FY 2026 Medicare Inpatient Prospective Payment System Proposed Rule

On April 11, the Centers for Medicare & Medicaid Services (CMS) released the Inpatient Prospective Payment System (IPPS) proposed rule (CMS-1833-P) for FY 2026. This rule updates policies and payment rates for acute care inpatient hospital services furnished under Medicare. A fact sheet is available that highlights some of the major policies proposed in the rule. Comments are due June 10. Denoted page numbers refer to the display version of the proposed rule linked above. The agency proposes a 2.4% increase in FY 2026 payment rates for acute care hospitals paid under the IPPS and successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program while being meaningful users of electronic health records.

UNLEASHING PROSPERITY THROUGH DEREGULATION OF THE MEDICARE PROGRAM – REQUEST FOR INFORMATION (P. 5)

Highlight: Deregulation, streamlining regulations, and reducing burden is a focus of the current administration as they seek information on ways to achieve that goal.

Included in the IPPS proposed rule is a Deregulation Request for Information (RFI), which was born out of Executive Order 14192, Unleashing Prosperity Through Deregulation. It is meant to gather stakeholder feedback, including removing or rescinding overly burdensome and duplicative regulations, while decreasing overall expenditures, in Medicare. The RFI is comprised of series of questions to facilitate meaningful feedback.

Specifically, the RFI is seeking public input on how the agency can implement meaningful changes to the volume, type, and redundancy of regulations to reduce administrative burden and documentation requirements across the Medicare program; it is not limited to the IPPS. As an example of how the agency views regulation, the agency notes that “reporting and documentation requirements for quality, value-based purchasing programs, and payment policies can necessitate additional administrative resources from providers, and duplicate private insurance requirements.” CMS has crafted questions, divided into three categories to assist stakeholders in preparing comments.

The CMS categories and questions are listed below.

1. Streamline Regulatory Requirements

a. Are there existing regulatory requirements (including those issued through regulations but also rules, memoranda, administrative orders, guidance documents, or policy statements), that could be waived, modified, or streamlined to reduce administrative burdens without compromising patient safety or the integrity of the Medicare program?

b. Which specific Medicare administrative processes or quality and data reporting requirements create the most significant burdens for providers?

c. Are there specific Medicare administrative processes, quality, or data reporting requirements, that could be automated or simplified to reduce the administrative burden on facilities and providers?

2. Opportunities to Reduce Administrative Burden of Reporting and Documentation

a. What changes can be made to simplify Medicare reporting and documentation requirements without affecting program integrity?

b. Are there opportunities to reduce the frequency or complexity of reporting for Medicare providers?

c. Are there documentation or reporting requirements within the Medicare program that are overly complex or redundant? If so, which ones? Please provide the specific Office of Management and Budget (OMB) Control Number or CMS form number.

3. Identification of Duplicative Requirements

a. Which specific Medicare requirements or processes do you consider duplicative, either within the program itself, or with other healthcare programs (including Medicaid, private insurance, and state or local requirements)?

b. How can cross-agency collaboration be enhanced to reduce duplicative efforts in auditing, reporting, or compliance monitoring?

c. How can Medicare better align its requirements with best practices and industry standards without imposing additional regulatory requirements, particularly in areas such as telemedicine, transparency, digital health, and integrated care systems?

The agency requests that comments include data (when possible) to support concepts, and comments should provide recommended actions, and include other information like personal narratives to support recommended changes.

MDC MS-DRG 018 CHIMERIC ANTIGEN RECEPTOR (CAR) T-CELL AND OTHER IMMUNOTHERAPIES (P. 47)

Highlight: CMS clarifies how MS-DRG assignments are made for CAR T-cell therapies.

In this proposed rule, CMS responded to a stakeholder request for review and clarification of the logic used to map certain cell and gene therapies to MS-DRG 018 (CAR T-cell and Other Immunotherapies). The request highlighted perceived inconsistencies in MS-DRG mappings of CAR T-cell therapies. For example, prademagene zamikeracel or PZ is assigned to MS-DRG 018, while similar therapies (e.g., eladocagene exuparvovec, Lantidra, Orca-T) are assigned to a different MS-DRGs. The stakeholder raised questions about the criteria CMS uses (clinical similarity vs. resource use vs. pricing) and asked whether CMS plans to split MS-DRG 018 by medical vs. surgical therapies, and whether a name change for MS-DRG 018 is appropriate.

