Medicare Inpatient Payments 2026: CMS Proposed Rules
- The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule for fiscal year 2026,outlining changes to Hospital Inpatient Prospective Payment systems (IPPS).
- A key element is the continued rollout of the Transforming Episode Accountability model (TEAM).
- The proposed rule also revises cost accounting for nursing and allied health programs.
CMS proposes meaningful changes to MedicareS Inpatient Prospective Payment Systems (IPPS) for fiscal year 2026, including a notable 2.4% increase in IPPS payment rates. This boost aims to inject an additional $4 billion into Medicare hospital payments nationwide. Mandatory participation in the Transforming Episode Accountability Model (TEAM) starts January 1, 2026, impacting hospitals in specific areas. The proposed rule also revises cost accounting for nursing and allied health programs, reflecting a court decision. Additionally, CMS is seeking public input, in line wiht President Trump’s Executive Order 14191, on streamlining regulations and reducing administrative burdens; News Directory 3 is closely following these developments. Stakeholders have until June 10 to submit comments. Discover what’s next for hospital payments.
CMS Proposes Hospital Payment Rule Changes for FY2026
Updated June 2,2025
The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule for fiscal year 2026,outlining changes to Hospital Inpatient Prospective Payment systems (IPPS). the proposed rule addresses several policy shifts, including those tied to deregulation efforts.
A key element is the continued rollout of the Transforming Episode Accountability model (TEAM). Beginning Jan. 1,2026,participation will be mandatory for hospitals in specific geographic areas. The agency is also codifying policies for counting resident full-time equivalent (FTE) positions to calculate Medicare payments to teaching hospitals for graduate medical education costs.
The proposed rule also revises cost accounting for nursing and allied health programs. This follows a court decision against the current CMS methodology. CMS aims for a more accurate accounting of net costs for approved educational activities.
Additionally, CMS plans to discontinue a low-wage index hospital policy deemed invalid by the D.C. Circuit Court of Appeals in 2024. A budget-neutral transitional exception is proposed for hospitals considerably affected by this change. The agency will continue add-on payments for new technologies, estimated at $234 million in FY 2026.
The proposed rule includes a projected 2.4% increase in IPPS payment rates for eligible hospitals, boosting Medicare hospital payments by $4 billion nationwide. This includes a $1.5 billion increase in uncompensated care payments to disproportionate share hospitals and $234 million for new medical technologies.
In line with President Trump’s Executive Order 14191, CMS seeks public input on streamlining regulations and reducing administrative burdens. The agency is requesting feedback on regulatory requirements that could be waived or modified without compromising patient safety.
What’s next
Stakeholders have until 5 p.m. EDT on June 10, 2025, to submit comments on the proposed rule. CMS is particularly interested in feedback related to deregulation opportunities within the Medicare program.