On April 10, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2027 proposed rule for the Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System.

The rule proposes to increase FY 2027 acute care hospital operating payments by about 2.4%, compared with FY 2026. CMS estimates the overall impact of the rule would result in an increase of about $1.9 billion in payments to acute care hospitals paid under the IPPS in FY 2027.

Medicare uncompensated care payments to disproportionate share hospitals would decrease by 0.2% in FY 2027, and additional payments for inpatient cases involving new medical technologies would increase by $464 million.In the rule, CMS noted that the November 2025 continuing resolution extended additional payments for Medicare-Dependent Hospitals (MDHs) and the temporary change in payments for low-volume hospitals through December 31, 2026. CMS estimated if Congress acts to further extend the funding, payments to those hospitals would increase by $400 million in FY 2026.

CMS expects the LTCH standard payment rate to increase by 2.4%. CMS said LTCHs can expect to see a $55 million increase in total payment for FY 2026.

The proposed rule also would expand the Comprehensive Care for Joint Replacement (CJR) Model. The expanded model, called CJR-X, would aim to improve care coordination for Medicare patients undergoing hip, knee and ankle replacements in both inpatient and outpatient hospital settings. CJR-X would be mandatory nationwide and begin on October 1, 2027. In addition, the proposed rule makes several updates to hospital quality and pay-for-performance programs.

The proposed rule is open for public comment through June 9, 2026.

Press Release, Fact Sheet, Proposed Rule

Additional information is available in the WCEY Health Alert, attached below.