CMS’ proposed 2027 outpatient and ASC payment rule drew 2,180 public comments, and 340B dominated them. About 1,000 submissions weighed in on a proposal to cut Medicare payment for 340B drugs by nearly 40%, a fight that pitted hospitals against one another.
The proposed rule (CMS-1850-P) was published July 7, and comments closed Aug. 31. Nearly a third of submissions — 689 — came in on the last day.
Beyond 340B, physician groups ran organized campaigns. Physiatrists opposed botulinum toxin prior authorization, bariatric surgeons supported removing their procedures from the inpatient-only list, and ophthalmologists and pain physicians opposed ASC payment cuts. Device, drug and AI companies filed hundreds of narrower requests.
Becker’s analyzed every submission. Here is what they said.
By the numbers
Submissions on the biggest topics (one submission letter can count toward several topics):
- 340B drug payment cut: About 1,010, including 612 form letters
- Site-neutral imaging: About 850
- Device, drug and new technology payment requests: About 340
- Inpatient-only list: About 290, including 122 on bariatric surgery
- Software as a medical service: About 210
- Off-campus department identifiers and attestations: About 200
- Price transparency: About 170
- Botulinum toxin prior authorization: 153
- Interventional pain procedures in ASCs: 129
- Ophthalmology ASC payment: 115
- Heart attack quality measure validation: 78
Approximate counts include only submissions that mention a topic at least three times, which screens out passing references.
1. 340B: Hospitals against hospitals
CMS proposed paying for 340B drugs at average sales price minus 33.4%, down from ASP plus 6%. The new rate is based on a survey of what hospitals pay for the drugs. The savings would fund an 8.44% increase in other outpatient payments. CMS also proposed recouping past 340B remedy payments faster, raising the annual reduction to outpatient rates from 0.5% to 3%.
Opposition was broad and largely templated. Beyond the 612 form letters, more than 300 hospitals, health systems and associations filed against the cut, often using shared language. Many attacked the survey. The New Jersey Hospital Association and Medford, Ore.-based Asante, among others, cited a 28.6% response rate among 340B hospitals. The American Hospital Association, 340B Health and America’s Essential Hospitals called the cut unlawful. Renton, Wash.-based Providence estimated it would lose $90 million to $100 million a year in Medicare payment from the combined 340B changes.
Roughly two dozen submissions backed the cut. Supporters included the Federation of American Hospitals, the American Medical Association, community oncology groups, drugmakers such as Pfizer and Johnson & Johnson, and policy groups such as Paragon Health Institute. FAH said about 78% of hospitals, including 54% of 340B hospitals, would gain under the policy. It also cited CMS’ estimate of $1.15 billion in lower beneficiary copays in 2027.
The Medicare Payment Advisory Commission took a third position. It pointed to its 2016 recommendation to cut 340B drug payment by 10% of ASP and redirect the savings to safety-net hospitals, and said CMS’ proposal differs in important ways.
Both sides backed the proposed exemptions for children’s hospitals and rural sole community hospitals. 340B Health, which opposes the cut, said it would support the exemptions if the cut moves forward.
2. Site-neutral imaging: Hospitals vs. payers and policy groups
CMS proposed paying certain off-campus hospital outpatient departments a physician office-equivalent rate for imaging without contrast. The AMA estimated first-year savings at about $260 million.
The hospital groups that split on 340B reunited to oppose this policy. At least 14 health systems and associations used the same language urging CMS not to finalize it, including Durham, N.C.-based Duke University Health System and Chicago-based CommonSpirit Health. They argued hospital departments carry costs physician offices do not, such as accreditation and emergency backup. Many asked CMS, at minimum, to extend exemptions beyond rural sole community hospitals to safety-net facilities and those in underserved areas.
Supporters formed a broader coalition than on 340B. It included MedPAC, payers such as AHIP and the Blue Cross Blue Shield Association, consumer groups such as AARP, and physician groups such as the American Academy of Family Physicians. Some, including Arnold Ventures, urged CMS to apply site-neutral rates to more services.
A related provision drew about 200 submissions. Under Section 6225 of the Consolidated Appropriations Act, CMS would require each off-campus department to have its own National Provider Identifier and attestation. Hospitals sought clarification and relief, while transparency groups backed the requirement.
3. ASCs: 340B ripples into surgery center rates
ASC rates are tied to hospital outpatient rates through an adjustment called the weight scalar, so the 340B proposal reaches surgery centers too. An ophthalmology coalition led by the Outpatient Ophthalmic Surgery Society said the 340B policy would push the scalar down from 0.872 to 0.809. The cut would hit procedures that aren’t device-intensive, such as cataract surgery, hardest.
