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 (CMS-1850-FC), finalizing significant Medicare outpatient reimbursement changes beginning January 1, 2027.
Among the most consequential provisions, CMS finalized substantial payment reductions for 340B-acquired drugs, accelerated the existing 340B remedy offset, and expanded site-neutral reimbursement to certain imaging services performed at grandfathered off-campus hospital outpatient departments (HOPDs).
Although CMS moderated several of its more significant proposed payment reductions following public comments, the final policies will have material and varying financial implications for hospitals and health systems nationwide.
CMS also finalized the mandatory separate National Provider Identifier (NPI) and provider-based attestation requirements for off-campus HOPDs under Section 6225 of the Consolidated Appropriations Act, 2026. These requirements take effect January 1, 2028, and are addressed in a separate Advis regulatory update: CMS Finalizes Mandatory Off-Campus HOPD Attestation and NPI Requirements: Key Clarifications and Implementation Timeline.
Key Provisions of the Final Rule
- OPPS and ASC Payment Updates: CMS finalized a 2.3% payment rate increase for hospitals and ASCs meeting applicable quality reporting requirements.
- 340B Drug Reimbursement: Beginning January 1, 2027, applicable 340B-acquired drugs will be reimbursed at Average Sales Price (ASP) minus 28%, rather than the proposed ASP minus 33.4%.
- 340B Budget-Neutrality Adjustment: CMS finalized a corresponding estimated 7.50% increase to non-drug OPPS payments to offset the reductions in 340B drug reimbursement.
- 340B Remedy Offset: CMS increased the annual non-drug payment reduction from 0.5% to 2%, rather than the proposed 3%, to accelerate recovery of prior 340B remedy payments.
- Site-Neutral Imaging Payments: CMS finalized reduced reimbursement for certain imaging services without contrast furnished at excepted off-campus HOPDs.
- Inpatient-Only List: CMS finalized the removal of 637 additional procedures from the Medicare inpatient-only list.
- ASC Covered Procedures List: CMS expanded the list of Medicare-covered ASC procedures by 618 codes.
- Prior Authorization: CMS expanded hospital outpatient prior authorization requirements to eight additional botulinum toxin injection codes, beginning July 1, 2027.
340B-Acquired Drug Reimbursement Reductions
CMS finalized its proposal to reduce Medicare reimbursement for applicable 340B-acquired drugs, effective January 1, 2027, but adopted a less significant reduction than originally proposed.
Under the finalized policy, applicable drugs purchased through the 340B Program will be reimbursed at ASP minus 28%, compared to the current general methodology of ASP plus 6%.
CMS initially proposed reimbursement at ASP minus 33.4%. Following consideration of public comments questioning the underlying acquisition-cost data, CMS instead finalized its alternative ASP minus 28% methodology.
The reduction generally applies to separately payable 340B-acquired drugs furnished by affected hospitals, including applicable drugs furnished at on-campus and off-campus hospital outpatient departments. Rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals remain exempt.
Budget-Neutrality Adjustment
To offset the reduction in 340B drug reimbursement, CMS finalized an estimated 7.50% increase to non-drug OPPS payments, compared to the proposed 8.44% adjustment.
Although this adjustment is intended to maintain aggregate budget neutrality, the financial impacts will vary substantially based on hospital-specific drug utilization, non-drug service volumes, and participation in the 340B Program.
Hospitals with significant 340B drug utilization may experience material reimbursement reductions notwithstanding the corresponding increase in non-drug payments.
Acceleration of the 340B Remedy Offset
Separately, CMS finalized an accelerated recoupment methodology associated with its prior 340B payment remedy.
Beginning January 1, 2027, CMS will increase the annual non-drug OPPS payment reduction from 0.5% to 2%, rather than the proposed 3%. This reduction is separate from the new 340B drug payment policy and is intended to recoup approximately $7.769 billion in additional payments previously distributed through the 340B remedy process. The offset generally applies to hospitals enrolled in Medicare before January 1, 2018, rather than only to hospitals participating in the 340B Program.
CMS anticipates completing the remedy offset in approximately CY 2031.
Billing Considerations
CMS also finalized related 340B billing requirements, including continued use of modifier JG for applicable 340B-acquired drugs, modifier TB for specified informational reporting, and the new modifier ND for separately payable drugs not acquired through the 340B Program.
