August 12, 2025
Policy Update: FY 2026 Medicare Hospital Inpatient Prospective Payment System Final Rule
On July 31, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for inpatient and long-term care hospitals under the Medicare hospital inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) for fiscal year (FY) 2026.
The increase in IPPS operating payment rates for general acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) program and are meaningful electronic health record (HER) users under the Medicare Promoting Interoperability Program is 2.6 percent.
This rule also finalizes changes to
- the Medicare Readmissions Reduction Program,
- the Value Based Purchasing Program,
- the IQR program, and
- the interoperability program.
These regulations are effective October 1, 2025.
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