Medicare Outpatient Final Rule Expands Surgical Options, Lowers Out-of-Pocket Costs for 340B Drugs

CMS issued the Calendar Year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment Final Rule on November 4, 2026, updating payment rates and policies effective for calendar year 2027. The rule updates reimbursement rates for hospital outpatient departments and ASCs and addresses 340B Drug Pricing Program payment levels, imaging service payment sites, the Inpatient Only procedure list, ASC covered procedures, EMTALA administrative oversight, and prior authorization for botulinum toxin services. On 340B drugs, CMS finalized a reduction in payment rates to better align reimbursement with documented acquisition costs, citing a CMS survey finding that hospitals acquire 340B drugs at an average cost significantly below ASP, consistent with MedPAC findings. CMS estimates the policy will save Original Medicare beneficiaries an estimated $1.1 billion and save taxpayers an additional estimated $4.35 billion in drug expenditures in CY 2027, for a combined reduction in total drug spending of approximately $5.45 billion in 2027. Beneficiaries receiving a qualifying drug in the hospital outpatient department are projected to save an average of $900 in drug costs in CY 2027. For imaging services, CMS extended its policy of paying the lower Physician Fee Schedule equivalent rate, rather than the OPPS rate, for imaging without contrast services at off-campus provider-based departments, covering bone density scans, x-rays, ultrasounds, CT scans, and MRIs. CMS estimates this change will save beneficiaries and taxpayers a combined $260 million in CY 2027 and over $9 billion from CY 2027 through CY 2036. The rule also continues phasing out the Inpatient Only list and expands the ASC covered procedures list by several hundred surgical procedures. CMS finalized a provision allowing hospital accrediting organizations with CMS-approved deeming authority to assess hospital compliance with certain EMTALA administrative requirements as part of routine accreditation and reaccreditation surveys. On prior authorization, CMS added eight botulinum toxin injection codes to the list of hospital outpatient services requiring prior authorization, citing a 42.8% volume increase in claims for those codes from 2017 to 2024 against an 8.3% overall decline in hospital outpatient service volume, with no identified clinical or coding explanation, and DOJ-documented fraudulent billing involving botulinum toxin services.