On July 2, the Centers for Medicare & Medicaid Services (CMS) released its proposed calendar year (CY) 2027 Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment rule. The rule would update general payment rates, amend outpatient drug reimbursement for 340B covered entities, and expand cuts to hospital payments under “site-neutral” frameworks for certain imaging services, among other updates.
America’s Essential Hospitals is analyzing the proposed rule for comment and will send members a detailed Washington Briefing in the coming days. Comments for proposed rule are due to CMS on Aug. 31.
OPPS Payment Rate and Conversion Factor Updates
CMS proposes a 2.4% increase in payment rates for hospital outpatient departments in CY 2026, representing a 3.2 % market basket update, less a 0.8% productivity adjustment. Hospitals that fail to meet outpatient quality reporting requirements would receive a 2–percentage point reduction in their OPPS payments.
Outpatient Drug Reimbursement Cuts for Some 340B Hospitals
CMS proposes to cut outpatient drug reimbursement for hospitals participating in the 340B Drug Pricing Program by a total of 39.4% from the default OPPS payment rate for outpatient drugs of average sales price plus 6%. CMS proposes to exempt rural sole community hospitals from the cut. The cut would be implemented in a budget-neutral manner, with the savings reinvested in an increased conversion factor for non-drug items and services at all OPPS hospitals.
Payment Adjustments for Non-Drug Items
From 2018–2022, CMS illegally cut outpatient drug payments for 340B hospitals, costing these facilities $7.8 billion over the duration of the policy. Because the policy was budget neutral, those funds taken from 340B hospitals were reinvested in other facilities in the form of enhanced payments for non-drug items and services. As the Supreme Court unanimously ruled the cut in outpatient drug payments to 340B hospitals was illegal, the resulting enhanced payments for non-drug services also were contrary to federal statute.
In 2023, CMS finalized a proposal to recoup $7.8 billion by reducing the OPPS conversion factor for non-drug items and services by 0.5% from 2026 until all funds were recouped. CMS now proposes to accelerate recoupment by cutting the conversion factor by 3% in 2027. CMS anticipates the $7.8 billion will be recouped in 2029.
Hospital Outpatient Department Cuts
CMS proposes to expand “site-neutral” payments to include certain imaging services furnished in excepted off-campus provider-based outpatient departments. CMS would continue to exempt rural sole community hospitals from the policy.
Continued Phase-Out of the Inpatient-Only (IPO) List
CMS proposes to continue phasing out the IPO list by removing an additional 637 procedures from the list, allowing for full elimination of the list in CY 2028.
Emergency Medical Treatment and Labor Act (EMTALA) Compliance
The proposed rule would permit hospital accreditation organizations with deeming authority to assess compliance with EMTALA’s administrative requirements.
Quality Reporting Program Adjustments
CMS proposes to remove the Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients measure from the Hospital Outpatient and Ambulatory Quality Reporting Programs.
The proposed rule also includes a request for information on hospital price transparency and domestic procurement of personal protective equipment and essential medicines. CMS seeks feedback on ways to improve the standardization, comparability, and usability of hospital pricing data, as well as Medicare payment approaches to support domestic procurement. America’s Essential Hospitals previously commented on the domestic procurement advance notice of proposed rulemaking and plans to respond to both RFIs in its comments on the proposed rule.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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