WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services has proposed sweeping changes to Medicare outpatient payment policies for 2027, including lower payments for certain hospital drugs and imaging services, in a move the agency estimates could save beneficiaries and taxpayers billions of dollars.
The proposed rule would revise payment policies for hospital outpatient departments and ambulatory surgical centers beginning in calendar year 2027 as the Trump administration seeks to curb healthcare spending and reduce incentives that steer patients toward higher-cost settings.
“Medicare beneficiaries deserve a program that pays for the right care, in the right setting, at the right time,” CMS Administrator Dr. Mehmet Oz said in a statement.
A central component of the proposal would change how Medicare reimburses hospitals participating in the federal 340B Drug Pricing Program. CMS said a recent survey found that hospitals purchase those drugs at prices substantially below current Medicare reimbursement rates.
The agency estimates aligning payments more closely with hospitals’ acquisition costs would reduce overall drug spending by about $5.7 billion in 2027, including $1.15 billion in savings for beneficiaries in traditional Medicare and $4.55 billion in savings for taxpayers.
Federal law requires the policy to be budget neutral, meaning the savings would be redistributed through higher payments for non-drug outpatient services.
CMS is also proposing to expand utilization management requirements for certain botulinum toxin injection services after agency data showed claims volumes for those procedures increased 42.8% between 2017 and 2024 despite an overall decline in hospital outpatient services.
The agency projects the change would generate more than $17 million in annual net savings.
Another proposal targets so-called site-of-care payment disparities, under which Medicare and beneficiaries often pay more for imaging services such as X-rays and MRIs when they are performed in hospital-owned outpatient facilities rather than independent physician offices.
CMS said equalizing payment rates for certain imaging services would reduce Medicare Part B spending by approximately $260 million in the first year, including about $190 million in program savings and $70 million in lower beneficiary premiums. Patient cost-sharing obligations are also projected to decline by roughly $70 million.
The proposed rule would also continue phasing out Medicare’s inpatient-only list and expand the list of procedures eligible to be performed in ambulatory surgical centers, giving physicians greater flexibility to determine whether outpatient surgery is appropriate.
Separately, CMS is seeking public comment on ways to improve hospital price transparency requirements. Since 2021, hospitals have been required to publicly disclose pricing information, but stakeholders have argued that inconsistent reporting formats have limited the data’s usefulness.
The agency’s request for information seeks input on standardizing those disclosures to make hospital pricing information more comparable and easier for patients, employers and researchers to use.
The proposed changes underscore the administration’s broader effort to reduce healthcare spending, address perceived inefficiencies in Medicare reimbursement and increase pricing transparency across the healthcare system.
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