2026 IPPS proposed rule: CMS proposes payment updates, mulls significant changes to numerous programs
CMS is seeking feedback on potential modifications to existing quality and reporting programs and possible new reporting measures, according to the fiscal year (FY) 2026 Inpatient Prospective Payment System (IPPS) proposed rule. The proposed rule was released April 11 and will be published in the Federal Register on April 30.
CMS is proposing a 2.4% increase in operating payments for acute care hospitals. The agency is also proposing to rebase and revise the IPPS market basket to reflect a 2023 base year. Currently, a 2018 base year is used.
The proposed rule outlines CMS’ plan to address 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. Therefore, CMS is proposing to discontinue the policy in FY 2026 and to implement a budget-neutral transition exception for hospitals that would be significantly affected by the discontinuation of the law-wage index hospital policy.
CMS finalized the Transforming Episode Accountability Model (TEAM) in the 2025 IPPS final rule. TEAM is a bundled payment model that builds on and advances previous models. The model will last for five years, starting January 1, 2026, and ending in December 2030. It will include episodes of care initiated by the following procedures:
- Coronary artery bypass graft
- Lower extremity joint replacement
- Major bowel procedure
- Surgical hip/femur fracture treatment
- Spinal fusion
CMS is proposing a number of changes to the program, including:
- A limited deferment period for certain hospitals
- Removing health equity plans
- Removing the Decarbonization and Resilience Initiative
CMS is requesting stakeholder feedback on opportunities to streamline regulations and reduce administrative burden.
The agency is also proposing modifications to numerous quality and reporting programs. For example, proposed modifications to the Hospital Inpatient Quality (HIQ) Reporting program include the removal of measures related to health equity and COVID-19 vaccination status of healthcare personnel, modifications to readmission and mortality measures, a request for comments on potential new measures on well-being and nutrition.
Comments on the proposed rule are due June 10. Revenue integrity professionals should carefully read the proposed rule, focusing on proposals that may directly affect their job duties, facility, or patient population. Make note of any proposals that could have a meaningful impact, whether positive or negative, on reimbursement, systems, or programs. Discuss the proposals with colleagues in other affected departments and consider responding to CMS’ various requests for information and feedback. Revenue integrity professionals looking for tips on commenting on the 2026 IPPS proposed rule can read NAHRI’s white paper Advocacy in Action: Commenting on Proposed Rules.