COA Credits CMS on 340B, Site Neutrality but Says Physician Cuts, IRA Threat Remain

The Community Oncology Alliance (COA) said final 2027 Medicare payment rules released November 4, 2026, by CMS mark real progress on its long campaign to narrow the gap between what hospitals and independent practices are paid for the same cancer care. But the group warned that community oncology faces threats that could bankrupt practices, and called on the Congress to act while there is still time.

In a preliminary statement, COA Executive Director Ted Okon, MBA, said the final Medicare Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS) rules show that “CMS responded constructively to several concerns raised by COA. We appreciate those changes and will continue evaluating their implications for cancer care.”¹

340B Payments Move Toward Acquisition Cost

Chief among the changes COA praised is the OPPS final rule's treatment of drugs acquired through the 340B Drug Pricing Program. Beginning January 1, 2027, CMS will pay for separately payable 340B-acquired drugs at average sales price (ASP) minus 28%, rather than ASP plus 6%.² CMS had proposed ASP minus 33.4%, based on a hospital drug acquisition cost survey conducted earlier this year; the final rate instead relies on 340B ceiling price data from the Health Resources and Services Administration.³

The change is budget neutral, so CMS will raise payments for non-drug items and services by 7.5%. Rural sole community hospitals, cancer hospitals exempt from the Prospective Payment System, and children's hospitals are not included, and non-340B hospitals will continue to be paid at ASP plus 6%. CMS also finalized faster recoupment of the estimated $7.8 billion 340B remedy, raising the annual OPPS conversion factor reduction from 0.5% to 2%, with recoupment expected to be complete by 2031.3

“Paying 340B hospitals at average sales price (ASP) minus 28%, rather than ASP plus 6%, is a far more realistic reflection of their acquisition costs and will lower patients' out-of-pocket costs for these drugs,” Okon said. “The budget-neutral redistribution of these savings will also benefit many smaller rural and urban hospitals through increased payments for non-drug services.”¹

COA Managing Director Nicolas Ferreyros had singled out the 2027 OPPS rule as the most consequential 340B change at the Patient-Centered Oncology Care meeting in Nashville, Tennessee, saying that bringing hospital reimbursement closer to acquisition cost would level the playing field.⁴

Site-Neutral Payment Advances

The OPPS final rule also extends site-neutral payment to imaging without contrast at grandfathered off-campus hospital outpatient departments, paying 40% of the OPPS rate; CMS estimates this will cut outpatient spending by $260 million in 2027.³ The policy builds on CMS’ application of site-neutral payment to clinic visits in 2019 and its expansion to drug administration services at excepted off-campus departments in the 2026 OPPS rule.² By January 1, 2028, hospitals must also obtain a separate National Provider Identifier for each off-campus outpatient department and attest to compliance with provider-based rules.³

Amid these changes, Okon said Congress must finish the job. “Medicare cannot continue paying hospitals substantially more than independent physician offices for delivering the same medical services,” he said. “Congress must address this longstanding disparity by enacting clinically appropriate site-neutral payments that lower costs for patients and Medicare, reduce the financial incentives driving hospital consolidation, and help preserve independent community-based care.”¹

Hospitals see things differently. In September 14, 2026, comments on the proposed PFS, the American Hospital Association (AHA) opposed the 2027 conversion factor cut, asked CMS not to finalize changes to its indirect practice expense methodology without a more detailed impact analysis, and said it remained “strongly opposed to the indirect PE site-of-service differential” that lowers payment for facility-based services.⁵ Responding to the final OPPS rule, Ashley Thompson, AHA senior vice president of public policy analysis and development, said hospital outpatient departments “treat sicker and more complex groups of patients than independent physician practices.”³

Physician Payment Falls Again

The final PFS cuts payment more deeply than CMS proposed in July. The conversion factor for qualifying alternative payment model (APM) participants falls 1.83% to $32.95, and the conversion factor for all other clinicians falls 2.31% to $32.63.⁶ Statutory updates of 0.75% and 0.25%, respectively, partly offset the expiration of a 1-year, 2.5% increase Congress provided for 2026, while a –0.12% adjustment for changes in work relative value units replaced the +0.53% adjustment that was proposed.^6,7

CMS framed the rule as a shift toward prevention and accountable care. It replaces the office/outpatient evaluation and management (E/M) complexity add-on code with a modifier that raises base E/M payment by 16%, or by 32% for clinicians in accountable care organizations (ACOs); lets approved ACOs reduce or eliminate Part B cost sharing starting April 1, 2027; and ends traditional Merit-based Incentive Payment System reporting after the 2031 performance period.⁷

“For too long, fee-for-service payment has rewarded volume over value, fueling a reactive system of sick care,” CMS Administrator Mehmet Oz, MD, MBA, said in a statement. "This final rule breaks from that status quo.”⁸

Okon said the CMS changes “do not resolve the fundamental instability of Medicare physician payment" and urged Congress to act during the lame-duck session to prevent the 2027 cuts, followed by a permanent, inflation-based fix from the 120th Congress.

