CMS proposes 2027 ASC rates: conversion factor $57.766, up 2.4%, but a smaller weight scaler cuts eye and GI payments

The number that matters most for surgery centers in next year’s outpatient rule is 0.809. That is the ASC weight scaler CMS proposes for 2027, down from 0.872 this year [2]. It is applied to the relative weights of most ASC procedures, and the drop is large enough that eye and digestive procedures would be paid less in aggregate in 2027 even as the conversion factor rises [2].

What changed

CMS released the calendar year 2027 Hospital Outpatient Prospective Payment System (OPPS) and ASC proposed rule, CMS-1850-P, on July 2, and it was published in the Federal Register on July 7 [1, 2]. Most provisions would take effect January 1, 2027. The proposed ASC conversion factor is $57.766, up from $56.322, for centers that meet quality reporting requirements [2]. That reflects a 2.4% update (a 3.2% hospital market basket increase less a 0.8 percentage point productivity adjustment) and a wage index budget neutrality factor of 1.0016 [2]. CMS estimates total Medicare payments to ASCs of about $9.9 billion in 2027, about $520 million more than in 2026 [2].

Hospital outpatient departments get the same 2.4% update, but their rule carries a much larger change: CMS proposes to pay for drugs that hospitals buy through the 340B program at average sales price (ASP) minus 33.4%, instead of ASP plus 6% [1, 2]. Comments are due August 31, 2026 [2].

Who it affects

About 6,400 ASCs and about 3,500 hospitals paid under the OPPS fall under the rule [1, 5]. Within the ASC side, the effect splits by specialty. CMS’s estimates for the six largest specialty groups are [2]:

• Eye and ocular adnexa: down about 1%
• Digestive system: down about 2%
• Musculoskeletal system: up about 6%
• Nervous system: up about 6%
• Cardiovascular system: up about 5%
• Genitourinary system: up about 1%

So cataract-heavy and endoscopy-heavy centers would lose ground, while orthopedic, spine and pain centers that do many implant cases would gain. The Ambulatory Surgery Center Association (ASCA) says the 10 highest-volume ASC codes are all projected to be paid less in 2027 than in 2026 [4].

Several other groups are touched. Physicians who work in hospital outpatient departments face a wider prior authorization list and a new site-neutral rate for imaging. Hospitals with off-campus departments face a new billing condition. And community oncology practices, which compete with 340B hospitals for infusion patients, have a stake in the drug payment change [1, 2, 5].

How does the ASC weight scaler work?

Medicare sets most ASC rates by multiplying a procedure’s relative weight by the ASC conversion factor. The weights start from hospital outpatient weights and are then scaled so that total ASC spending stays budget neutral from one year to the next [2]. The scaler is that adjustment.

There is one exception. For device-intensive procedures, the device portion of the payment is calculated with the OPPS conversion factor, not the lower ASC one, and it is left out of the scaling so that the device payment is the same in both settings [2]. This year that exception does the damage. The 340B drug cut has to be budget neutral within the OPPS, so CMS would raise payment for non-drug hospital services by an estimated 8.44% to return the roughly $4.85 billion it takes out of drug payments [2]. That pushes the proposed OPPS conversion factor to $102.004, from $91.415 in 2026 [2]. Device portions in ASCs rise with it, and to keep total ASC spending neutral, everything else is scaled down [2].

CMS spells out the result: specialties with many device-intensive procedures would see increases above 2.4%, and those with few would see smaller increases or cuts [2].

What it means for your practice

For a procedure with no device portion and an unchanged underlying weight, the arithmetic on the two published factors works out like this. The scaler change alone (0.809 divided by 0.872) lowers the weight by about 7.2%. The conversion factor increase ($57.766 divided by $56.322) gives back about 2.6%. The net is a payment roughly 4.8% lower [2]. Most codes’ underlying weights also move, which is why CMS’s specialty estimates are smaller cuts than that, but it shows the direction of pressure on a center that does few implants.

If you run an orthopedic or spine center, the device-heavy cases carry you. That gain is not secure, though. CMS asks for comment on whether device portions should be scaled too. If it did that, the scaler would be 0.865 rather than 0.809, but ASC payment for the device portion of device-intensive procedures would fall by about 14% [2]. CMS has not proposed the change, only asked about it [2].

