CMS Just Tied RPM Rates to Hospital Data. Here’s Why That Creates New Risk for Your Practice.
The 2026 Medicare rule change links some Physician Fee Schedule (PFS) remote monitoring rates to complex hospital (OPPS) cost data. This adds a new, massive layer of volatility and uncertainty to your RPM revenue.
This page provides a simple breakdown of what it means, why it’s a risk, and the stable alternative.
The Antidote: Stop Building on Shaky Ground.
This new rule is another example of why building your entire care management program on RPM is a high-risk gamble. When RPM rates are volatile, the smart move is to build a foundation on stable, predictable revenue.
FairPath's platform lets you pivot, not panic.
Why Should a Physician's Office Care About Hospital (OPPS) Data?
For years, Physician Fee Schedule (PFS) rates were set using data from office-based practices. Starting in 2026, CMS will now use auditable cost data from Hospital Outpatient Departments (OPPS) to set the rates for some PFS technical services, explicitly including remote patient monitoring.
Here is the practical implication: Your practice's RPM reimbursements are now tied to a complex, lagging dataset you can't see or control.
- If hospital costs for these services "drift," your RPM rates may drift, too.
- Vendor "list prices" and survey data now carry less weight than this new, opaque hospital data.
- It makes an already volatile revenue stream even more unpredictable.
This isn't just a "hospital issue" anymore. It's a direct threat to the financial stability of your remote monitoring program.
The Technical Breakdown: What Is OPPS?
For clinicians, revenue-cycle leaders, and digital-health teams, here is the technical explanation of the system that now influences your RPM rates.
What OPPS Is
Medicare pays hospital outpatient departments (HOPDs) under the Hospital Outpatient Prospective Payment System (OPPS). Services are grouped into Ambulatory Payment Classifications (APCs); each APC has a relative weight that, multiplied by a conversion factor, yields the payment rate.
The Core Idea: From Charges → Costs → Payment
OPPS does not use hospitals’ list charges as payment. CMS converts charges on claims to estimated costs using cost-to-charge ratios (CCRs) derived from hospital cost reports (HCRIS). CMS turns what hospitals billed into what it believes the service actually cost, and pays accordingly.
Step-by-Step: How OPPS Cost Modeling Works
- Cost reports → CCRs. Hospitals file detailed cost reports; CMS derives departmental CCRs that map charges to costs.
- Claims conversion. For each outpatient claim line, CMS applies the appropriate CCR to convert charges to estimated costs.
- Packaging & composites. Supportive items (e.g., routine supplies) are "packaged" into a primary service.
- Geometric means & weights. CMS calculates a geometric mean cost for each APC and converts it to a weight.
- Payment rate. The final Payment = (APC weight) × (OPPS conversion factor), which is then adjusted for local wages.
A quick example: if a claim line shows $1,000 in charges and the applicable CCR is 0.30, the estimated cost is $300. Thousands of such costed lines roll up into the geometric mean for the APC, which becomes the basis for the weight.
Key OPPS Policies That Add Complexity
- Wage Index: Payment is adjusted for local wages based on a 60% "labor-related share."
- Packaging Policy: Many ancillary items are bundled. For drugs, CMS sets a threshold (e.g., proposed $140 per day for 2026) below which payment is packaged, and above which separate payment applies.
- Outlier Payments: For very costly cases, OPPS pays "outliers" when the estimated cost exceeds 1.75× the APC payment (plus a fixed-dollar threshold).
Data Vintage (The "Lag" Problem)
Each year CMS sets rates using the latest available data, which always lags. For CY 2026, for example, CMS proposed using CY 2024 claims with CY 2023 HCRIS cost reports. This rolling window means payment rates are always reflecting practice patterns from 1-2 years ago.
Your Key Takeaways & What to Do Next
- RPM Is Now Linked to OPPS: As of CY 2026, complex hospital cost data (OPPS) is being used to set some PFS payments, including remote monitoring.
- This Creates Volatility: Your RPM revenue is now tied to a lagging, complex system you can't control, making it less predictable.
- Stability is the New Strategy: The most durable practices will use this as a signal to build a stable foundation on APCM (Advanced Primary Care Management), which is not subject to this volatility.
Don't let your practice's revenue be a victim of complex, changing rules.
The Antidote: Stop Building on Shaky Ground.
This new rule is another example of why building your entire care management program on RPM is a high-risk gamble. When RPM rates are volatile, the smart move is to build a foundation on stable, predictable revenue.
FairPath's platform lets you pivot, not panic.