Federal Policy
CMS Proposes 2.4% Outpatient Rate Increase With 340B Cuts and Site-Neutral Imaging Expansion
CMS released its proposed 2027 outpatient prospective payment system rule with a 2.4% base rate increase, significant reductions to 340B drug payments, and an expansion of site-neutral payment policies to off-campus imaging services. Provider groups say the combined effect of 340B cuts and site-neutral expansions could result in negative net payment updates for many hospitals. The rule is in proposed form, meaning CMS will accept public comments before issuing a final rule later this year. For Medicaid managed care organizations, these Medicare payment changes often influence hospital contracting strategies, network stability, and cost-shifting dynamics.
Why it mattersMedicare outpatient payment cuts and site-neutral expansions affect hospital financial margins, which can lead to network disruptions, cost-shifting to Medicaid managed care plans, and changes in hospital willingness to accept Medicaid contracts.