Budget neutrality turns the headline 340B cut in the CY 2027 hospital outpatient final rule into a transfer. From January 1, 2027, CMS will pay 340B hospitals average sales price minus 28% for drugs bought at the program discount, an estimated $4.35 billion less in Medicare drug payments in the first year, and will raise every non-drug outpatient rate by 7.5% to put the same money back (CMS fact sheet, November 2026).
The final rule with comment period, CMS-1850-FC, went on display November 4 and is scheduled for the Federal Register on November 6. CMS had proposed ASP minus 33.4% in July, the acquisition cost its own survey found, and finalized the milder figure from 340B ceiling-price data.
The rule lands five months after Medicare Advantage bids for 2027 were filed against the proposed version, alongside a 2.3% rate update, a quadrupled 340B remedy offset and the second year of the inpatient-only list phase-out.
Key Takeaways
- CMS set the 340B rate from HRSA ceiling prices, which ran 28.0% below mean ASP, against survey-reported acquisition costs 33.4% below.
- The swap lifts every non-drug outpatient rate. The OPPS conversion factor rises to $99.970 for 2027 from $91.415, with the 340B add-back the largest single piece.
- The sign depends on the hospital. Major teaching hospitals lose 3.9% on the 340B column alone while proprietary hospitals gain 6.8%.
- Two pieces are not neutralized: the cut at non-excepted off-campus departments saves Part B $640 million, and the imaging site-neutral extension another $190 million.
- The remedy offset rises to 2% of the conversion factor for hospitals enrolled before 2018, until $7.8 billion is recovered in CY 2031.
What the rule moves
CMS set the outpatient fee schedule increase factor at 2.3%, a 3.2% market basket less a 0.9 point productivity adjustment. Total CY 2027 OPPS payments come to about $114.4 billion, $10.7 billion above 2026 once enrollment, utilization and case mix are counted (final rule, November 2026).
On CY 2025 claims, separately payable drug payments including copayments fall about $4.65 billion at the new rate, $200 million less than the proposed rule's estimate, and the rule redistributes "an equal offsetting amount to all hospitals paid under the OPPS." Total Part B drug payment under the OPPS on those claims was about $27.7 billion. Projected into 2027, the fact sheet's $4.35 billion for Medicare and $1.1 billion for beneficiaries total $5.45 billion, and the average beneficiary who receives an affected drug saves $900.
CMS's acquisition cost survey ran from January 1 to April 7, 2026, with responses from about 41% of 3,147 eligible hospitals, and found 340B drugs bought at 33.4% below mean ASP and non-340B drugs at 2.7% above. Ceiling prices over the same period ran 28.0% below mean ASP, volume-weighted by 340B outpatient claims, which CMS called "a reasonable and conservative estimate" of acquisition cost. Non-340B drugs stay at ASP plus 6%, the rate rural sole community, children's and PPS-exempt cancer hospitals keep for every drug.
"By right-sizing payments and rooting out waste, today's reforms will drive affordability in Medicare for current beneficiaries," CMS Administrator Mehmet Oz said in the agency's release (CMS, November 4, 2026).
After the Supreme Court struck down the 2018 to 2022 cuts in American Hospital Association v. Becerra, the 2023 remedy rule paid about 1,700 hospitals a $9.0 billion lump sum and began recovering the $7.8 billion in extra non-drug payments made over those years at 0.5% of the conversion factor a year, a 16-year schedule (CMS, November 2023). The final rule lifts that to 2% from 2027 for the 3,322 providers enrolled before January 2018, about $1.6 billion in the year, until the total reaches $7.8 billion in CY 2031.
Separately, imaging without contrast at excepted off-campus departments will be paid at the physician fee schedule equivalent, 40% of the OPPS rate. CMS estimates that at $260 million less in 2027 and $9.33 billion in Part B benefits over ten years.
