On July 2, 2026, CMS released its Outpatient Prospective Payment System (OPPS) proposed rule for calendar year (CY) 2027. The rule includes updates for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). CMS estimates the rule will increase OPPS payments by $1.82 billion in CY 2027, excluding changes in enrollment, case mix, and utilization. However, the proposed rule also includes an increase in recoupment related to the 340B separately payable Part B drug settlement. For providers subject to it, the recoupment is estimated to reduce payments by $2.3 billion (increased from $275 million in the CY 2026 OPPS final rule).
In addition to the payment update and increased recoupment related to the 340B settlement, CMS proposes:
- A payment reduction for separately payable Part B drugs acquired under the 340B program
- A site-neutral payment policy for imaging services without contrast
- A continued phaseout of the Inpatient Only (IPO) list
- An expansion of the ASC Covered Procedures list
- Regulations implementing the separate National Provider Identifier (NPI) and attestation requirements for off-campus, provider-based HOPDs from the Consolidated Appropriations Act, 2026 (CAA 2026)
- Modifications to the Outpatient Quality Reporting (OQR) Program
CMS projects the net effect of all changes in the 2027 proposed rule will reduce OPPS payments to hospitals by 2.9%.
OPPS Market Basket Update
CMS proposes a net OPPS market basket update (MBU) of 2.4% for hospitals meeting OQR requirements. This reflects a 3.2% gross MBU reduced by the 0.8% productivity adjustment mandated by the Affordable Care Act, and is the same as the MBU in the fiscal year 2027 Inpatient Prospective Payment System (IPPS) proposed rule.
After budget neutrality and other adjustments, the resulting OPPS conversion factor is $102.004 (increased from $91.415 in the 2026 OPPS final rule). For those hospitals subject to the proposed 3% 340B remedy offset reduction (increased from 0.5% in the 2026 OPPS final rule), the proposed rule conversion factor is $99.015 (increased from $90.967 in the 2026 OPPS final rule). The significant increase in the proposed conversion factor compared to the 2026 final rule is a result of a proposed 340B drug payment budget neutrality positive adjustment of 8.44%.
CMS is continuing its pandemic-era policy of using the hospital MBU for ASCs. Therefore, the net update for ASCs meeting ASC Quality Reporting Program (ASCQRP) requirements is also 2.4% (3.2% gross MBU reduced by the 0.8% productivity adjustment). CMS estimates that applying the proposed hospital MBU and other policy changes will increase payments to ASCs by $520 million in CY 2027 compared to CY 2026. The ASC proposed rule conversion factor is $57.766 (increased from $56.322 in the CY 2026 final rule) for ASCs meeting quality reporting requirements.
Accelerated Recoupment of Increased Payments for Non-Drug Services
CMS proposes increasing the recoupment of payments related to the overturned 340B separately payable Part B drug policy to 3% starting January 1, 2027 (up from 0.5% in CY 2026). CMS anticipates increasing the percentage will allow the agency to recoup $7.769 billion by the end of CY 2029. The agency contends that an accelerated recoupment is necessary to help prevent shifts in services that may lead to inequitable recoupment of funds relative to those hospitals that received increased outpatient payments due to the original separately payable Part B drug reduction policy’s budget neutrality adjustment to the OPPS conversion factor.
The recoupment does not apply to new providers with a CMS Certification Number (CCN) effective date of January 2, 2018 or later. CMS estimates the recoupment will reduce payments by $2.3 billion in CY 2027 related to services impacted by the cut for providers subject to it.
New Payment Reduction for 340B Separately Payable Part B Drugs
Beginning in CY 2027, CMS proposes paying for drugs acquired under the 340B Drug Pricing Program at average sales price (ASP) minus 33.4%. This policy extends to separately payable 340B drugs provided to Medicare beneficiaries in non-excepted HOPDs. Similar to its prior 340B separately payable Part B drug reimbursement reduction policy, CMS proposes to implement this policy in a budget-neutral manner. CMS clarifies in the proposed rule that if this policy is finalized, non-340B separately payable drugs acquired by 340B hospitals will continue to be paid at ASP plus 6%.
