CMS’s Proposed 2027 Outpatient Payment Rule: A Comprehensive Overview
The Centers for Medicare and Medicaid Services (CMS) recently unveiled its proposed 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment Systems rule. This proposal includes a significant revision to 340B drug payment rates and underscores a continued emphasis on facilitating cost-effective care outside of traditional hospital settings.
Proposed Payment Increases and Adjustments
The proposed rule outlines a net rate increase of 2.4% for outpatient services and ASCs. This increase represents a projected 3.2% rise in the hospital basket, offset by a productivity adjustment of 0.8 percentage points. When combined with other agency policies, the overall payment increase is expected to be 1.9%, or $1.8 billion, over the 2026 calendar year, excluding changes in enrollment, utilization, and case mix, according to CMS’s calculations.
Controversy Surrounding 340B Drug Payment Changes
The proposed changes have sparked immediate opposition from hospital industry groups. The proposal includes a 33.4% reduction in 340B reimbursements below the average selling price, which is balanced by an 8.44% increase in non-drug benefit payments. The rule also proposes increasing the annual OPPS conversion factor for non-drug items and services from 0.5% to 3%, accelerating CMS’s efforts to rectify a prior $7.8 billion restitution to 340B hospitals after an unlawful rate reduction.
Ashley Thompson, Senior Vice President of Public Policy Analysis and Development at the American Hospital Association, expressed concern about these changes during challenging times for hospitals dealing with more complex and uncompensated care cases. She emphasized the need for payment policies that support sustainable improvements in healthcare delivery.
CMS Administrator Mehmet Oz, MD, defended the proposed changes, asserting that they aim to ensure Medicare pays “for the right care, in the right setting, at the right time.” He highlighted the proposal’s focus on aligning drug payments with actual acquisition costs and eliminating unnecessary cost disparities across care locations.
Impact on Medicare Drug Payments and 340B Providers
According to CMS, the 340B rate reduction is informed by a survey of hospital drug purchasing costs, revealing significant differences between costs within and outside the rebate program. The reduction is expected to decrease Medicare drug payments by nearly $4.6 billion and beneficiary payments by $1.2 billion in the first year. However, the agency has acknowledged that for most 340B providers, decreased drug payments will outweigh increased payments for non-drug services.
Maureen Testoni, President and CEO of 340B Health, criticized the reimbursement cut, arguing that it fails to meet the government’s spending and affordability objectives. Instead, she contends, the proposal could lead to higher payments for non-drug Part B services, affecting seniors negatively.
Site-Neutral Payment Policies and Outpatient Care Expansion
The proposal also reinforces CMS’s commitment to expanding outpatient care options. The agency plans to continue phasing out the inpatient-only list, allowing more procedures to be reimbursed in outpatient settings or ASCs. CMS proposes eliminating 638 additional services from this list, offering patients more choices for outpatient surgical options while maintaining safety standards.
CMS is also proposing to apply physician fee schedule payment rates for certain imaging services to off-campus provider departments, a move aimed at curbing unnecessary outpatient service volume increases. This change is expected to reduce Medicare Part B spending by $260 million and beneficiary cost-sharing by $70 million in the first year.
Reactions and Future Steps
The proposal has faced considerable backlash from healthcare associations, who argue that it threatens access to care in underserved communities. AHA’s Ashley Thompson and America’s Essential Hospitals’ Jennifer DeCubellis both expressed concerns about the impact on hospital funding and service provision.
CMS is accepting public comments on the proposed rule for 60 days, with the final rule typically issued in late fall. Stakeholders and the public are encouraged to provide input to shape the final decisions.
For more details on the proposal, you can access the full document Here.
“`
