CMS finalized its 2027 hospital outpatient and ASC payment rule Nov. 4, cutting payment for 340B-acquired drugs, expanding site-neutral payments to imaging and continuing to phase out the inpatient-only list.
Fifteen things to know:
Payment rates
1. Outpatient payment rates will rise 2.3% in 2027 for hospitals that meet quality reporting requirements. That’s a 3.2% market basket increase minus a 0.9 percentage point productivity adjustment.
“CMS’ Medicare outpatient hospital payment rate does not adequately take into account the financial challenges facing hospitals today,” Ashley Thompson, senior vice president, public policy analysis and development at the American Hospital Association, said in a Nov. 4 statement. “These challenges are amplified for hospitals serving rural and underserved communities, many of which are already making hard decisions about how they will maintain access to healthcare services in their communities.”
2. ASCs that meet quality reporting requirements will also get a 2.3% update.
3. Hospitals that don’t meet Hospital Outpatient Quality Reporting Program requirements will have their annual update cut by 2 percentage points.
4. CMS will apply a cost-of-living adjustment to the nonlabor share of outpatient payments in Alaska and Hawaii. It’s budget neutral and is expected to raise payments in those states by $66 million in 2027.
340B drugs
5. CMS will pay for 340B-acquired drugs at average sales price minus 28% in 2027. The rate is based on a CMS survey of hospital drug acquisition costs from Jan. 1 to April 7, 2026. The survey found big gaps between 340B and non-340B acquisition costs. In some cases, the beneficiary’s coinsurance, typically 20% of the payment, was higher than what the hospital paid for the drug.
6. CMS estimates the policy will cut Medicare drug spending by $4.35 billion and beneficiary costs by $1.1 billion in 2027, about $5.45 billion in total. Beneficiaries who receive a qualifying drug in a hospital outpatient department are expected to save an average of $900.
7. The law requires the 340B cut to be budget neutral, so CMS will raise payments for nondrug outpatient services by the same amount.
8. CMS is also speeding up how fast it recoups the extra nondrug payments hospitals received from 2018 to 2022 under the 340B payment cuts later ruled unlawful. The annual cut to the conversion factor for nondrug services rises from 0.5% to 2% in 2027. It continues until CMS has recouped $7.8 billion, which it expects to happen in 2031. Hospitals that enrolled in Medicare after Jan. 1, 2018, are exempt. CMS proposed the 2% offset for 2026 but didn’t finalize it then.
“We remain deeply concerned about CMS’ continued assault on the 340B program by the reduction of reimbursement rates and accelerated clawback of funds from hospitals, both of which will further stress hospitals’ ability to care for their patients,” Ms. Thompson said.
Site-neutral payments
9. CMS will pay the lower physician fee schedule-equivalent rate for imaging without contrast at excepted off-campus provider-based departments. That includes certain bone density scans, X-rays, ultrasounds, CT scans and MRIs. The policy already covers clinic visits (since 2019) and drug administration (since 2026). Rural sole community hospitals are exempt.
10. CMS expects the imaging change to save beneficiaries and taxpayers $260 million in 2027 and more than $9 billion from 2027 to 2036.
“The AHA is also disappointed that CMS finalized another expansion of site-neutral payment policies and continued phase out of the inpatient-only list,” Ms. Thompson said. “Both policies are misguided and overlook the unique role hospital outpatient departments play in delivering care to patients in communities nationwide. Hospital outpatient departments treat sicker and more complex groups of patients than independent physician practices, including those with higher rates of disability and who are more likely to come from low-income and rural communities.”
Surgical sites of care
11. CMS is removing 637 services from the inpatient-only list in 2027, the second year of a three-year phaseout. They span 11 clinical families, including digestive, respiratory, urinary and maternity care and delivery.
12. CMS is also adding “several hundred” surgical procedures to the ASC-covered procedures list, according to the news release.
Oversight and quality
13. Eight more botulinum toxin injection codes will need prior authorization in hospital outpatient departments. Outpatient claims for these codes rose 42.8% from 2017 to 2024, while overall outpatient volume fell 8.3%. CMS said it found no clinical or coding reason for the increase. Medically necessary injections, including for chronic migraine, are still covered.
14. Accrediting organizations with deeming authority can now check hospitals’ compliance with administrative EMTALA requirements during routine surveys. These requirements include signage, emergency department logs, transfer records kept for five years and on-call lists. More than 80% of hospitals are accredited this way. CMS and the HHS Office of Inspector General keep sole authority to enforce EMTALA’s patient care protections.
15. CMS updated its Overall Hospital Quality Star Rating methodology to give more weight to the Safety of Care measure group. It also dropped the “Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients” measure from the outpatient and ASC quality reporting programs, starting with the 2027 reporting period.
Click here for more details about the final rule.
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