CMS issued its calendar year (CY) 2027 Proposed Rule for the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System ahead of the Fourth of July holiday. If finalized, most policies will take effect on January 1, 2027. Comments are due to CMS by August 31, 2026.
Key provisions include:
- A 2.4% overall OPPS and ASC payment update for providers meeting applicable quality reporting requirements;
- A proposed reduction in Medicare reimbursement for 340B-acquired drugs to ASP minus 33.4%, which CMS estimates would generate a budget neutrality increase of 8.44% for non-drug OPPS services for all hospitals;
- A proposed increase in the prior 340B remedy offset from 0.5% to 3% for applicable hospitals;
- Expansion of site-neutral payment to certain imaging without contrast services furnished in excepted off-campus provider-based departments;
- Proposed regulations implementing the mandatory off-campus HOPD NPI and provider-based attestation requirements under Section 6225 of the Consolidated Appropriations Act, 2026;
- Continued implementation of the phased elimination of the Inpatient Only List and corresponding expansion of the ASC Covered Procedures List;
- Expansion of the hospital outpatient department prior authorization process to additional Botulinum Toxin Injection codes;
- Notice of available Direct GME and Indirect Medical Education slots resulting from the closure of Louis A. Weiss Memorial Hospital in Chicago; and
- Requests for information on hospital price transparency data standardization and potential separate IPPS payment for domestic procurement of PPE and essential medicines.
As a result of the proposed policies, CMS estimates payment changes for various hospital categories as follows:
- Urban hospitals: 1.9% increase
- Rural hospitals: 6.4% increase
- Non-teaching hospitals: 6.4% increase
- Minor teaching hospitals: 3.9% increase
- Major teaching hospitals: 2.4% decrease
- Voluntary hospitals: 2.0% increase
- Government hospitals: 0.8% decrease
- Proprietary hospitals: 10.6% increase
These aggregate estimates are highly dependent on provider-specific service mix, 340B participation, teaching status, ownership, wage index, and exposure to the proposed site-neutral and 340B remedy policies.
Advis provides more detail on each of the key provisions below. Should you have questions or would like assistance evaluating impacts to your organization, please contact your Advis representative or our office at (708) 478-7030.
General Payment Updates
CMS proposes a 2.4% update to OPPS and ASC payment rates for CY 2027 for hospitals and ASCs meeting applicable quality reporting requirements. The update is based on a proposed hospital market basket increase of 3.2%, reduced by a proposed productivity adjustment of 0.8 percentage points. Hospitals that fail to meet Hospital Outpatient Quality Reporting requirements would continue to be subject to the statutory 2.0 percentage point reduction.
For ASCs, CMS proposes to extend use of the hospital market basket update (2.4%) for one additional year, through CY 2027. CMS estimates total ASC payments of approximately $9.9 billion, an increase of approximately $520 million compared to estimated CY 2026 Medicare payments.
340B-Acquired Drugs Reimbursement Cuts
CMS proposes to reduce payment for 340B-acquired drugs from the current general OPPS drug payment methodology of ASP plus 6% to ASP minus 33.4% beginning in CY 2027. This represents approximately a 37% reduction in reimbursement. CMS states that this proposal is based on the results of the Medicare OPPS drug acquisition cost survey conducted from January 1, 2026 through April 7, 2026.
CMS proposes that the ASP minus 33.4% rate would apply to separately payable drugs, biologicals, biosimilars, and radiopharmaceuticals acquired under the 340B Program. CMS also proposes corresponding payment methodologies for 340B drugs where ASP is unavailable, including WAC minus 33.4% where WAC is available.
Because this policy must remain budget-neutral, the $4.55 billion cut to 340B facilities is being redistributed back into the broader OPPS conversion factor. This creates an 8.44% increase for non-drug service payments.
340B Remedy Offset
Compounding the financial pressure on historical 340B participants, CMS proposes accelerating the timeline to claw back the $7.8 billion associated with the prior 340B remedy (see here for a summary of the prior changes).
CMS previously finalized a 0.5% annual reduction to the OPPS conversion factor for non-drug items and services for applicable hospitals, excluding hospitals that enrolled in Medicare after January 1, 2018, until CMS recoups the estimated $7.8 billion in increased non-drug payments associated with the prior 340B remedy. For CY 2027, CMS proposes to increase that annual reduction from 0.5% to 3%.
For 340B hospitals subject to both policies, the proposed rule therefore includes two separate 340B-related impacts: reduced reimbursement for 340B-acquired drugs going forward and an accelerated offset to non-drug payments related to the prior 340B remedy.
Site Neutral Payments for Imaging without Contrast in Excepted Off-campus HOPDs
CMS proposes to extend site-neutral, Physician Fee Schedule-equivalent payment to certain imaging without contrast services furnished at excepted off-campus provider-based departments. The proposal would apply to HCPCS codes assigned to APCs 5521 through 5524 and composite APCs 8004, 8005, and 8007, including ultrasound, CT/CTA without contrast, and MRI/MRA without contrast composite APCs. Rural Sole Community Hospitals would be exempt.
