CMS finalized its 2027 outpatient rule on November 4, 2026, paying 340B drugs at ASP minus 28% and widening site neutral pay. Who gains and who loses.
Last updated: November 7, 2026
Medicare’s final 2027 outpatient rule pays hospitals for drugs bought through the 340B program at average sales price minus 28%, down from ASP plus 6%, starting January 1, 2027. It also raises the 340B remedy clawback to 2% and extends site neutral pay to imaging without contrast.
Scope: what CMS finalized in CMS-1850-F, how it differs from July’s proposal, and what it means for hospitals, drugmakers and outpatient providers.
What did CMS finalize in the 2027 OPPS rule?
CMS issued the calendar year 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center final rule on November 4, 2026. It touches about 3,500 hospitals and 6,400 surgery centers, and the headline is a deep cut to what Medicare pays for 340B drugs.
The base payment update is 2.3% for hospitals that meet quality reporting rules. That is a 3.2% projected market basket increase minus a 0.9 point productivity adjustment, and surgery centers get the same 2.3%. Healthcare Dive reported the July proposal had a 2.4% update, so the final number came in slightly lower. Hospitals that miss outpatient quality reporting lose two percentage points.
The rule is in the CMS fact sheet and the Federal Register public inspection copy (document 2026-22739). Most provisions apply to calendar year 2027.
How much will Medicare pay for 340B drugs in 2027?
Medicare will pay average sales price minus 28% for separately payable drugs a hospital acquired through 340B, starting with calendar year 2027. Non 340B hospitals stay at ASP plus 6%, according to the American Hospital Association.
CMS says this cuts Original Medicare drug payments by $4.35 billion and beneficiary drug payments by $1.1 billion in the first year. By our arithmetic that is about $5.45 billion combined. CMS puts the average beneficiary drug cost savings at $900 in 2027.
The cut is budget neutral. CMS says it will raise payments for non drug outpatient services by an equal amount, so the money moves from 340B drug margins into the general outpatient rate. HFMA and the AHA put that boost at 7.5%. The AHA says rural sole community hospitals, cancer hospitals exempt from the prospective payment system and children’s hospitals are excluded from the 340B drug rate.
The final rate is gentler than the proposal. Both the AHA and HFMA report CMS proposed ASP minus 33.4% in July.
Why is this cut different from the one the Supreme Court struck down?
This time CMS ran the drug acquisition cost survey the statute requires. In 2018 CMS cut 340B drug pay to ASP minus 22.5% without one, and in 2022 the Supreme Court ruled unanimously in American Hospital Association v. Becerra that HHS could not vary rates by hospital group without survey data.
CMS surveyed the acquisition cost of every separately payable drug at all OPPS hospitals from January 1 through April 7, 2026, and says it found “significant disparities” between 340B and non 340B costs. The fact sheet says CMS set the 28% figure taking the survey’s results into account. The AHA and HFMA describe the final rate as drawing on HRSA’s 340B ceiling price data. Expect hospital groups to test that distinction if this goes to court; the survey requirement was the whole basis of the 2022 win.
What happens to the 340B remedy offset?
CMS is raising the clawback on non drug items and services from 0.5% to 2% a year starting in 2027. The offset recovers $7.8 billion tied to the remedy for the unlawful 2018 to 2022 cuts, and CMS now expects to finish collecting in 2031.
Hospitals that enrolled in Medicare after January 1, 2018 stay exempt, as they were under the 0.5% offset that took effect January 1, 2026. HFMA reports the July proposal was 3%, and that CMS picked 2% in recognition of hospitals’ concerns about the burden. So 340B hospitals take two hits in 2027: lower drug pay and a faster recoupment, softened by the budget neutral bump to non drug rates.
What is changing in site neutral payment?
CMS is extending site neutral pay to imaging without contrast at excepted off campus hospital outpatient departments. Those services, including certain bone density scans, ultrasounds, CT scans and MRIs, will be paid at the physician fee schedule equivalent rate. Rural sole community hospitals are exempt.
CMS estimates about $260 million in first year savings: about $190 million in Part B and about $70 million in lower beneficiary premiums. Beneficiary cost sharing also falls by about $70 million. This builds on site neutral pay for off campus clinic visits (the 2019 rule) and drug administration (the 2026 rule). The AHA also notes a new requirement that off campus departments get a separate NPI and attest to provider based rules by January 1, 2028.
How do the proposed and final rules compare?
| Provision | July 2026 proposal | November 2026 final |
|---|---|---|
| OPPS rate update | 2.4% (per Healthcare Dive) | 2.3% |
| 340B drug payment | ASP minus 33.4% (per AHA, HFMA) | ASP minus 28% |
| Remedy offset on non drug services | 3% (per HFMA) | 2%, done by an estimated 2031 |
| Site neutral expansion | Imaging without contrast | Finalized as proposed (per AHA) |
| Inpatient only list | Remove 637 services | Finalized, year two of a three year phase out |
| Botulinum toxin prior authorization | Eight more codes | Finalized; July 1, 2027 per AHA and HFMA |
Who wins and who loses?
