Traditional MedicareReimbursementHigh impact
2026-08-03 - FY 2027 Hospital Inpatient Prospective Payment System & Long-Term Care Hospital Prospective Payment System Final Rule
Medicare/CMS·Payment
Effective date
Oct 1, 2026
We identified it
Aug 4, 2026
Summary
CMS issued final FY 2027 payment rules effective October 1, 2026, implementing a 2.3% increase to Medicare inpatient prospective payment system (IPPS) rates for hospitals, long-term care hospitals (LTCH), inpatient rehabilitation facilities (IRF), and hospice programs. All affected facilities must maintain participation in quality reporting programs and meet meaningful EHR requirements to receive full rate updates. Payment increases total approximately $2.1B for IPPS, $54M for LTCH, and $755M for hospice.
Action Required
By September 15, 2026: Billing team must prepare for FY 2027 rate changes by working with your practice's finance department to (1) update reimbursement rate tables in billing software to reflect 2.3% IPPS, LTCH, IRF, and hospice payment increases; (2) verify hospital/facility participation status in Hospital Inpatient Quality Reporting (IQR) Program and meaningful EHR requirements to ensure full rate updates are received; (3) confirm quality data submission deadlines for IQR, LTCH QRP, IRF QRP, and Hospice QRP programs; (4) review any applicable new technology add-on payment (NTAP) approvals and update internal charge masters. Finance and billing leadership should coordinate with hospital/facility administration to confirm Medicare-dependent hospital and low-volume hospital payment status given December 31, 2026 expiration of those provisions. Failure to update rates and quality reporting compliance may result in underbilling or payment denials.