CMS Finalizes FY 2027 Medicare Hospice, IPF, IRF and SNF Payment Rules
Last week, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2027 final rules for Medicare Hospice payments, the Inpatient Psychiatric Facility (IPF) prospective payment system (PPS), the Inpatient Rehabilitation Facilities (IRF) PPS, and the Skilled Nursing Facility (SNF) PPS.
For FY 2027, CMS updated the hospice payment rate by 2.3%, reflecting a 3.2% hospital market basket update reduced by a 0.9 percentage point productivity adjustment. The final hospice cap rate for FY 2027 is $36,174.75 compared to the FY 2026 $35,361.44 cap.
IPF PPS: CMS finalized an IPF PPS rate update of 2.3% reflecting a hospital market basket increase of 3.2% minus a 0.9 percentage point productivity adjustment. CMS also finalized capping IPF PPS outlier payments at the provider level in response to certain IPFs with exceptionally high routine costs that receive outlier payments on many of their claims. This policy will be effective FY 2028 to provide additional time for affected IPFs to evaluate their cost drivers. There is an exception to this cap policy for facilities with less than 50 stays per year.
IRF PPS: The FY 2027 IRF PPS rate update was finalized at 2.3% based on an IRF market basket update of 3.2% minus a 0.9 percentage point productivity adjustment. CMS also specified that all therapies provided under the IRF PPS must be initiated within 36 hours of admission, and finalized a requirement that the initial interdisciplinary team (IDT) meeting for a patient be completed on or before the fourth day of admission with subsequent IDT meetings conducted weekly.
SNF PPS: For the FY 2027 SNF PPS, CMS finalized a rate update of 2.4% based on a SNF market basket of 3.3% minus a 0.9 percentage point productivity adjustment. CMS also finalized removal of two SNF Quality Reporting Program (QRP) measures beginning with the FY 2028 SNF QRP: the COVID-19 Vaccination Coverage Among Healthcare Personnel measure and the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure. CMS also shortened the revised data submission timeframe from 4.5 months to approximately 45 days beginning with the FY 2029 SNF QRP.
Fact sheets are available on the CMS website for Hospice, IPF, IRF andSNF. IHA will make facility-specific estimated financial impact reports available in the IHA C-Suite for IPF, IRF and SNF in the coming weeks.
Staff contact: Cassie Yarbrough
CMS Releases FY 2027 IPPS Final Rule, Finalizes CJR-X Model
On July 31, the Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2027 Medicare Inpatient Prospective Payment System (IPPS) final rule. CMS finalized a 2.3% IPPS payment rate increase, which reflects at 3.2% hospital market basket increase and a 0.9 percentage point productivity reduction. The FY 2027 Medicare Long-Term Care Hospital PPS was also increased by 2.3%.
Illinois hospitals will once again default to the rural floor wage index across all core-based statistical areas. For FY 2027, IPPS payments and other PPS payment systems that use the inpatient wage index for reimbursement will have a wage index factor of 1.1719.
CMS also used the FY 2027 IPPS final rule to expand the Comprehensive Care for Joint Replacement (CJR) Model. The expanded model, CJR-X, is designed to improve care for original Medicare patients undergoing lower extremity joint replacements in both inpatient and outpatient hospital settings. CJR-X will be mandatory nationwide beginning Jan. 1, 2028. IHA is hosting a complimentary webinar on Aug. 20 with experts from Forvis Mazars to provide members with an overview of the new federal model’s structure, explain how CJR-X increases financial accountability for hospitals, and address the model’s impact on performance, operations and care delivery. You can register for the webinar here.
IHA will provide members with facility-specific estimated financial impact reports in the coming weeks. A CMS fact sheet on the final rule is available here.
Staff contact: Cassie Yarbrough
HHS Announces Revised 340B Rebate Model Pilot Program
The U.S. Dept. of Health and Human Services (HHS) issued a Friday notice announcing a revised 340B Rebate Model Pilot Program. The program would allow qualifying drug manufacturers to use rebates rather than upfront discounts to effectuate the 340B ceiling price for certain drugs purchased by 340B-covered entities.
According to HHS’ Health Resources and Services Administration (HRSA), the pilot will evaluate a rebate-based model for certain drugs while collecting information on program integrity, operational effects and the relationship between the 340B program and Medicare’s Drug Price Negotiation Program. Participation applies only to drugs included on the Centers for Medicare & Medicaid Services’ Medicare Drug Price Negotiation Selected Drug List for initial price applicability years 2026 and 2027.
Manufacturers wishing to participate must submit plans to HRSA by Aug. 24, and HRSA said it will make approval decisions by Sept. 24. The approved rebate models will take effect Jan. 1, 2027. Participating manufacturers are required to commit to the pilot for at least one year.
This revised pilot was developed following a federal district court ruling vacating the agency’s original 2025 rebate pilot program, and using information generated from HRSA’s February request for information seeking stakeholder feedback on rebate models.
Legislation Signed to Enhance Child Safety Protections Online
A new law signed last Friday, the Children’s Social Media Safety Act (HB 5511), enacts sweeping protections designed to keep Illinois children safe online. Under the law, social media platforms in use in Illinois are required to strengthen their default privacy settings for users under 18 and limit the use of algorithms designed to keep young people scrolling. Instead, these users will only be shown content they request or search for or that is posted by a creator or friend they follow. The law also includes provisions to shield the precise location of minors and provides for further limits on digital currency transactions. Click here for more information.
Illinois Respiratory Disease Surveillance Data
The Infectious Respiratory Disease Surveillance Dashboard from the Illinois Dept. of Public Health (IDPH) provides the latest data on hospital visits, seasonal trends, lab test positivity and demographic data. IDPH also tracks COVID-19, influenza and respiratory syncytial virus information through the Illinois Wastewater Surveillance System dashboard.
Briefly Noted
The Illinois Dept. of Financial and Professional Regulation last week announced the launch of a new webpage for whistleblower complaints to be submitted to the Division of Financial Institutions. The webpage provides a dedicated reporting channel, guidance and education regarding potential protections.
Leading the News
CMS finalizes 2.3% hospital pay bump, mandatory joint replacement model: 9 things to know
Becker’s Hospital Review
CMS on July 31 finalized its Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System rule for fiscal 2027, setting a 2.3% payment increase for acute care and long-term care hospitals and locking in the first mandatory, nationwide episode-based payment model for joint replacements.
Study ranks the most and least affordable states for retirees
WIFR
Where retirees choose to live can make a significant difference in how far their savings go — and a new study from Retirement Living identifies the states that offer the most financial breathing room.
HSHS brought back 400 former colleagues in 1 year — and cut turnover 50% in 2 years
Becker’s Hospital Review
Springfield, Ill.-based Hospital Sisters Health System has brought back roughly 400 former colleagues over the past year — a figure now representing more than 10% of annual new hires.
