Proposed Payment Rule
News
Proposed Payment Rule
Hospital Inpatient Prospective Payment System & Long-Term Care Hospital Prospective Payment System Proposed Rule: FY 2027
CMS issued a proposed rule that would update Medicare payment policies and rates for inpatient and long-term care hospitals under the Medicare hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2027.
Changes to IPPS Payment Rates
The proposed increase in IPPS payment rates is projected to be 2.4%. This reflects a projected FY 2027 hospital market basket percentage increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment. IPPS-participating hospitals must successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and be meaningful electronic health record users to earn the full rate update.
Overall, for FY 2027, CMS expects the proposed changes in IPPS payment rates — in addition to other changes — will generally increase hospital payments by approximately $1.4B. CMS also estimates that additional payments for inpatient cases involving new medical technologies will increase by approximately $464M in FY 2027, primarily driven by the continuation of new technology add-on payments for several technologies, subject to determinations on applications following a review of public comments on the proposed rule. Under current law, additional payments for Medicare-Dependent Hospitals and the temporary change in payments for low-volume hospitals will expire December 31, 2026. In the past, legislation has extended these payments, and if they were to be extended through the end of FY 2027, CMS estimates that these hospitals would receive additional payments of approximately $0.4B in FY 2027.
Changes to LTCH PPS Payment Rates
For FY 2027, CMS is proposing an annual update of 2.4% to the LTCH standard payment rate, which reflects a projected LTCH PPS market basket percentage increase of 3.2%, reduced by a 0.8 percentage point productivity adjustment. CMS expects LTCH PPS payments for discharges paid the LTCH standard payment rate to increase by approximately 2.3%, or $55M, due primarily to the 2.4% annual update. For FY 2027, CMS is proposing to maintain the LTCH PPS outlier threshold at its FY 2026 value. We estimate that this threshold will result in estimated outlier payments approximating 8% of estimated total payments, as required by statute, considering information currently available regarding possible LTCH charging practices and other information.
The proposed rule also includes:
- Comprehensive Care for Joint Replacement Model
- Graduate medical education payments
- Organ acquisition and reasonable cost payment policies
- Reimbursement appeals for independent organ procurement organizations and histocompatibility laboratories
- Hospital IQR Program
- Medicare Promoting Interoperability Program
- PPS-Exempt Cancer Hospital Quality Reporting Program
- Hospital Readmissions Reduction Program
- Hospital-Acquired Condition Reduction Program
- Hospital Value-Based Purchasing Program
- Long Term Care Hospital Quality Reporting Program
More Information:
- Full fact sheet
- CMS to Improve Patient Care Experience & Lower Costs for Hip, Knee, and Ankle Replacements press release
- Comprehensive Care for Joint Replacement Expanded Model webpage
News
CMS Proposes Major Reforms to Speed Up Patient Access to Drugs, Increase Transparency, & Reduce Administrative Burden
CMS is proposing changes to slash long waiting periods for drugs, reducing barriers to timely access to critical treatments. The Interoperability Standards & Prior Authorization for Drugs proposed rule would advance sweeping reforms to modernize prior authorization for drugs by establishing clear decision deadlines for impacted payers – no later than 24 hours for urgent requests and 72 hours for standard requests – and increasing transparency through full disclosure of claims denials and appeals outcomes.
More Information:
Subscribe to the MLN Connects® newsletter, or read past editions.
View the Medicare Learning Network® Content Disclaimer and Department of Health & Human Services Disclosure.
The Medicare Learning Network®, MLN Connects®, and MLN Matters® are registered trademarks of the U.S. Department of Health & Human Services (HHS).