CMS Releases CY 2027 OPPS Proposed Rule: Key Payment Changes Hospitals Need to Know
What’s happening
On July 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the proposed update to the Medicare hospital outpatient prospective payment system (OPPS) for calendar year (CY) 2027. The rule contains several proposed payment updates and policy changes of interest.
Of interest
For CY 2027, CMS is proposing changes to the following policies important to hospitals:
CMS proposes to expand site-neutral adjustments to include imaging services without contrast. Rural Sole Community Hospitals and CAHs, among other provider types, would not be subject to this change. If finalized, this change could substantially reduce Medicare payments for hospitals with off-campus provider-based imaging services subject to the policy change.
CMS proposes to pay for 340B-acquired drugs at the average sales price (ASP) minus 33.4%, a cut from the current rate of ASP plus 6%. This would be implemented in a budget-neutral manner, resulting in an increase to the conversion factor for non-drug items and services. Rural Sole Community Hospitals and CAHs, among other provider types, would not be subject to this change. If finalized, this change could increase payments for all hospitals as a result of the positive adjustment to the conversion factor, but simultaneously reduce payments to hospitals that participate in the 340B program. The net effect will depend upon the magnitude of a given hospital’s 340B savings and Medicare case mix, among other things.
CMS proposes to increase the 340B program recoupment adjustment under the OPPS from 0.5% to 3%. This will likely impact all hospitals, but the 3% reduction is offset and surpassed by the increase arising from the policy change discussed above.
Our partners at McDermott, Will & Schulte and McDermott+, one of healthcare’s most trusted and respected health law and health policy consulting firms, compiled key takeaways that hospitals and health systems should know about the proposed rule. McDermott+ also developed a dashboard that shows the actual payment rates to hospitals for providing care to Medicare fee-for-service patients, if these proposals were finalized.
Comments on the OPPS proposed rule are due on August 31, 2026.
Why you should care
The impact of these proposals, if finalized, will vary by hospital and outpatient setting depending on whether a system participates in the 340B program, provides imaging services in off-campus provider-based outpatient departments, or largely relies on revenue from non-drug items and services. Rural sole community hospitals and CAHs would be exempt from some of these proposals. Hospital and clinic leaders should be informed about these policy changes, assess payment impacts, and offer feedback to CMS.
Looking to learn more?
McDermott, Will & Schulte and McDermott+ offer valuable insights into what these policy updates mean and how they could affect organizations. McDermott+ will continue to track and analyze Medicare payment regulations and developments. Read more below to see what McDermott, Will & Schulte and McDermott+ are saying about these policies and how your organization could be impacted.
Click here for high-level key takeaways on the OPPS proposed rule, here for the data dashboard, here for an in-depth analysis of the in-patient only list, site-neutral, and 340B proposals, and here for the top four takeaways for hospitals.