The Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule. The rule increases OPPS and ASC payment rates by 2.3%, slightly below the 2.4% proposed increase, while advancing policies related to 340B drug reimbursement, site-neutral payments, outpatient surgical procedures, Provider-Based Departments (PBDs) and quality reporting. Notably, CMS modified two significant 340B proposals in response to stakeholder feedback, reducing the proposed payment cut for 340B-acquired drugs and adopting a smaller reduction to the OPPS conversion factor associated with the Agency’s ongoing 340B remedy recoupment.

Medicare Payment Updates and 340B Reimbursement

For CY 2027, CMS finalized a 2.3% increase in OPPS payment rates for hospitals meeting applicable quality reporting requirements, reflecting a 3.2% hospital market basket increase reduced by a 0.9% productivity adjustment. This is slightly lower than the proposed 2.4% increase. CMS estimates total OPPS payments will reach approximately $114.4 billion in 2027, an increase of approximately $11 billion compared to estimated 2026 payments when accounting for enrollment, utilization, case mix and beneficiary cost sharing. ASC payment rates will also increase by 2.3%, with total ASC payments projected to reach approximately $9.9 billion.

Among the most consequential changes from the proposed rule are revisions to Medicare reimbursement for drugs acquired through the 340B Drug Pricing Program. CMS finalized a payment rate of average sales price (ASP) minus 28% for most separately payable 340B-acquired drugs, rather than the proposed ASP minus 33.4%. The policy is based on CMS’ 2026 hospital drug acquisition-cost survey and represents a reduction from the current ASP plus 6% reimbursement methodology. The Agency also reduced the corresponding budget-neutral increase in payments for non-drug outpatient services from the proposed 8.44% to 7.50%. These adjustments redistribute payments within the OPPS, meaning that the budget neutral adjustment could result in increased payments for some hospitals.

CMS also modified its proposal to accelerate recoupment of payments associated with the Agency’s previous 340B reimbursement reductions between 2018 and 2022. Under the existing remedy, CMS had been reducing the OPPS conversion factor for non-drug services by 0.5% annually to recover approximately $7.8 billion in additional payments made during that period. Although CMS proposed increasing the annual reduction to 3% beginning in 2027, the final rule establishes a 2% annual reduction for affected hospitals. Hospitals that enrolled in Medicare after January 1, 2018, remain exempt from this recoupment adjustment. The change accelerates the recovery schedule while moderating the payment reduction compared with the proposed rule.

Expansion of Site-Neutral Payments

CMS also finalized its proposal to expand site-neutral payments to certain imaging services furnished in excepted off-campus PBDs. Beginning in 2027, Medicare will reimburse specified imaging services without contrast at the Physician Fee Schedule-equivalent rate rather than the higher OPPS rate. The policy applies to imaging services assigned to Ambulatory Payment Classifications (APCs) 5521–5524 and composite APCs covering ultrasound, CT/CTA without contrast, and MRI/MRA without contrast. Rural sole community hospitals remain exempt.

Inpatient Only List and ASC Changes

CMS also finalized the second phase of its three-year plan to eliminate the Medicare Inpatient Only (IPO) list by 2028. Consistent with the proposed rule, CMS will remove 637 procedures from the IPO list in 2027 across 11 clinical families, including digestive, endocrine, respiratory, urinary and maternity-related services.

The Agency also finalized the proposed addition of 618 procedures to the ASC Covered Procedures List. Removing procedures from the IPO list doesn’t require that they be performed in outpatient settings; rather, it allows Medicare reimbursement in those settings when clinically appropriate. These changes expand the range of services eligible for outpatient reimbursement and continue the shift toward greater flexibility in where surgical procedures may be furnished.

Provider-Based Department Requirements

CMS finalized new billing and attestation requirements for off-campus PBDs to implement provisions of the Consolidated Appropriations Act, 2026. Beginning January 1, 2028, affected departments must bill under a separate National Provider Identifier (NPI), and their main hospital providers must submit attestations demonstrating compliance with Medicare provider-based requirements. These requirements apply to departments receiving either standard OPPS reimbursement or site-neutral payments.

The final rule largely retains the proposed requirements but includes modifications and clarifications responding to stakeholder concerns. CMS clarified how the attestation requirements apply when a provider has submitted its attestation but has not yet received a provider-based status determination. The Agency also clarified exclusions for certain facilities, including critical access hospitals, and described plans to streamline the attestation process through a standardized electronic submission system. Departments with previous affirmative provider-based determinations will still be required to submit new attestations, although CMS says it intends to provide a streamlined process. Additional guidance on documentation and subsequent attestation requirements is expected. AHPA will be monitoring these changes closely and provide updates in future communications.

Prior Authorization, EMTALA, and Quality Reporting

CMS finalized its proposal to expand the hospital outpatient prior authorization program to additional botulinum toxin injection services beginning July 1, 2027. The expansion builds on existing prior authorization requirements for certain outpatient procedures and reflects CMS’ concerns regarding increased utilization of these services.

The final rule also adopts the expansion of accrediting organizations’ authority to assess compliance with certain administrative requirements under the Emergency Medical Treatment and Labor Act (EMTALA) during routine accreditation surveys. These requirements include emergency department signage, central emergency department logs, transfer record retention and on-call physician lists. Importantly, the change doesn’t extend accrediting organizations’ authority to enforce substantive EMTALA requirements, including medical screening examinations, stabilizing treatment and appropriate transfers; these remain subject to existing federal oversight.

For outpatient quality reporting, CMS finalized the removal of the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure from both the Hospital Outpatient Quality Reporting and ASC Quality Reporting programs, as proposed. The removal begins with the CY 2027 reporting period and affects the CY 2029 payment determination. CMS will retain the Facility 7-Day Risk-Standardized Hospital Visit Rate After Outpatient Colonoscopy measure, which focuses on patient outcomes rather than documentation of follow-up intervals. The final rule also updates Hospital Outpatient Quality Reporting validation and reconsideration procedures, including requirements related to electronic clinical quality measures. No changes were finalized for the Rural Emergency Hospital Quality Reporting Program.

Hospital Price Transparency and Other Policy Considerations

The final rule addresses several areas in which CMS solicited stakeholder feedback through requests for information rather than proposing immediate regulatory changes. These include potential improvements to hospital price transparency requirements (particularly standardizing machine-readable files), improving consistency between published pricing information and consumer-facing price estimator tools, and clarifying how ancillary and bundled services are reflected in displayed prices.

A more detailed summary of the final rule will be shared soon. In the meantime, here’s CMS fact sheet on the rule.

Topics: CMS, Payment Policy: Site Neutral Payments, Prescription Drugs: 340B