CMS has released proposed payment rules for inpatient and long-term care hospitals, hospices and inpatient rehabilitation, psychiatric and skilled nursing facilities in fiscal year 2026.
Twenty-five things to know:
Inpatient hospitals and long-term care hospitals
1. CMS proposed a 2.4% increase in inpatient hospital payment rates for 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 set 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. CMS proposed a 2.8% pay bump for SNFs in 2026. This is based on a 3% market basket update, a 0.6% forecast error adjustment and a -0.8% productivity adjustment.
6. SNF value-based purchasing adjustments for 2025 are expected to reduce payments by $196.5 million, and similar performance-based reductions are expected to continue in 2026.
7. CMS aims to remove four social determinant of health assessment items from the SNF Quality Reporting Program beginning Oct. 1, 2025:
- One item for “living situation”
- Two items for “food”
- One item for “utilities”
Inpatient psychiatric facilities
8. CMS proposed a 2.4% payment rate increase for IPFs in 2026.
9. The update includes a 3.2% market basket increase, offset by a 0.8% productivity adjustment. CMS estimates the update will result in an overall $70 million increase in payments.
10. The agency also proposed to update the outlier threshold to maintain outlier payments at 2% of total payments.
11. CMS plans to remove four quality measures beginning with the 2024 reporting period / FY 2026 payment determination:
- Facility commitment to health equity
- COVID-19 vaccination coverage among healthcare personnel
- Screening for social drivers of health
- Screen positive rate for social drivers of health
12. The agency aims to extend the reporting period for the 30-Day emergency department visit measure from one calendar year to a two-year fiscal year period to better align with related metrics.
13. CMS is seeking input on:
- Developing star ratings for IPFs to be displayed on the Care Compare tool
- Introducing future quality measure concepts related to well-being and nutrition
- Using Fast Healthcare Interoperability Resources standards to improve digital data reporting and interoperability in IPFs
14. CMS proposed a 2.4% increase in Medicare hospice payment rates for 2026, reflecting a 3.2% inpatient hospital market basket update offset by a 0.8% productivity adjustment.
15. The pay bump is expected to raise aggregate hospice payments by $695 million compared to 2025.
16. Hospices that do not meet quality reporting requirements would receive a 4 percentage point reduction, resulting in a net 1.6% decrease in payment compared to the prior year.
17. The proposed hospice aggregate cap for 2026 is $35,292.51, up from $34,465.34 in 2025.
18.. The agency is seeking public comment on:
- Future quality measures focused on interoperability, nutrition and well-being
- Strategies for advancing digital quality measurement, including FHIR adoption
Inpatient rehabilitation facilities
19. CMS proposed a 2.6% pay increase for IRFs in 2026, reflecting a 3.4% market basket increase and a -0.8% productivity adjustment.
20. The update would increase total IRF payments by about $295 million.
21. CMS plans to maintain the IRF outlier payment threshold at 3% of total payments.
22. Two COVID-19-related quality measures would be removed from the IRF Quality Reporting Program, citing the burden outweighing benefit:
- COVID-19 vaccination coverage among healthcare personnel (starting 2026)
COVID-19 vaccine: Percent of patients/residents who are up to date (starting 2028)
23. Four SDOH items would become optional in 2025 and be fully removed by 2028:
- One item for “living situation”
- Two items for “food”
- One item for “utilities”
24. CMS is seeking public input on four RFIs to inform future program development:
- New measure concepts in interoperability, nutrition, delirium and well-being
- Revisions to the Inpatient Rehabilitation Facility Patient Assessment Instrument to reduce data collection burden
- Adjusting data submission deadlines to improve feedback timelines
- Adoption of digital quality measurement tools using FHIR standards
25. Stakeholders have 60 days to submit public comments on the proposed rules.
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