Medicare beneficiaries receiving certain prescription drugs at hospital outpatient departments could save an average of $900 in 2027 under new federal payment rules. The changes, announced November 4 by the Centers for Medicare & Medicaid Services (CMS), aim to reduce what patients and Medicare pay for medications purchased through a federal discount program.
The measures form part of a broader revision of Medicare outpatient payments, covering prescription drugs, diagnostic imaging and surgical procedures. While federal officials expect substantial savings, hospital representatives have raised concerns about the financial consequences for facilities serving vulnerable communities.
New Medicare Drug Payments Could Reduce Patient Costs by $1.1 Billion
The central change concerns the 340B Drug Pricing Program, which allows eligible hospitals and healthcare providers to purchase outpatient medications from manufacturers at discounted prices.
Under the new rules, Medicare will reimburse hospitals for qualifying 340B drugs at 28% below their average sales price, replacing the previous payment rate of 6% above that price.
According to CMS, a survey conducted between January 1 and April 7, 2026, identified significant differences between hospitals’ acquisition costs and Medicare reimbursement amounts.
In some cases, the agency found that a patient’s required contribution toward a medication exceeded the amount the hospital originally paid to purchase it.
CMS estimates that the revised reimbursement system will reduce Original Medicare beneficiaries’ drug payments by $1.1 billion in 2027, while lowering Medicare drug expenditures by another $4.35 billion.
Together, those reductions represent approximately $5.45 billion in projected drug spending savings. Patients receiving qualifying medications in hospital outpatient departments are expected to save an average of $900 during the year.
The changes address a period of rising spending on medications covered by Medicare Part B, which includes certain drugs administered by healthcare professionals, including chemotherapy treatments and injectable biologics.
According to the Medicare Payment Advisory Commission’s July 2026 Data Book, Medicare and beneficiaries spent $23.9 billion on Part B drugs administered in hospital outpatient departments in 2024, compared with $21.1 billion in 2023. Those figures include both Medicare payments and patients’ cost-sharing obligations.
Outpatient Imaging and Surgical Services Face Further Changes
The 2027 rule also changes Medicare payments for certain diagnostic imaging services performed at off-campus hospital outpatient departments. These include X-rays, ultrasounds, CT scans, MRI examinations and bone density tests performed without contrast.
CMS will apply payment rates comparable to those used in physician offices, rather than the higher hospital outpatient rates previously applied to these services. The agency estimates that the imaging policy will reduce costs for beneficiaries and taxpayers by $260 million in 2027 and more than $9 billion between 2027 and 2036.
Another provision removes 637 services from Medicare’s inpatient-only procedure list, allowing those treatments to be performed in outpatient settings when physicians consider that appropriate. The policy is intended to expand treatment options while maintaining patient safety.
The American Hospital Association has expressed concerns about the reduced drug reimbursements. According to Newsweek, Ashley Thompson, the association’s senior vice president of public policy analysis and development, warned that the changes could place additional financial pressure on hospitals serving rural and low-income communities. She said the reductions could “further stress hospitals’ ability to care for their patients.”
The revised payment policies will take effect in 2027, with the projected savings applying to eligible Medicare beneficiaries receiving qualifying outpatient services.
