Updates to Medicare Inpatient Prospective Payment System

Federal Policy Update
Article Background

CMS Releases Proposed FY 2026 Updates to Medicare Inpatient Prospective Payment System

On April 11th, the Centers for Medicare & Medicaid Services (CMS) posted proposed updates to the Medicare hospital Inpatient Prospective Payment System for fiscal year 2026.

Of interest

For FY 2026, CMS is proposing changes to the following policies important to hospitals:

The low wage index policy
The Medicare-dependent hospital and low volume adjustment programs
Uncompensated care payments
Payment rate updates
Changes to the Transforming Episode Accountability Model
Quality measure additions and removals

Our partners at McDermott+, one of healthcare’s most trusted and respected policy and lobbying consulting firms, wrote a summary of the proposed rule that provides valuable information about the potential changes.  McDermott+ also created a dashboard that shows the actual costs to hospitals for providing care to Medicare fee-for-service inpatients if these proposals were finalized.

 

Comments on the proposed rule are due June 10, 2025.

Why you should care

The provisions included in this proposal will, if finalized, impact hospital payment and quality reporting program requirements. Hospital leaders should be informed about these potential policy changes and offer feedback to CMS on how these changes will impact your organization.

Looking to learn more?

McDermott+ offers valuable insights into what these policy updates mean and how they could affect organizations. Read more to see what McDermott+ is saying about these proposals and how your organization could be impacted.

Click here for the proposed rule analysis and click here for the dashboard.