Wednesday, August 5, 2026

CMS published the final Hospital Inpatient Prospective Payment System rule for fiscal year 2027. The rule finalizes a 2.3% payment rate increase for acute care hospitals, effective October 1, 2026. It also adopts updated versions of certain health information technology standards required for claims reporting. The 2.3% final increase matches the figure reported in the agency's August proposal. Hospital-based practices and those billing under hospital outpatient or ambulatory surgery center rules should monitor the upcoming OPPS final rule for related policy changes. The IPPS final rule is a key indicator of Medicare's payment policy direction for the coming year.

CMS granted New Technology Add-On Payment status to ZEVASKYN. The NTAP designation provides additional Medicare reimbursement for qualifying cases using this new technology, typically for two to three years, to bridge the gap until the technology is incorporated into the standard DRG payment. This creates a new, temporary billing pathway for hospitals and providers using this specific product. Billing and clinical teams in relevant specialties should confirm the specific ICD-10 and CPT codes required to trigger the NTAP payment with their Medicare Administrative Contractor. Monitor the Inpatient Only List and OPPS updates to see if the technology receives permanent payment classification.

A year after implementing federal Medicaid work requirements, Indiana saw its Medicaid enrollment drop 8%. The state lost 175,000 enrollees, over twice the number the state had predicted would exit the program. This drop provides a concrete preview of the impact other states may experience as the 2025 Reconciliation Law's work requirements roll out nationally. The data shows the policy's primary effect is to reduce coverage rather than increase employment, shifting patients to uninsured status. Monitor state-specific 1115 waiver applications and early enrollment reports from states like Idaho for how this will affect practice payer mix and uncompensated care.

Sens. Jerry Moran and Shelley Moore Capito introduced the Rural Hospital Assistance Act to create a new Medicare designation and payment model for 'Rural Emergency Hospitals' with inpatient beds of 20 or fewer. The bill comes as the 2020 law creating the REH designation faces its first real-world test; the model offers higher outpatient payments but requires facilities to give up inpatient services. With over 600 rural hospitals at financial risk, this policy shift could accelerate service-line closures in rural communities, redirecting patient flow and referrals. Track CMS-2026-XXXX for the proposed rule expected in late 2026.

A new Office of Inspector General report reveals significant flaws in CMS's prior authorization processes for post-acute care services like inpatient rehab and long-term care. The audit found inadequate program safeguards, insufficient documentation, and inconsistent application of coverage rules across Medicare Administrative Contractors. This systemic critique arrives as payers, including Medicare Advantage plans, are expanding prior authorization reviews. The findings may embolden providers to appeal denials more aggressively and signal increased regulatory scrutiny of payer authorization practices. While no immediate action is required, billing teams for orthopedic, neurological, and post-surgical services should note the OIG's position when documenting medical necessity for skilled nursing and rehab claims.