Payer Policy | CY 2027 OPPS and ASC Proposed Rule: 2.4% Update, Inpatient Only Cuts and New Prior Authorization - Effective Date: January 01, 2027 (proposed)
Summary of the Rule or Edit Change
CMS released the CY 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center proposed rule (CMS-1850-P) on July 2, 2026, and it was published in the Federal Register on July 7. Comments closed August 31, and CMS usually finalizes this rule in early November. The proposed payment update is 2.4 percent for both hospital outpatient departments and ASCs: a 3.2 percent market basket increase minus a 0.8 point productivity adjustment. For ASCs that meet quality reporting requirements, that works out to a proposed conversion factor of $57.766.
The bigger story for surgical practices is site of service. CMS proposes removing 637 services from the Inpatient Only list, the second year of a three-year phase-out, across clinical families including digestive, endocrine, genital, integumentary, respiratory and urinary procedures. It also proposes adding 618 codes to the ASC covered procedures list. When a procedure leaves the IPO list, it can be paid in the outpatient setting, and often it can move to an ASC.
Three other proposals will reach billing teams directly:
- More outpatient prior authorization. Eight more botulinum toxin injection codes would join the hospital outpatient department prior authorization process for dates of service on or after July 1, 2027.
- Site-neutral imaging. CMS proposes paying the Physician Fee Schedule equivalent rate for imaging without contrast at excepted off-campus provider-based departments, with rural sole community hospitals exempt. CMS estimates about $260 million in savings in the first year.
- 340B drugs. CMS proposes paying 340B-acquired drugs at ASP minus 33.4 percent, based on its drug acquisition cost survey.
The rule also starts implementing section 6225 of the Consolidated Appropriations Act, 2026. Beginning January 1, 2028, OPPS payment for off-campus outpatient departments requires billing under a separate NPI, and the main provider must attest that those departments meet the provider-based rules.
Action Required for Billing Teams
- Check the IPO and ASC list changes against your procedure mix. Pull 12 months of inpatient surgical cases and flag the CPT codes CMS proposes to remove from the IPO list or add to the ASC list. Those are the cases whose site of service, and payment, could change in 2027.
- Start a Botox prior authorization workflow now. If your hospital outpatient department bills botulinum toxin injections, map which codes would need authorization from July 1, 2027, and who will submit the requests.
- Inventory off-campus departments and NPIs. Hospitals with off-campus provider-based clinics should list each location, its current NPI and its provider-based attestation status. The separate NPI requirement takes effect January 1, 2028, and enrollment changes take time.
- Model the imaging change. For off-campus departments billing non-contrast CT, MRI and ultrasound, re-price a year of volume at the PFS-equivalent rate to see the 2027 impact.
- Put the final rule on the calendar. Assign one owner to read it in November and update the charge master and payer-mix model before January 1.
Verifiable References
- CMS. Calendar Year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (CMS-1850-P) (fact sheet). cms.gov/newsroom/fact-sheets/calendar-year-2027-hospital-outpatient-pro...
- Federal Register. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; and Quality Reporting Programs (proposed rule, July 7, 2026). federalregister.gov/documents/2026/07/07/2026-13656
- HFMA. CY 2027 OPPS/ASC Proposed Rule Summary. hfma.org/payment-reimbursement-and-managed-care/cy-2027-opps-asc-proposed-rule-summary/
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