Author: Knicole C. Emanuel Esq. | November 12, 2026
The Centers for Medicare & Medicaid Services (CMS) finalized its Outpatient Prospective Payment System (OPPS) rule for the 2027 calendar year (CY).
At first glance, hospitals get a raise. Look more closely, though, and the rule takes back a large share with the other hand.
We’ll start with the good news.
Hospitals that meet quality reporting requirements will see a 2.3-percent payment update. That figure is a projected market basket increase of 3.2 percent, minus a 0.9-percentage-point productivity adjustment.
Overall, Medicare outpatient payments are projected to climb by $11 billion, to $114.4 billion. Ambulatory Surgical Centers (ASCs) get the same 2.3-percent bump, which comes to about $560 million more, for a total of $9.9 billion.
Now, the rest of the story.
340B: Round Two
Today, 340B hospitals are paid average sales price plus 6 percent for separately payable drugs. Under the Final Rule, that becomes average sales price minus 28 percent. That is a little gentler than the minus 33.4 percent CMS proposed, but it is still a steep drop. CMS expects to cut Medicare spending by $4.35 billion and beneficiary drug costs by $1.1 billion next year.
Around 2021, CMS cut 340B payments to average sales price minus 22.5 percent. In 2022, a unanimous U.S. Supreme Court struck those cuts down. The Court held that CMS could not set different rates for one group of hospitals without first conducting the acquisition cost survey the statute requires. That ruling cost the agency roughly $9 billion in repayments.
This time, CMS says it performed the survey, and that it found “substantial disparities” between what hospitals pay for 340B drugs and what they pay for other drugs. Critics are not convinced. The Association of American Medical Colleges calls it a “hasty and faulty survey” that fails to follow “the clear requirements of the Medicare statute.” Whether this version holds up in court is the question to watch.
There is also a clawback. Under budget neutrality rules, the original 340B cuts raised payments for non-drug services, and CMS is still recovering $7.8 billion of those increases. The Final Rule raises the annual offset from 0.5 percent to 2 percent, which puts full recovery on track for 2031. Hospitals are effectively paying for the last fight while the next one begins.
Site Neutrality and the Inpatient-Only List
Also, site-neutral payments are expanding to imaging without contrast, including certain bone density scans, X-rays, ultrasounds, CT scans, and MRIs performed in off-campus, provider-based departments. CMS projects savings of $260 million in 2027 and more than $9 billion over 10 years. Rural sole community hospitals are exempt.
Third, the phase-out of the Inpatient-Only List continues. CMS is removing 637 more services in 2027, and several hundred procedures are joining the ASC covered list. The direction is clear: care, and dollars, are moving out of the hospital.
Two Very Different Stories
CMS Administrator Dr. Mehmet Oz describes the rule as “right-sizing payments and rooting out waste.” The American Hospital Association (AHA) hears something else. It says the rule “does not adequately take into account the financial challenges facing hospitals today,” especially in rural and underserved communities. It also says outpatient departments treat “sicker and more complex” patients than independent practices do.
One Sleeper Provision
Finally, there is a provision compliance teams should not miss. Accrediting organizations with deeming authority may now assess the administrative Emergency Medical Treatment and Labor Act (EMTALA) requirements under 42 C.F.R. § 489.20. These include signage, the central emergency department log, five-year retention of transfer records, and on-call physician lists. Enforcement of the substantive patient protections in § 489.24 stays with CMS and the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). In practice, your next accreditation survey may include an EMTALA paperwork check.
The Bottom Line
The bottom line is a modest raise, a sizable 340B cut, a faster clawback, and a probable return to court. Hospitals should model the net effect now and keep their litigation options open.
This article was originally published on RACmonitor.