CMS Proposes 340B Payment Cut in 2027 Outpatient Rule — Comments Close August 31

The Centers for Medicare & Medicaid Services has proposed a significant change to how Medicare pays hospitals for drugs bought through the 340B program. In its proposed rule for the calendar year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center payment system, CMS proposes to pay for 340B-acquired drugs at the average sales price minus 33.4 percent — a rate below ASP — and to redistribute the difference to other outpatient services. The rule is a proposal, not final policy, and the public comment period closes August 31, 2026.

What CMS is proposing

CMS proposes an overall CY2027 outpatient payment update of 2.4 percent, built from a projected hospital market basket increase of 3.2 percent reduced by a 0.8 percentage-point productivity adjustment. It proposes the same 2.4 percent update for ambulatory surgical centers that meet the program's quality-reporting requirements. Those topline updates set the CY2027 baseline for outpatient and ASC payments — but the most consequential single proposal in the rule is how it pays for 340B drugs.

The 340B drug payment change

CMS proposes to pay for 340B-acquired drugs at ASP minus 33.4 percent for CY2027. Because the OPPS operates under a budget-neutrality requirement, the money not spent on those drug payments does not leave the system — CMS proposes to redistribute it as an estimated 8.44 percent increase to payments for non-drug outpatient services across the OPPS. In other words, the proposal would move Medicare dollars away from drug reimbursement at 340B hospitals and toward outpatient service payments generally.

The August 31 comment deadline

To be considered, comments must be received by August 31, 2026. The rule was published in the Federal Register on July 7, 2026 (document 2026-13656) under regulatory identifier CMS-1850-P; comments are submitted through the regulations.gov docket, CMS-2026-2344. For affected hospitals, clinics, and patient and industry groups, that deadline is the formal window to influence what CMS finalizes.

Site-neutral and outpatient provisions

The proposed rule also advances Medicare's move toward “site-neutral” payment. CMS proposes to pay the Physician Fee Schedule-equivalent rate for imaging-without-contrast services furnished at off-campus provider-based departments that are excepted under section 1833(t)(21) of the Social Security Act, while exempting rural sole community hospitals from that method. Separately, the rule addresses provider-based attestation requirements for off-campus outpatient departments under section 6225 of the Consolidated Appropriations Act, 2026.

What changes if finalized — and what is still only proposed

Nothing in the rule is in effect today. These are proposals subject to public comment, and CMS can change them in the final rule, which the agency typically issues later in the year. If finalized, the CY2027 rates and policies would generally apply beginning January 1, 2027. The August 31 comment deadline, the July 7 publication date, and the document and docket numbers are established facts; the payment figures are not — they are what CMS has put forward for comment.

Who is most directly affected

• 340B hospitals — disproportionate-share and other safety-net hospitals that participate in 340B would see lower Medicare payment for the drugs they administer under the proposal.
• All OPPS hospitals and qualifying ASCs — would receive the offsetting increase to non-drug service payments under the budget-neutral formula.
• Off-campus provider-based departments — would be affected by the site-neutral imaging proposal and the section 6225 attestation requirements.
• Rural sole community hospitals — would be exempted from the proposed imaging site-neutral method.

Federal Policy Monitor analysis

FPM analysis: Because the OPPS is budget-neutral, this is best understood not as money leaving Medicare but as a redistribution — away from drug-heavy 340B hospitals and toward the broader pool of outpatient services. That makes the proposal a contested, zero-sum question among hospital types rather than a simple spending cut, and it is why 340B and safety-net hospital groups tend to fight below-ASP drug payment while others do not object to the offsetting increase. Medicare's payment rate for 340B drugs has been a recurring flashpoint in outpatient rulemaking, and the August 31 comment window is the concrete point of leverage for anyone seeking to shape the final rule.