The Centers for Medicare & Medicaid Services (“CMS”) recently published its proposed payment rule for hospital outpatient services paid under the Outpatient Prospective Payment System (“OPPS”) and for ambulatory surgical center (“ASC”) services for calendar year (“CY”) 2027 (the “Proposed Rule”). Comments are due August 31, 2026.
The Proposed Rule would: (1) increase overall OPPS and ASC payment rates by 2.4%; (2) dramatically cut Medicare payment for drugs acquired through the 340B Drug Pricing Program (from ASP +6% to ASP −33.4%); (3) reduce payment for non-contrast imaging at off-campus hospital outpatient departments; (4) implement new mandatory attestation requirements for provider-based status under Section 6225 of the Consolidated Appropriations Act, 2026 (“CAA 2026”); (5) continue eliminating the Inpatient-Only list and expand ASC-eligible procedures; (6) expand prior authorization requirements; and (7) require accrediting organizations to assess Emergency Medical Treatment and Active Labor Act (“EMTALA”) compliance during hospital surveys.
A summary of the most significant proposals and their potential impact on hospital operations and revenue is below.
1. 340B Drug Payment Cut — Major Revenue Impact, Offset by Redistribution
Based on a new drug acquisition cost survey, CMS proposes to slash Medicare payment for 340B-acquired drugs from ASP +6% to ASP −33.4% — a reduction of approximately $4.85 billion nationwide. This cut would apply to most 340B-acquired drugs, including biologicals, biosimilars, and radiopharmaceuticals, and would also apply to 340B drugs furnished in off-campus provider-based departments already subject to the site neutral payment policy enacted in Section 603 of the Bipartisan Budget Act in 2025. Vaccines, drugs with transitional pass-through status, and non-opioid pain management drugs would be excluded from the cut. CMS based this proposal on survey responses from 53.3% of non-340B hospitals and 28.6% of 340B hospitals. Exempt hospitals include rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals. Critical access hospitals, Rural Emergency Hospitals, and Maryland hospitals (all exempt from OPPS) would also not be affected.
To implement this policy, CMS proposes making certain billing modifiers mandatory: “JG” for 340B-acquired drugs subject to the payment reduction, “TB” for informational reporting by exempt providers, and a new modifier (to be assigned) for non-340B drugs. These modifiers were previously optional.
Because OPPS must remain budget neutral, the $4.85 billion reduction in 340B drug payments would be redistributed to all OPPS hospitals through an estimated 8.44% increase in payments for non-drug hospital outpatient services. In other words, hospitals that rely less on 340B revenue may see a net payment increase.
Separately, CMS proposes to accelerate the recoupment of $7.8 billion in excess payments made to hospitals for non-drug hospital services during CY 2018–2022 (which was the budget-neutral redistribution caused by a Medicare payment cut for 340B-acquired drugs that the Supreme Court later invalidated). The annual offset to non-drug OPPS payments would increase from 0.5% (CY 2026) to 3% beginning in CY 2027, with full recoupment expected by end of CY 2029.
2. Site Neutral Payment for Imaging Without Contrast at Off-Campus Hospital Outpatient Departments
CMS proposes to extend its site-neutral payment policy by paying rates equivalent to the Medicare Physician Fee Schedule (approximately 40% of the OPPS rate) for imaging services without contrast (APCs 5521–5524 and composite APCs 8004, 8005, 8007) when furnished at excepted off-campus provider-based departments. Rural sole community hospitals would be exempt. CMS estimates this change will save Medicare $260 million in CY 2027—meaning a corresponding revenue reduction for affected hospitals.
3. New Mandatory Provider-Based Attestation Requirements — Deadline: January 1, 2028
Section 6225 of the CAA 2026 requires that by January 1, 2028: (1) every off-campus hospital outpatient department must obtain, and bill under, a unique National Provider Identifier (NPI) separate from the main provider’s NPI; and (2) the main provider must submit an initial provider-based status attestation confirming compliance with the requirements at 42 CFR § 413.65. In addition, after the initial attestation, the main provider must submit a subsequent attestation within the timeframe specified by the Secretary of Health and Human Services.
