2026 IPPS final rule: Payment increase and changes to reporting requirements
Most hospitals may see slightly higher payments for inpatient services than expected for fiscal year 2026, according to the 2026 Inpatient Prospective Payment System (IPPS) final rule. The final rule, released July 31, details payment updates for inpatient hospital services, changes to the low wage index hospital policy, and adjustments to numerous quality and reporting programs.
CMS finalized a 2.6% increase in IPPS payments, a slight increase compared to the 2.4% the agency floated in the proposed rule. CMS finalized its proposal to rebase and revise the IPPS market basket to reflect a 2023 base year.
CMS is moving forward with its transition to discontinue its low wage index hospital policy. The policy, which was adopted in the 2020 IPPS final rule, created a temporary, budget-neutral fix for wage index disparities that affected low-wage index hospitals, particularly rural hospitals. In July 2024, the Court of Appeals for the D.C. Circuit ruled that CMS lacked the authority to adopt the policy and that the policy must be vacated. According to the final rule, the policy will be discontinued starting in fiscal year 2026. CMS will adopt a narrow, budget-neutral transition exception for hospitals that would be significantly affected by the discontinuation of the law-wage index hospital policy.
The Transforming Episode Accountability Model (TEAM) saw numerous changes finalized, including expanding the three-day skilled nursing facility rule waiver, changes to quality measures, and updates to target price construction.
The final rule also includes changes to various quality and reporting programs including the:
- Hospital Inpatient Quality Reporting Program
- Medicare Promoting Interoperability Program
- Hospital Readmissions Reduction Program
- Hospital-Acquired Conditions Reduction Program
- Hospital Value-Based Purchasing Program
See the final rule and upcoming NAHRI coverage for more information on changes to these and other programs.
Revenue integrity professionals should carefully read the final rule, paying particular attention to provisions that may directly affect their job duties, department, organization, and community. Work with colleagues in other revenue cycle departments, such as HIM and CDI, to share information about changes and coordinate education. Get in touch with clinical and IT leaders and develop plans to implement any changes or training. Test systems and plan to audit areas affected by these changes.