Proposed Rule Highlights and Potential Implications

• Issued on July 2, 2026, the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) proposed rule includes notable reductions in 340B drug reimbursement and inclusion of imaging services for site-neutral payments. CMS is also continuing to phase out the inpatient only (IPO) list through the proposed removal of 637 additional services.
  
  These proposed changes align with the Trump administration’s stated priorities to reduce Medicare spending, expand site-neutral payments, and promote use of lower-cost care settings.
• Of note, earlier 340B reimbursement initiatives have encountered significant legal opposition, suggesting that this proposed rule is likely to face comparable legal scrutiny. Comments on the proposed rule are due on August 31, 2026.

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Additional Details

Payment Updates

• OPPS

  • For CY 2027, CMS is proposing an increase to OPPS payment rates of 2.4% based on a projected hospital market basket increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment.
  • CMS estimates that total payments to OPPS providers will increase by approximately $9.5 billion compared to estimated CY 2026 OPPS payments, though the experience by hospital would vary considerably, most significantly for those with a material volume of 340B-eligible drugs.
  • 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 proposed 340B changes, payments for services at hospitals subject to the 340B remedy offset will be reduced by 3.0 percentage points.

• ASC

  • For CY 2027, CMS is proposing an increase to ASC payment rates of 2.4% based on a projected hospital market basket increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment.
  • CMS estimates that total payments to ASCs will increase by approximately $520 million compared to estimated CY 2026 OPPS payments.

• 340B Drug Program

  • For CY 2027, CMS is proposing to reduce reimbursement for 340B-acquired drugs from the current 106% of average sales price (ASP) to ASP minus 33.4%
    • CMS notes that this proposal 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 proposal would reduce original Medicare drug payment by $4.55 billion and beneficiary drug payments by $1.15 billion in the first year.
    • If finalized, statute would require that this policy be implemented in a budget-neutral manner. As such, CMS is proposing to offset by increasing OPPS payments for non-drug services by an equivalent amount, which is estimated to be an 8.44% increase to non-drug service payments.
  • CMS is also proposing to adjust 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 proposing to increase the reduction applied to the OPPS conversion factor for applicable hospitals from 0.5% to 3%. This 3% reduction would remain in effect until the estimated payment reduction reaches $7.8 billion, which CMS estimates will occur in CY 2029.

• Coverage Updates

  • Site-Neutral Payments: CMS is proposing to include imaging without contrast services in site-neutral payments. Specifically, CMS is proposing to 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. CMS is proposing to exempt rural sole community hospitals from this proposed policy.
  • ASC Covered Surgical Procedures and Ancillary Services Lists: CMS is proposing to continue to expand the ASC covered procedures list (CPL) by adding 618 codes. The proposed additions reflect codes that are proposed for removal from the IPO list or were recommended for addition by stakeholders.
  • IPO List: CMS is continuing to phase out the IPO list by proposing 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.

• Quality Programs

  • Hospital Outpatient Quality Reporting (OQR) Program
    • CMS is proposing 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.
  • ASC Quality Reporting Program
    • CMS is proposing 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.
    • CMS is also soliciting information on potential stratification of the All-Cause Transfer/Admission measure.

• Other Updates

  • Request for Information (RFI) on Strengthening the Standardization and Comparability of Hospital Price Transparency (HPT) Data: CMS is seeking feedback on potential mechanisms to strengthen requirements around machine-readable files, including opportunities to increase pricing data standardization and the accuracy of reporting within free text fields. CMS notes a particular interest in comments regarding the reporting of contract mechanisms such as outlier payments, stop-loss provisions, rate tiering, and carve-outs.
  • Prior Authorization for Select Botulinum Toxin Injection Codes: CMS is proposing 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 proposal is aimed at ensuring care is medically necessary while protecting from unnecessary increases in volume and improper payments.

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