If ASP information is not available and payment is based on the wholesale acquisition cost (WAC), CMS proposes reimbursing drugs acquired under the 340B program at WAC minus 33.4%. If WAC information is also unavailable, CMS proposes a payment rate of 59.69% of average wholesale price (AWP).
The proposed reduction in separately payable Part B drug reimbursement is based on the drug cost acquisition survey CMS fielded in early 2026. In the proposed rule, CMS notes that approximately 41.4% of hospitals responded to this survey and reported having acquisition costs during the study period. Broken down further, this includes approximately 53.3% of non-340B hospitals and approximately 28.6% of 340B hospitals in the survey population. CMS notes that compared to the overall survey-eligible population, hospitals that responded to the survey and reported data were slightly more likely to have lower claims billing volume, be smaller, be located in rural areas, and not be major teaching hospitals.
CMS proposes exempting children’s hospitals, PPS-exempt cancer hospitals, and rural sole community hospitals from the payment reduction. Critical access hospitals (CAHs) are not subject to this policy, as they are not paid under the OPPS.
CMS estimates this proposed policy will reduce 340B separately payable Part B drug reimbursement by $4.85 billion. Therefore, CMS proposes a positive 8.44% budget neutrality adjustment to the conversion factor. This adjustment, if finalized, will increase payment for OPPS services paid by Ambulatory Payment Classification (APC).
Payment for Non-340B Separately Payable Drugs
CMS proposes to continue reimbursing separately payable Part B drugs not acquired under the 340B program at ASP plus 6%. In the proposed rule, CMS notes slightly greater heterogeneity in acquisition costs for non-340B drugs than for 340B drugs. CMS asserts the survey results for non-340B drugs generally indicate lower acquisition costs than the current payment rate. However, at this juncture, the data is not as “clear and significant” as it is for 340B-acquired drugs, and the variation warrants additional analysis by CMS.
Site-Neutral Payment for Imaging Services Without Contrast Provided in Excepted HOPDs
Beginning in CY 2027, CMS proposes reducing payment for imaging services without contrast, e.g., X-ray, ultrasound, computed tomography (CT), magnetic resonance imaging (MRI), and dual-energy X-ray absorptiometry scans (DXA), provided in excepted off-campus HOPDs (those billing with a PO modifier) to the Physician Fee Schedule equivalent (currently 40% of the applicable APC rate). CMS proposes applying the policy to APCs 5521 through 5524 and imaging composite APCs 8004, 8005, and 8007.
The agency estimates this policy will save $260 million in 2027 ($190 million saved by CMS, $70 million saved by beneficiaries). Like the site-neutral clinic visit and drug administration policies, CMS proposes exempting rural sole community hospitals from this policy.
CMS proposes applying this policy change in a non-budget-neutral manner. It justifies this action as a “volume-control method” and cites the growth in spending for imaging services without contrast provided in excepted HOPDs.
Separate NPIs for Off-Campus HOPDs & Provider-Based Attestation Requirements
Section 6225 of CAA 2026 establishes significant new requirements for hospitals operating off-campus HOPDs. CMS proposes implementing these requirements beginning January 1, 2028. Under the statute and the proposed rule, no Medicare OPPS payment can be made for services furnished by an off-campus HOPD after January 1, 2028, unless the department meets both a new NPI requirement and a mandatory provider-based attestation requirement.
The most operationally significant change is the requirement that every off-campus HOPD obtain and bill under its own unique NPI, separate from the hospital’s main NPI. CMS proposes that hospitals obtain these NPIs and update enrollment information in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS) before submitting any provider-based attestation. This represents a major departure from current practices for many organizations and will require health systems to inventory their off-campus locations, verify provider-based relationships, and align billing systems, enrollment records, and organizational structures before the 2028 compliance deadline.