Large 340B hospitals lose the most, since the spread between their discounted purchase price and Medicare’s payment has been a major source of 340B margin. Hospitals outside 340B and surgery centers come out ahead through the budget neutral rate increase and the shift of procedures out of the inpatient only list.
The reaction split the hospital lobby. Ashley Thompson, AHA senior vice president of public policy analysis and development, called the 340B policy a “continued assault on the 340B program.” Beth Feldpush of America’s Essential Hospitals said in comments quoted by HFMA that CMS is “prioritizing hospitals that do not serve the safety net and nodding to the pharmaceutical industry’s interests.” Charlene MacDonald, president and CEO of the Federation of American Hospitals, whose for profit members mostly sit outside 340B, backed the changes, saying they will lower what seniors pay out of pocket. CMS Administrator Mehmet Oz said the reforms will “drive affordability in Medicare.”
What does it mean for drugmakers?
Manufacturer economics barely move on the Medicare side, because ASP is still the base and the 340B discount is set by statute. What changes is the incentive structure around 340B. A smaller Medicare spread lowers what hospitals earn on 340B drugs, which is the financial core of the long fight over contract pharmacies and rebates.
It also lands just before HRSA’s separate 340B rebate pilot, set to start January 1, 2027 and under challenge in federal court in Maine. Commercial teams running Part B oncology, immunology and infusion products should expect sites of care to shift as hospital outpatient economics change. For the basics of how ASP and Part B reimbursement fit together, see our guide on how drug pricing actually works.
Our framework: a 2027 OPPS checklist
- Hospital finance: model 340B drug revenue at ASP minus 28%, the 2% offset if you enrolled before 2018, and the 7.5% non drug bump reported by the AHA and HFMA together. The net matters more than any single line.
- Exemption check: confirm whether you qualify as a rural sole community hospital, children’s hospital or exempt cancer hospital.
- Off campus sites: list imaging without contrast volume at excepted departments and reprice it at the fee schedule rate. Start the NPI and attestation work for the January 1, 2028 deadline.
- Surgery center strategy: map the 637 services leaving the inpatient only list against your surgery center and outpatient capacity.
- Manufacturers: watch site of care shifts for Part B infused products and reconcile with the rebate pilot timeline.
- Prior authorization: update workflows for the eight new botulinum toxin codes ahead of July 1, 2027.
What to watch next
- Whether hospital groups sue, and whether the survey versus ceiling price question becomes the legal fight.
- The AHA’s regulatory advisory to members and any CMS correction notice.
- Rulings in the 340B rebate pilot litigation before the January 1, 2027 start.
- How the physician fee schedule final rule interacts with site neutral pay for imaging.
FAQ
When does the 340B payment cut take effect?
The ASP minus 28% rate applies for calendar year 2027, with January 1, 2027 cited by the AHA and HFMA as the start date.
What does ASP minus 28% mean?
Medicare pays the drug’s average sales price, as reported by manufacturers, minus 28%. Non 340B hospitals are paid ASP plus 6%.
How much money is involved?
CMS estimates $4.35 billion less in Original Medicare drug payments and $1.1 billion less in beneficiary drug payments in the first year, with the same amount added back to non drug services.
Which hospitals are exempt from the 340B drug rate?
According to the AHA, rural sole community hospitals, exempt cancer hospitals and children’s hospitals.
Did CMS conduct a drug acquisition cost survey?
Yes. CMS surveyed acquisition costs for separately payable drugs at all OPPS hospitals from January 1 to April 7, 2026.
What is the 340B remedy offset?
It is a reduction in non drug outpatient payments that recovers $7.8 billion in extra non drug payments Medicare made in 2018 to 2022, when the unlawful drug cut was offset by budget neutral increases. It rises from 0.5% to 2% in 2027.
When will the offset end?
CMS estimates the full $7.8 billion will be recovered in 2031.
What services does the new site neutral policy cover?
Imaging without contrast, such as certain bone density scans, ultrasounds, CT scans and MRIs, at excepted off campus hospital outpatient departments.
How much is the 2027 OPPS update?
2.3% for hospitals meeting quality reporting requirements: a 3.2% market basket increase minus 0.9 points for productivity.
Does the rule change 340B drug discounts from manufacturers?
No. The rule changes what Medicare pays hospitals, not the statutory discount drugmakers give 340B entities.
Sources
- CMS, fact sheet: Calendar Year 2027 OPPS and ASC Final Rule (CMS-1850-F), November 4, 2026 (primary)
- Federal Register public inspection, document 2026-22739 (primary)
- Supreme Court of the United States, American Hospital Association v. Becerra, No. 20-1114, June 15, 2022 (primary)
- American Hospital Association news, November 4, 2026 (proposed 33.4% rate, exemptions, ASP plus 6%, NPI requirement, Thompson quotes; attributed)
- HFMA, Nick Hut, November 5, 2026 (proposed 3% offset, 7.5% non drug increase, Feldpush and MacDonald quotes; attributed)
- Healthcare Dive via BioPharma Dive, Sydney Halleman, November 5, 2026 (proposed 2.4% update, Oz quote; attributed)
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