# 2025-06271: Hospitals' 2026 Medicare Cash: Rates Up, Rules Tweak 2025-06271, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes, is a Federal Register proposed rule from Health and Human Services Department, Centers for Medicare & Medicaid Services published 2025-04-30, effective 2025-10-01; deemed significant under Executive Order 12866; PRIA reads it as touching household money (as of 2026-10-14). - Canonical: https://policyrisk.com/federal-register/2025-06271 - As of: 2026-10-14 - Plain-text twin of the page above; the HTML and this file carry the same facts. ## Facts - Document number: 2025-06271 - Title: Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes - Type: Proposed Rule - Agencies: Health and Human Services Department; Centers for Medicare & Medicaid Services - Citation: 90 FR 18002 - Published: 2025-04-30 - Effective: 2025-10-01 - Comments close: not stated - Significant: yes (OIRA_API) - Touches household money: yes - Regulation identifier numbers: 0938-AV45 - Last updated: 2026-10-14 ## In one line Hospitals' 2026 Medicare Cash: Rates Up, Rules Tweak ## Summary Starting in fiscal year 2026, Medicare is updating how it pays hospitals for inpatient care, including changes to teaching hospital funding and long-term care hospital rates. These updates aim to improve quality programs and adjust payment policies, affecting hospitals and patients nationwide. Comments on these proposed changes are open until June 10, 2025, so stakeholders have a chance to weigh in before the new rules take effect. ## Abstract This proposed rule would revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital- related costs of acute care hospitals; make changes relating to Medicare graduate medical education (GME) for teaching hospitals; update the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs); update and make changes to requirements for certain quality programs; and make other policy-related changes. ## Effects PRIA read - Low Wage Index Policy Ends with FY2026 Transition: mixed, medium. CMS proposes to discontinue the "low wage index hospital" policy for FY 2026 and later. For hospitals that benefitted from the FY 2024 low wage index policy and whose proposed FY 2026 wage index would fall by more than 9.75% compared to FY 2024, CMS would provide a one-year transitional exception f… - Labor-Related Share Reduced to 66.0%: mixed, medium. CMS proposes to rebase the IPPS market basket to a 2023 base year and set the labor-related share at 66.0% for discharges on or after October 1, 2025. The proposed labor-related share of 66.0% is 1.6 percentage points lower than the current share of 67.6%. CMS states this change is budget neutral. - Acute Care Hospital Payments Rise by $4.0B (FY2026): benefit, high. CMS estimates that the proposed FY 2026 IPPS payment rate and policy changes would increase payments to acute care hospitals by approximately $4.0 billion in FY 2026. CMS attributes this increase primarily to FY 2026 operating payments, uncompensated care payments, capital payments, and the expirat… - LTCH Payments Estimated to Increase $61 Million: benefit, medium. CMS estimates that the proposed FY 2026 changes to the Long-Term Care Hospital (LTCH) prospective payment system would increase payments to LTCHs by approximately $61 million in FY 2026, based on data for 328 LTCHs in CMS’s database. - MDH Program Expires October 1, 2025: cost, medium. Under current law CMS says the Medicare-dependent, small rural hospital (MDH) program is effective only through September 30, 2025. Beginning October 1, 2025, hospitals that previously qualified for MDH status will no longer have MDH status and will be paid based on the IPPS Federal rate. - Readmissions Program Adds Medicare Advantage Data: mixed, low. CMS proposes to add Medicare Advantage (MA) beneficiaries into the six Hospital Readmissions Reduction Program (HRRP) measures and to remove the COVID-19 diagnosis denominator exclusion from all six readmission measures beginning with the FY 2026 program year. CMS also proposes to shorten the appli… - Hospital IQR: Measure Changes and Reporting Burden Drop: benefit, medium. CMS proposes refinements to four Hospital Inpatient Quality Reporting (IQR) measures and removal of four other measures beginning with reporting periods tied to the FY 2026 payment determination. CMS estimates that across 3,050 IPPS hospitals these IQR changes would reduce information collection bu… - Cancer Hospitals: Public Reporting and Fewer Measures: benefit, low. CMS proposes to publicly report data for PPS-exempt cancer hospitals on the CMS website (replacing references to the Provider Data Catalog) and to remove three measures beginning with the CY 2024 reporting period/FY 2026 payment determination. CMS estimates a reduction in information collection bur… - LTCH QRP: Data Element Removals and Burden Changes: mixed, low. CMS proposes to remove five items from the LTCH Continuity Assessment Record and Evaluation (LCDS), amend the LTCH Quality Reporting Program (QRP) reconsideration process, and request information on future measure concepts. CMS estimates a FY 2026 information collection burden increase of 4 hours a… - EHR Reporting Period and New Attestation Rules (CY2026+): mixed, low. For the Medicare Promoting Interoperability Program, CMS proposes to define the EHR reporting period in CY 2026 and subsequent years as any continuous 180-day period within that calendar year. Beginning with the CY 2026 EHR reporting period, CMS also proposes that eligible hospitals and critical ac… - TEAM Model Updates and Estimated $481M Medicare Savings: mixed, medium. CMS proposes updates to the Transforming Episode Accountability Model (TEAM), a mandatory model running January 1, 2026 through December 31, 2030, including changes to participation policies, quality measures, risk-adjustment (180-day lookback and HCC v28), replacement of the Area Deprivation Index… ## Related documents - [2026-20281](https://policyrisk.com/federal-register/2026-20281): Global Benchmark for Efficient Drug Pricing (GLOBE) Model, 2026-10-02 - [2026-20131](https://policyrisk.com/federal-register/2026-20131): Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2027 and Updates to the IRF Quality…, 2026-10-01 - [2026-19959](https://policyrisk.com/federal-register/2026-19959): Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Prog…, 2026-09-30 - [2026-20067](https://policyrisk.com/federal-register/2026-20067): Medicare Program; FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements; Correction, 2026-09-30 - [2026-19946](https://policyrisk.com/federal-register/2026-19946): Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospectiv…, 2026-09-29 - [2026-15652](https://policyrisk.com/federal-register/2026-15652): Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2027 and Updates to the IRF Quality…, 2026-08-03 ## Sources - [2025-06271 on federalregister.gov](https://www.federalregister.gov/documents/2025/04/30/2025-06271/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the) - [2025-06271 as published (PDF)](https://www.govinfo.gov/content/pkg/FR-2025-04-30/pdf/2025-06271.pdf) ## Related - [Previous: 2025-07310, Petition for Reconsideration of Action in Rulemaking Proceeding](https://policyrisk.com/federal-register/2025-07310) - [Next: 2025-06298, Medicare Program; FY 2026 Inpatient Psychiatric Facilities Prospective Payment…](https://policyrisk.com/federal-register/2025-06298) - [All Federal Register documents](https://policyrisk.com/federal-register) Source: PRIA, https://policyrisk.com/federal-register/2025-06271 (as of 2026-10-14).