CMS also proposes a mandatory provider-based attestation process for all off-campus HOPDs. Per the proposed rule, hospitals would be required to submit an initial attestation within the two years preceding the furnishing of services. For existing off-campus departments, this effectively means attestations must be submitted between January 1, 2026 and December 31, 2027. Departments that begin operations after January 1, 2028 would need to submit an attestation during the two years prior to furnishing services. CMS further proposes recurring attestations at intervals not to exceed five years, with additional details expected in future rulemaking. CMS proposes that hospitals that submit a timely attestation before January 1, 2028 would satisfy the statutory requirement even if CMS has not yet completed its review.
To support these attestations, CMS proposes a standardized national attestation form and centralized electronic submission system, replacing the current patchwork of Medicare Administrative Contractor (MAC)-specific templates. The attestation would include identifying information for the hospital and each off-campus department, including NPIs, addresses, and provider numbers, along with a certification by an authorized official that the department complies with the applicable provider-based requirements. This should be the same authorized official on the provider’s PECOS form.
Hospitals would need to maintain evidence demonstrating compliance with provider-based requirements related to licensure, clinical integration, financial integration, public awareness, ownership and control, administrative integration, and HOPD obligations, such as Emergency Medical Treatment and Labor Act (EMTALA) compliance and beneficiary financial liability notifications.1 CMS specifically indicates that hospitals should be prepared to provide licensure records, organizational charts, financial documentation, clinical oversight evidence, and proof that patients understand they are receiving services from the hospital rather than an independent provider.
From a compliance and audit perspective, CMS proposes a risk-based oversight approach. All attestations would undergo automated validation and screening against enrollment data. Attestations exhibiting inconsistencies or elevated risk indicators could be subject to targeted documentation reviews. CMS and its contractors would also have the authority to conduct site visits, remote audits, investigations, and other verification activities to determine compliance. Hospitals that fail to provide requested information within specified timeframes could face adverse determinations, loss of provider-based status, or recovery of Medicare payments.
For hospital executives, the proposal creates both operational and financial risk. Any off-campus HOPD lacking a separate NPI or required attestation after January 1, 2028 would be ineligible for OPPS payment. Health systems should begin preparing now by identifying all off-campus provider-based locations, assessing compliance with provider-based regulations, validating organizational documentation, and developing governance processes to support future attestations and audits. The practical effect of these proposed policies is the creation of a new ongoing compliance framework that will require significant coordination among reimbursement, compliance, legal, enrollment, revenue cycle, and operational leadership teams.
Continued Phaseout of the IPO List
CMS began phasing out the IPO list in CY 2026 by removing 285 CPT codes, mostly for musculoskeletal services. For CY 2027, CMS proposes removing another 637 services. The clinical families impacted include auditory, digestive, endocrine, female genital, hemic and lymphatic systems, integumentary, male genital, maternity care and delivery, mediastinum and diaphragm, respiratory, and urinary. These services and their proposed status indicators and APC assignments (if applicable) are listed in the public use file titled “Proposed Procedures for Removal from the IPO List for CY 2027.” The list of codes CMS proposes leaving on the IPO list for 2027 is available in Addendum E. Assuming CMS finalizes this proposal, the agency expects to address the remaining clinical families on the IPO list and their removal during CY 2028 rulemaking.
CMS will continue exempting procedures removed from the IPO list from medical review activities to assess compliance with the Two-Midnight rule until the Secretary of Health and Human Services determines that the service or procedure is more commonly performed in the Medicare population in the outpatient setting. More details regarding the Two-Midnight rule protections for procedures removed from the IPO list can be found in the CY 2026 OPPS final rule.
Expansion of the ASC Covered Procedures List (CPL)
For CY 2027, CMS proposes adding 618 procedures to the ASC CPL, marking a substantial expansion of ASC-eligible services. The list of procedures is available here. According to the proposal, these additions include procedures identified through stakeholder recommendations, as well as services tied to the agency’s proposed removals from the IPO list. The proposed expansion is concentrated across several key surgical specialties, including general surgery; ear, nose, and throat (ENT); urology; gynecology; pulmonary and thoracic surgery; wound care; and skin-related procedures. If finalized, these service lines are expected to experience the greatest shift in procedural volume toward the ASC setting, further expanding outpatient care opportunities and increasing site-of-service competition.
