Guide to FY 2026 Medicare Inpatient Payment Regulations

This guide presents the finalized regulations for the Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) for fiscal year 2026. It outlines significant changes, including a 2.6% increase in IPPS operating payments, estimated to total $5 billion, and a 2.7% rise in LTCH standard payment rates. The document details updates to Uncompensated Care (UCC) and Disproportionate Share Hospital (DSH) payments, which are projected to increase by over $2 billion. Additionally, it discusses modifications to quality reporting measures, including the removal of certain quality measures and adjustments to readmission measures. The guide emphasizes the importance of understanding these reimbursement changes as healthcare organizations navigate financial challenges in a volatile economic environment. It also highlights the implications of the Transforming Episode Accountability Model (TEAM) and the discontinuation of the low wage index hospital policy, providing critical information for hospital leaders preparing for the upcoming fiscal year.