The American Hospital Association is urging CMS not to finalize two 2027 Outpatient Prospective Payment System proposals that would accelerate a Medicare payment clawback and cut 340B drug reimbursement.
CMS’s proposed rule would raise the annual rate hospitals must repay toward $7.8 billion in prior 340B overpayments from 0.5% to 3%, a sixfold increase. AHA said in an Aug. 26 letter to CMS Administrator Mehmet Oz, MD, that the accelerated timeline would cost hospitals more than $600,000 on average in 2027, with more than 500 hospitals facing repayments exceeding $1 million a year.
CMS also proposed cutting 340B drug reimbursement to average sales price minus 33.4%. AHA said the change would eliminate $4.85 billion in payments and require an 8.44% increase to the overall OPPS conversion factor to preserve budget neutrality.
“CMS should learn from that history — not repeat it,” AHA wrote, pointing to a 2022 Supreme Court ruling that found the agency’s earlier 340B cuts unlawful. CMS’s 2023 remedy for that ruling paid hospitals $10.6 billion in lump sums while recouping $7.8 billion of that amount.
“Before imposing another reimbursement cut, CMS must be certain that it has the statutory authority to act and that the benefits justify the substantial costs it will impose on 340B hospitals and the vulnerable patients they serve,” the letter said. “At the very least, CMS must consider the time, effort and resources spent litigating and unwinding its first attempted reimbursement cut — and the prospect that, a decade from now, CMS and hospitals could find themselves doing the same thing all over again.”
AHA also challenged the cost survey CMS used to justify the new reimbursement cut, saying it includes data from just 23.1% of 340B hospitals — 28.6% after CMS’s own refinements. The survey period overlapped with Hurricane Helene, which knocked out a major Baxter IV-solution plant in September 2024 and triggered months-long shortages the survey never accounted for. AHA also flagged that CMS never disclosed whether it excluded “penny pricing” from the new survey — a step it took in a prior rule after finding the practice skewed results, dropping the estimated average drug discount from 47% to 40.9%.
AHA asked CMS to rescind the clawback acceleration entirely and reject the 340B reimbursement cut outright. Short of full rescission, AHA asked CMS to at least maintain or extend the current 0.5% repayment timeline. On the reimbursement cut specifically, AHA also asked CMS to release its underlying survey data for public review and delay the policy long enough to allow a second comment period before finalizing it.
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