CMS releases final 2027 outpatient payment plans: Questions and answers

Hospitals now know the federal government’s outpatient payment rates and policies for the coming year, but they aren’t pleased.

The Centers for Medicare & Medicaid Services issued the 2027 Hospital Outpatient Prospective Payment System (OPPS) Final Rule this week.

In addition to setting payment rates for outpatient services, the CMS is moving ahead with major changes to payments for the federal 340B Drug Pricing Program, which allows health systems serving vulnerable communities to buy outpatient drugs at lower costs. Health systems say they are particularly troubled by changes in the 340B drug program.

CMS is also expanding the number of services that can be done on an outpatient basis.

Dr. Mehmet Oz, the CMS administrator, said the changes are designed to ensure taxpayer funds are used “wisely and efficiently, so America’s seniors can continue getting the care they need.”

“By right-sizing payments and rooting out waste, today’s reforms will drive affordability in Medicare for current beneficiaries while ensuring it will still be there to serve their children and grandchildren,” Oz said in a news release.

Health systems say some of the policies will add more financial pressures on hospitals and could reduce access to care.

Here’s an overview of what the CMS final outpatient rule for 2027 means for health systems, and reactions from hospital trade groups.

Q: What’s the outpatient payment plan for 2027?

A: CMS is going to increase outpatient payment rates by a net 2.3%. The plans reflect a 3.2% market basket update, or essentially the cost of inflation, but that’s offset by a reduction of 0.9% for gains in productivity.

CMS has also finalized a 2.3% increase in payment rates for ambulatory surgery centers.

Q: What do hospitals think about the rates?

A: They’re not thrilled. Ashley Thompson, senior vice president of public policy analysis and development for the American Hospital Association, said the rates are insufficient as health systems are facing more cost pressures.

“CMS’ Medicare outpatient hospital payment rate does not adequately take into account the financial challenges facing hospitals today,” Thompson said in a statement. “These challenges are amplified for hospitals serving rural and underserved communities, many of which are already making hard decisions about how they will maintain access to healthcare services in their communities.”

Q: What changes are coming for the 340B program?

A: CMS is planning significant changes to prices for 340B drugs. Hospitals participating in the 340B program will be able to obtain the drugs for a 28% discount of the average sales price. CMS had previously proposed a 33% discount off the average price. Hospitals in the 340B program have typically had a discount of about 40%.

CMS said it adjusted its pricing to “more accurately align Medicare payments with hospital drug acquisition costs.”

Q: How are health systems reacting?

A: Groups representing hospitals say the move will cost them billions.

Beth Feldpush, DrPH, senior vice president of policy and advocacy at America’s Essential Hospitals, said the changes could put some safety net hospitals over the edge. She said Congress should preserve the 340B program, especially as hospitals are facing the prospect of millions of Americans losing Medicaid coverage.

"The 340B cuts contained in CMS’ Outpatient Prospective Payment System (OPPS) rule are an existential threat to essential hospitals and the patients they serve,” Feldpush said in a statement. “Rather than strengthening and preserving safety net funding, CMS is instead prioritizing hospitals that do not serve the safety net and nodding to the pharmaceutical industry's interests.”

Jonathan Jaffery, chief health care officer for the AAMC, said the CMS policies are damaging to academic health systems and teaching hospitals.

“The rule will lead to a nearly five and a half billion dollar reduction in drug reimbursement to 340B hospitals,” Jaffery said in a statement.

Q: What about the CMS efforts to recoup the 340B payment remedy?A: CMS is speeding up the repayment of remedy for bigger payments for non-drug goods and services from 2018-2022. Starting in 2027, CMS is finalizing a revision to the annual offset percentage for non-drug items and services from 0.5% to 2%.

The AHA says that move, combined with changes in 340B drug discounts, puts more stress on hospitals.

“We remain deeply concerned about CMS’ continued assault on the 340B program by reducing reimbursement rates and the accelerated clawback of funds from hospitals, both of which will further stress hospitals' ability to care for their patients,” Thompson said in a statement.

Q: Is there some support for CMS plans?

A: For-profit hospitals offered a hearty endorsement.

Charlene MacDonald, president and CEO of the Federation of American Hospitals (FAH), called the final rule “a win for patients, taxpayers, and the hospitals that communities depend on.”

“By bringing Medicare drug payments more in line with actual costs, this reform will lower seniors’ out-of-pocket expenses and redirect billions in Medicare dollars where they’re needed most — supporting access to care for patients served by small and rural hospitals across the country,” MacDonald said in a statement. “We applaud the Administration for advancing a smarter, fairer approach to Medicare payment.”

Q: Is CMS continuing its push for site-neutral payments?

A: Yes. CMS has finalized a policy of site neutral payments for imaging without contrast services, such as some bone density scans, x-rays, ultrasounds, CT scans and MRIs. The agency says it will ensure Medicare from paying significantly more for services in off-campus hospital outpatient departments, than in the physician office setting.

Q: What about the winding down of the “inpatient only list”?

A: CMS continues to phase out the list of services that can be delivered only on an inpatient basis. It’s the second year of the planned three-year elimination of the list.

In 2027, CMS is finalizing its plans to remove 637 services from the list, including these services: auditory, digestive, endocrine, maternity care and delivery, respiratory, and urinary.

“CMS believes that the evolving nature of medical practice allows more procedures to be performed on an outpatient basis with a shorter recovery time,” the agency said.

Thompson said the site-neutral policy and the continued winding down of the inpatient only list are “misguided.”

“Hospital outpatient departments treat a sicker and more complex group of patients than independent physician practices, including those with higher rates of disability and more likely to come from low-income and rural communities,” Thompson said.