Site-Neutral Imaging Payment 2027: CMS Proposes 60% Cut for Hospital Outpatient Imaging in Urology

QUICK ANSWER

• What is the proposed site-neutral imaging payment for 2027? As of September 2026, CMS has proposed reducing Medicare reimbursement for imaging services without contrast performed at excepted off-campus hospital outpatient departments to the physician fee schedule equivalent rate, beginning January 1, 2027. The change applies to X-rays, ultrasounds, CT scans, MRIs, and DXA scans. For urology practices that perform non-contrast imaging at hospital-affiliated outpatient facilities, this site-neutral imaging payment shift represents a payment reduction of approximately 60% on affected services, with CMS estimating $260 million in first-year savings.
• Affected services: Non-contrast imaging including renal and bladder ultrasound, CT KUB for kidney stones, and DXA scans for bone density monitoring in prostate cancer patients on androgen deprivation therapy.
• Payment shift: CMS would pay these services at the Medicare Physician Fee Schedule rate rather than the higher OPPS rate, eliminating the site-of-service payment differential for imaging at off-campus hospital outpatient departments.
• Timeline: The CY 2027 OPPS proposed rule comment period closed August 31, 2026. CMS is expected to release the final rule in early November 2026, with changes taking effect January 1, 2027.

How Does Site-Neutral Imaging Payment Work?

Under current Medicare payment rules, the same imaging service can generate significantly different reimbursement depending on where it is performed. An ultrasound done in a freestanding physician office is paid at the Medicare Physician Fee Schedule rate. That same ultrasound performed at a hospital-owned off-campus outpatient department is paid at the higher OPPS rate. The payment difference exists because hospital outpatient departments carry higher overhead costs, and CMS has historically paid more to account for that.

The problem, as CMS sees it, is that the payment differential is driving volume increases at hospital-based sites that are not clinically necessary. CMS has pointed to imaging services specifically, noting that non-contrast scans are low-intensity, high-volume services that can be delivered safely in freestanding physician offices. The agency cited echocardiograms as one example, noting that Medicare pays approximately 294% more for these exams at hospital settings compared to offices.

Site-neutral payment removes that differential. Instead of paying the OPPS rate, CMS would pay the PFS-equivalent rate for non-contrast imaging at excepted off-campus hospital outpatient departments. The result is a roughly 60% reduction on affected services at those locations. Rural sole community hospitals would be exempt from the cut.

This is not the first time CMS has applied site-neutral payment. The agency implemented it for clinic visits at off-campus hospital departments in 2019 and for drug administration services in 2026. Imaging without contrast is the next expansion of the same policy approach.

Which Urology Imaging Services Are Affected?

The proposed rule targets imaging without contrast across several APC categories. For urology practices, the most commonly affected services include the following.

Renal and bladder ultrasound is one of the highest-volume imaging services in urology. Practices use it for evaluating hydronephrosis, post-void residual measurement, renal masses, and follow-up on known kidney stones. When performed at a hospital-based outpatient department, this service currently pays at the OPPS rate. Under the proposed rule, payment would drop to the PFS rate.

CT scans without contrast, including the CT KUB used for kidney stone evaluation, fall squarely within the affected category. CT KUB is the standard first-line imaging study for suspected nephrolithiasis, and many urology practices order these at hospital-affiliated outpatient imaging centers.

MRI without contrast is less common in routine urology billing but is used in certain prostate cancer evaluation workflows and for complex renal mass characterization. DXA scans for bone density monitoring are relevant for urology practices managing prostate cancer patients on long-term androgen deprivation therapy, where bone health surveillance is part of ongoing care.

The specific APCs affected include 5521 through 5524 for individual imaging services, plus composite APCs 8004 (Ultrasound Composite), 8005 (CT and CTA without Contrast Composite), and 8007 (MRI and MRI without Contrast Composite). The full list appears in Table 60 of the proposed rule.

How Much Will Urology Imaging Reimbursement Drop?

The dollar impact depends on where the practice performs imaging and which services make up the bulk of its imaging volume. The table below compares approximate current OPPS payment rates to the proposed PFS-equivalent rates for common urology imaging services. These are illustrative figures based on 2026 national rates.

In our experience matching providers with billing partners, the practices that track their imaging revenue by site of service are the ones that can model this kind of change accurately. Practices that do not separate hospital-based imaging volume from office-based imaging volume in their reports cannot forecast the impact and tend to discover it when reimbursement drops.

One important distinction: this rule does not affect imaging performed in freestanding physician offices. Practices that already perform most of their non-contrast imaging in-office will see no direct revenue impact from this provision. The cut applies specifically to services billed through excepted off-campus hospital outpatient departments.

Why Is CMS Pushing Site-Neutral Imaging Payment for Hospital Outpatient Departments?

CMS has stated that the growth in outpatient imaging volume at hospital-owned off-campus departments is driven by financial incentives tied to the payment differential, not by clinical necessity. The agency frames site-neutral payment as a correction that aligns reimbursement with the actual resources required to deliver the service, regardless of setting.

The broader policy context matters here. CMS implemented site-neutral payment for clinic visits at off-campus hospital departments in 2019. In 2026, the agency expanded the policy to drug administration services. Non-contrast imaging is the third category to be brought under the same framework. Each expansion follows the same logic: when a service can be safely delivered in a lower-cost setting, Medicare should not pay more simply because the service happens inside a hospital-affiliated facility.

From the provider side, the pushback has been significant. The American Hospital Association and multiple specialty societies argued in public comments that the payment reductions will strain hospital finances and could reduce patient access to imaging in areas where hospital-based outpatient departments are the only available site. LUGPA, the Large Urology Group Practice Association, specifically flagged the cumulative impact of multiple 2027 proposed cuts on independent urology practices, including this imaging provision alongside the proposed modifier 25 payment reduction and the conversion factor decrease.

