CMS Proposes 2.4% Update in FY 2026 Hospital IPPS Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) released the federal fiscal year (FY) 2026 Hospital Inpatient Prospective Payment System (IPPS) proposed rule April 11, which includes a 2.4% update above the FY 2025 base. This 2.4% payment update reflects a hospital market basket increase of 3.2% as well as a productivity cut of 0.8%. 

The IPPS proposed rule provides updates for Medicare fee-for-service payment rates and policies for inpatient hospitals and long-term care hospitals for FY 2026. CMS pays acute care for inpatient stays under the IPPS. Under this payment system, CMS sets base payment rates for inpatient stays based on the patient’s diagnosis and severity of illness. Subject to certain adjustments, a hospital receives a single payment for the case based on the payment classification assigned at discharge through Medicare Severity Diagnosis-Related Groups (MS-DRGs). 

The rule also included a Request for Information entitled “Unleashing Prosperity Through Deregulation of the Medicare Program Request for Information” to solicit public feedback for potential changes to Medicare regulations, with the goal of reducing the costly private healthcare expenditures required to comply with federal regulations.

The American College of Radiology®(ACR®) is reviewing the proposed rule and will soon provide a detailed summary. Comments are due to CMS by June 10.

If you have questions or would like more information, contact Christina Berry, ACR Team Lead, Economic Policy.