CMS proposes to implement these requirements by:
- Mandatory Attestation Process. Establishing a standardized, centralized electronic attestation form, signed by an authorized official of the main provider (as identified in PECOS), to replace the current Medicare Administrative Contractor (“MAC”) specific templates. Until the new system is finalized, providers may continue to use the current voluntary attestation process. Providers must obtain a separate NPI for each off-campus department and update PECOS enrollment information before submitting an attestation. Initial attestations for existing departments must be submitted between January 1, 2026 and December 31, 2027. CMS proposes that subsequent attestations would be required at intervals not to exceed five years. Indian Health Service, Tribal facilities, and certain FQHCs are excluded from the attestation requirement.
- Documentation Requirements. Eliminating the requirement for providers to submit all supporting documentation at the time of attestation. Instead, CMS and its contractors (including MACs) would use risk-based screening and targeted review to identify attestations requiring further documentation. CMS anticipates that its electronic attestation system would be able to measure the location distance requirement, but in cases where the distance is not verified or exceeds 35 miles, CMS proposes that providers would be required to submit supporting documentation. CMS also proposes that providers must maintain records to demonstrate compliance with the applicable provisions of § 413.65, including: the department is operated under the same license as the main provider; clinical integration (staff privileges, monitoring, access to main provider services); financial integration (consolidated general ledger, no separate trial balance); public awareness (signage identifying the department as part of the main provider); ownership and administrative control (including that the department is 100 percent owned by the main provider and main provider retains final approval over administrative decisions, personnel policies and medical staff appointments); and compliance with EMTALA obligations and beneficiary financial liability notice requirements.
- Verification and Oversight. Implementing a layered, risk-based oversight approach. At the initial stage, CMS and its MACs, would conduct automated validation to screen attestations for completeness and consistency with PECOS enrollment records. Attestations flagged for incompleteness, inconsistency, or elevated risk would be subject to targeted documentation review. At the extended review stage, CMS and its program integrity contractors would select a subset of attestations for more extensive compliance review, which may include site visits, remote audits, desk reviews, or investigations. Providers must submit requested documentation within the timeframe specified by CMS and failure to do so may result in a non-compliance determination and recovery of payment.
- Remote Locations of the Main Provider. Clarifying the definition of “off-campus outpatient department of a provider” to include departments not located on the campus of the main provider or within 250 yards of a remote location of a hospital.CMS previously exempted off-campus facilities within 250 yards of a remote location of a hospital from the site-neutral payment policy enacted in Section 603 of the Bipartisan Budget Act of 2015) and now proposes to exempt those facilities from the mandatory attestation process and the regulatory standards that apply to off-campus hospital outpatient departments in 42 C.F.R. § 413.65(e), (g)(1)(i) and (ii), and (h).
4. Continued Shifts in Sites of Service
As part of a three-year phase-out of the Inpatient-Only (IPO) list, CMS proposes to remove 637 procedures from the IPO list in CY 2027, spanning multiple clinical families (auditory, digestive, endocrine, integumentary, respiratory, urinary, and others). CMS also proposes to add 618 procedures to the ASC-eligible list, primarily those being removed from the IPO list. Hospitals should evaluate which procedures may shift to outpatient or ASC settings and assess the operational and financial implications of these changes.
5. Expanded Medicare Prior Authorization Requirements
In CY 2020, CMS established a prior authorization process for five categories of hospital outpatient services. Each year since then, CMS has gradually added services to that process. CMS is proposing to add eight Botulinum Toxin Injection codes to the existing prior authorization requirement, effective July 1, 2027.
6. New EMTALA Compliance Review During Accreditation Surveys
Historically, CMS has enforced compliance with EMTALA through complaint investigations conducted by State Survey Agencies under CMS direction (in California, the California Department of Public Health). CMS is proposing a new requirement for accrediting organizations authorized by CMS to deem hospitals compliant with the Medicare Conditions of Participation. Accrediting organizations will be required to assess compliance with EMTALA’s administrative requirements during accreditation surveys. This would include review of signage, on-call physician lists, logs, and transfer records. An accrediting organization that identifies EMTALA deficiencies during an accreditation survey would require the hospital to submit an acceptable Plan of Correction (“PoC”). If the PoC is rejected, the accrediting organization must report any EMTALA deficiencies identified during an accreditation survey to CMS for further review and possible investigation.
CMS issued 1,071 EMTALA citations in CY 2025, and views administrative compliance to be a “leading indicator” of overall EMTALA program integrity. CMS believes that incorporating a structured, thorough review of EMTALA compliance in every hospital survey is essential to fulfilling the protective intent of EMTALA. Hospitals should ensure their EMTALA administrative documentation is current and survey-ready at all times.