failure to respond to the survey as confirmation that a hospital does not have meaningful additional costs, and, as such, the hospital’s drug costs should not be paid separately but rather should be packaged into the payment for the associated service. Another potential alternative CMS is considering is to attribute to such a hospital the lowest acquisition cost reported by a similarly situated hospital. CMS has also suggested that it might look at supplemental data from other sources, even though there is no provision in the statute for such an approach. Ironically, CMS’s consideration of supplemental information exclusively when setting the ASP minus 22.5% rate was a main factor considered by the Supreme Court in the American Hospital Association v. Becerra decision. CMS has suggested that it would be premature, however, to commit to a specific penalty for failure to complete the survey until the survey process is completed.
Some may find it hard to square CMS’s proposed penalties with the text of the statute. The statute requires CMS to “tak[e] into account the hospital acquisition cost survey data” when setting the payment rate for separately payable drugs. When CMS discerns “relevant characteristics” in data that help explain correlations, CMS can vary reimbursement for a specific group. A nonresponding hospital, in contrast, demonstrates the absence of data, from which no pattern can be discerned. Arguably, opting not to respond is more properly viewed as an “action” and not a “characteristic.” Many hospitals may conclude that, just as with American Hospital Association v. Becerra, CMS is likewise interpreting the statute to reach an outcome, rather than adhering to the statute’s plain meaning. Yet hospitals must also keep in mind that nothing prevents CMS from implementing a policy that is ultimately unlawful, resulting in the imposition of penalties for some period of time until a court overturns any policy that exceeds CMS’s statutory authority.
Hospitals Face a Difficult Choice
Notwithstanding all of CMS’s protestations to the contrary, completing the survey will require significant effort. A lot of the work required cannot be automated and will be manual, given the pervasive nature of lagged discounts, and will require intricate calculations. For 340B covered entities, there is additionally the fear that the data will be used to cut much-needed reimbursement. A rational hospital might opt not to participate if it did not believe that there would be significant negative consequences. The issue a hospital will face is determining what its peers will do. If the response rate is below what is statistically necessary, then the plain meaning of the statute does not allow CMS to use the data to revise its payment policies. However, each hospital will need to decide if it individually is willing to risk the potential consequences CMS set forth in the Final Rule for not responding. In other words, CMS has created a “prisoner’s dilemma.” Each hospital will need to decide whether to minimize its own exposure to the proposed negative consequences by responding or take a chance that the survey is invalidated by an industrywide inadequate response rate.
Some actions available to hospitals will be:
- Respond fully;
- Disregard the survey; or
- Respond to the survey only to state that the hospitals’ costs are not minimal, but that the hardships in responding preclude the full response CMS is seeking. By doing so, the hospital could thwart CMS’s objective of attributing zero cost to a nonresponding hospital.
Of course, most hospitals will not consider this to be an easy decision. Hospitals, especially 340B covered entities, should consult with their advisors and peers to make the decision that is most appropriate for them.
