On November 4, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the CY 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule with comment period and the CY 2027 Physician Fee Schedule (PFS) final rule. Both rules go into effect on January 1, 2027. This client alert analyzes key aspects of these final rules for drug manufacturers.
As discussed in our client alert on the proposed rules, CMS had proposed a significant reduction in Medicare Part B payments to providers and suppliers for 340B-acquired outpatient drugs. The agency also had proposed targeted refinements and technical clarifications to its regulations implementing the Medicare Part B and D Inflation Rebate Programs, including with respect to the establishment of a 340B claims repository. CMS finalized these drug pricing proposals, with a few notable modifications: 1) the OPPS final rule established a rate cut for 340B-acquired outpatient drugs of ASP minus 28% instead of the proposed payment rate of ASP minus 33.4%; and 2) the PFS final rule delayed the initial 340B claims data submission deadline until September 30, 2027, and added a new certification requirement for covered entities. These updates are summarized below.
In the OPPS final rule, CMS finalized a significant reduction in Medicare Part B payments to providers and suppliers for 340B-acquired outpatient drugs. For CY 2027, CMS will pay for such drugs at ASP minus 28%, compared to the default rate of ASP plus 6%.
In the proposed rule, CMS proposed cutting payments for 340B-acquired drugs to ASP minus 33.4%, based on results from the OPPS Drug Acquisition Cost Survey (“the survey”). CMS also described an alternative payment approach for 340B-acquired drugs under which the discount would be determined based on 340B ceiling prices published by HRSA, estimated at approximately ASP minus 28%.
CMS received comments from stakeholders who expressed concern that setting payments for 340B-acquired drugs at ASP minus 33.4% would lead to underpayment for certain therapeutic classes of drugs. Commenters preferred the alternative ASP minus 28% approach because the methodology was “grounded in objective, regularly updated ceiling price data” and would be “less disruptive” than the survey-based approach. In response to the concerns raised by commenters, CMS finalized the more conservative reduction in Part B reimbursement for 340B drugs of ASP minus 28%. In the final rule, the agency states that while both approaches would serve as “excellent proxies” for hospitals’ 340B drug acquisition costs, “ASP minus 28 percent is based on objective data, is a reasonable and conservative estimate of hospital 340B drug acquisition costs as validated by the [survey], and is responsive to commenters’ concerns that a payment rate of ASP minus 33.4 percent would result in too significant of a payment reduction and would inhibit beneficiary access to these drugs.” CMS projects that this change will reduce Medicare drug payments for 340B-acquired drugs by approximately $4.65 billion in CY 2027.
CMS finalized the majority of its proposed updates to the Medicare Part B and D Inflation Rebate Programs. Under the final rule, CMS requires covered entities to submit 340B claims data elements for all Part D claims to the 340B claims data repository, with the exception of 340B units dispensed to AIDS Drug Assistance Program (ADAP) enrollees. CMS also addresses gaps in CPI-U data and narrows the exclusion from the definition of a Part B rebatable drug for skin substitutes. In addition, CMS clarifies that civil monetary penalties (CMPs) are not CMS’s exclusive enforcement mechanism under the Inflation Rebate Programs. For example, the agency may refer manufacturers to the Department of Justice, the Department of Treasury, and/or the Office of Inspector General for further review and investigation.
The final rule does, however, include two notable departures from the proposed rule:
- Delayed Data Submission Timeline: CMS finalized its proposal to require providers and suppliers that are covered entities to submit 340B claims data elements to a claims data repository beginning in 2027, with some delays in the submission timeline. Specifically, while covered entities must submit 340B claims data for Part D claims with dates of service on or after January 1, 2027, rather than requiring submission of Q1 2027 340B claims data by the end of Q2 2027, data for Q1 and Q2 2027 are due on September 30, 2027. After the first data submission deadline of September 30, 2027, submissions will be due on a quarterly basis. In the final rule, CMS confirms that data submitted to the repository will not be used to calculate inflation rebates at this time, and any future proposal to use the data in the repository to remove 340B units from Part D inflation rebate calculations would undergo notice-and-comment rulemaking. The agency explained that mandatory participation in the 340B repository is necessary “to ensure more complete and reliable data submissions,” allowing CMS to more accurately assess whether the 340B repository can be appropriately used to remove 340B units from Part D inflation rebate calculations. Covered entities will be required to report five data elements: 1) date of service, 2) prescription or service reference number, 3) fill number, 4) dispensing pharmacy NPI, and 5) NDC-11.
- New Certification Requirement: CMS introduced a new requirement that all covered entities subject to mandatory data submissions to the repository must certify that the “data elements from all claims submitted to the 340B repository are from verified 340B claims and, to the best of the 340B provider’s knowledge, its submission includes all Part D 340B claims for the 340B provider at the time of submission.” CMS clarifies that 340B entities may designate third party administrators or other vendors to submit data on their behalf. The certification must be signed by the covered entity’s CEO, CFO, an individual with equivalent authority, or an individual or contractor to whom that authority has been delegated.
Please reach out to any of the Covington attorneys listed below if you would like to discuss the content of this alert or any other drug pricing questions.
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