While nothing was proposed in the rule, the agency did address the requestor’s concerns by providing information about how MS-DRG assignments are made for CAR T-cell therapies. The agency also noted this issue has been addressed in previous rule-making cycles. There is more detailed explanation of the process, including the requestor’s complete list of questions and comments beginning on page 47 of the rule.

• MS-DRG 018 does not require cancer or CAR T-cell use and may include other therapies.
• MS-DRG assignments consider factors like clinical complexity, resource use, and severity, and not just pricing or code type.
• CMS uses predecessor codes and clinical criteria to assign new codes when no claims data exists.

NEW TECHNOLOGY ADD-ON PAYMENT (NTAP) APPLICATIONS

Highlight: CMS seeks comments on newness criteria of three products related to blood disorders.

The proposed rule contains NTAP applications for two CAR T-cell therapies, and one for a conditioning agent used before allogeneic hematopoietic stem cell transplantation (allo-HSCT) in adult and pediatric patients.

• Aucatzyl® (obecabtagene autoleucel) indicated for the treatment of adults with relapse or refractory B-cell precursor lymphoblastic leukemia. (p. 249)
• Breyanzi® (lisocabtagene maraleucel) indicated for the treatment of adult patients with relapsed/refractory (R/R) chronic lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL) who have received two or more prior lines of therapy (LOTs), including a Bruton tyrosine kinase inhibitor (BTKi) and a B-cell lymphoma 2 protein inhibitor (BCL2i). (p. 269)
• Grafapex™ (treosulfan) is a novel conditioning agent for use in combination with fludarabine as a preparative regimen for allogeneic hematopoietic stem cell transplantation (allo-HSCT) in adult and pediatric patients one year of age and older with acute myeloid leukemia (AML) or myelodysplastic syndrome (MDS). (p. 312)

CMS is seeking comments on whether these new products meet newness criteria and if the therapies are “substantially similar” to existing products.

MEASURE CONCEPTS UNDER CONSIDERATION FOR FUTURE YEARS IN THE HOSPITAL INPATIENT QUALITY REPORTING PROGRAM – REQUEST FOR INFORMATION: WELL-BEING AND NUTRITION (P. 832)

Highlight: The agency seeks stakeholder feedback on quality measures to support RFK Jr’s Make America Healthy Again initiative.

The proposed rule provides background on the concepts of well-being and nutrition that the agency would like to incorporate into the IQR program in future years. There were no specific quality measures proposed, however, the agency seeks input from interested stakeholders on tools and measures “that assess overall health, happiness, and satisfaction in life that could include aspects of emotional well-being, social connections, purpose, and fulfillment.” Additionally, the agency seeks comments on ways to assess “the integration of complementary and integrative health, skill building, and self-care.”

In addition to well-being measure concepts, the agency seeks information on considerations and concepts that could be used to measure optimal nutrition. Currently, the IQR program uses the Malnutrition Care Score to measure nutritional care that matches the level of malnutrition risk and malnutrition diagnoses of inpatients. However, CMS would like to consider developing quality measures that assess optimal nutrition and preventive care in the hospital IQR program, including assessing nutritional status, guidelines, and practices to promote healthy eating habits, and ensuring patients receive the necessary nutrients to maintain health, growth, and overall well-being. The agency would also like feedback on ways to support nutritional goals through physical activity and sleep, and how to measure in the context of an inpatient stay.

PROPOSED REMOVALS IN THE HOSPITAL IQR PROGRAM MEASURE SET (P. 856)

Highlight: CMS proposes to remove three measures previously finalized that address social factors citing cost as a mitigating factor in recommending removal from the IQR program.

Effective for FY 2026 Hospital IQR payment determination year, CMS proposes to remove the following three quality measures: Hospital Commitment to Health Equity (HCHE), Screening for Social Drivers of Health (SDOH-1), and Screen Positive Rate for Social Drives of Health (SDOH-2).

The agency proposes to remove the HCHE measure because the high costs of meeting the reporting goals outweigh the benefits, and the agency wishes to switch focus to using clinical outcome measures. The rule notes that participating hospitals will save $22,260 per year, while alleviating approximately 525 staff hours needed to report on the HCHE measure. Additionally, the priority now is to create quality measures for prevention, nutrition, and well-being.

Regarding the removal of SDOH-1, and SDOH-2, the agency cites that the costs associated with the measures outweigh the benefit of its continued use in the IQR program. Per the agency, hospitals have reported that the resources associated with screening patients, storing data, training hospital staff, and changing workflows have made this measure costly to report with little added value in improving inpatient care.