As part of the 2027 Calendar Year (CY) Outpatient Prospective Payment System (OPPS) final rule, the Centers for Medicare & Medicaid Services (CMS) plans to cut nearly $5.5 billion from hospitals participating in the 340B Drug Pricing Program and redistribute this funding to hospitals that do not serve a safety net role.
Despite making up just 8% of OPPS providers, essential hospitals face 20.2% of the proposed reductions in payments for outpatient drugs. However, because CMS is required to make these cuts budget-neutral, the policy will result in large increases in non-drug Medicare payments for hospitals that do not serve a safety net role. After accounting for all the changes in the OPPS final rule, we find that Medicare payments to essential hospitals will shrink by 4.2%, while for-profit hospitals will see a net 7.9% increase in outpatient Medicare payments in CY 2027.
Congress should act now to stop these cuts from taking effect. The cuts will cause irreparable harm to safety net providers at a time when the essential care they provide is needed more than ever. Congress should make sure that CMS follows the law and preserve the 340B program’s intent: to strengthen the safety net and expand access to care.
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