The Centers for Medicare & Medicaid Services (CMS) announced new final rules scheduled to take effect in 2027, aimed at restructuring the payment system for hospitals and ambulatory surgical centers. This step comes as part of the administration's efforts to lower direct costs for Medicare beneficiaries, with a special focus on the 340B drug discount program.
Reducing 340B Program Allocations
Under the new rules, reimbursement amounts for 340B participants will be reduced to the average sales price of the drug minus 28%. Regulators expect this measure to reduce drug spending by approximately $5.5 billion in 2027 alone. This adjustment aims to address the significant cost disparity, as hospitals previously received reimbursements that exceeded the actual cost of purchasing the drugs.
Expanding Site-Neutral Payment Policies
Medicare is moving toward adopting "site-neutral payment" policies, where medical service prices will be standardized regardless of whether they are provided in hospital outpatient departments or independent physician offices. This policy will include medical imaging services such as computed tomography (CT), magnetic resonance imaging (MRI), and X-rays, thereby reducing the financial incentives that previously drove hospital consolidation and raised costs.
What This Means for Hospitals and Beneficiaries
The CMS administration argues that these reforms will enhance the affordability of healthcare for current beneficiaries and ensure the program's sustainability for future generations. In contrast, the American Hospital Association (AHA) expressed strong opposition, noting that the slight increase in non-drug service payments (by 2.3%) is insufficient to meet growing financial challenges, and described the changes to the 340B program as an "ongoing assault" that will increase operational pressures on hospitals.
Updating the Inpatient-Only Procedure List
In an additional step, CMS decided to remove 637 services from the list of procedures restricted to inpatients, including gastrointestinal and respiratory procedures. The agency plans to phase out this list gradually over three years, based on medical advancements that have made performing these procedures feasible and safe in less costly outpatient settings.