The swap, line by line, for a plan paying Medicare rates
On the drug line, a separately payable drug bought at the 340B discount at a non-exempt 340B hospital moves from ASP plus 6% to ASP minus 28%, a 32% cut in the unit price. On the non-drug line, the conversion factor rises from $91.415 to $99.970, up 9.4%. That carries the 2.3% update, the 7.5% 340B add-back and smaller budget-neutrality factors. A hospital enrolled before 2018 gives 2 points of it back under the remedy offset, which HFMA nets to a 5.5% non-drug increase before the update (HFMA, November 2026).
CMS's impact table does the arithmetic by hospital class. Column 4 isolates the 340B swap and column 7 is the whole rule before the remedy offset, which takes a further 2 points off most rows.
| Hospital class | 340B swap alone | All CY 2027 changes |
|---|---|---|
| All hospitals (3,502) | -0.1% | +1.7% |
| Large urban, over 1 million population | -0.8% | +0.8% |
| Rural sole community | +5.3% | +7.7% |
| Major teaching | -3.9% | -2.7% |
| Non-teaching | +3.5% | +6.0% |
| DSH patient percent 0.35 or more | -5.2% | -4.2% |
| Urban, 500 or more beds | -4.8% | -3.7% |
| Proprietary ownership | +6.8% | +10.1% |
| Government ownership | -2.9% | -1.7% |
Source: Table 112, CY 2027 OPPS/ASC final rule with comment period. Estimated change in OPPS payments versus CY 2026; excludes the 2.0 point remedy offset applied to providers enrolled before January 1, 2018.
The rule states the direction: "For most 340B providers, the decreased 340B drug payments will outweigh the increased payments for non-drug services." A plan whose members use the large academic and safety-net systems with the highest 340B drug volume sees Part B outpatient unit costs fall. One concentrated in non-340B, proprietary or small non-teaching hospitals sees a pure increase: they keep ASP plus 6% on drugs and collect 7.5% on everything else.
Bids for 2027 were due June 1 against the proposed rule, which cut 340B drugs to ASP minus 33.4%, estimated $4.55 billion of Medicare drug savings and set the remedy offset at 3%. A plan that priced the proposal carries a drug line slightly above its bid and a non-drug line slightly below it at pre-2018 hospitals. The site's walk-through of the 2027 rate announcement covers the revenue side. The 2.48% payment increase is untouched, since budget neutrality leaves the fee-for-service spending that feeds later benchmarks where it was.
Two parts escape the swap. The same ASP minus 28% rate applies to 340B drugs furnished at non-excepted off-campus departments, paid under the physician fee schedule outside the OPPS pool. CMS expects that to save the Part B trust fund about $640 million and beneficiaries $160 million in 2027 with no add-back. With the imaging policy's $190 million, the real reductions in the fee-for-service base that drives 2028 and 2029 MA benchmarks come to about $830 million against $114 billion.
Where the surgical volume goes
CMS removed 637 services from the inpatient-only list for 2027, the second year of a three-year phase-out, and added 618 codes to the ambulatory surgical center covered procedures list. ASC rates rise 2.3% on the same market basket, to a conversion factor of $57.721 from $56.322. CMS puts total 2027 ASC payments at about $9.9 billion, $560 million above 2026.
The 340B swap reaches the ASC side through the weight scaler. OPPS non-drug rates rose on the add-back while device costs are held constant between the two systems, so the scaler falls to 0.814 from 0.872 and the update lands unevenly: eye and gastrointestinal procedures down 1%, musculoskeletal and nervous system up 6%, cardiovascular up 5% (Table 113). For a plan paying Medicare rates, the hospital price for a procedure moves with a 9.4% higher conversion factor while the ASC price moves 2.5%, a wider gap than the June bids' site-of-service assumptions carried, in the year 637 more procedures become eligible to move.
"We remain deeply concerned about CMS' continued assault on the 340B program," Ashley Thompson of the American Hospital Association said in the group's statement (AHA, November 4, 2026). The Community Oncology Alliance, whose members compete with hospital infusion sites, called the new rate "a far more realistic reflection of their acquisition costs" (Targeted Oncology, November 2026).
Comments on the final rule with comment period are due January 4. Every separately payable drug claim under the OPPS will need a JG, TB or new ND modifier from January 1, so CMS will see 340B status line by line for the first time.