CMS Proposes Bold Reforms to Modernize Hospital Payments and Strengthen Transparency

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule to modernize hospital payments, expand access to care, and enhance hospital accountability. The proposed changes aim to reduce out-of-pocket costs for Medicare beneficiaries, expand choices in where patients can receive care, increase hospital accountability and transparency, and safeguard the Medicare Trust Fund from waste and abuse. CMS Administrator Dr. Mehmet Oz stated, "These reforms expand options and enforce the transparency Americans deserve to ensure they receive high-quality care without hidden costs."

Key Takeaways:

• The proposed rule aims to reduce out-of-pocket costs for Medicare beneficiaries by introducing patient-focused reforms that modernize payments and expand access to care.
• The rule proposes phasing out the inpatient-only list, giving physicians greater flexibility to determine the most clinically appropriate setting for care and allowing more patients to choose outpatient surgical options.
• CMS is improving hospital price transparency rules, requiring hospitals to post real, consumer-usable prices, not estimates, and provide data in standardized formats that allow patients to understand what their care will actually cost.
• Hospitals that fail to comply with the price transparency requirements could face civil monetary penalties.
• The proposed rule also updates the Hospital Star Rating system and quality reporting programs to focus on patient safety and wellness.
• CMS is seeking public input on potential quality measures focused on nutrition, wellness, and preventive health.
• The proposed changes support program sustainability by aligning payments more closely with the actual cost of care, helping ensure Medicare continues to deliver high-quality, patient-centered services nationwide.
• CMS projects these proposals will improve access to outpatient care, reduce unnecessary costs, and deliver savings for both the Medicare program and beneficiaries, estimated at nearly $11 billion over the next ten years.

Statistics:

• CMS projects the proposed changes will save the Medicare program and beneficiaries an estimated $11 billion over the next ten years. (Source: CMS, 2025)
• The proposed rule includes changes to the Hospital Star Rating system, which will impact hospital ratings and transparency. (Source: CMS, 2025)
• The Centers for Medicare & Medicaid Services (CMS) received 52 public comments on the proposed rule in 2024 (Source: CMS, 2024)

Sources:

• CMS (2025): CMS Proposes Bold Reforms to Modernize Hospital Payments, Strengthen Transparency, and Put Patients Back in Control
• CMS (2024): About the Proposed Rule for Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.