Calendar Year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (CMS-1850-P)

Ambulatory surgical centers Coverage EMTALA Hospitals Policy Quality Share Calendar Year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (CMS-1850-P) On July 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates for hospital outpatient and Ambulatory Surgical Center (ASC) services under the Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System Proposed Rule for calendar year (CY) 2027. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for hospital outpatient and ASCs annually. This fact sheet discusses the proposed rule’s major provisions. These proposed payment policies would affect approximately 3,500 hospitals and approximately 6,400 ASCs. In addition to proposing payment rates, this year’s rule includes a proposal to update the methodology used to calculate the Overall Hospital Quality Star Rating to emphasize the Safety of Care measure group in hospitals’ star ratings. CMS is also proposing changes to and requesting comment on the Hospital Outpatient Quality Reporting (OQR) ASC Quality Reporting (ASCQR) programs to further meaningful measurement and reporting for outpatient quality of care. To align with current administrative priorities, CMS is including a Request for Information (RFI) to seek public input on strengthening requirements for hospital price transparency to increase the information’s standardization and comparability. Updates to OPPS and ASC Payment Rates In accordance with Medicare law, CMS proposes updating OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.4%. This update is based on the projected hospital market basket percentage increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment. For CY 2027, using the hospital market basket update, CMS proposes an update factor to the ASC rates of 2.4%. The update applies to ASCs meeting relevant quality reporting requirements. This update is based on the proposed IPPS market basket percentage increase of 3.2%, reduced by 0.8 percentage point for the productivity adjustment. Expanding the Method to Control Unnecessary Increases in the Volume of Outpatient Services In the CY 2019 OPPS/ASC final rule, CMS adopted a method to control unnecessary increases in the volume of the clinic visit services furnished in excepted off-campus provider-based departments (PBDs). This method prevents Medicare and beneficiaries from paying significantly more in the excepted off-campus PBD setting than in the physician office setting for some services. In the CY 2026 OPPS/ASC final rule, CMS finalized a policy expansion to include drug administration services furnished in excepted off-campus PBDs. For CY 2027, CMS is proposing to include imaging without contrast services furnished in excepted off-campus PBDs. Specifically, CMS is proposing to use the agency’s authority under section 1833(t)(2)(F) of the Social Security Act to apply the Physician Fee Schedule equivalent payment rate for any HCPCS codes assigned to the imaging without contrast ambulatory payment classifications (APCs) when provided at an off-campus PBD excepted from section 603 of the Bipartisan Budget Act of 2015. As with the existing volume control method for off-campus clinic visits and drug administration services, CMS is proposing to exempt rural Sole Community Hospitals from this proposed policy. For CY 2027, we estimate this provision would reduce Medicare Part B expenditures by approximately $260 million in the first year, including approximately $190 million in Part B savings and approximately $70 million in reduced beneficiary premiums. In addition, beneficiary cost-sharing obligations are estimated to decrease by approximately $70 million in the first year. This policy helps ensure that beneficiaries are not subject to higher premiums and cost sharing based solely on the site at which care is furnished. Reduced Payments for 340B-Acquired Drugs Based on the Medicare OPPS Drugs Acquisition Cost Survey Section 1833(t)(14)(D)(ii) of the Social Security Act requires the Secretary to periodically conduct hospital drug acquisition cost surveys for specified covered outpatient drugs and use this information to set the payment rates for such drugs. Additionally, on April 18, 2025, President Trump signed Executive Order (E.O.) 14273, “Lowering Drug Prices by Once Again Putting Americans First.” Section 5 of the E.O., “Appropriately Accounting for Acquisition Costs of Drugs in Medicare” directs the Secretary of HHS to publish in the Federal Register a plan to conduct a survey under section 1833(t)(14)(D)(ii) of the Social Security Act to determine the hospital acquisition cost for covered outpatient drugs at hospital outpatient departments. Accordingly, from January 1, 2026, through April 7, 2026, we conducted a surv