CMS proposes increases to Medicare hospital outpatient department payment rates, site-neutral and 340B changes

The Centers for Medicare & Medicaid Services July 2 issued a proposed rule that would increase Medicare hospital outpatient prospective payment system rates by a net 2.4% in calendar year 2027 compared to 2026. This includes a proposed 3.2% market basket update, offset by a 0.8 percentage point cut for productivity.

In a statement shared with the media, Ashley Thompson, AHA senior vice president of public policy analysis and development, said, “America’s hospitals and health systems continue to operate under growing financial challenges that threaten their ability to provide care. At the same time, CMS’ proposed outpatient policies would further reduce resources available, including another insufficient reimbursement update, an excessive productivity adjustment, and additional payment reductions affecting key hospital services.”

In addition, CMS proposes to expand its site-neutral payment policy to imaging without contrast services furnished in grandfathered off-campus hospital outpatient departments, proposing a site-neutral rate of 40% of the outpatient PPS rate. The agency estimates this policy would cut outpatient PPS spending by $260 million in CY 2027.

“Compared with independent physician offices, hospital outpatient departments disproportionately care for patients with more complex health conditions, higher rates of disability, and those from rural or underserved communities. Payment policies should recognize these differences to avoid undermining access for the patients who rely most on hospital-based care,” said Thompson.

Further, based on the results of a drug acquisition cost survey fielded by CMS earlier this year, the agency proposes to cut payments for drugs acquired under the 340B program by nearly 40% from ASP plus 6% to ASP minus 33.4%. CMS estimates this reduction in payment will amount to $4.85 billion in CY 2027. The policy would be implemented in a budget-neutral manner by offsetting the decrease in 340B payments by increasing the conversion factor for payments to all outpatient PPS hospitals for non-drug services by 8.14%.

“This enormous cut will make drugs less affordable for America’s most vulnerable patients — many already struggling with higher insurance premiums, loss of healthcare coverage, and skyrocketing drug prices,” said Thompson.

CMS also proposes to accelerate 340B recoupment by reducing the outpatient PPS conversion factor further from 0.5% annually to 3% annually, allowing the agency to complete recoupment by CY 2029 instead of CY 2041. AHA said that by proposing to speed up its clawback, the agency “will punish 340B hospitals for CMS’ own error in implementing a policy that a unanimous Supreme Court held to be unlawful. … Today’s actions make one thing clear: HHS has chosen to make healthcare more expensive for patients in rural and other underserved communities. These proposals will undermine the ability of hospitals to maintain essential services and protect affordable access to care for those who depend on the 340B program.”

Among other proposals, CMS would remove additional services from the inpatient-only list; remove one measure from the Outpatient and ASC Quality Reporting Programs; authorize CMS-approved accrediting organizations to assess compliance with certain Emergency Medical Treatment and Labor Act administrative requirements; and require separate National Provider Identifiers in order to bill as an off-campus provider-based department.

CMS will accept comments on the proposed rule through Aug. 31.