CMS FY 2027 IPPS Proposed Rule: 2.4% Payment Increase

April 15, 2026

CMS releases FY 2027 IPPS proposed update

Deborah Godes, Olivia Gomez, Marla Kugel, Anthony Livshen, Maddie News, Simeon Niles, Kristen O'Brien, Parashar Patel, Erica Stocker, Devin Stone, Eric Zimmerman McDermott+ + Follow Contact LinkedIn Facebook X Send Embed

On April 10, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2027 Inpatient Prospective Payment System (IPPS) proposed rule. This proposed rule would update Medicare payment policies and quality reporting programs relevant for inpatient hospital services.

A CMS fact sheet on the proposed rule is available here. Comments are due by 5 pm EDT on June 9, 2026.

Key takeaways from the FY 2027 IPPS proposed rule

• CMS proposes a 2.4% increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users. This reflects a projected FY 2027 hospital market basket increase of 3.2%, less a 0.8 percentage point productivity adjustment.
• CMS proposes to nationalize the Comprehensive Care for Joint Replacement (CJR) Model. If finalized, all hospitals that bill Medicare Part A and Part B will be paid through the Comprehensive Care for Joint Replacement Expansion (CJR-X) or the Transforming Episode Accountability Model (TEAM) for lower-extremity joint replacement episodes of care for Medicare fee-for-service beneficiaries.
• CMS proposes to eliminate the alternate pathway for new technology add-on payments under IPPS and the transitional pass-through under the Outpatient Prospective Payment system (OPPS), requiring medical devices with breakthrough dstrationevice designation (BDD) to meet the same eligibility criteria as non-BDD technologies.
• Consistent with prior years’ rulemaking, CMS proposes a number of MS-DRG changes, including the creation of new extensive and complex spinal fusion MS-DRGs, reorganization of cardiac pacemaker revision and device replacement MS-DRGs, and deleting a number of MS-DRGs with severity levels to create a few single-base MS-DRGs.
• CMS is proposing one new measure for the Hospital Readmissions Reduction Program, but no new measures to the other two pay-for-performance programs. CMS is proposing new measures, modified measures, and measure removals for the inpatient quality reporting program.
• CMS is not proposing any major changes to wage index policy. CMS proposes to continue the transitional exception for hospitals that benefitted from the low wage index policy before it ended in FY 2024.
• Proposed uncompensated care payment and supplemental payment for FY 2027 totals $7.563 billion, a 3.3% decrease from the FY 2026 total of $7.821 billion.
• CMS is proposing requirements to prohibit unlawful discrimination by graduate medical education (GME) programs and to modify the criteria for identifying new residency programs for purposes of direct GME and indirect medical education (IME) payments.
• Because Congress extended the low-volume hospital payment adjustment and Medicare-Dependent Hospital (MDH) programs only through the end of the calendar year, CMS sets forth proposed policies for these hospitals for both the portion of the fiscal year that falls within that window (October 1, 2026, through December 31, 2026) and the remainder of the fiscal year, beginning on January 1, 2027.
• CMS proposes updates to TEAM to expand eligible spinal fusion episodes, better align attribution and quality measures with other CMS programs and models, and refine pricing methodologies. The agency is also seeking input on expanding participation to other organizations and episodes.

INTERACTIVE IPPS DATA DASHBOARD

McDermott+ has developed an interactive dashboard that shows total Medicare fee-for-service volume and the average cost per inpatient stay by MS-DRG, as calculated by CMS for the FY 2027 IPPS proposed rule. This information can illuminate trends in inpatient volume and payments and identify the resource costs to hospitals for providing care for individual MS-DRGs.

ACCESS DASHBOARD

[View source.]

Send Print Report

Latest Posts

• CMS releases FY 2027 IPPS proposed update
• Healthcare Preview for the Week of: April 13, 2026
• McDermott+ Check-Up: April 10, 2026
• LEAD: CMS brings Medicare Advantage-like flexibility to original Medicare
• FY 2027 president’s budget: Meeting or defying expectations? See more »

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Attorney Advertising.

©
McDermott+

Written by:

McDermott+ Contact + Follow Deborah Godes + Follow Olivia Gomez + Follow Marla Kugel + Follow Anthony Livshen + Follow Maddie News + Follow Simeon Niles + Follow Kristen O'Brien + Follow Parashar Patel + Follow Erica Stocker + Follow Devin Stone + Follow Eric Zimmerman + Follow more less

PUBLISH YOUR CONTENT ON JD SUPRA

• ✔ Increased readership
• ✔ Actionable analytics
• ✔ Ongoing writing guidance Join more than 70,000 authors publishing their insights on JD Supra

Start Publishing »

Published In:

Alternative Payment Models (APM) + Follow Centers for Medicare & Medicaid Services (CMS) + Follow Comment Period + Follow Graduate Medical Education + Follow Healthcare Facilities + Follow Hospitals + Follow Inpatient Prospective Payment System (IPPS) + Follow Inpatient Quality Reporting + Follow Medical Devices + Follow Medicare + Follow Notice of Proposed Rulemaking (NOPR) + Follow Proposed Rules + Follow Reimbursements + Follow Reporting Requirements + Follow Rulemaking Process + Follow Value-Based Payments + Follow Administrative Agency + Follow Health + Follow Insurance + Follow Science, Computers & Technology + Follow more less

McDermott+ on:

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: Sign Up Log in ** By using the service, you signify your acceptance of JD Supra's Privacy Policy.* - hide - hide