Significant Proposed Changes to Medicare Payment Systems for 2027

The Centers for Medicare & Medicaid Services (CMS) recently unveiled significant proposed regulations for the 2027 calendar year, focusing on Medicare payment systems. Notably, the proposed changes affect the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

Each year, CMS navigates the complexities of adjusting Medicare payments, which involves multiple intersecting policies. These adjustments often lead to fluctuations in payment rates, with some services receiving increased funding while others may face cuts. Data analysis plays a crucial role in determining these impacts and assessing potential areas for policy refinement.

For 2027, CMS suggests a 2.4% increase in the statutory conversion factor update for both OPPS and ASC systems. However, the proposed adjustments to actual payments are more intricate, largely due to policies aimed at maintaining budget neutrality. These proposals would increase payments for certain non-drug-related hospital services but reduce reimbursements for drugs, particularly those under the 340B program. The specific effect on a hospital's revenue depends on its mix of services and the proportion of drugs subject to the 340B payment reduction.

Hospitals have the opportunity to comment on CMS's analysis methods, including an alternative proposal to adjust the average sales price (ASP) discount for 340B drugs from 33.4% to 28%. This is significant as changes in ASP discounts alter the savings amounts and necessitate corresponding adjustments to budget neutrality.

Site Payment Equalization and Medicare Coverage Expansion

CMS is also continuing efforts to equalize payments across different service sites, as seen in the proposed application of a Physician Fee Schedule-equivalent rate to certain imaging services at off-campus provider-based departments (PBDs)—except those in rural areas. This initiative could potentially save Medicare $260 million in 2027 and impact Medicare Advantage rates from 2028 onward. The exemption for certain rural healthcare services aims to protect those areas from reduced funding.

Additionally, CMS has expanded the list of procedures eligible for Medicare coverage in ASCs, though the 340B policy's budget neutrality adjustments could lead to reimbursement declines for specific services. The proposal would also address the calculation methodology for device-intensive procedures, potentially impacting payment scales. Stakeholders are encouraged to review CMS's calculations and provide feedback.

Overall, understanding these proposed rules is crucial for hospitals, ASCs, and other stakeholders to anticipate the financial implications. Detailed data analysis allows these entities to offer informed comments and explore alternatives that CMS may consider before finalizing the rules for 2027.