FFY 2027 OPPS proposed rule: What's changing and why it matters

On July 2, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2027 proposed rule for the Medicare Outpatient Prospective Payment System (OPPS). The proposed rule includes updates to the Medicare fee-for-service (FFS) OPPS payment rates based on changes set forth by CMS and those previously adopted by Congress. Here are some of the policy proposals hospitals should be aware of that could affect CY 2027 OPPS payments.

Annual updates under the 2027 OPPS proposed rule

The proposed rule contains annual updates to the Medicare FFS OPPS payment rates and policies. In addition to the regular updates to wage indexes and market basket, the policies being proposed in this rule include:

• updating Ambulatory Payment Classification (APC) groups and weights;

• updating the 340B Remedy reduction to the OPPS conversion factor;

• continuing the elimination of the Inpatient-Only (IPO) list;

• expanding the method to control unnecessary increases in the volume of outpatient services;

• reducing payments for 340B-acquired drugs based on the Medicare OPPS Drug Acquisition Cost Survey;

• updating requirements for the Hospital Outpatient Quality Reporting (OQR) Program; and

• updating payment rates and policies for Ambulatory Surgical Centers (ASCs).

Key changes to note under the proposed rule

1. Payment adjustments for non-drug items and services as a result of the 340B payment policy

The 340B Drug Pricing Program allows certain hospitals to purchase outpatient drugs at discounted prices. From CY 2018 to Sept. 27, 2022, CMS reduced payments for 340B-acquired drugs from Average Sales Price (ASP) +6% to ASP −22.5%. The Supreme Court ruled in Bridgeport Hospital, et al., v. Becerra that the payment reductions for 340B drugs were unlawful because CMS had not conducted a survey of hospital acquisition costs. In turn, CMS revised the payment policy to once again pay for 340B drugs at ASP +6% and provided a single-lump sum payment to affected hospitals to address the reduced reimbursement rates.

To recoup the $7.8 billion increase that CMS made due to budget-neutrality adjustments for all OPPS hospitals for non-drug items and services from CY 2018 to CY 2022, CMS adopted an annual prospective payment reduction of 0.49 percentage points (PPT) to the OPPS conversion factor that was to start in CY 2026. Recoupment was estimated to take approximately 16 years.

Beginning with CY 2027, CMS is proposing to increase the annual reduction to the OPPS conversion factor from 0.49 PPTs to 2.93 PPTs. Under this revised rate, CMS expects to recoup the $7.8 billion by the end of CY 2029. This is a large decrease to hospitals’ bottom lines for the suggested years. For CY 2027 alone, there is an estimated $1.8 billion decrease nationally. This reduction is applicable to all OPPS hospitals except those enrolled in Medicare after Jan. 1, 2018.

2. Medicare OPPS drugs acquisition cost survey and 340B drugs

After conducting surveys of acquisition costs CMS found significant disparities between hospital acquisition costs for drugs acquired through the 340B program and drugs acquired outside the 340B program. Therefore, for CY 2027, CMS is proposing to pay for drugs acquired through the 340B program at ASP −33.4%. This is estimated to have a national payment reduction of $3.9 billion for CY 2027.

3. Payment for Off-Campus Outpatient Departments

Since CY 2019, CMS has paid excepted off-campus provider-based departments (PBDs) using the Medicare Physician Fee Schedule (MPFS) payment methodology for clinic visits to control unnecessary increases in OPPS service volume. In the CY 2026 OPPS final rule CMS adopted an extension of this policy to drug administration services furnished in excepted off-campus PBDs.

Currently, CMS believes that there has been an unnecessary increase in the volume of imaging without contrast services paid under the OPPS. Therefore for CY 2027, CMS is proposing to apply the MPFS equivalent payment rate to Healthcare Common Procedure Coding System (HCPCS) codes assigned to services paid through the following APCs when furnished at an off-campus PBD.

• APC 5521 — Level 1 Imaging without Contrast

• APC 5522 — Level 2 Imaging without Contrast

• APC 5523 — Level 3 Imaging without Contrast

• APC 5524 — Level 4 Imaging without Contrast

• APC 8004 — Ultrasound Composite

• APC 8005 — CT and CTA without Contrast Composite

• APC 8006 — MRI and MRA without Contrast Composite

Nationally, this is estimated to be a $307 million decrease to CY 2027 payments.

4. Inpatient-only list

The IPO list specifies services/procedures that Medicare will only pay for when provided in an inpatient setting. In the CY 2026 OPPS final rule, CMS adopted the elimination of the IPO list through a three-year transition, beginning in CY 2026 and completing the elimination by Jan. 1, 2029. For CY 2027, CMS is proposing to continue the second phase of elimination and remove 637 services from the IPO list. These services would now be able to be performed in other settings such as outpatient and ASC, which could lead to reduced payment.

5. Expansion of botulinum toxin injection codes for hospital outpatient department prior authorization process

After routine data analysis, CMS concluded that the increases in volume for botulinum toxin injections are unnecessary and is proposing to add prior authorization requirements for eight additional botulinum toxin injection codes.

6. RFI — strengthening the standardization and comparability of hospital price transparency data

CMS is seeking public input on potential approaches to strengthen transparency and usability of the machine-readable files (MRFs). Specifically, CMS seeks input on increasing transparency of outlier provisions, standardization to enhance MRF utility and consumer- friendly display requirements.

What’s ahead

Proposed program changes for CY 2027 would be effective on or after Jan. 1, 2027, unless otherwise noted. CMS estimates an increase of $1.82 billion in OPPS payments for CY 2027 over CY 2026. However, for providers subject to the 340B remedy offset, CMS estimates a further $2.3 billion reduction in payments in CY 2027.

Comments are due by Aug. 31, leaving hospitals a narrow window to evaluate impact and respond.