The Ambulatory Surgery Center Association said ASCs are paid an average of 53% of the hospital outpatient rate for their top 100 procedures. That share would fall to 44% in 2027, with 85 of those codes facing cuts. ASCA and the AMA asked CMS to drop the scalar. Devicemakers including Boston Scientific and Edwards Lifesciences urged CMS to keep device costs or the 340B effect out of it.
Two specialty campaigns carried the ASC argument:
- Ophthalmology (115 submissions): Surgeons and ASCs said they are losing operating room time to better-paid specialties. Another 29 letters asked CMS to pay separately for inserting Dextenza, a nonopioid eye implant.
- Interventional pain (129): Most used template letters from the American Society of Interventional Pain Physicians opposing cuts to eight pain procedures in ASCs. At least 77 also opposed a multiple-procedure payment reduction for spinal cord and peripheral nerve stimulator implants.
Bariatric surgeons drove much of the inpatient-only list debate. This is the second year of CMS’ phaseout of the list. In 122 submissions on bariatric surgery, surgeons largely supported removing eight metabolic and bariatric codes, and 68 used nearly identical language. The American Society for Metabolic and Bariatric Surgery and others questioned whether the assigned rates would cover the procedures’ costs.
Not everyone wants the list to disappear quickly. The AHA asked CMS to return to its 2025 removal process and drop a proposed expansion of the ASC covered procedures list, citing safety. The AMA asked CMS to base each phase on clinical and utilization evidence.
4. Botulinum toxin prior authorization: The largest physician campaign
CMS proposed adding eight botulinum toxin injection codes to the hospital outpatient prior authorization program starting July 1, 2027. Nearly all of the 153 submissions on the proposal opposed it. Most came from physical medicine and rehabilitation physicians, along with nurses, therapists and parents of patients.
Commenters said the injections treat spasticity and dystonia from stroke, brain and spinal cord injuries, and cerebral palsy, not cosmetic conditions. They also said patients already wait months for care. The American Academy of Physical Medicine and Rehabilitation said it knows of no evidence of meaningful billing fraud among physiatrists. The AHA also asked CMS to withdraw the expansion. Paragon Health Institute was one of the few commenters to back targeted prior authorization as a program integrity tool.
5. The long tail: Products, software and transparency
About 340 submissions focused on payment for a specific product or code. They show how much of an outpatient payment rule is fought, one code at a time.
- Devices and drugs: Repeated letters sought special pass-through payment for products such as Neuros Medical’s Altius nerve block system and AngioSafe’s Santreva-ATK catheter. A 28-letter campaign from cancer providers asked CMS to pay separately for the Hepzato Kit, a liver-directed therapy for metastatic uveal melanoma.
- Software: MedPAC and most AI and diagnostics firms supported CMS’ interim payment policy for software as a medical service. AHIP opposed moving software into new technology payment categories without a framework for judging value.
- Price transparency: About 170 submissions answered CMS’ request for information. Hospitals argued that more contract detail doesn’t tell patients what they owe and that insurers set out-of-pocket costs. They included New Orleans-based Ochsner Health and King of Prussia, Pa.-based Universal Health Services. Data firms such as Turquoise Health and patient advocates pushed for stricter reporting standards.
- Domestic supply: Glove makers, Civica and the Securing America’s Medicines and Supply Coalition backed separate inpatient payment for domestically made personal protective equipment and essential medicines.
- Quality: 78 submissions, many from hospital quality teams, flagged problems with a quality measure for ST-elevation myocardial infarction. They asked CMS to delay validation, which is scheduled to begin with 2027 data.
Hospitals also pushed back on the base payment update. The AHA and the National Rural Health Association called the 2.4% net increase inadequate. That figure is a 3.2% market basket increase minus a 0.8-percentage-point productivity adjustment. NRHA noted that CMS projects rural hospitals will gain 6.4% on average in 2027, compared with 1.9% for urban hospitals. The association said that figure hides the effect of the 340B recoupment.
What to watch
The 340B policy is the hinge of the rule. It sets hospital drug payment, the rest of the outpatient conversion factor and, through the scalar, ASC rates. The AHA’s letter signals a possible legal challenge, while FAH’s comments frame the fight around which hospitals would gain. CMS also floated an alternative rate of ASP minus 28%, so the final number isn’t settled.
The final rule typically arrives in early November. CMS’ decisions on 340B, imaging site neutrality and botulinum toxin prior authorization will show how the agency weighed the volume of comments against the arguments behind them.
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