This proposal continues CMS’s use of its statutory authority to control what it views as unnecessary increases in the volume of covered outpatient department services. Consistent with prior site-neutral policies for clinic visits and drug administration services, CMS proposes to implement this imaging policy in a non-budget neutral manner, and to reimburse hospitals at 40% of the OPPS rate.
Mandatory Off-Campus HOPD NPI and Attestation Requirements
CMS also proposes regulations implementing Section 6225 of the Consolidated Appropriations Act, 2026. Beginning January 1, 2028, OPPS payment for off-campus hospital outpatient departments would be conditioned on each off-campus HOPD billing under a separate NPI and the main provider submitting a provider-based attestation confirming compliance with 42 C.F.R. § 413.65.
Advis has summarized the new requirements the proposed HOPD NPI and attestation processes separately here. Key operational takeaways include CMS’s proposed centralized electronic attestation process, the need to obtain NPIs and update PECOS before filing, automated validation and risk-based review, potential targeted documentation requests, remote audits and site visits, and a proposed 60-day response window for requested documentation. CMS also indicates that additional operational guidance will address specific review criteria, validation protocols, documentation expectations, and sampling methodology.
Inpatient Only List and ASC Covered Procedures List
CMS continues implementation of the phased elimination of the Inpatient Only List. For CY 2027, CMS proposes to remove 637 services from the IPO List across 11 clinical families, including auditory, digestive, endocrine, respiratory, urinary, and other procedure families.
CMS also proposes to add 618 codes to the ASC Covered Procedures List, including codes recommended by stakeholders and codes proposed for removal from the IPO List. These changes continue CMS’s broader movement of surgical procedures into outpatient and ASC settings, although providers should continue to evaluate patient selection, clinical appropriateness, site-of-service rules, and payer-specific coverage requirements before shifting procedures.
Hospital Price Transparency
CMS’s is requesting information regarding potential approaches to improve comparability and standardization of the HPT information reported in machine-readable files (MRFs) and consumer-friendly displays. In the proposed rule, CMS is explicitly questioning whether to eliminate the popular “deemed compliance” workaround for internet-based price estimators. This would largely impact hospitals’ current consumer-facing pricing tools.
Device Pass-Through Payment Applications
Of the 19 complete applications submitted for high-cost device pass-through status, 6 were withdrawn. For the remaining 13, CMS proposes to approve 7 applications and deny 6 applications. Reimbursement professionals should review the finalized list closely, as denial shifts the entire cost burden of these specialized devices into standard, packaged APC payments.
Direct and Indirect Graduate Medical Education
CMS announces the closure of Louis A. Weiss Memorial Hospital in Chicago, Illinois, and initiates Round 29 of the application and selection process to redistribute the hospital’s Direct GME and IME FTE resident caps under Section 5506. CMS identifies available caps of approximately 85.824 IME FTEs and 66.795 Direct GME FTEs.
Hospitals eligible under the Section 5506 redistribution criteria, particularly hospitals located in the same CBSA, contiguous CBSAs, or the same state, should evaluate whether to apply for available slots.
Hospital Outpatient Quality Reporting Program
CMS proposes limited changes to the Hospital OQR, ASCQR, and REHQR Programs. Most notably, CMS proposes to remove the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure from both the Hospital OQR and ASCQR Programs. CMS also proposes updates to Hospital OQR validation and reconsideration procedures and seeks comment on potential future measure concepts. CMS does not propose changes to the Rural Emergency Hospital Quality Reporting Program for CY 2027.
Hospital Outpatient Prior Authorization Expansion
Effective for dates of service on or after July 1, 2027, CMS proposes a mandated prior authorization for Botulinum Toxin Injection codes in hospital outpatient settings. CMS states that this expansion is driven by a 42.8% surge in utilization.
Partial Hospitalization and Intensive Outpatient Programs
CMS is not proposing any changes to payment rates for the Partial Hospitalization Program (PHP) and Intensive Outpatient Program (IOP), maintaining the exact structural methodology finalized in the CY 2026 rule.
Domestic Procurement of PPE and Essential Medicines
CMS is soliciting comments on potential approaches for separate IPPS payment related to domestic procurement of personal protective equipment and essential medicines. CMS is also seeking feedback on a potential “Secure American Medical Supplies” designation and possible structural quality measure concepts tied to domestic procurement attestations.
Although this is not a proposed OPPS payment change for CY 2027, hospitals should monitor the request because CMS appears to be continuing to explore payment and quality reporting levers tied to domestic supply chain resilience.
Advis Takeaway
The CY 2027 OPPS and ASC Proposed Rule includes several technical payment and compliance proposals with potentially significant provider-specific impacts. The most significant financial issues for many hospital systems will be the proposed 340B drug payment reduction, the accelerated 340B remedy offset, the non-budget neutral site-neutral expansion for imaging without contrast, and the continued migration of procedures from inpatient-only status to outpatient and ASC settings.
Hospitals should model the combined impact of these proposals by provider type, site of service, 340B participation, service line, and off-campus HOPD location. Advis is available to assist providers in evaluating financial impacts, preparing comments, reviewing HOPD NPI and attestation readiness, and assessing operational changes that may be needed if these proposals are finalized.
Published July 7, 2026
