CMS Releases Proposed FY 2026 IPPS and LTCH Rule: Impact on Hospital Payments and FHIR Standards

Details

The Centers for Medicare & Medicaid Services (CMS) issued the proposed fiscal year (FY) 2026 IPPS and LTCH Rule (CMS-1833-P) on April 11, 2025. This rule proposes significant policy changes expected to affect hospital financial performance starting October 1, 2025. Key financial updates include a proposed 2.4 percent increase in operating payments for general acute care hospitals under the IPPS, totaling an estimated $4 billion increase in total IPPS hospital payments for FY 2026. Uncompensated care payments are also projected to rise significantly. Beyond payments, CMS proposes revisions to the TEAM Model framework, including replacing the Area Deprivation Index (ADI) with the Community Deprivation Index (CDI) and using Hierarchical Condition Categories (HCC) for risk adjustment. A critical aspect for healthcare IT is the inclusion of an RFI regarding digital quality measurement and the use of Health Level 7 Fast Healthcare Interoperability Resources (FHIR). CMS specifically seeks comments on its anticipated approach to FHIR-based electronic clinical quality measure (eCQM) reporting in quality programs, as well as the potential use of FHIR-based patient assessment instrument reporting for inpatient psychiatric facilities. These changes signal a major push toward standardized, interoperable digital data submission processes across Medicare. Stakeholder comments are due by June 10, 2025.