CMS Proposes 60% Imaging Payment Cut: What Radiology Practices Need to Know

What Is the CMS Site-Neutral Imaging Payment Cut for 2027?

As of September 2026, CMS has proposed reducing Medicare reimbursement for noncontrast imaging services performed in off-campus hospital outpatient departments by approximately 60 percent, effective January 1, 2027. The proposal is part of the CY 2027 Hospital Outpatient Prospective Payment System (OPPS) proposed rule, released July 7, 2026, with the public comment period closing August 31, 2026. CMS estimates the change would cut $260 million in imaging spending in the first year alone.

• Which services are affected: The proposal targets X-rays, CT scans without contrast, MRIs without contrast, and ultrasounds billed through off-campus hospital outpatient departments, covering Ambulatory Payment Classifications 5521 through 5524 plus composites for ultrasound, CT/CTA, and MRI/MRA without contrast.
• Who is not affected: Hospital-based radiologists billing only the professional component with modifier 26 are not directly affected, since the cut targets the facility technical payment. Freestanding imaging centers and physician offices billing under the Medicare Physician Fee Schedule are also unaffected. Rural sole community hospitals are exempt from this policy.
• Current status: The rule is proposed, not finalized. CMS accepted public comments through August 31, 2026, and the final rule is expected in early November 2026 with an effective date of January 1, 2027.

Which Imaging Services Are Affected

CMS is proposing to apply site-neutral payment rates to a specific set of imaging services that do not involve contrast material. The affected services span the most common diagnostic modalities performed in outpatient settings and are organized by Ambulatory Payment Classification. According to the CMS CY 2027 OPPS proposed rule, the affected APCs include Level 1 through Level 4 X-rays (APCs 5521 through 5524), the Ultrasound Composite (APC 8004), the CT and CTA without Contrast Composite (APC 8005), and the MRI and MRA without Contrast Composite (APC 8007).

In practical terms, that covers chest X-rays like CPT 71046, abdominal X-rays, CT scans of the head without contrast, CT abdomen and pelvis without contrast (CPT 74176), noncontrast MRI studies, and standard diagnostic ultrasound. The proposal does not cover imaging studies performed with contrast material, which remain under the standard OPPS payment rates. It also does not apply to imaging performed at on-campus hospital outpatient departments, only off-campus locations.

The distinction between noncontrast and contrast studies is the dividing line. A CT abdomen and pelvis without contrast (CPT 74176) falls under this proposal, while the same study with contrast (CPT 74177) does not. Practices that run a mixed volume of contrast and noncontrast studies through off-campus departments will see a selective hit to the noncontrast portion of their revenue.

Does the Site-Neutral Imaging Cut Apply to Your Practice?

The impact depends entirely on how and where your practice bills for imaging services. In our experience matching providers with billing partners, the most common confusion we see is between practices that bill through hospital outpatient departments versus those that bill under their own tax ID through the Physician Fee Schedule. The distinction determines whether this proposal touches your revenue at all.

If your radiology group is hospital-employed and bills only the professional component with modifier 26, your direct reimbursement is unchanged. The cut targets the hospital’s technical payment under OPPS, not the radiologist’s professional read. However, the indirect pressure is real. When a hospital’s imaging revenue drops by 60 percent on these procedures, the financial pool available to compensate employed radiologists contracts. Providers often come to us after discovering that a hospital’s budget restructuring triggered compensation renegotiations they did not anticipate.

Freestanding imaging centers and physician offices are not affected by this specific proposal because they already bill under the Medicare Physician Fee Schedule, which is the rate CMS is aligning the OPPS payment toward. In fact, independent practices may benefit if hospital-based competitors lose their pricing advantage and patient volume redistributes.

Rural sole community hospitals are explicitly exempt from this policy, consistent with prior site-neutral exemptions CMS has maintained since 2019.

Why CMS Is Targeting Noncontrast Imaging

CMS frames this proposal as a volume control measure. According to the CMS fact sheet, the agency identified consistent growth in noncontrast imaging volume at off-campus hospital outpatient departments over the past several years. CMS argues that because these studies are routinely and safely performed in physician offices, the higher OPPS reimbursement rate creates a financial incentive for hospitals to acquire independent practices and shift imaging to higher-cost settings without clinical justification.

CMS gave a specific example in the proposed rule: Medicare currently pays approximately 294 percent more for an echocardiogram performed in a hospital outpatient setting compared to a physician office. That payment gap, CMS argues, drives consolidation and increases cost to Medicare beneficiaries, who pay higher copays for the same study performed in a more expensive setting. The Brookings Institution, in a comment letter submitted August 31, 2026, supported CMS’s approach and recommended extending site-neutral policies even further to on-campus settings.