“Independent practices cannot plan for the future, retain staff, or sustain patient access when every year brings another Medicare payment crisis,” he said.

“These mounting financial pressures are driving independent physician practices to close, consolidate, or move into the much more expensive hospital settings. For patients with cancer, this threatens access to high-quality, affordable care close to home.”¹

The IRA Threat Looms

For community oncology, the largest risk lies ahead. Under the Inflation Reduction Act (IRA), Medicare negotiation extends to Part B drugs in 2028, when payment for selected drugs shifts to 106% of the maximum fair price (MFP) rather than ASP plus 6%.^9,10 In the 2026 PFS final rule, CMS confirmed that units sold at MFP will be included in ASP calculations, calling that interpretation “most consistent with the statutory framework.”¹¹ Avalere Health has projected a 39% to 64% drop in Medicare fee-for-service add-on payments for oncology and hematology drugs.^9,10

COA has argued that CMS already has authority under Section 1847A(b)(2)(B) of the Social Security Act to exclude MFP units from ASP, citing a 2005 precedent involving the Competitive Acquisition Program. It also supports the bipartisan Protecting Patient Access to Cancer and Complex Therapies Act (HR 4299), which would have manufacturers rebate the difference between ASP and MFP directly to Medicare so practices keep ASP-based reimbursement.⁹

“If we get this wrong, practices could be forced to stop providing certain therapies, consolidate, or close," Okon said in September.⁹

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. https://mycoa.communityoncology.org/news-updates/press-releases
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 5, 2026. https://www.cms.gov/newsroom/fact-sheets/calendar-year-2027-hospital-outpatient-prospective-payment-system-opps-ambulatory-surgical-center-0
3. 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 5, 2026. https://www.aha.org/news/headline/2026-11-04-cms-finalizes-increases-medicare-hospital-outpatient-department-payment-rates-changes-site-neutral-and
4. IRA fix needed to protect community oncology: Nicolas Ferreyros. AJMC. October 13, 2026. https://www.ajmc.com/view/ira-fix-needed-to-protect-community-oncology-nicolas-ferreyros
5. AHA comments on physician fee schedule proposed rule for 2027. American Hospital Association. September 14, 2026. Accessed November 5, 2026. https://www.aha.org/2026-09-14-aha-comments-physician-fee-schedule-proposed-rule-2027
6. Calendar year (CY) 2027 Medicare Physician Fee Schedule final rule. Fact sheet. CMS. November 4, 2026. Accessed November 5, 2026. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2027-medicare-physician-fee-schedule-final-rule
7. Medicare's final 2027 fee schedule cuts physician pay more than proposed but softens the same-day visit penalty. Medical Economics. November 2026. Accessed November 5, 2026. https://www.medicaleconomics.com/view/medicare-s-final-2027-fee-schedule-cuts-physician-pay-more-than-proposed-but-softens-the-same-day-visit-penalty
8. CMS finalizes CY 2027 physician fee schedule to shift from sick care to health care, curb waste. News release. CMS. November 4, 2026. https://www.cms.gov/newsroom/press-releases/cms-finalizes-cy-2027-physician-fee-schedule-shift-sick-care-healthcare-curb-waste
9. COA warns that price negotiation for Medicare Part B drugs threatens community oncology. CancerNetwork. September 21, 2026. Accessed November 5, 2026. https://www.cancernetwork.com/view/coa-warns-that-price-negotiation-for-medicare-part-b-drugs-threatens-community-oncology
10. Caffrey M. Part B losses to oncologists due to IRA could total $12B through 2032 across Medicare, commercial plans. AJMC. September 17, 2024. Accessed November 5, 2026. https://www.ajmc.com/view/part-b-losses-to-oncologists-due-to-ira-could-total-12b-through-2032-across-medicare-commercial-plans
11. Major changes to US government pricing requirements finalized, with some wins for pharma and biotech. Sidley Austin LLP. October 2025. Accessed November 5, 2026. https://www.sidley.com/en/insights/newsupdates/2025/10/major-changes-to-us-government-pricing-requirements-finalized-with-some-wins-for-pharma-and-biotech