CMS on April 11 released its fiscal year 2026 proposed rule for the Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System.
Nine things to know:
1. CMS proposes a 2.4% increase in inpatient hospital payment rates for FY 2026 — reflecting a 3.2% projected market basket increase offset by a 0.8% productivity adjustment.
2. The update is expected to increase hospital payments by $4 billion, including $1.5 billion in additional Medicare disproportionate share hospital payments and $234 million in new technology add-on payments.
3. Long-term care hospitals are slated to receive a 2.6% payment rate update, resulting in a net 2.2% payment increase, or about $52 million in total additional payments.
4. CMS is proposing to discontinue the low wage index hospital policy for 2026, following a federal court ruling. A transitional payment exception will be provided for significantly impacted hospitals.
5. The Transforming Episode Accountability Model will launch in January 2026. Selected acute care hospitals will be responsible for episode-based care for five surgeries, from the inpatient procedure through 30 days post-discharge.
6. CMS proposed changes to the Hospital Inpatient Quality Reporting program, including:
- Modifying four existing measures
- Removing four measures (including those related to health equity and social drivers of health)
- Updating the Extraordinary Circumstances Exception policy
7. The Hospital Readmissions Reduction Program will now include Medicare Advantage data and shorten performance periods from three years to two.
8. For the Hospital Value-Based Purchasing Program, CMS proposes:
- Removing the health equity adjustment from the scoring methodology
- Modifying the total hip/knee arthroplasty complication measure risk adjustment model
9. The proposed rule is open for public comment for 60 days.
Click here for more details on the proposed rule.
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