The Centers for Medicare & Medicaid Services (CMS) has proposed a 2.4% pay increase for inpatient hospital payments in fiscal year 2026. This adjustment, while reflecting a $4 billion total payment boost, falls short of last year’s 2.6% proposed rate and the finalized 2.9% rate. Hospital groups have criticized the proposal as insufficient, citing rising costs and financial strain, particularly in rural and underserved areas.

The proposed increase includes a 3.2% hospital market basket update, reduced by a 0.8% productivity adjustment. CMS also plans to shift the IPPS market basket base year to 2023 and discontinue the low wage index hospital policy, offering a transitional exception for affected hospitals.

Long-term care hospitals are set to receive a 2.6% pay update, with total payments expected to rise by $52 million.

CMS is also seeking public input on deregulation and wellness initiatives under the Make America Healthy Again agenda. Proposed changes include streamlining quality reporting, incentivizing interoperability, and enhancing nutrition and physical activity measures.

Additionally, CMS aims to refine the TEAM payment model, focusing on patient-reported outcomes and expanding post-acute care access. Updates to quality programs include eliminating outdated measures, such as healthcare worker vaccination reporting, and clarifying exception policies.

Hospital groups, including the American Hospital Association, have expressed concerns over the proposed rates, urging CMS to ensure adequate Medicare payments to support patient care and hospital resiliency.

The proposed rule is open for public comment for 60 days and is available on the Federal Register.