WASHINGTON – Medicare is changing what it pays hospitals for some drugs in 2027. The Centers for Medicare & Medicaid Services says the new rates “better reflect what hospitals pay for these medications.” The agency announced the rule on November 4, 2026.
The change covers drugs bought under the 340B Drug Pricing Program. CMS gives one figure for people with Medicare who get a qualifying drug at a hospital clinic. They “are expected to save an average of $900 in drug costs in calendar year (CY) 2027.”
The rule is wider than one discount. It also lowers what patients pay for some imaging at hospital clinics. It allows more services in outpatient settings and adds prior approval for eight botulinum toxin codes. It also sets the 2027 payment rates for hospital outpatient departments and ambulatory surgical centers.
CMS Administrator Dr. Mehmet Oz said the agency is “committed to spending taxpayer funds wisely and efficiently, so America’s seniors can continue getting the care they need.” He said the changes “will drive affordability in Medicare for current beneficiaries.” He tied that to “right-sizing payments and rooting out waste,” “while ensuring” Medicare “will still be there to serve their children and grandchildren.”
| Key fact | What the source says |
|---|---|
| Average saving per person | About $900 expected in 2027. For a person with Medicare who gets a qualifying drug at a hospital outpatient department. |
| Total saving for people with Original Medicare | An estimated $1.1 billion in drug costs in 2027. |
| Total saving for taxpayers | An additional estimated $4.35 billion in drug spending in 2027. |
| Total cut in drug spending | Approximately $5.45 billion in 2027. It equals the two estimates above added together. |
| Imaging at off-campus hospital clinics | CMS estimates $260 million saved in 2027 by beneficiaries and taxpayers together. |
| New prior approval | Eight more botulinum toxin injection codes at hospital outpatient departments. |
| Emergency care oversight | Groups that accredit hospitals may check certain EMTALA administrative requirements during their routine surveys. |
Contents
What changed#
CMS says its survey is consistent with MedPAC and industry reports “showing that Medicare payments have substantially exceeded 340B drug acquisition costs.” Those costs are what hospitals pay for the drugs. CMS says it is “updating payment rates for drugs purchased under the 340B Drug Pricing Program to better reflect what hospitals pay for these medications.”
A CMS survey found that hospitals acquire 340B drugs “at an average cost significantly below the Average Sales Price.” MedPAC is the Medicare Payment Advisory Commission. The release does not say what makes a drug qualifying. It does not say how many hospitals answered the survey or when it was taken.
CMS says the policy “ensures that hospital drug discounts are passed directly to the Medicare beneficiaries who receive the drugs and to American taxpayers.”
The release puts the total cut in drug spending at “approximately $5.45 billion in 2027 alone.” The release’s total equals the $1.1 billion for people with Original Medicare and the $4.35 billion for taxpayers added together.
The rule also extends a payment policy for imaging. CMS says people with Medicare “often face different copayments for imaging services.” It depends on where they get care. The policy covers imaging without contrast, such as certain bone density scans, x-rays, ultrasounds, CT scans and MRIs. At off-campus provider-based departments, CMS will pay the lower Physician Fee Schedule equivalent rate. That applies to imaging without contrast. That policy already applies to clinic visits and drug administration at those locations. CMS estimates the change “would save beneficiaries and taxpayers” more than $9 billion from 2027 to 2036.
Two more changes affect surgery. The rule “continues to phase out the ‘Inpatient Only’ procedure list,” which lets more services be done as outpatient care. It also continues to expand the list of procedures covered at ambulatory surgical centers “by several hundred surgical procedures.” CMS says these changes “will often lower beneficiaries’ cost-sharing obligations.” It says they also “give physicians more flexibility to choose an appropriate care setting.” It says doctors get more choice of care setting and patients get more surgical options “while maintaining patient safety.”
One more change is about oversight, not payment. Some groups that accredit hospitals hold CMS approved “deeming authority.” The rule lets them check certain administrative requirements of EMTALA during their routine surveys. EMTALA is the Emergency Medical Treatment and Labor Act. CMS says this “integrates EMTALA administrative oversight into the existing deeming framework.” The release does not say which requirements are covered or how a patient would notice the change.
Who it affects#
The $900 figure is for people with Medicare who get a qualifying drug at a hospital clinic. CMS ties a larger figure to one group. It says the policy will save “people with Original Medicare an estimated $1.1 billion in drug costs.” The release does not name Medicare Advantage in that estimate.
It is an average. One person may save more or less, and the release does not list the drugs. The release links the full rule at the Federal Register page. This article did not open it.
The imaging change reaches people who get imaging without contrast at off-campus hospital clinics. The $260 million estimate covers beneficiaries and taxpayers together, so it is not a patient-only saving.
The surgery changes reach people who have surgery in an outpatient setting. The release does not name the procedures moved off the Inpatient Only list or added to the surgical center list. For the surgical center list it says only “several hundred surgical procedures.”
The botulinum toxin change is narrower. CMS “will add eight additional botulinum toxin injection codes to the list of hospital outpatient services requiring prior authorization.” Prior authorization means Medicare must approve the service before the hospital provides it. CMS says hospital outpatient department claims for these eight codes rose 42.8 percent from 2017 to 2024. That is an average of 4.6 percent per year, it says. Over the same years, it says, overall hospital outpatient service volume fell 8.3 percent.
CMS says it “found no clinical or coding explanation for the increase.” It also cites U.S. Department of Justice reports that “documented fraudulent billing, misbranded products, and improper payments involving botulinum toxin services.” The release does not list the eight codes.
CMS says Medicare “will continue to cover medically necessary injections … when a physician documents the need.” That includes “treatment for chronic migraines and certain other conditions.”
What to watch, with dates#
- November 4, 2026: CMS announced the final rule. The release also links a fact sheet on the rule, which this article did not open.
- Calendar year 2027. CMS’s savings estimates are for that year. The release prints no effective date for the 340B rates or the imaging policy.
- 2027 to 2036: the period for the imaging estimate of more than $9 billion.
What the release does not say matters. It gives no per-drug list. It gives no start date for the botulinum toxin prior approval, and no figure for Medicare Advantage members. This article did not open the full rule text.
CMS says the rule supports the Trump Administration’s goal of “promoting affordable care, patient choice, and responsible stewardship of taxpayer dollars.”
For how Medicare’s payment parts fit together, see the five parts that decide what Medicare pays. For what a denial letter must tell you, see what a denial letter must tell you. For the 2027 appeal dollar threshold, see our page on the 2027 appeal threshold.
Source: Centers for Medicare & Medicaid Services, “Medicare Outpatient Final Rule Expands Surgical Options, Lowers Out-of-Pocket Costs for 340B Drugs,” press release, November 4, 2026; read November 5, 2026.