Some Medicare beneficiaries could save $900 on prescription drug costs in 2027 under new federal rules to help reduce payments for certain medications administered in hospitals. The Centers for Medicare and Medicaid Services (CMS) announced Wednesday that the projected saving would apply to those covered by Original Medicare who receive qualifying medications in hospital outpatient departments. The changes are designed to lower out-of-pocket expenses for patients as well as reduce the amount Medicare pays for certain drugs.
The CMS estimates the change will reduce patients' combined costs by $1.1 billion and trim Medicare spending by $4.35 billion over next year. Original Medicare is the federal government's health insurance program for those aged 65 and over, as well as Americans with disabilities or long term health conditions. The rule is part of a broader overhaul of payments for hospital outpatient services, including care, tests or surgeries that do not require staying in a hospital or clinic overnight.
Americans continue to face substantial healthcare costs. Medicare Part B generally covers certain medications administered by health workers, such as chemotherapy infusions or injectable biologics. Patients typically pay 20 percent of the cost after meeting their deductible.
In 2026, that stands at $283, while the standard monthly premium is $202.90. Federal and personal spending on drugs covered by Part B has risen substantially in recent years. The Medicare Payment Advisory Commission found that Medicare and beneficiaries spent a combined $23.9 billion on Part B drugs administered in hospital outpatient departments in 2024, up from $21.1 billion in 2023.
That includes government payments and patients' cost-sharing, rather than only what beneficiaries personally paid. The new rules will make changes to the 340B Drug Pricing Program. This allows eligible hospitals and other healthcare providers to purchase outpatient medication from manufacturers at discounted prices.
Medicare will reimburse qualifying hospitals for drugs purchased through the program at 28 percent below medications' average sale price, instead of the previous six percent rate. According to the CMS's final rule, a survey conducted between January and April 2026 found "significant disparities" between hospitals' acquisition costs for discounted medication and how much Medicare paid for them. In some instances, the agency found that a patient's required contribution toward a drug exceeded the price the hospital had originally paid to purchase it.
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