The comment period closed August 31, 2026. CMS is reviewing comments and is expected to publish the final rule in early November 2026.

Steps to Prepare Your Urology Practice Before January 2027

The final rule is expected in early November 2026. That gives practices approximately 60 days between finalization and the January 1 effective date. The following steps can begin now, using the proposed rule as the planning basis.

1. Segment your imaging volume by site of service. Pull a report from your billing system or clearinghouse showing every non-contrast imaging claim from the past 12 months, broken down by place of service. Identify which claims were billed through a hospital-based outpatient department versus a freestanding office.
2. Calculate the revenue difference between OPPS and PFS rates for your top imaging codes. Apply the PFS-equivalent rate to your hospital-based imaging volume to model the dollar impact. This gives you a baseline revenue forecast for 2027 under the proposed rule.
3. Evaluate whether any imaging services can shift to your office-based setting. For practices that own or lease in-office ultrasound equipment, the site-neutral change may actually create a competitive advantage, since office-based imaging already pays at the PFS rate and would be unaffected.
4. Review your hospital outpatient department contracts and affiliations. If your practice is employed by or affiliated with a hospital system, understand how the payment reduction flows through to your compensation model. Some hospital systems absorb OPPS payment changes centrally; others pass them through to physician compensation.
5. Brief your coding and billing staff on the site-of-service distinction. Staff should understand that the change affects the facility payment, not the professional component. The professional fee paid to the physician remains unchanged. The reduction applies to the technical component paid to the facility.
6. Set a 30-day post-implementation audit for January 2027 imaging claims. Compare payment amounts to the prior quarter to confirm the new rates are processing correctly and to identify any unexpected denials or payment discrepancies.

Common Misunderstandings About Site-Neutral Imaging Payment

One question we hear frequently from practice managers during payment policy transitions is whether the change affects all imaging or only imaging at specific facilities. Based on patterns we have observed across the billing companies in our network, the most common misunderstandings about site-neutral imaging include the following.

• Assuming the cut applies to all imaging everywhere. It does not. The proposed reduction targets only excepted off-campus hospital outpatient departments. Imaging performed in freestanding physician offices, on-campus hospital departments, and critical access hospitals is not affected by this specific provision.
• Confusing the facility fee with the professional fee. Site-neutral payment reduces the facility (technical) component, not the professional component. The physician’s professional fee for reading and interpreting the imaging study remains unchanged. Practices that split-bill with a hospital for imaging services need to track the facility side separately.
• Overlooking the rural exemption. CMS has proposed exempting rural sole community hospitals from the imaging payment reduction. Practices in rural areas affiliated with qualifying hospitals should verify their facility’s exemption status before modeling the revenue impact.
• Not accounting for payer follow-on effects. When CMS implements a site-neutral policy, commercial payers and Medicare Advantage plans often adopt similar payment logic within 12 to 24 months. Practices that model only the Medicare impact may underestimate the total revenue exposure if commercial contracts follow CMS.

Providers often come to us after a payment policy change has already taken effect and they have already lost revenue. The practices that reach out early, before the final rule, are the ones that have time to restructure their imaging workflow and renegotiate contracts.

How Does This Interact With Other 2027 Urology Billing Changes?

The site-neutral imaging provision does not exist in isolation. It arrives alongside several other proposed changes in the CY 2027 OPPS and PFS rules that compound the financial pressure on urology practices.

The CY 2027 PFS proposed rule includes a separate provision to reduce payment for same-day E/M visits billed with modifier 25 alongside procedures with global surgical periods. For urology practices that perform in-office procedures and same-day imaging, the interaction between the modifier 25 cut and the site-neutral imaging reduction creates a combined revenue hit that exceeds either change alone.

CMS has also proposed a conversion factor reduction of approximately 1.68% for non-APM clinicians in 2027, which our 2027 Medicare fee schedule overview covers in detail. When layered on top of the site-neutral imaging cut, the net revenue impact for practices billing significant hospital-based imaging volume could exceed 5% on affected service lines.

The continued phase-in of cystoscopy supply pack practice expense reductions, which the AUA negotiated to spread over four years, adds another layer of downward payment pressure on one of urology’s highest-volume office procedures. Taken together, these changes represent the most significant year-over-year revenue risk for urology practices since the 2021 E/M restructuring.

Frequently Asked Questions

Next Steps

• Modeling the modifier 25 cut too? Review our breakdown of the proposed modifier 25 payment reduction for urology billing in 2027, a separate but related provision in the CY 2027 PFS proposed rule.
• Need the cystoscopy billing rules? For reference on how cystoscopy billing works alongside E/M visits, see our urology billing guide to cystoscopy CPT code 52000.
• Want the full 2027 picture? Understand the scope of conversion factor and reimbursement changes for the coming year in our 2027 Medicare fee schedule overview for urology, and see the proposed RPM and RTM billing changes landing on the same January 1 date.
• Evaluating your billing partner? Our free urology billing matching service connects you with vetted billing companies that specialize in urology revenue cycle management.

CPT codes and descriptors are maintained by the American Medical Association and are provided here for reference. The CY 2027 OPPS and Physician Fee Schedule provisions described here are proposed and not final. The payment figures in this article are illustrative national estimates based on 2026 rates and are not a substitute for your own fee schedule. Rates, affected APCs, exemptions, and effective dates may change in the final rule, so verify against the published final rule, your Medicare Administrative Contractor guidance, and individual payer policies before modeling revenue or submitting claims.