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Medicare is shaking up how it pays for drugs and outpatient services in 2027. CMS finalized a rule slashing 340B drug payments by billions and expanding site-neutral policies to cover more imaging services. Hospitals are pushing back hard, calling the changes financially damaging — but regulators say the reforms will lower costs for Medicare beneficiaries.
Medicare is overhauling how it pays for drugs and outpatient care in 2027. CMS finalized its Outpatient Prospective Payment System rule, cutting reimbursements for drugs acquired through the 340B discount program to the average sales price minus 28% — a reduction expected to slash roughly $5.5 billion in drug spending next year alone. The Trump administration has been a vocal critic of the 340B program, arguing that spending has ballooned well beyond its original intent of helping safety-net hospitals afford expensive drugs.
Site-neutral payments are also getting a bigger footprint. Starting next year, Medicare will pay the same rate for imaging services without contrast — including CT scans, MRIs, X-rays, and bone density scans — whether performed in hospital outpatient departments or freestanding physician offices. CMS estimates this will save taxpayers and beneficiaries over $9 billion over a decade.
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Why it matters: These changes represent one of the most significant Medicare payment restructurings in recent years, directly affecting hospital finances, drug affordability for patients, and the long-term sustainability of the 340B program. Hospitals — especially safety-net institutions — could face serious financial strain, while for-profit hospitals and freestanding outpatient centers may benefit.
