Federal regulators have kicked off a rulemaking process that could raise Medicare reimbursements for outpatient services in Hawai‘i, potentially steering about $17 million a year to hospitals across the state. The proposed change zeroes in on care delivered in hospital outpatient departments, including emergency-department visits and imaging, which are currently reimbursed at lower rates than inpatient services. If finalized in the calendar-year 2027 outpatient pay rule, the adjustment is intended to chip away at a long-standing gap in how Medicare pays for care in noncontiguous states.
In a press release from Schatz's office, the senator called the move “a big win for Hawai‘i” and said the extra federal dollars will help keep care accessible for seniors on every island. Local outlets quickly picked up the news, with Maui Now breaking down what the shift could mean for hospital budgets and Hawaii News Now reporting that the new payments would support services for hundreds of thousands of Medicare beneficiaries statewide.
How the change would work
The Centers for Medicare & Medicaid Services (CMS) is proposing to apply a cost-of-living adjustment to the nonlabor share of hospital outpatient payments in Alaska and Hawai‘i, a technical fix meant to line outpatient rates up with inpatient adjustments that already account for higher local costs, according to CMS. In the CY 2027 OPPS/ASC proposed rule, the agency projects the policy would increase payments to hospitals in those two states by about $55 million in 2027. The full proposed rule is posted in the Federal Register with a public comment period that runs through Aug. 31, 2026 (Federal Register). The COLA proposal is wrapped inside a broader outpatient payment update that also reweights APCs and adjusts certain drug-payment policies.
Who stands to gain
According to Schatz's office, Hawai‘i’s share of the adjustment is roughly $17 million a year, money that would help support care for more than 300,000 Medicare beneficiaries in the islands. The additional reimbursement would flow to services furnished in hospital outpatient departments, from ER visits to imaging, and is intended to help hospitals, including those on neighbor islands, keep services in place for seniors. Schatz and Sen. Mazie Hirono previously led legislation pressing CMS to recognize Hawai‘i’s higher cost structure, a push detailed in a press release from Sen. Mazie Hirono. While the $17 million figure comes from agency modeling and Schatz’s analysis, the final amounts will depend on how CMS settles the rule and any budget offsets it adopts.
Next steps and what to watch
The proposed rule (CMS-1850-P) is open for public comment until Aug. 31, 2026, and CMS says the changes would take effect in calendar year 2027 if they are finalized, giving hospitals, advocates and anyone else with skin in the game a window to weigh in through the Federal Register docket. Stakeholders will be combing through the rule’s Addenda and supporting files for detailed modeling that shows how payment increases would be distributed across specific hospitals. For now, Hawai‘i lawmakers are treating the proposal as a win, while the finer points of the policy and any offsets will be hammered out through the comment period and the final-rule process.
