The Centers for Medicare & Medicaid Services (CMS) has proposed updates to the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System for calendar year 2027. The proposals would affect approximately 3,500 hospitals and 6,400 ASCs and include changes to payment rates, site-of-service policies, drug reimbursement, prior authorization, and quality reporting.
As outpatient care evolves, health systems are navigating increasingly complex requirements around where procedures are performed, how they are reimbursed, and what is required to support them.
Below, we outline six key changes health systems should prepare for.
1. 2027 OPPS and ASC payment update
CMS is proposing a 2.4% payment-rate increase for hospitals that meet applicable quality reporting requirements. Qualifying ASCs would receive the same update. The proposal is based on a projected 3.2% hospital market basket increase, reduced by a 0.8 percentage-point productivity adjustment.
2. Continued phaseout of the inpatient-only list
CMS is continuing its three-year phaseout of the Inpatient Only (IPO) list. For 2027, the agency is proposing to remove 638 additional services across clinical families including digestive, endocrine, respiratory, urinary, integumentary, maternity and delivery, and others.
If finalized, the change would allow Medicare to pay for these services in the hospital outpatient setting when clinically appropriate, giving physicians greater flexibility in choosing the right site of care.
The proposal follows the removal of 285 codes finalized for 2026, marking the first year of the phase-out.
As more procedures become eligible for outpatient care, health systems need to keep scheduling, authorization, and reimbursement workflows aligned with changing site-of-care policies.
3. Expansion of site-neutral payments
CMS is proposing to expand site-neutral payment policies by paying a Physician Fee Schedule-equivalent rate for certain imaging services without contrast at excepted off-campus provider-based departments. Rural Sole Community Hospitals would be exempt.
CMS estimates the change would reduce Medicare Part B expenditures by approximately $260 million in the first year.
Building on earlier policies affecting clinic visits and drug-administration services, the proposal reflects CMS’s continued efforts to reduce payment differences based on where care is delivered.
4. Changes to 340B drug reimbursement
The proposed rule also includes significant changes for hospitals participating in the 340B Drug Pricing Program.
Based on a 2026 hospital drug acquisition cost survey, CMS proposes reimbursing 340B-acquired drugs at Average Sales Price (ASP) minus 33.4%. The agency estimates this would reduce Original Medicare drug payments by $4.55 billion and beneficiary payments by $1.15 billion in the first year. To maintain budget neutrality, CMS proposes a corresponding increase in OPPS payments for non-drug services.
CMS also proposes accelerating the existing 340B remedy offset by increasing the reduction to the OPPS conversion factor for affected non-drug services from 0.5% to 3% beginning in 2027. The agency estimates this would achieve the targeted $7.8 billion reduction by 2029.
Together, these proposals could significantly affect outpatient reimbursement for participating hospitals.
5. Expansion of prior authorization requirements
CMS proposes adding eight botulinum toxin injection codes to its prior authorization requirements for hospital outpatient departments, citing utilization increases and program-integrity concerns.
For providers, the proposal underscores the importance of identifying applicable authorization requirements before performing procedures to help reduce avoidable delays and reimbursement risk.
6. Quality reporting changes for hospitals and ASCs
CMS is proposing updates to both the Hospital Outpatient Quality Reporting (OQR) and ASC Quality Reporting (ASCQR) programs.
One change would remove the Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients measure from both programs beginning with the CY 2027 reporting period for the CY 2029 payment determination. CMS notes that another existing colonoscopy measure is more closely tied to clinical outcomes.
Quality reporting also carries financial implications. Hospitals and eligible ASCs that fail to meet applicable reporting requirements may receive a two-percentage-point reduction to their annual payment-rate update.
What these changes mean for health systems
Taken together, the proposed policies reinforce a common challenge: health systems must keep pace with evolving requirements for where procedures are performed, authorized, and reimbursed.
Accurate surgical data is critical to navigating these changes.
That content supports appropriate site-of-care decisions, consistent workflows, and reimbursement accuracy.
IMO Health helps health systems navigate this complexity through standardized surgical terminology and maintained procedural content. Its perioperative offering includes IPO-list and ASC-inclusive code identification to support scheduling, prior authorization, and revenue tracking as CMS policies evolve.
