The AAMC issued a statement strongly opposing the calendar year (CY) 2027 Outpatient Prospective Payment System (OPPS) final rule that goes beyond the annual payment rate update and drastically reduces hospital payment, effective Jan. 1, 2027. In its statement, the AAMC outlined the harmful impact of these policies on academic health systems and teaching hospitals and emphasized the association’s determination to work to reverse the payment cuts.
In the final rule, the Centers for Medicare & Medicaid Services (CMS) increased base payment rates by 2.3% for items and services paid under OPPS for CY 2027. It also finalized a policy to reduce payment for 340B acquired drugs to the drug’s average sales price (ASP) minus 28%, a slight change from the proposed rate of ASP minus 33.4% [refer to Washington Highlights, July 10]. CMS calculated 340B hospital acquisition costs at ASP minus 28% based on Health Resources and Services Administration ceiling price data, a change from the proposed rule, which used responses to a 2025 CMS survey [refer to Washington Highlights, Sept. 19, 2025]. The CMS estimates this will reduce Medicare drug payments by $5.45 billion. To maintain overall budget neutrality under the OPPS, the agency will raise OPPS payments for nondrug services by 7.5%.
The agency is also moving forward with accelerating the reduction in OPPS payment rates for nondrug items and services to offset lump sum payments previously paid to 340B hospitals. The accelerated reduction will begin in CY 2027 and is expected to last through CY 2031. The agency will apply a 2-percentage-point reduction to payment for nondrug items and services, down from the 3 percentage points proposed, but up from the 0.5 percentage points in effect for CY 2026.
The rule finalized provisions to implement a requirement of the Consolidated Appropriations Act of 2026 (P.L. 119-75, PDF) that hospitals apply for a separate National Provider Identifier for each off-campus department and submit a provider-based attestation for each location. Additionally, the CMS is expanding its so-called site-neutral payment policies to imaging without contrast services provided at excepted off-campus hospital outpatient departments.
The CMS announced the closure of St. Luke’s Des Peres Hospital in Missouri and Franciscan Health Hammond in Indiana, including the redistribution of graduate medical education full-time equivalent (FTE) positions through Section 5506 of the Affordable Care Act. The agency prioritizes redistribution of FTEs to hospitals that are geographically close to the closed hospital. Hospitals interested in applying for FTEs from these hospitals have until Feb. 2, 2027, to submit applications.
- Washington Highlights