CY 2027 OPPS and ASC proposed rule: rates, 340B drugs and prior authorization
CMS published the CY 2027 hospital outpatient (OPPS) and ASC proposed rule (CMS-1850-P) on July 7, 2026. It proposes a 2.4 percent update, payment of ASP minus 33.4 percent for 340B drugs, and prior authorization for botulinum toxin injections from July 1, 2027. Comments were due August 31, 2026.
Written by Salman Saeed, CEO and Co-Founder · Reviewed by a Certified Medical Coder · 
In short: the CY 2027 OPPS and ASC proposed rule (CMS-1850-P, 91 FR 41734) proposes a 2.4 percent update for OPPS and ASC rates, removal of 637 services from the Inpatient Only list and ASP minus 33.4 percent for 340B acquired drugs. It is a proposal that CMS can change in the final rule.
What did CMS propose, and when?
CMS published the proposed rule in the Federal Register on July 7, 2026 at 91 FR 41734. It is the Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems proposed rule (CMS-1850-P, RIN 0938-AV83).
The proposals would update payment policies and rates beginning January 1, 2027. To be assured consideration, comments had to be received by August 31, 2026, so the comment period has closed. The rule that sets 2026 outpatient payment is covered in CMS finalizes the CY 2026 OPPS and ASC rule.
What would change for billing in 2027?
| Proposal | What the proposed rule says | Proposed for |
|---|---|---|
| Payment update | An OPD fee schedule increase factor of 2.4 percent: a 3.2 percent market basket increase less a 0.8 percentage point productivity adjustment. CMS estimates OPPS payments of about $110.9 billion, up about $9.5 billion from CY 2026. The reporting factor for hospitals that miss OQR requirements stays 0.9805. | CY 2027 |
| ASC update | ASC rates rise 2.4 percent for ASCs meeting quality reporting, using the hospital market basket for one more year. CMS estimates ASC payments of about $9.9 billion, up about $520 million. | CY 2027 |
| 340B acquired drugs | Pay ASP minus 33.4 percent, based on the Medicare OPPS Drug Acquisition Cost Survey run from January 1 to April 7, 2026. Budget neutrality would raise payments for non-drug services by an estimated 8.44 percent. | CY 2027 |
| 340B remedy offset | The annual reduction to the conversion factor for non-drug items and services rises from 0.5 percent to 3 percent for hospitals the offset applies to. | CY 2027 |
| Inpatient Only list | Remove 637 more services from the list. CMS also proposes adding 618 codes to the ASC covered procedures list. | CY 2027 |
| Prior authorization | Add botulinum toxin injection codes to the services subject to hospital outpatient prior authorization. | Dates of service on or after July 1, 2027 |
| Other items | A cost-of-living adjustment for outpatient services in Alaska and Hawaii, off-campus department provisions from the Consolidated Appropriations Act, 2026, and EMTALA deeming by accrediting organizations. | CY 2027 |
Who does this affect?
Hospital outpatient departments and ASCs paid under these systems. Hospitals in the 340B program feel the drug payment and offset proposals most, and hospitals that give botulinum toxin injections need a new authorization step if the proposal is finalized.
Facility claims on the UB-04 carry these changes.
What should billing teams do now?
- If you are a 340B hospital, model drug revenue at ASP minus 33.4 percent and the 3 percent offset, then compare it with the 8.44 percent estimated increase for non-drug services.
- Pull botulinum toxin injection volume for hospital outpatient claims so you can size the prior authorization workload for July 1, 2027.
- Check surgical schedules against the 637 proposed Inpatient Only removals, because some cases could move to outpatient billing.
- Keep the 2026 rate set from the final rule in your model as the base, then update when the CY 2027 final rule is out.
What is still open?
Comments closed on August 31, 2026 under docket CMS-2026-2344. CMS answers comments in the final rule, which is a separate document and is not covered here.
The OPPS and APCs rule page explains how rates are built, and the hospital revenue cycle guide covers the wider facility process. See the Medicare billing guide for claim basics, and hospital and facility billing for how Nucleus Align handles UB-04 claims.
- Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; and Quality Reporting Programs (CMS-1850-P), 91 FR 41734 · Federal Register
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Common questions
Straight answers from the team that does the work.
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01What update does the CY 2027 OPPS proposed rule propose?
CMS proposes an OPD fee schedule increase factor of 2.4 percent for CY 2027, based on a 3.2 percent hospital market basket increase minus a 0.8 percentage point productivity adjustment. ASC payment rates would also rise 2.4 percent for ASCs that meet quality reporting requirements.
02How would 340B drugs be paid under the CY 2027 OPPS proposal?
CMS proposes paying ASP minus 33.4 percent for 340B acquired drugs, using results of its OPPS Drug Acquisition Cost Survey. The change must be budget neutral, so CMS estimates an 8.44 percent increase in payments for non-drug services. A separate offset would rise from 0.5 percent to 3 percent.
03What prior authorization change does the OPPS proposed rule include?
CMS proposes adding botulinum toxin injection codes to the services subject to hospital outpatient department prior authorization. The requirement would apply to dates of service on or after July 1, 2027, if the proposal is finalized in the CY 2027 final rule.
04When were comments due on the CY 2027 OPPS and ASC proposed rule?
The Federal Register published it on July 7, 2026, and comments had to be received by August 31, 2026 to be assured consideration. The docket is CMS-2026-2344 on regulations.gov. The comment period is closed, and CMS responds in the final rule.
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