Healthcare Facilities & Managed Care: IRF Final Rule Net Rate Update +2.3% in FY27, Down 10 bps From Proposed; All-in Payments Up 2.7%, 10 bps Lower Than Proposed

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Healthcare Facilities & Managed Care: IRF Final Rule Net Rate Update +2.3% in FY27, Down 10 bps From Proposed; All-in Payments Up 2.7%, 10 bps Lower Than Proposed

Global Research

31 July 2026ab

Healthcare Facilities & Managed Care Equities

AmericasIRF Final Rule Net Rate Update +2.3% in FY27,

Down 10 bps From Proposed; All-in Payments Healthcare Providers

Up 2.7%, 10 bps Lower Than Proposed AJAnalystRice

aj.rice@ubs.com

+1-212-713 4299

FY27 IRF Final 10 bps Lower Versus Proposal James Kurek

Analyst

On July 30th, CMS released the FY27 final rule for Inpatient Rehab Facilities (IRFs or james.kurek@ubs.com

rehab hospitals). The final rule would increase total Medicare payments to IRFs by $340 +1-212-713 3704

mln (vs $355 mln proposed), representing a 2.3% (versus +2.4% proposed) rate update

Joseph Overman

which consists of a 3.2% market basket (unchanged) update and offset by 0.9% (versus

Associate Analyst

0.8% proposed) of productivity adjustment. It also includes a 0.4% overall increase in joseph.overman@ubs.com

estimated IRF outlier payments from the update to the outlier threshold amount, and +1-212-882 0086

places the average estimated increase in payments for all IRFs at +2.7% (2.8%

Jonathan Yong

proposed). The finalized outlier threshold remains the same as proposed at 3.0% of

total payments. We think most investors had expected the final update to be jonathan.yong@ubs.com

unchanged, so the 10 bps cut is somewhat disappointing, but we still view the +2.3% +1-212-713 6268

rate update as broadly favorable for IRFs.

Michael Wei

Companies Affected: EHC michael.wei@ubs.com

According to the rule, payments per discharge to freestanding rehabilitation hospitals +1-212-713 2565

(more applicable to EHC) are estimated to increase 2.3% in urban areas. Virtually all of