COA Backs 340B Payment Cut in 2027 Final Rules, Warns of Physician Cuts

The Community Oncology Alliance (COA) said the Centers for Medicare & Medicaid Services (CMS) responded constructively to several of its concerns in the final 2027 Medicare Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS) rules, but that another round of physician payment cuts still threatens independent cancer practices, according to a statement from COA Executive Director Ted Okon.¹

In the November 4 statement, Okon said COA’s initial analysis found that the changes do not resolve the instability of Medicare physician payment. He said independent community oncology practices face another Medicare payment cut as the costs of care rise, pressures COA said are pushing practices to close, consolidate, or move into more expensive hospital settings.¹

340B Drug Payment Policy

COA commended CMS for finalizing a policy in the OPPS rule to pay 340B hospitals for drugs at average sales price (ASP) minus 28% instead of ASP plus 6%. Okon said the change corrects excessive Medicare payments for 340B-acquired drugs that COA said have raised out-of-pocket costs for seniors receiving cancer treatment. He described the new rate as “a far more realistic reflection of their acquisition costs.”

CMS said it set the rate to align Medicare payment with hospitals’ drug acquisition costs.² The agency had proposed ASP minus 33.4% in July, a rate based on a drug acquisition cost survey it conducted earlier in 2026.³ CMS estimates the policy will reduce Medicare drug payments by $4.35 billion in the first year and beneficiary drug payments by $1.1 billion.

COA said the policy will lower patient out-of-pocket costs for these drugs. It also said the budget-neutral redistribution of the savings will benefit many smaller rural and urban hospitals through higher payments for non-drug services.¹ CMS estimates the corresponding budget neutrality adjustment will increase 2027 payments for nondrug OPPS services by 7.5%, or 5.5% after accounting for a 2% recoupment.³

CMS also finalized a policy to accelerate recoupment of the earlier 340B payment remedy by raising the annual reduction to the OPPS conversion factor from 0.5% to 2% beginning in 2027, less than the 3% it proposed.³^,⁴ The agency expects recoupment of the estimated $7.8 billion to be completed by 2031.⁴

Physician Payment Outlook

Okon called on Congress to act during the lame-duck session to prevent the 2027 physician payment cuts. He said the 120th Congress should then end the annual cycle of temporary patches and enact a permanent solution that provides predictable, inflation-based updates reflecting the actual costs of delivering care.¹

COA’s statement did not quantify the cut for oncology practices. In the PFS final rule, CMS set the 2027 conversion factor at $32.95 for qualifying alternative payment model (APM) participants, a 1.83% decrease from $33.57, and at $32.63 for nonqualifying participants, a 2.31% decrease from $33.40.⁵ Both reductions are deeper than the 1.19% and 1.68% decreases CMS proposed in July.⁶^,⁷ The decreases follow the expiration of a one-year 2.5% conversion factor increase that Congress attached to 2026 payments.⁸ The changes take effect January 1, 2027.⁵

Site-Neutral Payment

Okon also said Medicare should not continue paying hospitals substantially more than independent physician offices for the same services. COA urged Congress to enact clinically appropriate site-neutral payments, which it said would lower costs for patients and Medicare, reduce financial incentives for hospital consolidation, and help preserve independent community-based care.¹

In the OPPS rule, CMS expanded site-neutral payment for imaging services, which it estimates will reduce Medicare Part B spending by $260 million and beneficiary cost sharing by $70 million in 2027.⁹ The American Hospital Association has argued that hospital outpatient departments treat sicker and more complex patients than independent physician practices, including those with higher rates of disability.⁴

COA is a nonprofit that advocates for community oncology practices and the patients they serve. It describes itself as the only national organization focused exclusively on community oncology, where the majority of Americans with cancer receive treatment.¹

REFERENCES

1. COA preliminary reaction to 2027 PFS and OPPS final rules: CMS advances hospital payment reforms, but physician cuts still threaten independent cancer care. News release. Community Oncology Alliance. November 4, 2026. Accessed November 6, 2026. https://tinyurl.com/2b7b64hp

2. Calendar year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule (CMS-1850-F). Fact sheet. CMS. November 4, 2026. Accessed November 6, 2026. https://tinyurl.com/tjfan57v

3. 2027 Medicare OPPS final rule cuts 340B payments, expands site-neutral rates. HFMA. Accessed November 6, 2026. https://tinyurl.com/fcyn2tn6

4. CMS finalizes increases to Medicare hospital outpatient department payment rates, changes to site-neutral and 340B for 2027. American Hospital Association. November 4, 2026. Accessed November 6, 2026. https://tinyurl.com/2exmtzce

5. Calendar year (CY) 2027 Medicare Physician Fee Schedule final rule. Fact sheet. CMS. Accessed November 6, 2026. https://tinyurl.com/5n9tvj7f

6. Stempniak M. CMS finalizes 2027 physician fee schedule with even larger conversion factor cuts. Radiology Business. November 5, 2026. Accessed November 6, 2026. https://tinyurl.com/5euk9v3k

7. CMS issues CY 2027 Medicare physician fee schedule proposed rule. Holland & Knight. July 20, 2026. Accessed November 6, 2026. https://tinyurl.com/438v5thr

8. The CMS 2027 payment bombshell looming for physicians. Becker’s ASC Review. Accessed November 6, 2026. https://tinyurl.com/yyabj8mb

9. 340B cuts softened, site-neutral expansion progresses in CMS CY 2027 OPPS final rule. HealthLeaders. Accessed November 6, 2026. https://tinyurl.com/bd4w9dm2