Inside the proposed OPPS/ASC rule

For CY 2027, CMS proposed increasing OPPS payment rates by 2.4%, which includes a projected hospital market basket increase of 3.2%, reduced by an -0.8-percentage point productivity adjustment. ASCs would see a similar 2.4% payment increase.

A significant change in the proposed rule involves reimbursement for 340B drugs. Currently, CMS pays hospitals the average sales price of 340B drugs plus 6%. However, under the proposed rule, CMS would pay hospitals the average sales price minus 33.4% — significantly reducing reimbursement for 340B drugs.

According to a CMS survey, hospitals acquire 340B drugs significantly below the average sales price. By reducing 340B reimbursement, the agency estimates that federal spending would decrease by $4.6 billion and out-of-pocket costs for beneficiaries would decrease by $1.15 billion in the first year alone.

"This proposal ensures that hospital drug discounts are passed directly to the Medicare beneficiaries who receive the drugs and the American taxpayers," CMS said. To ensure budget neutrality, the agency plans to increase reimbursements for non-drug outpatient services.

However, as part of CMS' ongoing efforts to recoup previous overpayments for non-drug services, the agency has also proposed a heightened 3% conversion factor. This conversion factor would reduce payments to impacted providers by $2.3 billion in 2027.

In a statement, CMS Administrator Mehmet Oz said the proposed changes ensure Medicare is paying "for the right care, in the right setting, at the right time" and that the rule "focuses squarely on patient affordability by strengthening our utilization management tools, aligning drug payments with actual acquisition costs, and removing site-of-care disparities that have unnecessarily driven up costs for millions of seniors."

Separately, Maureen Testoni, president and CEO of 340B Health, said the reimbursement cuts to the 340B program will not achieve the administration's spending and affordability goals. Instead, she said the administration will "[use] that revenue to pay more to non-safety net providers. This proposal is not about cutting costs for seniors, as they will face higher payments for non-drug Part B services."

Charlene MacDonald, president and CEO of the Federation of American Hospitals, also criticized CMS' efforts to accelerate its recoupment of outpatient payments.

"Ensuring payments more closely reflect hospitals' costs is an important step toward a fairer and more predictable payment system for all providers," MacDonald said. "CMS' proposed accelerated recoupment, however, runs counter to those same principles and would place an unnecessary financial burden on hospitals at a time when preserving access to care remains critical."

"As HHS continues to remain silent on drug companies' illegal claims data policies, moves forward with its misguided Rebate Program, and repeatedly supports the pharmaceutical industry in courts across the country, today's actions make one thing clear: HHS has chosen to make healthcare more expensive for patients in rural and other underserved communities," Thompson said. "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."