Medicare Will Pay ASP Minus 28 Percent for 340B Drugs in 2027 and Add 619 Procedures to the Surgery Center List
CMS's final 2027 outpatient rule cuts 340B drug payment, moves 637 services off the inpatient-only list and adds 619 procedures to the ASC list.
Medicare will pay hospitals the average sales price minus 28 percent for drugs bought through the 340B program starting Jan. 1, 2027, under the final hospital outpatient and ambulatory surgical center rule the Centers for Medicare and Medicaid Services released Nov. 4.
The rule, CMS-1850-F, also removes 637 more services from the inpatient-only list and adds 619 procedures to the list of surgeries Medicare covers in ambulatory surgical centers. It was released alongside the final 2027 physician fee schedule. The details below come from the CMS fact sheet and the final rule text on public inspection at the Federal Register.
What changes for 340B drugs?
Payment drops from the default rate, generally the average sales price plus 6 percent, to the average sales price minus 28 percent. CMS surveyed hospitals' drug acquisition costs from Jan. 1 to April 7, 2026, and in its proposed rule would have paid ASP minus 33.4 percent, the gap the survey showed. It finalized instead the ASP minus 28 percent alternative it had floated, which the rule notes is above the survey figure. Rural sole community hospitals, children's hospitals and PPS-exempt cancer hospitals are exempt.
CMS estimates the change cuts Original Medicare drug payments by $4.35 billion and beneficiary payments for drugs by $1.1 billion in the first year, and that a beneficiary who receives a qualifying drug in a hospital outpatient department will save $900 on average in 2027.
By our arithmetic, for a drug with an average sales price of $1,000 per dose, the hospital payment falls from $1,060 to $720, a 32 percent drop, and the patient's 20 percent coinsurance falls from $212 to $144, before any deductible or supplemental coverage.
For an oncologist or rheumatologist who infuses in a 340B hospital's outpatient department, the rate cut lowers what the patient owes and what the hospital is paid for the drug by the same share.
The policy must be budget neutral, so the rule raises payment for non-drug outpatient services by an estimated 7.50 percent. Separately, CMS raises its 340B remedy offset, the reduction to the non-drug conversion factor it uses to recover $7.8 billion paid under the prior 340B policy, from 0.5 percent to 2 percent a year. Hospitals that enrolled in Medicare after Jan. 1, 2018, are excluded, and CMS expects the recovery to finish in 2031.
What moves to the outpatient and surgery center setting?
Most of what leaves the inpatient-only list in 2027 can go to a surgery center too. The 637 removed services, the second year of a three-year phase-out, come from 11 clinical families, including digestive, female genital, maternity care and delivery, respiratory and urinary. CMS added 618 of them to the ambulatory surgical center covered procedures list, plus CPT code 64629 at commenters' request. By our count, that is 97 percent of the services removed from the inpatient-only list this year.
Commenters split. Some supported more site-of-service choice for physicians. Others opposed the expansion on patient safety grounds, the rule says, because many of the procedures carry risks that would previously have excluded them from the surgery center list.
What else is in the rule?
Outpatient rates rise 2.3 percent for hospitals that meet quality reporting requirements, the 3.2 percent market basket less a 0.9 percentage point productivity adjustment. Surgery centers get the same 2.3 percent. CMS estimates total outpatient payments of about $114.4 billion and surgery center payments of about $9.9 billion in 2027.
Imaging without contrast, including certain X-rays, ultrasounds, CT and MRI scans, will be paid at the physician fee schedule equivalent rate in excepted off-campus provider-based departments, with rural sole community hospitals exempt. CMS estimates first-year savings of about $260 million. The approach extends the policy CMS already applies to clinic visits and, since 2026, drug administration, the core of the site-neutral payment debate.
Hospital outpatient departments will also need prior authorization for eight more botulinum toxin injection codes.
What should physicians check?
If you practice in or refer to a 340B hospital's outpatient department, ask its finance team how the drug cut and the 7.50 percent non-drug increase net out for your service line, since infusion-heavy departments and procedure-heavy ones will land differently. Surgeons should check the new surgery center list against their case mix before 2027 block time is set. Practices that inject botulinum toxin in hospital outpatient departments should confirm which of their codes now need prior authorization before scheduling January patients.
Reported, fact-checked and edited by The Script Pad's editorial staff. See How we use AI.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
