Medicare Finalizes Hospital Payment Rule
Federal regulators issued a correction to the Medicare hospital outpatient payment system, finalizing updates for 2026. The rule includes new requirements for quality reporting and price transparency. It also establishes a process for teaching hospitals to apply for new residency slots following the closure of other institutions, which could impact the training environment for advanced practice nurses.
- The final rule increases payment rates for hospital outpatient services by 2.6% for 2026, a figure derived from a 3.3% market basket increase reduced by a 0.7% productivity adjustment. This rate impacts the overall financial resources available to hospitals for all services, including obstetrics. - A key feature of recent updates is the "Birthing-Friendly" hospital designation, which is displayed publicly on the CMS Care Compare website. This designation is based on hospital reporting of their participation in quality improvement collaboratives and implementation of evidence-based safety bundles to address issues like obstetric hemorrhage and severe hypertension. - The Centers for Medicare & Medicaid Services (CMS) is phasing in new Conditions of Participation—foundational requirements for hospitals—specifically for obstetrical services. The second phase, effective January 2026, addresses the organization, staffing, and delivery of care in OB units, while a third phase in 2027 will cover staff training and quality improvement. - The rule continues the multi-year phase-out of the "Inpatient Only" (IPO) list, which is set to be fully eliminated by 2029. This allows a broader range of procedures, including certain gynecological surgeries, to be performed and reimbursed in the hospital outpatient setting. - The American Hospital Association (AHA) has voiced concerns that the payment increase is inadequate and that CMS's use of Conditions of Participation to advance its policy goals could unintentionally hinder access to maternal care services. - Federal law has authorized the creation of 1,000 new Medicare-funded physician residency positions, which are being distributed at a rate of 200 per year over five years. These slots are prioritized for hospitals in health professional shortage areas, which can alter the training landscape and interprofessional dynamics for future nurse-midwives in those regions. - Under Medicare Part B, Certified Nurse-Midwife (CNM) services are reimbursed at 100% of the physician fee schedule amount for the same service. This policy, distinct from the hospital payment system, directly impacts the financial viability and practice autonomy of nurse-midwives.
