CY 2027 OPPS Final Rule: What the 340B Changes Mean for Hospitals, Patients, and Pharma

On November 4, CMS finalized its CY 2027 OPPS Rule. Most of what was initially proposed has been finalized with one headline exception: Starting January 1, 2027, drugs acquired through the 340B discount program will be paid at average sales price (ASP) minus 28%, down from the ASP plus 6% they’re at today. Of all the policies we track, we have a soft spot for the OPPS Rules (chief among its charm is the ease with which one might accidentally spell it as the “CY OOPS Rule”) and are eager to have another year’s worth of progress to explore. Let’s break down the changes and what this means for you.

The primary changes are all around 340B

If you’re not familiar with pharmaceutical economics and its various Rube Goldberg-like mechanics, this is a statutory discount program from drug manufacturers for providing services to the underserved population. In return, manufacturers can participate in the Medicaid program. 340B hospitals buy drugs at the 340B discount price that’s calculated by subtracting Unit Rebate Amount (URA) from the Average Manufacturer Price (AMP). This often results in a minimum statutory rebate of 23.1% from AMP for most brand-name drugs, though this percent can quickly increase when the drug is subject to penalties due to price increases above inflation.

Due to this discount, 340B hospitals are able to purchase drugs at significantly lower cost relative to what CMS is currently reimbursing them (ASP plus 6%). CMS’s own survey found 340B hospitals pay roughly ASP minus 33.4% (something we raised questions about in our August public comment). In the final rule, CMS landed on ASP minus 28% instead, a rate based on the 340B ceiling price, which is the maximum manufacturers can charge these hospitals. That’s still a steep drop from ASP plus 6%, but it sits above what the survey found hospitals actually pay. What this means for the industry differs depending on the stakeholder, but at large, we expect acute financial impact for hospitals with high Medicare exposure. We also anticipate some indirect impact to follow suit.

This is not the first time CMS has pushed for a reimbursement cut. Between Jan 2018 and Sep 2022, CMS cut reimbursement to ASP minus 22.5% for 340B hospitals. However, the Supreme Court ruled this reimbursement cut unlawful and it was struck down due to CMS not initially conducting an acquisition cost survey. This time CMS conducted the acquisition cost survey.

What CY 2027 OPPS means for Medicare Part B patients

Overall, this is good news for patients! Lower drug payments should ultimately lead to lowered cost-share. This is one of the main intentions of the reimbursement cut; the benefits of the discounts are passed down to patients.

What CY 2027 OPPS means for 340B hospitals

Lowered costs for CMS means margins for these drugs will shrink significantly. 340B programs were created to help support under-insured patients. While the efficacy of this program is often under scrutiny, lowered margins mean less funding for those programs in general. On the other hand, payments for non-drug services will increase by 7.5%. Whether it's enough to balance out in the end is up to each hospital’s specific service mix. Other downstream outcomes might look like care shifting out of the hospital outpatient setting to other settings of care as the industry attempts to offset the change in revenue. 

What CY 2027 OPPS means for the Pharma at large

This shift in margins will mean some of Pharma’s biggest hospital customers are soon to find themselves under more financial pressure than they’re already under. The impact on drug utilization is difficult to predict. On one hand, the reimbursement cut could reduce utilization of higher-cost drugs, but on the other hand, the lower patient out-of-pocket cost can drive up demand. Pharma should anticipate more discussions, legislation, and reporting on 340B in the coming year.

What CY 2027 OPPS means for payers

This may also go on to act as a template for Medicare Advantage and some Commercial payers may choose to follow, as well. Looking at hospital price transparency data from 2022, we observed some signals that certain Commercial / Med Advantage payer-provider contracts were adhering to the reimbursement cut. We’ll continue to publish updates if we observe significant rate cuts in Q1’27.

How will this impact healthcare costs at large?

The 340B program has grown fast enough to put it in the crosshairs of lawmakers, regulators, and courts. The Health Resources and Services Administration (HRSA) reported that 340B covered entities purchased $100 billion in drugs in 2025, up 23% from $81.4 billion the year before. That growth has fueled bipartisan reform proposals in Congress and a string of ongoing lawsuits between drug manufacturers and hospitals. This final rule is one of several efforts to rein in the program, and we expect 340B to stay a key policy focus as we enter 2027. We’ll continue to monitor its development! 

Other changes of note

If you recall, extra non-drug payments hospitals received from 2018 to 2022 are still at play. CMS has maintained that by changing what it pays for non-drug outpatient services, and only for hospitals that were enrolled in Medicare by the start of 2018. Historically, that rate has been 0.5% a year. For this rule, CMS proposed jumping to 3%. The final rule landed on 2%, which CMS expects means they can wrap things up around 2031 instead of 2029. 

Lastly, in relation to CMS’ July RFI on strengthening the standardization and comparability of hospital price transparency data, the final rule included a few paragraphs where CMS thanked responders for their insights but gave no clear indication of when (or what) we can expect as a result. As always, we’ll stay tuned for updates.

Conclusion

Overall, the ASP changes from proposed to final were significant, we see this as to be expected  given the Trump Administration's continued focus on drug costs. The focus on lowering the cost of healthcare remains top of mind for both patients and CMS, and all stakeholders involved in the healthcare transaction continue to be in the spotlight in rulemaking.

Until next time!