Hospitals in 2008 need not break out their pharmacy’s overhead costs for medications administered in outpatient departments to Medicare beneficiaries, the government announced in November. But the formula underlying the payment rates for drugs and biologicals is decreasing by one percentage point. The dual announcements appear in the Centers for Medicare and Medicaid Services’s (CMS’s) explanation of changes to Medicare’s hospital outpatient prospective payment system for the upcoming calendar year. A prepublication copy of the changes became available November 1, with formal publication scheduled for the November 27 Federal Register. Since August 2000, CMS has paid hospitals for services to Medicare outpatients on a rate-per-service basis. The rates are set annually to cover hospitals’ expenses for providing specific services and are intended in part to encourage the efficient delivery of health care. Medicare pays separately for medications only if they have “pass-through” or another special status or are not included in the rate for an outpatient-department service.