Last week, the Centers for Medicare and Medicaid Services (CMS) released several rules, including the Inpatient Prospective Payment System (IPPS) proposed rule for FY 2026. Proposals in IPPS include a 2.4% payment adjustment, eliminating the requirement for hospitals to screen for Social Determinants of Health (SDOH), increasing reporting requirements for Medicare Advantage and changes to the Transforming Episode Accountability Model (TEAM) model. Click here for the CMS fact sheet. Stay tuned for an in-depth summary from AHPA in the next Policy Brief as well as our upcoming webinar.  

Payment Updates: 2.4% Increase, Sunsetting LWI 

CMS proposes to increase the payment rate for inpatient acute care services by 2.4%. In 2026, CMS will be discontinuing the Low Wage Index Hospital policy following a 2024 court ruling which determined that CMS lacked the statutory authority to implement it. CMS plans to move certain LWI hospitals that will be most impacted by the discontinuation of the program to a transitional program for 2026. 

Quality Updates: Medicare Advantage, In; Health Equity, Out 

CMS proposes to modify four current measures used in the Hospital Inpatient Quality Reporting (IQR) Program and eliminate measures relating to SDOH and health equity.  

 

Amend: 

  • Add Medicare Advantage patients and shorten the performance period from three to two years: 
  • Hospital-Level, Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Replacements 
  • Hospital 30-day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke Hospitalization with Claims-Based Risk Adjustment for Stroke Severity 
  • To lower the submission thresholds, reduce the core clinical data elements submission requirements and reduce the submission requirements of linking variables: 
  • Hybrid Hospital-Wide Readmission Measure 
  • Hybrid Hospital-Wide Mortality Measure 

Remove: 

CMS proposes to eliminate the measures below in order to reduce regulatory burden, which began reporting in 2024 with payment determinations set for 2026. Please note that the rule does not prohibit hospitals from collecting SDOH data; it simply removes the requirement to report it.  

  • Hospital Commitment to Health Equity 
  • COVID-19 Vaccination Coverage Among Health Care Personnel 
  • Screening for Social Drivers of Health 
  • Screen Positive Rate for Social Drivers of Health
     

Transforming Episode Accountability Model (TEAM): 

Key proposed changes to TEAM include: 

  • Adopting a limited deferment period for new hospitals; 
  • Adding the Information Transfer Patient Reported Outcome-based Performance Measure (Information Transfer PRO-PM); 
  • Amending the model’s methodology to account for changes to MS-DRGs that impact target prices; 
  • Replacing the Area Deprivation Index (ADI) with the Community Deprivation Index (CDI); 
  • Using a 180-day lookback period for risk adjustment; 
  • Removing the Decarbonization and Resilience Initiative.
     

Requests for Information: Burdensome and Duplicative Regulations 

CMS has also started releasing a request for information within each proposed rule asking the public to identify burdensome and duplicative regulations. This effort is being driven by President Trump’s Executive Order on “Unleashing Prosperity Through Deregulation.” If you would like to provide recommendations for AHPA to include in response to this RFI, please email Thomas Melton at Thomas.Melton@AdventHealth.com.