Today, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payments and policies for inpatient and long-term care hospitals. The agency is also seeking public input on ways to improve the quality of care provided by inpatient hospitals. The feedback received will help advance CMS’ commitment to Making America Healthy Again by reprioritizing patients’ activity, nutrition, and overall wellness.
The law requires CMS to update payment rates for inpatient hospitals annually, accounting for changes in the prices of goods and services used to treat Medicare patients, among other factors. In addition to setting payment rates, the Fiscal Year (FY) 2026 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule would also update CMS’ quality measurement and promotes interoperability programs that focus on updating the regulatory framework to prioritize safety and outcomes while empowering patients and holding the healthcare system accountable.
On January 31, 2025, President Trump issued Executive Order (EO) 14192 "Unleashing Prosperity Through Deregulation," which states the Administration’s policy to significantly reduce the private expenditures required to comply with federal regulations to secure America’s economic prosperity and national security and the highest possible quality of life for each citizen. To comply with the Executive Order, CMS is including in the proposed rule a Request for Information (RFI) seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program. The RFI is available at https://www.cms.gov/medicare-regulatory-relief-rfi, and the public should submit all comments in response to this RFI through the provided weblink.
For fiscal year 2026, CMS proposes that the payment rate for hospitals will increase by 2.4%. This reflects a 3.2% projected increase in the hospital market basket for the fiscal year 2026, reduced by a 0.8% productivity adjustment. The productivity adjustment results from anticipated improvements in efficiency. This increased payment will help support people with Medicare. These proposed payment rates reflect the most accurate, updated data on the cost of goods, services, and labor.
CMS is furthering its commitment to Making America Healthy Again by improving patient nutrition and wellness outcomes. The agency is requesting input from the public on enhancing nutrition and physical activity to promote better wellness through quality measurement and other initiatives.
CMS is proposing to modernize healthcare regulations by reducing duplications through technology and holding providers accountable for safety and outcomes. The agency is seeking feedback on potential future quality measures, implementing Fast Healthcare Interoperability Resources® (FHIR®), modernizing health reporting, and reducing burden.
CMS is also proposing modifications to the Transforming Episode Accountability Model (TEAM) that address patient care and Medicare spending. The TEAM proposals would, among other things, capture quality measure performance in the outpatient setting without increasing participant burden, improve target price construction, and expand the three-day Skilled Nursing Facility Rule waiver, giving patients a wider choice of and access to post-acute care. In TEAM, selected acute care hospitals will coordinate care for patients with Original Medicare who are undergoing one of five surgical procedures. The five-year mandatory episode-based payment model will run from January 1, 2026, to December 31, 2030. Selected acute care hospitals will take responsibility for the cost and quality of care from a hospital-based surgery through the first 30 days after the patient’s surgery.
The FY 2026 IPPS and LTCH PPS proposed rule has a 60-day comment period. The proposed rule can be downloaded from the Federal Register at https://www.federalregister.gov/public-inspection/current.
For a fact sheet on the IPPS/LTCH PPS proposed payment rule, visit https://www.cms.gov/newsroom/fact-sheets/fy-2026-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospital-prospective.
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