If your center misses ASC Quality Reporting Program requirements, your update drops to 0.4% and your conversion factor to $56.638 [2]. CMS also proposes removing the measure on follow-up intervals after a normal colonoscopy from the ASC program [2].

The covered procedures list grows again. CMS proposes adding 618 codes, most of them procedures also proposed for removal from the inpatient-only list, which would lose 637 services in 2027 [2]. The additions include four complex hernia repair codes [2, 4].

For hospital-employed physicians, three provisions matter:

• Prior authorization: CMS would add eight botulinum toxin injection codes to the hospital outpatient prior authorization program for dates of service on or after July 1, 2027 [1, 2]. Botulinum toxin has been on the list since 2020; CMS says claims for the added codes grew 42.8% from 2017 to 2024 while total outpatient claims fell 8.3%, and the codes represent about $102 million a year in Medicare payments [2].
• Imaging without contrast: at excepted off-campus departments, CMS would pay these services at the Physician Fee Schedule equivalent rate, with rural sole community hospitals exempt. CMS estimates about $260 million in reduced Part B spending in the first year [1, 2]. AHA News puts the rate at 40% of the OPPS rate [3].
• Off-campus departments: under section 6225 of the Consolidated Appropriations Act, 2026, the OPPS will not pay for services on or after January 1, 2028, from an off-campus department unless it bills under its own NPI and the main hospital has attested that it meets the provider-based rules. CMS proposes the regulations to carry that out [2].

The 340B proposal is an OPPS policy and applies to hospital outpatient drug payment [2]. For hospital outpatient departments, CMS also proposes raising the annual offset that recovers $7.8 billion in non-drug payments from the 2018 to 2022 340B policy from 0.5% to 3% of the conversion factor, for hospitals subject to it [2]. CMS projects the offset would be complete in 2029 [1].

What to do now

• Download Addendum AA from the CMS rule page and reprice your 20 highest-volume Medicare codes with the proposed weights and $57.766 [2].
• Sort your case mix by device-intensive status. That split, more than the 2.4% headline, predicts where your 2027 revenue moves [2].
• If you are weighing new service lines, check the 618 proposed additions to the covered procedures list against what your surgeons already do in the hospital [2].
• If your physicians inject botulinum toxin in a hospital outpatient department, plan staff time for prior authorization requests starting July 1, 2027 [1, 2].
• If you are a hospital-owned practice billing as an off-campus department, confirm with the hospital how it will handle separate NPIs before January 1, 2028 [2].
• Comment on CMS-1850-P by August 31 at regulations.gov, docket CMS-2026-2344. The device-portion scaling question is open for comment [2].

When will CMS finalize the 2027 outpatient and ASC rates?

The proposed rule does not set a date. CMS says it will use claims processed through June 30, 2026, for the final rule, so device offset percentages and rates could change [2]. It also says its 340B adjustment in the final rule could change with updated data [2].

The policy fight

ASCA welcomed the decision to keep using the hospital market basket for ASC updates through 2027. Its president, Todd Currier, said “other payment policies will disincentivize ASCs from providing care to Medicare beneficiaries,” and that “despite the inflation update, this proposal would actually reduce payments” for the most common ASC procedures [4]. CEO Bill Prentice said the rule “largely maintains the status quo in terms of ASC policy,” and cited an ASCA-commissioned study estimating more than $84 billion in Medicare savings from ASCs over 10 years [4].

Hospitals objected to the 340B cut. Ashley Thompson, AHA senior vice president for public policy analysis and development, said: “This enormous cut will make drugs less affordable for America’s most vulnerable patients” [3]. The AHA also said the faster offset “will punish 340B hospitals for CMS’ own error in implementing a policy” [3].

Independent oncology took the other side. According to Targeted Oncology, Community Oncology Alliance executive director Ted Okon said, “When Medicare overpays for 340B drugs and hospital outpatient services, it encourages consolidation,” and argued the overpayment steers cancer patients away from independent practices [5].

CMS based the 33.4% figure on a survey of hospital drug acquisition costs run from January 1 through April 7, 2026 [2]. It also modeled an alternative of ASP minus 28%, built from 340B ceiling prices [2]. Which number survives, and whether ASCs end up paying for it through the scaler, is now a question for the comment period.