CMS Releases Final FY2027 Inpatient Hospital and LTCH Payment Regulation: Health Care Policy Update

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Health Care Policy Update

CMS Releases Final FY2027 Inpatient

Hospital and LTCH Payment Regulation

Government Regulations

CMS Releases Final Inpatient Hospital Payment Regulation

with a Net +1.7% payment increase for FY2027

On July 31, CMS released its final FY2027 Medicare Inpatient Hospital and LTCH

Payment Regulation. The final regulation includes a net inpatient hospital operating

payment increase of 1.7% (vs. proposed +1.2%). The payment update includes a 3.2%

market basket update, and a 0.9% productivity reduction. The final regulation also

assumes a 0.1% reduction in payments due to the expiration of the Medicare Dependent

Hospital (MDH) program, as well as a 0.6% reduction in outlier payments (vs. proposed 0.7%), and a +0.2% increase in uncompensated care payments (vs. -0.2% proposed).

Overall, CMS estimates hospital payments will increase by $2.9 billion in FY2027,

including $2.3 billion increase in operating and capital payment updates, a $228 million

increase in uncompensated care payments, $779 million in increase in new technology

payments, and $0.3 billion reduction from the expiration of MDH and low-volume

hospital program payments.

We view the final +1.7% operating payment increase as an improvement over

the proposed +1.2% increase, primarily due to CMS revising its uncompensated

care payment assumptions.

CMS payments for Medicare DSH and Uncompensated Care payments are estimated to

be $12.0 billion in FY2027, up from $11.9 billion in FY2026. CMS revised its estimates

of the percentage of uninsured for FY2027 from 9.1% in its proposed regulation to 9.4%

estimate of FY2027 uninsured percentage in this final regulation. CMS estimates $8.0

billion in Uncompensated Care payments (up from $7.8 billion in FY2026) an increase of

$228 million in FY2027 (+2.9% from FY2026). In addition, CMS also estimates $3.9

billion in base DSH payments in FY2027 (down from $4.1 billion in FY2026).

CMS Finalizes Expansion of the Comprehensive Care for

Joint Replacement (CJR-X) Model Nationwide

CMS also finalized its expansion of the CJR model (CJR-X) nationwide. CMS states that

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