CMS finalizes CY 2027 OPPS update: 2.3 percent increase factor, $99.970 conversion factor, $7,150 outlier threshold
Published November 8, 2026 · Coverage November 1–7, 2026, Pacific · Medium priority
CMS published the CY 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule with comment period on November 6, 2026, effective January 1, 2027. The outpatient department (OPD) fee schedule increase factor is 2.3 percent (3.2 percent market basket less a 0.9 percentage point productivity adjustment); the proposal had been 2.4 percent with a 0.8 point adjustment, and the rule says the change reflects more recent data. The final conversion factor is $99.970; hospitals that fail Hospital Outpatient Quality Reporting (OQR) requirements get a reporting ratio of 0.9804 and a reduced conversion factor of $98.011. The outlier fixed-dollar threshold rises from $6,225 (CY 2026) to $7,150 with the 1.75 multiplier unchanged. CMS estimates total CY 2027 OPPS payments of about $114.4 billion and a net 1.7 percent increase from all finalized policies, with urban hospitals up 2.0 percent, rural hospitals up 5.6 percent, major teaching hospitals down 2.0 percent and government-owned hospitals down 1.1 percent.
Background
When the Medicare law was enacted, payment for hospital outpatient services was based on hospital-specific costs; the OPPS replaced that method and was first implemented for services furnished on or after August 1, 2000. Section 1833(t) of the Social Security Act requires CMS to review and update OPPS payment rates every year.
Who this affects
Hospitals paid under the OPPS (general acute care, children's, cancer hospitals) and community mental health centers (CMHCs). Excluded from the OPPS: critical access hospitals (CAHs), Maryland hospitals under its model, Indian Health Service (IHS) hospitals, rural emergency hospitals (REHs) and hospitals outside the 50 States, DC and Puerto Rico.
Why it matters
Revenue cycle and reimbursement teams need to load the January 2027 OPPS rates (Addenda A and B on cms.gov) and model the combined effect of the 2.3 percent update, the 340B drug payment change and its budget neutrality adjustment, the 340B remedy offset and the imaging site-neutral policy (each reported separately in this edition). Inference: hospitals with high outlier volume may see fewer qualifying cases at the $7,150 threshold. Inference: a California hospital's net change will depend heavily on 340B status, teaching status and ownership, so the facility-specific impact file is the right starting point.
Required actions
- Hospital OQR Program requirements must be met to avoid the 2.0 percentage point reduction (reduced conversion factor $98.011) for CY 2027 payment
Recommended action
- Download the CY 2027 final rule Facility Specific Impacts file and Addenda A/B from the CMS-1850-FC page and compare to the CY 2026 baseline before January 1, 2027
- Update contract-modeling tools that reference Medicare OPPS rates (including Medicare Advantage contracts priced off Original Medicare)
- Confirm the drug packaging threshold ($135 per day) and diagnostic radiopharmaceutical threshold ($635 per day; one paragraph of the rule calls $665 final, which conflicts with the rule's own computation of $635, so confirm against the addenda) in chargemaster and pharmacy billing logic
Implementation playbook
- Load the CY 2027 conversion factor ($99.970) and addenda rates into the 2027 budget and contract models. Owner: Finance. Due: 2026-12-15.
- Download the facility-specific impact file and compare it with the internal model. Owner: Reimbursement. Due: 2026-12-01.
- Confirm Hospital Outpatient Quality Reporting requirements are met, to avoid the 2.0 percentage point reduction. Owner: Quality. Due: 2026-12-31.
- Decide whether to comment on the interim ambulatory payment classification (APC) and status indicator assignments. Owner: Revenue Integrity. Due: 2027-01-04 (the date by which comments are assured consideration).
Scope and timing
- Authority status
- Final
- Responsible owner
- Revenue Cycle / Reimbursement (primary); Finance; Pharmacy; Quality
- Publication date
- 2026-11-06 (91 FR 70284); CMS fact sheet and press release dated 2026-11-04
- Effective date
- 2027-01-01
- Other dates
- Approved by the CMS Administrator 2026-10-29; CMS waived the 60-day Congressional Review Act delay; comments received by 2027-01-04 are assured consideration (final rule with comment period)
Not established
Addenda A/B and the facility-specific impact file were not downloaded, so no California hospital-level figures. The govinfo PDF link is from the Federal Register application programming interface (API) record and was not itself retrieved. The impact text cites both section XXVI and XXVII for the impact analysis; not reconciled.
Sources
Complete edition and supplemental material
This article in the complete report →
Executive triage, source-coverage limitations, context and forward horizons remain in the complete report.
Read the entire Medicare & Medicaid Sweep report →