What to Know About CMS’ New Proposed Outpatient Payment Rule

CMS released its proposed 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center rule last week. It proposes a modest payment bump alongside several deep cuts.

Below are four of the most notable changes in CMS’ new rule.

—The base payment update is 2.4%. CMS based this increase on a projected hospital market basket increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment. ASCs meeting the same requirements would get an identical 2.4% bump.

—340B hospitals face a steep drug payment cut. CMS’ proposal seeks to significantly decrease the amount it pays hospitals for 340B drugs. Right now, CMS pays hospitals what they paid for the drug plus 6% — but under the proposed rule, hospitals would instead be paid 33.4% less than what they paid, based on a survey of hospitals’ actual drug costs. The agency says the change would save Medicare patients $1.15 billion and taxpayers $4.55 billion.

—Off-campus imaging is the newest target for site-neutral payment. A year after implementing site-neutral payment for drug administration services, CMS is trying to do the same for imaging-without-contrast services, including most MRIs. The proposed rule seeks to reimburse off-campus hospital outpatient departments at the physician payment rate instead. CMS estimates the change would save $260 million total in 2027: $190 million in Medicare Part B spending, $70 million in lower beneficiary premiums and another $70 million in reduced beneficiary cost-sharing.

—Roughly half the remaining inpatient-only list would move to outpatient. CMS’ new rule would continue shifting services off the inpatient-only list and onto the ASC-covered procedure list — as well as adjust payment groupings and add a provision to pay off-campus imaging at the physician fee schedule rate. CMS proposed removing about half of the remaining IPO services, and it plans to remove the cardiovascular family of services specifically in 2028.

Provider groups are reacting negatively to CMS’ proposal, arguing that the cuts would push many hospitals further into financial anguish.

Ashley Thompson, senior vice president of public policy analysis and development at the American Hospital Association, said that the changes would strain already-stressed hospitals and jeopardize patients’ access to care.

“These proposals come at a particularly difficult time, as hospitals are caring for more and sicker patients while facing upticks in uncompensated care due to additional uninsured patients. Payment policies should recognize, rather than exacerbate, these pressures and protect access to comprehensive patient care and support long-term, sustainable improvements to the healthcare system,” Thompson said in a statement.

John Knapp, vice president of advocacy at Premier, agreed, saying that between the site-neutral expansion and the 340B cuts, many hospitals would end up worse off despite the base rate increase.

“The 2.4% update proposed in this rule again falls short of what is needed to reflect the true costs of providing care. Furthermore, other proposals, such as a further expansion of Medicare site‑neutral payment cuts, an acceleration of a 340B recoupment policy and a proposal to dramatically reduce 340B payments, will effectively move the payment update into negative territory for many hospitals. Premier cautions against CMS pursuing these policies which fail to recognize the rising costs and operation realities hospitals face,” he stated.

Photo: Juan Moyano, Getty Images