Advis Observations:
Hospitals should evaluate the combined impact of the new 340B reimbursement reduction, the corresponding non-drug budget-neutrality adjustment, and the accelerated remedy offset using actual Medicare outpatient claims. Advis has previously identified meaningful discrepancies between CMS’s published hospital-specific impact estimates and financial modeling based on actual hospital utilization.
Importantly, orphan-designated drugs that are not acquired through the 340B Program will not be subject to the ASP minus 28% reduction and will instead be identified using the new ND modifier. This distinction presents a potential opportunity for qualifying hospitals to mitigate the financial impact of the new reimbursement methodology.
Specifically, hospitals that qualify for Rural Referral Center (RRC) designation may consider transitioning their 340B enrollment classification from Disproportionate Share Hospital (DSH) to RRC status. Unlike DSH hospitals, RRCs are subject to the statutory 340B orphan-drug exclusion. Accordingly, orphan drugs would generally remain reimbursable at ASP plus 6%, while hospitals may continue to access 340B-like discounted pricing for these drugs when voluntarily offered by manufacturers.
Although such a transition requires careful consideration, Advis has evaluated this strategy for qualifying hospitals and identified circumstances in which an RRC transition can generate a favorable financial outcome. Advis can assist hospitals with evaluating eligibility and modeling the anticipated financial implications of alternative 340B participation classifications.
Expansion of Site-Neutral Payments for Off-Campus Imaging
CMS finalized its proposal to expand site-neutral reimbursement to certain imaging without contrast services furnished at excepted, or grandfathered, off-campus HOPDs beginning January 1, 2027.
The policy applies to certain services assigned to imaging APCs 5521–5524 and applicable composite imaging APCs 8004, 8005, and 8007.
Under the finalized policy, affected services will be reimbursed at a PFS-equivalent rate (40% of OPPS) rather than the full OPPS payment rate, notwithstanding the departments’ grandfathered status under Section 603 of the Bipartisan Budget Act of 2015.
CMS retained an exemption for rural sole community hospitals but did not extend comparable exemptions to urban safety-net, teaching, high-Medicaid, or other essential-access hospitals.
Advis Observations:
Health systems should assess the impact at the individual imaging department level, particularly for off-campus CT, MRI, ultrasound, and other imaging facilities with significant Medicare utilization.
Inpatient-Only List and ASC Procedure Expansion
CMS finalized the removal of 637 additional procedures from the Medicare inpatient-only list as part of its continuing phaseout of the list.
Removal from the inpatient-only list does not mandate outpatient performance. Rather, the appropriate setting will continue to depend on clinical circumstances, medical necessity, and physician judgment.
CMS also finalized the addition of 618 procedures to the ASC Covered Procedures List, further expanding the range of surgical services eligible for Medicare reimbursement in the freestanding ASC setting.
These changes may create additional opportunities for hospitals and health systems to reevaluate surgical site-of-service strategies, service-line operations, and relationships with affiliated ASCs.
Additional Regulatory Updates
CMS finalized the expansion of its hospital outpatient prior authorization program to eight additional botulinum toxin injection codes, effective July 1, 2027.
The final rule also includes revisions to hospital outpatient and ASC quality reporting programs, as well as additional changes to Medicare outpatient payment policies.
Next Steps for Hospitals and Health Systems
Given the January 1, 2027 implementation date for most payment provisions, Advis recommends that hospitals and health systems:
- Model the combined financial impact of the 340B payment reduction, budget-neutrality adjustment, and remedy offset.
- Evaluate site-neutral imaging reimbursement exposure at the individual off-campus department level.
- Coordinate pharmacy and revenue cycle preparations for the updated 340B billing requirements.
- Assess strategic and operational opportunities associated with changes to the inpatient-only and ASC procedure lists.
Advis is actively assisting hospitals and health systems nationwide with reimbursement modeling, 340B analytics, and outpatient site-of-service assessments.
We will continue monitoring additional CMS guidance and the operational implications of the CY 2027 OPPS/ASC Final Rule.
Source: CMS CY 2027 OPPS/ASC Final Rule (CMS-1850-FC) – https://public-inspection.federalregister.gov/2026-22739.pdf
Related Advis Publications:
- CY 2027 OPPS/ASC Proposed Rule – https://advis.com/regulatory-updates/cms-cy-2027-opps-asc-proposed-rule/
- CY 2027 OPPS: 340B Payment Cuts – https://advis.com/regulatory-updates/cy-2027-opps-340b-payment-cuts/
Published November 5, 2026