2026 enacted Medicare payment changes: Three key policy updates

Through our Medicare fee-for-service policy analytics solution, DataGen provides an overview of enacted legislative, regulatory and quality-based payment changes affecting Medicare reimbursement across care settings, including projected impacts through 2035. Here’s our latest dive into our 2026 Enacted Medicare Changes Analysis.

Enacted Medicare payment changes impacting providers

Medicare payment policy changes recently enacted by Congress and CMS will continue to affect provider reimbursement across care settings. Below are three notable policies reflected in DataGen’s analysis.

1. Sequestration cuts (2.0% reduction)

Sequestration applies a 2.0% reduction to Medicare payments across all provider settings. The reduction applies to all Medicare payment lines, including those outside of the prospective payment system (PPS). The reductions began in FFY 2013 and were recently expanded through Feb. 28, 2033. DataGen’s analysis quantifies the impact of this expansion for providers.

2. 340B budget neutrality adjustments

CMS reduced payments for certain 340B-acquired drugs from average sales price (ASP)+6% to ASP-22.5% beginning in calendar year (CY) 2018. Following the decision in American Hospital Association v. Becerra, CMS vacated this policy in CY 2022 and issued remedy payments and revised OPPS rates.

As part of the remedy:

• A -3.09% prospective adjustment was applied to the OPPS rates in CY 2023 to offset the +3.19% OPPS conversion factor increase applied in CY 2018.

• A 0.5% reduction to the OPPS conversion factor applies for CYs 2026-2041:

• • This is to recoup payments made under this policy during CYs 2018-2022 until a total of $7.8 billion is recovered.

• • The actual reduction amount applied to the CY 2026 conversion factor was 0.49%.

• • CMS is still evaluating opportunities to recoup payments at a different rate, so it is important for providers to use our estimated impacts to understand how the current model affects their payments.

3. OPPS SN payment for drug administration services

Previously, CMS established site-neutral payment for certain drug administration services provided at off-campus provider-based departments.

Under this policy:

• OPPS payment is set equal to the Medicare Physician Fee Schedule (MPFS) site-neutral payment rate.

• The OPPS payment amount is reduced by 60%.

• Implemented in a non-budget-neutral manner: Beginning CY 2026, CMS is extending this policy for drug administration Ambulatory Payment Categories (APCs 5691-5694) furnished in excepted off-campus PBDs, the impact of which is provided in our analysis.

Evaluate the full Medicare FFS impact

These policies illustrate how enacted Medicare changes continue to shape fee-for-service reimbursement across inpatient and outpatient settings. While individual adjustments may appear incremental, their cumulative and long-term effects can materially influence financial performance, as shown in the DataGen analysis.

To evaluate the full scope of enacted legislative, regulatory and quality-based payment changes, including historical impacts and forward projections, organizations need comprehensive modeling and consistent methodology.

DataGen’s Medicare Fee-for-Service Policy Analytics solution provides detailed, structured analysis of Medicare FFS policy changes to help healthcare leaders assess exposure, quantify impact and plan with greater clarity.