CMS Finalizes Updates to the Hospital Inpatient Prospective Payment System
The Centers for Medicare & Medicaid Services (“CMS”) issued a final rule that updates Medicare payment policies and rates under the Inpatient Prospective Payment System (“IPPS”) and the Long-Term Care Hospital Prospective Payment System for fiscal year (“FY”) 2026. Among other changes, this rule increases IPPS payment rates by 2.6%; finalizes the proposal to discontinue the low wage index hospital policy for FY 2026 (and beyond) and adopts a transitional payment exception to the calculation of FY 2026 IPPS payments for those low wage index hospitals significantly impacted by this discontinuation; modifies and removes several quality measures from the Hospital Inpatient Quality Reporting Program; and makes changes to the Transforming Episode Accountability Model (“TEAM”), which was implemented in last year’s final IPPS rule and is set to begin January 1, 2026 for selected hospitals. More information can be found here.
CMS Also Releases Final Rules for Skilled Nursing, Inpatient Rehabilitation, Inpatient Psychiatric, and Hospice Facilities
CMS released several additional final rules that update other Medicare prospective payment systems for fiscal year 2026. These updated payment systems include the skilled nursing facilities, inpatient rehabilitation facilities, inpatient psychiatric facilities, and hospice payment systems. These final rules also update the quality reporting program for each respective type of facility. These final rules are effective October 1, 2025.
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