Hospital Price Transparency Request for Information (RFI)
The proposed rule includes an RFI on hospital price transparency, focused on improving the accuracy, comparability, standardization, and actionability of posted price information. The language in the RFI suggests that CMS is particularly interested in reducing variability in how hospitals report negotiated rates and contract terms, improving consistency across consumer-facing tools, and helping users better understand what is and isn’t included in the prices displayed. The RFI will likely help CMS lay the groundwork for future rulemaking that could establish more prescriptive standards for both machine-readable file (MRF) reporting and consumer-facing price transparency disclosures.
The agency is seeking feedback in two primary areas:
- MRFs: This continues the agency’s focus on making contracted payment information easier to interpret, compare, and analyze.
- Consumer-Friendly Displays: CMS seeks feedback on enhancing the usefulness and comparability of pricing information for patients shopping for care, with a greater emphasis on providing clear, service-specific pricing that is easily identifiable, more concrete, and presented in a manner that resembles an actual charge or expected cost rather than a generalized estimate.
For stakeholders considering submitting comments in response to the RFI, we encourage reviewing the draft legislation introduced in Congress known as the Patients Deserve Price Tags Act. Many of the concepts reflected in CMS’ RFI align with provisions in the legislation, and it is reasonable to anticipate that some or all of these policy concepts could ultimately be advanced by stakeholders through the comment process for CMS’ consideration in future rulemaking. The draft legislation may provide useful insight into potential policy directions the agency could pursue as it continues to strengthen hospital price transparency requirements.
Packaging Threshold for Drugs, Biologics, & Radiopharmaceuticals
CMS proposes a separate payment for non-policy packaged drugs, biologics, and radiopharmaceuticals with a per-day cost greater than $140. This threshold is the same as finalized in the CY 2026 OPPS rule.
Separate Payment for Diagnostic Radiopharmaceuticals
CMS proposes a separate payment for diagnostic radiopharmaceuticals with a per-day cost greater than $665. This is increased from $655 in the 2026 OPPS final rule. Qualifying products would be paid based on their mean unit cost, which is based on hospital claims data.
Hospitals should review their charge capture and billing processes for qualifying diagnostic radiopharmaceuticals to make sure these separately payable items are accurately captured and included on the Medicare claim.
Hospital OQR Program Changes
The proposed rule contains relatively few changes to the Hospital OQR Program measure set, but it does include several important program integrity and reporting proposals.
- Measure Set Changes: CMS proposes removing the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure beginning with the CY 2029 payment determination, citing the availability of stronger outcome-oriented measures. CMS does not propose any other substantive additions or removals to the OQR measure set.
- eCQM Data Validation: CMS proposes incorporating electronic clinical quality measure (eCQM) validation into the existing OQR validation process, establishing a 75% accuracy threshold for eCQM validation, expanding the use of targeted validation reviews, reducing the annual validation pool from 500 to up to 400 hospitals, and transitioning from a two-year to a three-year validation cycle. Hospitals selected for validation would need to successfully pass both chart-abstracted and eCQM validation requirements to receive the full OPPS annual payment update. CMS also proposes streamlining reconsideration and appeals processes by eliminating unnecessary resubmission of previously submitted medical records.
- Advance Care Planning RFI: The proposed rule seeks stakeholder feedback on whether an Advance Care Planning eCQM should be incorporated into the OQR Program. CMS is exploring measures that would assess whether patients have advance directives or documented advance care planning discussions reflected in the electronic health record (EHR). The agency specifically seeks input on the appropriateness of such measures in outpatient settings, target patient populations, timing and frequency of advance care planning activities, and alternative measurement approaches for HOPDs. The RFI signals CMS’ growing interest in advancing person-centered care and measuring advance care planning as more complex services migrate to outpatient settings.
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- 1For additional details, see page 600 of the display copy of the proposed rule: https://public-inspection.federalregister.gov/2026-13656.pdf