(April 18, 2025) – On April 11, 2025, the Centers for Medicare & Medicaid Services released the fiscal year 2026 proposed rule for the Medicare Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System, in addition to other proposed rules. The proposed rule reflects the annual updates to the Medicare fee-for-service inpatient and long-term care payment rates and policies. Key highlights include:
- IPPS overall net rate change: +2.4 percent
- Increases disproportionate share hospital payments by $1.5 billion
- Increases new medical technology payments by $234 million
- LTCH overall net rate change of +2.2 percent
- Discontinue the low-wage index hospital policy and adopt a budget-neutral transitional exception for certain hospitals significantly impacted by the discontinuation
- Modifies four current measures in the Hospital Inpatient Quality Reporting Program:
- Hospital-Level, Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty to add Medicare Advantage patients to the current cohort of patients, shorten the performance period from three to two years and change the risk adjustment methodology.
- Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke Hospitalization with Claims-Based Risk Adjustment for Stroke Severity to add Medicare Advantage patients to the current cohort of patients, shorten the performance period from three to two years and make changes to the risk adjustment methodology.
- Hybrid Hospital-Wide Readmission and Hybrid Hospital-Wide Mortality measures to lower the submission thresholds to allow for up to two missing laboratory results and up to two missing vital signs, reduce the core clinical data elements submission requirement to 70 percent or more of discharges and reduce the submission requirement of linking variables to 70 percent or more of discharges.
- Removes four current measures in the IQR program:
- Hospital Commitment to Health Equity beginning with the CY 2024 reporting period/FY 2026 payment determination.
- COVID-19 Vaccination Coverage among Health Care Personnel measure, beginning with the CY 2024 reporting period/FY 2026 payment determination.
- Both the Screening for Social Drivers of Health and Screen Positive Rate for Social Drivers of Health measures, beginning with the CY 2024 reporting period/FY 2026 payment determination.
- Request comments regarding quality measure concepts under consideration for future years and on measure concepts focusing on well-being and nutrition
- Changes to the Transforming Episode Accountability Model, including limited deferment for certain hospitals, and requesting comments on items, including a potential low-volume threshold
Additionally, CMS has requested information seeking input on opportunities to streamline regulations and reduce burdens on providers.
Program changes would be effective on or after Oct. 1, 2025, unless otherwise noted.
Comments on the proposed rule are due to CMS by June 10, 2025, and can be submitted electronically at http://www.regulations.gov by using the website's search feature to search for file code "CMS-1833-P."
Please contact Jaron Caffrey at jcaffrey@kha-net.org or Shannan Flach at sflach@kha-net.org, if you have questions or feedback that you would like KHA to reflect in our comment letter to CMS.
--Jaron Caffrey