The Centers for Medicare and Medicaid Services (CMS) on July 7, 2026, issued a proposed rule (CMS-1850-P) for calendar year (CY) 2027 that would overhaul payment policies for hospital outpatient departments and ambulatory surgical centers under the Medicare program. The deadline to submit comments is August 31, 2026.
Below are preliminary key takeaways from this year’s broad-sweeping proposed rule.
Provider-Based Department Compliance Attestations
In furtherance of implementing the Consolidated Appropriations Act of 2026, CMS proposes that hospital outpatient departments must submit a completed attestation and document compliance with the provider-based requirements of 42 CFR § 413.65 using the CMS-standardized attestation form, signed and dated by an authorized official of the main provider as identified in PECOS. CMS also proposes certain amendments to the regulation designed to ease the review and approval process to address the expected volume of attestations.
Aligning 340B Drug Payments with Acquisition Costs
Based on findings from recent hospital drug acquisition cost surveys, CMS proposes to reduce payments for drugs purchased under the 340B Drug Pricing Program to the average sales price (ASP) minus 33.4%. This is a substantially higher reimbursement reduction than the ASP minus 22.5% adopted in CY 2018, which was successfully challenged by hospitals in the US Supreme Court’s 2022 decision in American Hospital Association v. Becerra. CMS proposes that it has cured the statutory flaws that condemned its CY 2018 attempt.
Leveling Site-of-Care Imaging Payments
CMS proposes to equalize payment rates between physician offices and off-campus provider-based departments for certain imaging without contrast services.
Expanded Utilization Management for Botulinum Toxin Injections
Based on increases in botulinum toxin injection claims from 2017 to 2024, CMS proposes to require prior authorization for eight additional injection codes to ensure medical necessity.
Phasing Out the Inpatient Only List
In year two of a three-year phaseout, CMS proposes to remove 638 services from the Inpatient Only list for several clinical families. CMS also proposes expanding the ASC covered procedures list to include new permanently office-based procedures.
Hospital Price Transparency
CMS seeks public input on ways to strengthen machine-readable file standardization to increase hospital pricing transparency and improve consumer-friendly display. CMS is particularly interested in the reporting of contract mechanisms such as outlier payments, stop-loss provisions, rate tiering, and carve-outs.
Cost-of-Living Adjustment for Alaska and Hawaii Hospitals
CMS proposes to apply a cost-of-living adjustment to the nonlabor share of Outpatient Prospective Payment System (OPPS) payments for hospitals in Alaska and Hawaii.
Quality Reporting and Accreditation Changes
The proposed rule updates payment rates for Intensive Outpatient Programs (IOP) and Partial Hospitalization Programs (PHP) using recent claims and cost data.
CMS also proposes to allow accrediting organizations with deeming authority to assess compliance with administrative requirements under the Emergency Medical Treatment and Labor Act (EMTALA) during routine surveys. Enforcement authority over substantive patient care protections remains exclusively with CMS and the Office of Inspector General (OIG).
This year’s CY 2027 OPPS proposed rule includes several impactful policy changes affecting hospital outpatient services. Hospitals and other affected entities should carefully review the proposed rule and consider commenting before the August 31, 2026 deadline. Morgan Lewis Bockius LLP will be furnishing deeper dives into two of the larger policy changes – PBD attestations and reimbursement for 340B Program drugs – in the coming days.