On July 2, 2026, the Centers for Medicare and Medicaid Services (CMS) released the 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (Proposed Rule), which outlines proposed changes to payments made by Medicare to hospitals and surgery centers for outpatient services. The Proposed Rule details significant updates for next year, including:
- OPPS/ASC Reimbursement Increase: CMS proposes an increase to OPPS and ASC payment rates of 2.4% for providers that meet applicable quality reporting requirements, reflecting a projected 3.2% hospital market basket increase reduced by a 0.8 percentage point productivity adjustment.
- Site-Neutral Payment Policy Expansion: CMS proposes to expand its method for controlling unnecessary increases in outpatient service volume in excepted off-campus provider-based departments. Specifically, the Proposed Rule would set reimbursement for imaging without contrast services performed in certain off-campus hospital departments based on the Physician Fee Schedule (PFS) rather than the OPPS. While the reimbursement levels vary by imaging modality, PFS reimbursement is generally 40% less than the OPPS reimbursement.
- Reduced 340B Drug Payments: If finalized, the Proposed Rule would reduce Medicare payment for drugs acquired under the 340B program to Average Sales Price (ASP) minus 33.4%, based on a recent hospital drug acquisition cost survey. This reduction will be offset by an increase to non-drug OPPS payments resulting in a budget neutral impact.
- Payment Adjustment for Prior 340B Payment Policy: Effective Jan. 1, 2026, a 0.5% reduction in the OPPS conversion factor was implemented for non-drug items and services. This reduction is expected to remain in effect until the aggregate payment reduction offset increased payments made under the prior 340B payment policy (approximately $7.8 billion from 2018 to 2022). CMS proposes to reduce the timeline for this rebalancing by increasing the reduction from 0.5% to 3.0% starting in 2027 until the increased prior payments are offset.
- Elimination of the Inpatient Only List: In accordance with the 2026 Final Rule enacted in November 2025, CMS began the process of eliminating the inpatient only list (IOL) over a three-year process. For 2026, CMS eliminated 285 musculoskeletal procedures from the IOL. For 2027, CMS proposes to remove another 638 services with the complete elimination of the IOL proposed for 2028.
- Hospital Price Transparency: CMS includes a request for information seeking public input on strengthening hospital price transparency requirements, with a focus on improving the standardization and comparability of pricing information.
While not yet finalized, the Proposed Rule reflects CMS’s continued focus on site-of-service alignment, quality measurement, and price transparency. The proposed updates would affect approximately 3,500 hospitals and 6,400 ASCs, reinforcing the importance of outpatient network strategy as health systems evaluate service-line growth, ASC partnerships, and broader care delivery models.
CMS is soliciting comments from the public on the Proposed Rule before finalizing changes later this year.
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC, its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
