Medicare Finalizes 2027 Hospital Payment Rates and Tweaks
Published Date: 8/4/2026
Rule
Summary
This final rule will 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. ONC also adopts certain health information technology (health IT) standards and specifications on behalf of HHS.
Analyzed Economic Effects
8 provisions identified: 6 benefits, 2 costs, 0 mixed.
Medicare-Dependent Hospital (MDH) Status Ends
The Medicare-dependent, small rural hospital (MDH) program is extended only through December 31, 2026; beginning January 1, 2027, hospitals that previously had MDH status will no longer have MDH status and will be paid based on the IPPS Federal rate.
Medicare TEAM Model Updates
The mandatory Transforming Episode Accountability Model (TEAM) runs January 1, 2026 through December 31, 2030 and applies to certain procedure-based episode categories (CABG, LEJR, major bowel, SHFFT, and spinal fusion). CMS finalized updates that change episode triggers, quality measure timing, and target price construction for TEAM.
CJR‑X: Mandatory Joint Replacement Model
CMS is expanding the Comprehensive Care for Joint Replacement Expanded (CJR‑X) Model nationally starting January 1, 2028. It will be mandatory for acute care hospitals (except those in TEAM and hospitals in Maryland) and holds hospitals accountable for lower extremity joint replacement (LEJR) episodes from the inpatient/outpatient admission through 90 days after discharge.
Low-Volume Hospital Payment Extension & Thresholds
Section 6201 of the Consolidated Appropriations Act, 2026 extends the modified low-volume hospital definition through the portion of FY 2027 occurring October 1, 2026 through December 31, 2026: a hospital qualifies if it is more than 15 road miles from another subsection (d) hospital and has fewer than 3,800 total discharges. The sliding payment adjustment ranges from +25% for hospitals with 500 or fewer discharges to 0% for hospitals with more than 3,800 discharges.
No‑Discrimination Rule for GME Programs
CMS finalized a requirement that approved graduate medical education (GME) residency programs must not discriminate, or promote or encourage discrimination, on the basis of race, color, national origin, sex, age, disability, or religion in selections, participation, resource allocation, or similar activities.
90% Rule for New Residency Program Status
For a residency program to be considered new for cap‑building purposes, CMS finalized a criterion that at least 90 percent of individual residents must not have prior experience training in another program in the same specialty, with exceptions for small programs, displaced residents, and binding third‑party matches.
Advance Care Planning eCQM Adopted
CMS finalized adoption of the Advance Care Planning electronic clinical quality measure (eCQM) in the Hospital Inpatient Quality Reporting and Medicare Promoting Interoperability Programs and adopted it (with modification) in the PPS‑Exempt Cancer Hospital Quality Reporting Program, with mandatory reporting tied to future payment determinations (e.g., adoption in Hospital Inpatient QRP beginning with the FY 2030 payment determination).
Sepsis Readmission Measure for HRRP
CMS finalized adoption of the Hospital 30‑Day, All‑Cause, Risk‑Standardized Readmission Rate Following Sepsis Hospitalization measure for the Hospital Readmissions Reduction Program with two years of early look reports for the FY 2028 and FY 2029 program years and full use beginning with the FY 2030 program year.
Personalized for You
How does this regulation affect your finances?
Personalize government policy and PRIA will tell you what this federal register document means for your household, plus every other regulation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.
Key Dates
Department and Agencies
Related Federal Register Documents
2026-14709, Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program; Correction
This correction fixes some typos and technical mistakes in the 2027 health insurance rules under the Affordable Care Act. It mainly affects people and organizations involved in health coverage plans by clarifying when the rules take effect and restoring some important regulation details. These fixes take effect on July 20, 2026, ensuring smoother and clearer health plan operations next year.
