Medicare sets 2027 outpatient hospital pay with a 2.3% raise and a $99.97 base factor

The Centers for Medicare & Medicaid Services has finalised how it will pay hospitals for outpatient care and surgery centres for operations in 2027. The final rule with comment period, published in the Federal Register on 6 November 2026 under docket CMS-1850-FC, updates the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) payment system [s1]. The provisions take effect on 1 January 2027 [s1].

The 2027 payment update

For 2027 CMS set what it calls the outpatient department fee schedule increase factor at 2.3 percent [s1]. The agency reaches that number by starting from the inpatient hospital market basket percentage increase of 3.2 percent and subtracting a productivity adjustment of 0.9 percentage point [s1]. The finalised 2.3 percent is slightly below the 2.4 percent CMS had put forward in its July proposed rule, where it had paired the same 3.2 percent market basket with a 0.8 point productivity adjustment [s2].

Applying that update and the required budget-neutrality adjustments produces a full OPPS conversion factor of $99.970 for 2027 [s1]. Hospitals that do not meet the Hospital Outpatient Quality Reporting requirements face the statutory 2.0 percentage point reduction, which CMS applies as a ratio of 0.9804, giving them a reduced conversion factor of $98.011 [s1].

What it adds up to

CMS estimates total payments to OPPS providers in 2027 will be approximately $114.4 billion, an increase of about $11 billion over estimated 2026 OPPS payments [s1]. That figure includes beneficiary cost sharing and projected changes in enrolment, utilisation and case mix [s1]. The effect is uneven across hospital types: CMS estimates urban hospitals will see payments rise 2.0 percent and rural hospitals 5.6 percent, while non-teaching hospitals are projected to gain 6.5 percent [s1].

The surgery-centre side moves in parallel. CMS set the ASC payment update at 2.3 percent for centres that meet the ASC Quality Reporting requirements, again built from the 3.2 percent market basket less the 0.9 point productivity adjustment [s1]. It estimates total payments to ASCs in 2027 at approximately $9.9 billion, an increase of about $560 million over 2026 [s1]. The agency set the 2027 ASC relative-weight scalar at 0.814 [s1].

The 340B offset grows

A notable change sits inside the conversion-factor arithmetic. To recover the extra $7.8 billion Medicare paid for non-drug items under the earlier 340B drug-payment policy, CMS has been applying an annual reduction to the OPPS conversion factor for affected hospitals. For 2027 the agency is raising that reduction from 0.5 percent to 2 percent [s1]. The increase speeds the recovery that the courts and CMS's remedy rule set in motion, and it applies to hospitals that were enrolled in Medicare before 1 January 2018 [s1].

Prior authorisation and other provisions

The rule expands Medicare's outpatient prior-authorisation programme to cover additional botulinum toxin injection services [s1]. CMS also finalised implementation of certain Consolidated Appropriations Act, 2026 provisions for off-campus outpatient departments of a provider, and said hospital accrediting organisations with deeming authority may assess compliance with certain Emergency Medical Treatment and Labor Act administrative requirements during accreditation surveys [s1].

Alongside the payment policies, CMS issued a request for information on strengthening the standardisation and comparability of hospital price-transparency data, and published notices of closure of teaching hospitals with opportunities to apply for available residency slots [s1]. The price-transparency request does not itself change any rule; it asks the public how the agency might make posted hospital prices easier to compare.

What is settled

What this rule fixes is concrete. A dated final rule now exists, the 2027 increase factor is 2.3 percent, the full conversion factor is $99.970, the 340B reduction rises to 2 percent, prior authorisation reaches more botulinum toxin services, and the provisions take effect on 1 January 2027 [s1]. These are not proposals; a final rule carries the force of regulation once effective.

What the rule does not do is change the structure of outpatient payment. The OPPS remains a prospective, service-grouped system, and the 2027 rule adjusts rates and tightens a handful of policies within it rather than rebuilding the model [s1]. Because the payment estimates are prospective, they reflect CMS's current forecasts of inflation and utilisation rather than realised cost, and the comment period means some provisions remain open to further response before they are finalised in full [s1].