Article
The headline numbers
CMS released its calendar year 2027 outpatient prospective payment system proposal on July 2. The base update is a net 2.4%, built from a 3.2% market basket increase less a 0.8 percentage point productivity adjustment. Comments are due Aug. 31.
The larger story sits beneath the update. Drawing on a drug acquisition cost survey it fielded earlier this year, CMS proposes to pay for drugs acquired through the 340B program at average sales price minus 33.4%, down from ASP plus 6%. The agency estimates the reduction at $4.85 billion in 2027. Because the change is budget neutral, CMS would raise the conversion factor for non-drug services by 8.14% for every OPPS hospital.
Three more items that move dollars
- Faster recoupment. CMS is still clawing back money tied to its earlier 340B remedy. It proposes lowering the conversion factor by 3% a year instead of 0.5%, finishing in 2029 rather than 2041.
- Site-neutral imaging. Imaging without contrast at grandfathered off-campus departments would be paid at 40% of the OPPS rate, an estimated $260 million cut.
- Billing identity. Off-campus provider-based departments would need their own National Provider Identifiers to bill as such. CMS would also shorten the inpatient-only list again.
Winners, losers and the math to run
The proposal redistributes money. A hospital that buys little through 340B but provides a large volume of non-drug outpatient services could come out ahead from the higher conversion factor. A safety-net hospital with a large infusion and oncology book could face a sizable loss, made worse by the faster recoupment.
CFOs should build three scenarios before the comment deadline:
- Separately payable 340B drug volume repriced at ASP minus 33.4%.
- Non-drug OPPS revenue lifted by 8.14%, then reduced by the faster recoupment schedule.
- Grandfathered off-campus imaging repriced at 40% of OPPS.
Combine those with commercial and Medicaid exposure to see whether 340B savings that fund outpatient pharmacy, charity care or rural clinics remain intact. Also check NPI enrollment for every off-campus site now, since a billing identity change can be slow.
The American Hospital Association called the update insufficient and opposes both the drug cut and the faster clawback, arguing the latter penalizes hospitals for an agency error. Legal challenges are possible, given past litigation over 340B payment cuts, but planning should assume the policy could take effect Jan. 1.
Archive entry for Jul 2, 2026, added Nov. 11, 2026.