Starting in 2027, Medicare plans to reduce billions in funding for the 340B drug pricing program while extending equal reimbursement rates for outpatient services, according to a final rule published by the Centers for Medicare & Medicaid Services (CMS) on Wednesday. The agency announced that 340B drug payments will decrease significantly, and Medicare will now offer identical compensation for additional procedures—whether delivered in hospital-owned outpatient clinics or independent physician offices.
Officials stated that the final rule will make drugs and imaging services more affordable for Medicare recipients by reducing their out-of-pocket expenses. CMS Administrator Dr. Mehmet Oz remarked, ‘Through correcting payment amounts and eliminating unnecessary spending, these changes will make Medicare more affordable for current participants and ensure it remains available for future generations.’
Impact on Hospitals
The regulation has faced opposition from hospitals, with the American Hospital Association claiming the payment increase is insufficient to tackle the financial difficulties hospitals are experiencing. Ashley Thompson, AHA senior vice president of public policy analysis and development, expressed concern that the continued reductions to the 340B program are troubling and will further strain hospital finances.
Under the final rule, Medicare will compensate 340B participants at the drug’s average sales price minus 28%. This modification will cut billions from 340B payments, though it’s marginally less severe than the rate Medicare had suggested earlier this year for 340B drugs. Regulators reported the policy would decrease drug expenditures by approximately $5.5 billion next year alone.
Site-Neutral Payments
Starting next year, non-contrast imaging services, such as CT scans, MRIs, x-rays, and bone density scans, will receive the same reimbursement rate across both facility types.
The equalized payment policy has been a key focus for the Trump administration. According to CMS estimates, this initiative will save taxpayers and beneficiaries more than $9 billion over ten years. This rule continues previous CMS efforts to implement site-neutral payments, including a policy from last year that standardized payment rates for drug administration services.
For the second consecutive year, Medicare is proposing to reduce the number of procedures restricted to inpatient settings. Next year, CMS will remove 637 services from the inpatient-only list, encompassing endocrine, digestive, auditory, and respiratory procedures. Regulators plan to eliminate the inpatient-only list gradually over three years, noting that medical advancements now allow these procedures to be performed more conveniently and affordably in outpatient settings.