2026-12069, Medicare Program; Strengthening Oversight of Accrediting Organizations (AOs) and Preventing AO Conflicts of Interest, and Related Provisions
This new rule makes sure the groups that check Medicare providers play fair and follow clear rules to avoid conflicts of interest. It updates how psychiatric hospitals are reviewed and tightens rules for providers who lost their Medicare status but want back in. These changes affect Medicare providers and accrediting groups, start June 16, 2027, and aim to keep care safe and trustworthy.
2026-10890, Medicare Program; Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model
Starting July 1, 2026, Medicare is updating the Increasing Organ Transplant Access (IOTA) Model to help kidney transplant hospitals do even better at getting more people transplanted and improving care quality. These changes affect hospitals involved in kidney transplants and aim to make the process smoother and more effective, with new payment rules that reward success. This update is part of a 6-year plan running through 2031 to save more lives and boost patient experience.
2026-10292, Medicaid Program; Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments
This proposed rule changes how states can pay Medicaid managed care plans and certain doctors to make sure payments are fair, efficient, and encourage enough providers to offer quality care. It affects states, Medicaid managed care organizations, and targeted Medicaid practitioners, aiming to keep payments balanced and services available. Comments on these changes are open until July 21, 2026, so stakeholders have time to weigh in before it’s finalized.
2026-10050, Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program
Starting in 2027, health insurance plans on federal and state marketplaces will see new rules to make coverage fairer and easier to use. These changes affect insurance companies, agents, and people buying plans, including new fees, penalties, and better protections for those with hardships. Expect updates on plan quality, dental coverage limits, and longer-term catastrophic plans, all aiming to keep your health coverage solid and affordable.
2026-07205, Medicare and Medicaid Programs; Patient Protection and Affordable Care Act; Interoperability Standards and Prior Authorization for Drugs for Medicare Advantage Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, and Issuers of Qualified Health Plans on the Federally-Facilitated Exchanges
This new rule will help Medicare, Medicaid, CHIP, and health plan companies share patient info more easily and speed up drug approval requests. It affects Medicare Advantage, Medicaid, CHIP, and health plans on federal exchanges, aiming to make care smoother and faster. These changes will start soon and could save time and money by cutting red tape.
Previous / Next Documents
Previous: 2026-15825, Airworthiness Directives; Diamond Aircraft Industries Inc. Airplanes
The FAA is adopting a new airworthiness directive (AD) for certain Diamond Aircraft Industries Inc. (DAI) Model DA20-C1 airplanes. This AD was prompted by a report of a certain emergency locator transmitter (ELT) not activating due to a missing jumper wire. This AD requires a continuity inspection of the D-sub connector of the Artex ELT 1000 and, if necessary, corrective actions. The FAA is issuing this AD to address the unsafe condition on these products.
Next: 2026-15835, Accessible Lavatories on Single-Aisle Aircraft and Ensuring Safe Accommodations for Air Travelers With Disabilities Using Wheelchairs
The U.S. Department of Transportation (DOT or Department) is extending its previously announced enforcement discretion for four provisions of the final rule on "Ensuring Safe Accommodations for Air Travelers With Disabilities Using Wheelchairs" (Wheelchair Rule I) related to airline liability for mishandled wheelchairs, refresher training frequency, pre-departure notifications, and fare difference reimbursements from December 31, 2026 to April 30, 2027. To maintain regulatory consistency, the Department is also expanding this enforcement discretion to include the 12-month hands-on training mandate for flight attendants regarding on-board wheelchair (OBW) assistance and lavatory accessibility in the final rule titled "Accessible Lavatories on Single-Aisle Aircraft" (Accessible Lavatory Rule). These provisions will be formally addressed in an upcoming rulemaking titled "Airline Obligations to Accommodate Air Travelers with Disabilities Using Wheelchairs" (Wheelchair Rule II). This extension is necessary to allow sufficient time for the Department to review and analyze public comments, and to make final determinations regarding the content of the final rule. This exercise of enforcement discretion is intended to remove the burden of complying with the requirements under review by DOT and does not prejudge the outcome of the new rulemaking. This notice does not affect the enforcement of requirements in the Accessible Lavatory Rule other than the one identified.