CMS FY2027 hospital payment proposal

Medicare would raise base inpatient hospital payments by 2.4% next fiscal year under a Centers for Medicare and Medicaid Services proposal released April 10. (cms.gov) The proposal covers acute-care hospitals paid under the Inpatient Prospective Payment System and long-term care hospitals paid under the Long-Term Care Hospital Prospective Payment System for fiscal year 2027. For hospitals that meet electronic health record and quality-reporting requirements, the inpatient update reflects a 3.2% market-basket increase minus a 0.8 percentage-point productivity cut. (cms.gov) (aha.org) The Centers for Medicare and Medicaid Services said the inpatient changes would increase hospital payments by about $1.9 billion in fiscal year 2027, including a $464 million increase in new-technology add-on payments. The American Hospital Association said the same proposal would reduce disproportionate-share and uncompensated-care payments by $564 million even as the uninsured rate is projected to rise to 9.1% from 8.7%. (aha.org) (cms.gov) The bigger policy shift is not the rate update but a new way of paying for joint replacements. Instead of paying separately for surgery, the hospital stay, and follow-up care, Medicare would hold hospitals responsible for the full episode, including 90 days after discharge. (cms.gov) That model, called Comprehensive Care for Joint Replacement Expanded, or CJR-X, would apply to hip, knee, and ankle replacements in both inpatient and hospital outpatient settings and would start October 1, 2027, if finalized. The Centers for Medicare and Medicaid Services said it would be the first mandatory nationwide test of an episode-based payment model. (cms.gov 1) (cms.gov 2) The agency is leaning on an older pilot to justify the expansion. The original Comprehensive Care for Joint Replacement model ran from April 2016 through December 2024, and the Centers for Medicare and Medicaid Services said it produced Medicare savings while maintaining quality. (cms.gov) Not every hospital would be pulled in. The American Hospital Association said CJR-X would be mandatory for acute-care hospitals except those already in the Transforming Episode Accountability Model and those in Maryland. (aha.org) That exception matters because the Transforming Episode Accountability Model already requires selected hospitals in chosen metro areas to manage surgical episodes from the procedure through 30 days after hospitalization for five types of operations, including lower-extremity joint replacement. That model began January 1, 2026, and runs through December 31, 2030. (cms.gov) Hospital groups backed the push toward value-based payment but objected to making the new joint-replacement model mandatory everywhere. The American Hospital Association said a phased or voluntary approach would better fit hospitals that lack the scale or cash to redesign care, and the Federation of American Hospitals called the 2.4% payment update “a step in the right direction” but said inflation and uncompensated care are still squeezing providers. (aha.org) (fiercehealthcare.com) The proposal is still open for comment before it can take effect. The Centers for Medicare and Medicaid Services said comments on the fiscal year 2027 hospital rule are due by 5 p.m. Eastern Daylight Time on June 15, 2026, ahead of the usual final rule for payments that start October 1. (cms.gov)