Final Rule Highlights and Potential Implications

• Issued on November 4, 2026, the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule includes notable reductions in reimbursement for 340B-acquired drugs, accelerates recoupment of prior 340B remedy payments, and expands site-neutral payment for certain imaging services.
• This rule represents a significant redistribution of OPPS payments away from hospitals with a high volume of 340B-acquired drugs, although each hospital’s net impact will depend on its mix of 340B drug and non-drug outpatient services. CMS estimates that the reduction in payment for 340B drugs to average sales price (ASP) minus 28% will reduce original Medicare drug payment by approximately $5.5 billion in 2027.
• To maintain budget neutrality, CMS estimates that the reduction in 340B drug reimbursement will result in a 7.5% increase in OPPS payment rates for non-drug items and services.
• Although the final rule directly impacts original Medicare, it will also affect Medicare Advantage reimbursement under contracts that incorporate current Medicare OPPS rates or payment methodologies.
• CMS also finalized an acceleration of previously established 340B remedy recoupment, increasing the annual OPPS conversion factor reduction from 0.5% to 2.0% for affected hospitals beginning in CY 2027.

---

Additional Details

Payment Updates

• OPPS

  • For CY 2027, CMS is finalizing an increase to OPPS payment rates of 2.3% based on a projected hospital market basket increase of 3.2%, reduced by a 0.9 percentage point productivity adjustment. The finalized adjustment falls just shy of the previously proposed 2.4% increase.
  • CMS estimates that total payments to OPPS providers will increase by approximately $114.4 billion compared to estimated CY 2026 OPPS payments. This estimate from CMS includes beneficiary cost sharing and estimated changes in enrollment, utilization, and case mix. The experience by hospital will also vary considerably, most significantly for those with a material volume of 340B-eligible drugs paid through OPPS.
  • CMS continues to implement the statutory 2.0 percentage point reduction in payments for hospitals that fail to meet quality reporting requirements.
  • Finally, under the finalized 340B changes, payments for services at hospitals subject to the 340B remedy offset will be reduced by 2.0 percentage points.

• ASC

  • For CY 2027, CMS is finalizing an increase to ASC payment rates of 2.3% based on a projected hospital market basket increase of 3.2%, reduced by a 0.9 percentage point productivity adjustment.
  • CMS estimates that total payments to ASCs will increase by approximately $9.9 billion compared to estimated CY 2026 OPPS payments when including beneficiary cost sharing and estimated changes in enrollment, utilization, and case mix.

• 340B Drug Program

  • For CY 2027, CMS is finalizing a reduction in reimbursement for 340B-acquired drugs from the current ASP plus 6% to ASP minus 28%. CMS previously proposed a reimbursement rate of ASP minus 33.4%.
    • CMS notes that this change is based on findings from a survey the agency conducted from January 1 through April 7, 2026, on the acquisition costs for each separately payable drug acquired by all hospitals paid under the OPPS.
    • According to CMS, the survey revealed significant disparities between drug acquisition costs through the 340B program and acquisition costs outside of the 340B program. CMS noted that in some instances, the survey revealed that the beneficiary cost-sharing amount, typically 20% of the total payment amount, was greater than the total price that the hospital paid for the drug.
    • CMS estimates that this will reduce original Medicare drug payment by $4.35 billion and beneficiary drug payments by $1.11 billion in the first year.
    • Statute requires that this policy be implemented in a budget-neutral manner. As such, CMS will offset this policy through an increase in OPPS payments for non-drug services by an equivalent amount.
  • CMS is also finalizing adjustments to the previously established 340B remedy recoupment.
    • Specifically, the November 2023 340B remedy final rule codified a 0.5% reduction in the OPPS conversion factor for non-drug items and services (excluding hospitals that enrolled in Medicare after January 1, 2018). This policy was set to remain in effect until the applied reduction had fully offset the $7.8 billion in estimated non-drug services payments made as part of the prior 340B drug payment policy.
    • However, after reconsideration, CMS believes that a shorter time frame to recover this amount is more appropriate. As such, CMS is finalizing a revised version to the annual offset percentage for non-drug items and services from 0.5% to 2%, effective CY 2027. This 2% reduction will remain in effect until the estimated payment reduction reaches $7.8 billion, which CMS estimates will occur in CY 2031.
    • The 2% reduction represents a revision from the previously proposed 3% reduction.
    • Hospitals that enrolled in Medicare after January 1, 2018, are excluded from this policy.

• Coverage Updates

  • Site-Neutral Payments: CMS is finalizing its proposal to include imaging without contrast services in site-neutral payments. Specifically, CMS will apply the Physician Fee Schedule equivalent payment rate for any HCPCS codes assigned to the imaging without contrast ambulatory payment classifications (APCs) provided at an off-campus provider-based department. Rural sole community hospitals will be exempt from this policy.
  • ASC Covered Surgical Procedures and Ancillary Services Lists: CMS is finalizing its proposal to continue expanding the ASC covered procedures list (CPL) by adding 618 codes. The additions reflect codes that were removed from the IPO list or were recommended by stakeholders.
  • IPO List: CMS is continuing to phase out the IPO list by finalizing the removal of 637 services from the IPO list for CY 2027. These services span auditory, digestive, endocrine, female genital, hemic and lymphatic systems, integumentary, male genital, maternity care and delivery, mediastinum and diaphragm, respiratory, and urinary clinical families.
  • Payment for Software as a Medical Service (SaMS): CMS is finalizing its proposal to assign SaMS, or software-based technology used to diagnose and support clinical decision-making, to New Technology APCs as an interim step toward a broader payment policy. CMS also finalized its revision of the associated Medicare terminology from Software as a Service (SaaS) to SaMS.
  • CMS is also finalizing payment for a small number of SaMS analyses performed on laboratory tests that were previously paid under the under the Medicare Clinical Laboratory Fee Schedule (CLFS) to the OPPS by assigning the codes to New Technology APCs that align with current CY 2026 CLFS payment rates.

• Quality Programs

  • Hospital Outpatient Quality Reporting (OQR) and ASC Quality Reporting Programs
    • CMS is finalizing its proposal to remove the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure from the Hospital Outpatient and ASC Quality Reporting Programs beginning with the CY 2027 reporting period.

• Other Updates

  • Prior Authorization for Select Botulinum Toxin Injection Codes: CMS is finalizing its proposal to require prior authorization for eight additional botulinum toxin injection codes for dates of service on or after July 1, 2027. CMS notes that this policy is aimed at ensuring care is medically necessary while protecting from unnecessary increases in volume and improper payments.

---

---