This is the third expansion of site-neutral payment under the OPPS. CMS applied the same logic to clinic visits in 2019 and to drug administration services in 2026. Imaging without contrast is the next category, and CMS has signaled in requests for information that additional services may follow. For radiology practices tracking 2027 Medicare reimbursement changes, this OPPS proposal sits alongside the Physician Fee Schedule conversion factor reductions as a second front of payment pressure.

How Much Revenue Could Your Practice Lose?

CMS estimates the proposal would save Medicare $260 million in 2027, which means $260 million leaves the imaging provider ecosystem. That total breaks into approximately $190 million in Part B savings and $70 million in reduced beneficiary premiums and cost-sharing. For individual practices, the impact depends on the volume of noncontrast imaging billed through off-campus hospital departments.

Under the proposal, CMS would pay affected imaging services at 40 percent of the current OPPS rate, aligning with the Physician Fee Schedule equivalent. The Radiology Business Management Association (RBMA) noted in its response to the proposed rule that this is not a marginal reduction. According to Radiology Business, RBMA co-executive director Linda Wilgus stated that the affected procedures represent a significant and complex portion of imaging volume, not a small or niche subset.

One question we hear constantly from practice managers is how to model the actual dollar impact before a rule finalizes. The calculation starts with your off-campus HOPD imaging volume for the affected APCs, multiplied by the difference between the current OPPS rate and 40 percent of that rate. A practice performing 400 noncontrast CT studies per month through an off-campus department, for example, would multiply the per-study OPPS reduction by 400 to see the monthly revenue loss. Across the billing companies we vet, the practices that model this early are the ones that adjust their billing arrangements before the effective date rather than after.

What Radiology Practices Should Do Now

The final rule is expected in early November 2026 with a January 1, 2027, effective date. That timeline leaves a narrow window for preparation. These steps address the operational and billing adjustments that apply regardless of whether the final rule modifies the proposal.

1. Identify your off-campus HOPD imaging volume. Pull claims data for the affected APCs (5521 through 5524, 8004, 8005, 8007) billed through off-campus hospital outpatient departments over the last 12 months.
2. Model the revenue impact per modality. Calculate the difference between your current OPPS payment and 40 percent of that rate for each affected APC, then multiply by volume.
3. Review your site-of-service billing arrangements. If your practice bills globally through an off-campus department, evaluate whether shifting certain studies to a freestanding setting or renegotiating the facility arrangement produces better net reimbursement.
4. Audit your modifier 26 and TC assignments. Confirm that component billing is set up correctly. A practice that is unintentionally billing the technical component through an off-campus department when it should be billing globally from a physician office loses more under this proposal than it needs to.
5. Check whether the off-campus HOPD NPI and attestation requirements apply to you. Beginning January 1, 2028, CMS proposes that off-campus hospital outpatient departments must bill under a separate NPI and the main provider must submit a provider-based attestation. Departments that fail to meet these requirements lose OPPS payment entirely.
6. Track the final rule release. CMS typically publishes the OPPS final rule in early November. The final rule may modify, scale back, or finalize the proposal as written. Do not wait for the final rule to begin modeling.

Common Misreadings of This Proposal

The most common misreading we see across the billing companies we vet is the assumption that this proposal cuts all imaging payments by 60 percent. It does not. The reduction applies only to noncontrast imaging services billed through off-campus hospital outpatient departments. Contrast-enhanced studies, on-campus hospital imaging, and all services billed through the Physician Fee Schedule are unchanged.

A second misreading conflates this OPPS proposal with the CY 2027 Medicare Physician Fee Schedule proposed rule, which addresses the conversion factor and practice expense methodology for physician services. These are two separate payment systems and two separate proposed rules. A practice could be affected by one, both, or neither depending on how it bills. The OPPS rule governs hospital outpatient payments; the Physician Fee Schedule governs physician office and professional component payments.

Third, the proposal is not finalized. CMS accepted comments through August 31, 2026, and may modify the policy in the final rule. The American Hospital Association, the RBMA, and the ACR have all submitted responses. Until the final rule publishes in November, the scope and implementation timeline could change.

Finally, some practices assume that because their radiologists bill modifier 26 only, they are entirely insulated. Directly, that is correct. Indirectly, the hospital’s reduced technical revenue may affect employment contracts, compensation structures, and volume expectations for hospital-employed radiologists.

Frequently Asked Questions

Next Steps

Start by modeling the revenue impact for your specific imaging volume and billing setup. If your practice bills noncontrast imaging through an off-campus hospital department, the financial exposure is quantifiable today using the methodology outlined above.

For a deeper look at how the 2027 Physician Fee Schedule conversion factor changes interact with this OPPS proposal, see our 2027 Medicare Radiology Reimbursement guide. Both rules together shape the full reimbursement picture for 2027.

If you need a billing partner that understands radiology component billing, site-of-service rules, and OPPS versus MPFS payment dynamics, Radiology Bill Co connects you with qualified companies in as little as 30 minutes at no cost.