Medicare Proposes Lower Payments for Imaging Services at Off-Campus Hospital Sites, With Savings Projected for Patients

CMS issued the Calendar Year 2027 Hospital Outpatient Prospective Payment System proposed rule, known as CMS-1850-P, in early July 2026 with a public comment deadline of August 31, 2026. Among its provisions, the rule would apply physician fee schedule payment rates, rather than the higher hospital outpatient rates, for imaging services without contrast when provided at off-campus provider-based departments of hospitals.

Off-campus provider-based departments are hospital-affiliated facilities located away from a hospital's main campus. Medicare currently pays more for the same imaging services at these locations than at freestanding physician offices. CMS cited this disparity as a driver of higher beneficiary premiums and cost-sharing.

CMS estimates the imaging-specific proposal would reduce Medicare Part B spending by approximately 260 million dollars in the first year, comprising 190 million dollars in program savings and 70 million dollars in lower beneficiary premiums. Patient cost-sharing at affected sites would fall by an estimated additional 70 million dollars. Rural sole community hospitals would be exempt from the change.

The proposed rule also implements a new requirement from the Consolidated Appropriations Act of 2026: off-campus provider-based departments must submit attestations demonstrating they have complied with provider-based regulations within the prior two years. Starting January 1, 2028, failure to meet the attestation standard would mean the facility no longer qualifies for the higher hospital outpatient rates.

Overall, CMS proposes a 2.4 percent update to hospital outpatient payment rates for 2027, based on the projected market basket increase minus a productivity adjustment. The 340B drug payment provisions in the same proposed rule, which would reduce Medicare drug payments at eligible facilities, were covered when the rule was first released.