Final Payment Rules
- FY 2027 Hospital Inpatient Prospective Payment System & Long-Term Care Hospital Prospective Payment System Final Rule
- FY 2027 Inpatient Rehabilitation Facilities Prospective Payment System Final Rule
- FY 2027 Hospice Wage Index, Payment Rate Update & Quality Reporting Program Requirements Final Rule
Final Payment Rules
FY 2027 Hospital Inpatient Prospective Payment System & Long-Term Care Hospital Prospective Payment System Final Rule
CMS issued a final rule that updates 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. The final rule also includes changes, clarifications, and codifications for Organ Acquisition and Reasonable Cost Payment Policies, and Reimbursement Appeals for Independent Organ Procurement Organizations and Histocompatibility Laboratories.
Changes to IPPS Payment Rates
The finalized increase in the IPPS payment rates is 2.3%. This reflects a projected FY 2027 hospital market basket percentage increase of 3.2%, reduced by a 0.9 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 final changes in IPPS payment rates — in addition to other changes — will generally increase hospital payments by approximately $2.1B. CMS also estimates that additional payments for inpatient cases involving new medical technologies will increase by approximately $779M in FY 2027, primarily driven by new approvals for new technology add-on payments. 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 $0.3B in FY 2027.
Changes to LTCH PPS Payment Rates
For FY 2027, CMS finalized an annual update of 2.3% to the LTCH standard payment rate, which reflects a projected LTCH PPS market basket percentage increase of 3.2%, reduced by a 0.9 percentage point productivity adjustment. CMS expects LTCH PPS payments for discharges paid the LTCH standard payment rate to increase by approximately 2.2%, or $54M, due primarily to the 2.3% annual update. For FY 2027, CMS is finalizing the proposal 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.
This final rule also includes:
- Comprehensive Care for Joint Replacement Expanded Model (CJR-X)
- Graduate medical education payments
- Hospital IQR Program
- Hospital Readmissions Reduction Program
- Hospital-Acquired Condition Reduction Program
- Hospital Value-Based Purchasing Program
- PPS-Exempt Cancer Hospital Quality Reporting Program (QRP)
- LTCH QRP
- Medicare Promoting Interoperability Program
More Information:
- Full fact sheet
- CMS Announces Nationwide Expansion of Proven Joint Replacement Program press release
- IPPS webpage
- LTCH PPS webpage
FY 2027 Inpatient Rehabilitation Facilities Prospective Payment System Final Rule
CMS issued a final rule that updates Medicare payment policies and rates for inpatient rehabilitation facilities under the Inpatient Rehabilitation Facilities (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for FY 2027.
For FY 2027, CMS finalized an update to the IRF PPS payment rates of 2.3% based on an IRF market basket update of 3.2%, less a 0.9 percentage point productivity adjustment. The final rule includes annual updates to the prospective payment rates, the outlier threshold, the case-mix-group relative weights and average length of stay values, the wage index, and associated impact analysis. In addition, this final rule includes policy revisions for the 36-hour rule (§ 412.622(a)(3)(ii)), updates to the interdisciplinary team meeting 412.622(a)(5)(ii)), and provides a summary of feedback on one Request for Information (RFI) on payment reform.
This final rule also includes:
- Final updates to FY 2027 IRF PPS payment
- Proposed updates to the FY 2027 IRF QRP
- IRF PPS and QRP RFIs
- Finalized change to the DMEPOS Competitive Bidding Program
More Information:
- Full fact sheet
- IRF PPS webpage
- IRF QRP webpage
FY 2027 Hospice Wage Index, Payment Rate Update & Quality Reporting Program Requirements Final Rule
CMS issued a final rule that would update Medicare hospice payments and the aggregate cap amount for FY 2027 under existing statutory and regulatory requirements.
For FY 2027, CMS updated the hospice payment rate by 2.3% (an estimated increase of $755M in payments from FY 2026). This figure results from the finalized 3.2% inpatient hospital market basket percentage increase reduced, as required by law, by a finalized 0.9 percentage point productivity adjustment. The finalized FY 2027 rates for hospices that do not submit required quality data information include the finalized FY 2027 hospice payment update percentage of 2.3% minus 4 percentage points as required by law, which would result in a 1.7% reduction over the previous year’s payment rate. These finalized payment rates reflect the most accurate, updated data available on the cost of goods, services, and labor.
Hospice payments are subject to a statutory aggregate cap limiting the overall payments made to a hospice annually. The finalized hospice cap amount for FY 2027 is $36,174.75 (FY 2026 cap amount of $35,361.44 increased by the FY 2027 hospice payment update percentage of 2.3%).
This final rule also includes:
- Service and spending variation index
- Telehealth face-to-face policy
- Finalized mandatory hospice election statement addendum
- Hospice Quality Reporting Program (QRP)
More Information:
- Full fact sheet
- Hospice webpage
- Hospice QRP webpage
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