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Getting the latest healthcare news for you
Major hospital groups are calling CMS' proposed 340B drug reimbursement cuts "straightforwardly unlawful" and signaling potential litigation. The proposed 2027 outpatient payment rule would slash 340B reimbursements from ASP+6% to ASP-33.4%, hitting safety-net hospitals hardest while benefiting for-profits. Industry groups warn the changes — layered on top of other coverage cuts — could force service reductions or even hospital closures.
Hospital industry groups are sounding the alarm — and hinting at a courtroom showdown — over CMS' proposed 2027 Hospital Outpatient Prospective Payment System (OPPS) rule. The proposal would cut 340B drug reimbursements from ASP+6% to ASP-33.4%, a roughly 40% reduction from current rates, while offsetting the cut with an 8.44% increase in non-drug outpatient service payments to maintain budget neutrality. The American Hospital Association (AHA), America's Essential Hospitals (AEH), and the Association of American Medical Colleges (AAMC) argue the policy is unlawful, citing an acquisition cost survey that covered only 23.1% of 340B hospitals — falling short of statutory requirements.
The financial fallout would be uneven. Disproportionate share hospitals face an estimated 5.8% net OPPS revenue reduction, while for-profit hospitals — which don't participate in 340B — stand to gain a 7.4% net increase thanks to the budget-neutrality adjustment. Hospital groups warn the cuts, compounded by Medicaid reductions from the One Big Beautiful Bill Act, could force service cuts or closures at safety-net facilities. The Federation of American Hospitals, representing for-profits, is the lone major industry voice backing the 340B rate change.
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Why it matters: Safety-net hospitals — already strained by rising uncompensated care and looming Medicaid cuts — could face serious financial pressure if this rule is finalized as proposed. The legal challenges being telegraphed by major hospital groups suggest this fight is far from over, with a Supreme Court precedent already on the books from a similar 2017 policy reversal.
