CMS’ final 2027 outpatient payment rule has split the hospital industry, and the inpatient-only phaseout at the center of the fight is sending hundreds more surgical cases to ASCs.
CMS finalized the rule Nov. 4. It cuts payment for 340B-acquired drugs to average sales price minus 28%, expands site-neutral payment to imaging and removes 637 services from the inpatient-only list in the second year of a three-year phaseout.
The reaction broke along familiar lines. The American Hospital Association opposed the site-neutral expansion and inpatient-only phaseout, arguing hospital outpatient departments treat sicker, more complex patients than independent physician practices. America’s Essential Hospitals called the 340B cuts “an existential threat to essential hospitals.”
The Federation of American Hospitals, which represents investor-owned hospitals, took the opposite view.
“Today’s final rule is a win for patients, taxpayers, and the hospitals that communities depend on,” the group said.
The 340B drug cut must be budget neutral, so CMS will raise nondrug hospital outpatient payments by the same amount. Hospitals also face a faster 340B remedy offset: The annual cut to nondrug services rises from 0.5% to 2% until CMS recoups $7.8 billion, expected in 2031.
What the hospital fight means for ASCs
The inpatient-only phaseout feeds the ASC pipeline. Most services leaving the inpatient-only list go straight onto the ASC covered procedures list. For 2027, CMS added 619 procedures to the ASC list, the 618 it proposed plus CPT 64629, basivertebral nerve ablation for each additional vertebral body. The phaseout’s final year, 2028, covers the most complex procedures.
The same-day physician fee schedule rule sharpens the pull toward ASCs. Charles Taunt, DO, a hip and knee replacement surgeon at Lansing-based Michigan Orthopedic Center, told Becker’s the combination of a 2.3% ASC increase and lower physician pay “leaves us in a situation where the only financially feasible option is to keep moving our patients and our work into our ASC.” Dr. Taunt said the shift takes volume from the local hospital, which he still wants to see succeed. “It’s quite a conundrum,” he said.
Site-neutral payment is the other pressure point. Off-campus hospital departments will be paid physician fee schedule-equivalent rates for non-contrast imaging, including X-rays, ultrasounds, CT and MRI. CMS projects savings of $260 million in 2027 and more than $9 billion through 2036. Site-neutral policy already covers clinic visits, since 2019, and drug administration, since 2026.
Site-neutral shifts reinforce “a competitive reset already underway” between ASCs and hospitals, Becker’s ASC reported in February. Some ASC leaders want the policy to go further. Travis Doering, MD, owner of Austin, Texas-based Upper Extremity ATX, asked CMS to “pair site-neutral payment with site-neutral regulation.”
The payment side
The volume gains come with thinner rates. ASCs that meet quality reporting requirements get a 2.3% update in 2027, down from the 2.4% proposed, with a conversion factor of $57.721, up from $56.322 in 2026. The ASC weight scalar fell to 0.814 from 0.872 in 2026, and CMS rejected requests to eliminate it or to remove the 340B adjustment from ASC ratesetting. The result is a split by specialty, with a center’s case mix deciding whether 2027 is a raise or a cut.
“Other than the IPO list changes, the 2027 final rule disappoints in that it maintains the status quo for surgery center policy,” Ambulatory Surgery Center Association CEO Bill Prentice said.
The new Congress
The fight now moves to a different Congress. Democrats won majorities in both the House and Senate in the Nov. 3 midterms, the first time since 2006 the opposition party has controlled both chambers during a Republican presidency. The new Congress is sworn in Jan. 3.
ASC leaders are split on what that means for site-neutral policy. Kevin Connor, founder and CEO of Tampa, Fla.-based PulsePoint EP, cited site-neutral payment as part of a rare area of bipartisan support.
Dev GnanaDev, MD, chairman of the department of surgery at Colton, Calif.-based Arrowhead Regional Medical Center, was less certain: “I am not sure Democrats will be enthusiastic about site-neutral payments.”
Ray Brown, CEO of Maitland, Fla.-based Lake Lucien Surgery Center, warned that “well-funded lobbying interests can have an outsized influence.”
