Outpatient PPS

The Centers for Medicare & Medicaid Services (CMS) July 2 issued a proposed rule that would increase Medicare hospital outpatient prospective payment system (PPS) rates by a net 2.4% in calendar year (CY) 2027 compared to CY 2026. The rule also includes proposals to pay at the site-neutral rate for imaging without contrast services in grandfathered off-campus hospital outpatient departments (HOPDs) and to cut payments for drugs acquired under the 340B program and accelerate 340B recoupment. It would also implement provisions of the Consolidated Appropriations Act of 2026 (CAA, 2026) requiring unique identifiers and an initial attestation for all off-campus provider-based departments (PBDs) by Jan. 1, 2028. CMS will accept comments on the proposed rule until Aug. 31, 2026.

AHA Take

America’s hospitals and health systems continue to operate under growing financial challenges that threaten their ability to provide care. At the same time, CMS’ proposed outpatient policies would further reduce resources available, including another insufficient reimbursement update, an excessive productivity adjustment, and additional payment reductions affecting key hospital services. These proposals come at a particularly difficult time, as hospitals are caring for more and sicker patients while facing upticks in uncompensated care due to additional uninsured patients. Payment policies should recognize, rather than exacerbate, these pressures and protect access to comprehensive patient care and support long-term, sustainable improvements to the healthcare system.

We are deeply concerned about CMS’ continued assault on the 340B drug pricing program, including its proposal to reduce 340B reimbursement rates by a shocking 33.4%. This enormous cut will make drugs less affordable for America’s most vulnerable patients — many already struggling with higher insurance premiums, loss of healthcare coverage, and skyrocketing drug prices. Additionally, CMS proposes to speed up its clawback, which will punish 340B hospitals for CMS’ own error in implementing a policy that a unanimous Supreme Court held to be unlawful. As HHS continues to remain silent on drug companies’ illegal claims data policies, moves forward with its misguided Rebate Program, and repeatedly supports the pharmaceutical industry in courts across the country, today’s actions make one thing clear: HHS has chosen to make healthcare more expensive for patients in rural and other underserved communities. These proposals will undermine the ability of hospitals to maintain essential services and protect affordable access to care for those who depend on the 340B program.

Finally, we are concerned about CMS’ proposal to expand site-neutral payments to certain imaging services. Treating hospital outpatient departments as equivalent to other care settings ignores the unique role they play in serving patients with greater medical and other needs. Compared with independent physician offices, hospital outpatient departments disproportionately care for patients with more complex health conditions, higher rates of disability, and those from rural or underserved communities. Payment policies should recognize these differences to avoid undermining access for the patients who rely most on hospital-based care.

View the Regulatory Advisory.