On July 2, 2026, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2027 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule (CMS-1850-P), which includes proposals to update payment rates and regulations affecting Medicare services furnished in hospital outpatient and ASC settings beginning in CY 2027.
For CY 2027, CMS proposes to increase payment rates under OPPS and the ASC Payment System by 2.4%. This increase factor is based on a proposed hospital market basket percentage increase of 3.2% reduced by a productivity adjustment of 0.8 percentage points. CMS continues to implement the statutory 2 percentage point reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting requirements by applying a reporting factor of 0.9805 to the OPPS payments and copayments for all applicable services. CMS notes that payments for services at hospitals subject to the proposed 340B remedy offset would be reduced by 3 percentage points, a significant increase from the 0.5 percentage point reduction in place for CY 2026.
Based on the proposed policies, CMS estimates that total payments to OPPS and ASC providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2027 would be about $110.9 billion and $9.9 billion, respectively. This represents an increase of about $9.5 billion and $520 million, respectively, from CY 2026 payment levels.
Key takeaways from the CY 2027 OPPS and ASC Payment System proposed rule
- Inpatient only (IPO) list: CMS proposes the second set of procedures to be removed from the IPO list as part of a three-year transition period to completely phase out the IPO list. For CY 2027, CMS proposes to remove 637 procedures from the IPO list and assign them to clinical ambulatory payment classifications (APCs). The remaining 801 procedures, which are more clinically complex in nature, would move off the IPO list in the final transition year, CY 2028.
- Site-neutral payments: CMS proposes to expand site-neutral payments to include imaging services without contrast furnished by excepted off-campus provider-based outpatient departments, with an exception for rural sole community hospitals (SCHs).
- ASC covered procedures list (CPL): CMS proposes to expand the ASC CPL by adding 618 procedures, tracking the procedures that CMS proposes to remove from the IPO list for CY 2027.
- Changes to device pass-through eligibility criteria: As discussed in the fiscal year 2027 Inpatient Proposed Payment System proposed rule, CMS proposes to eliminate the alternate pathway for transitional pass-through under OPPS, requiring medical devices with breakthrough device designation to meet the same eligibility criteria as non-breakthrough technologies.
- Payment for 340B-acquired drugs: CMS proposes to pay for 340B-acquired drugs at average sales price (ASP) minus 33.4%, rather than the current default OPPS rate of ASP plus 6%. Several hospital types, including rural SCHs, would be exempt from this change, if finalized. This reduction would be implemented in a budget-neutral manner, resulting in an 8.44% increase to the conversion factor for OPPS non-drug items and services for CY 2027.
- 340B remedy: CMS proposes to increase the annual reduction to the OPPS conversion factor for non-drug items and services from 0.5% to 3% effective January 1, 2027, to accelerate recoupment of the budget neutrality payments associated with the 340B remedy.
- Software as a medical service (SaMS): CMS proposes an interim payment policy of assigning all service codes representing SaMS technologies to new technology APCs for CY 2027 while the agency contemplates a broader strategy for payment of these types of services.
- Algorithm-only laboratory services: CMS proposes to remove algorithm-only analyses of laboratory tests from the Clinical Laboratory Fee Schedule (CLFS) and assign the codes to new technology APCs, consistent with its broader SaMS proposed policy.
- Prior authorization: CMS proposes to incorporate additional codes into the existing botulinum toxin injections service category that is subject to prior authorization beginning on July 1, 2027.
- Skin substitutes: CMS proposes to maintain its policy finalized in CY 2026 of unpackaging skin substitutes and paying for them separately as incident-to supplies.
- ASC payments: CMS proposes to continue to apply a productivity-adjusted hospital market basket update to ASC payments for CY 2026.
- Diagnostic radiopharmaceuticals: CMS proposes to continue to pay separately for diagnostic radiopharmaceuticals whose per day costs (PDCs) exceed the annually adjusted threshold.
- Quality reporting programs: CMS’s proposed updates to the outpatient and ASC quality reporting programs include removal of a cross-program measure on colonoscopies.
- Requests for information: CMS requests feedback on ways to improve the comparability and standardization of available hospital price transparency data.
Comments on the proposed rule are due August 31, 2026.
Our full summary of the OPPS/ASC Payment System proposed rule is for McDermott+ clients and McDermott+ Insider subscribers only; please contact your relationship consultant with questions. For inquiries, please contact us.
updated opps-pfs data dashboard
McDermott+’s interactive dashboard for PFS, Outpatient Prospective Payment System (OPPS), and Ambulatory Surgical Care (ASC) shows key information published by CMS for individual procedure codes. This includes for individual procedure codes (where applicable), the payment rate through the Medicare physician fee schedule, outpatient prospective payment system, and ambulatory surgical center payment system, plus status and payment indicators, geometric mean costs, device offset amounts, and other useful information.
This dashboard can be used by providers, device manufacturers and the general public to see how payments for services of interest have changed across years and see how much their services are getting paid across localities.
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OPPS and ASC Proposed Rule Resources
- The proposed regulations are available here.
- The press release is available here.
- The fact sheet is available here.
