FY 2026 Medicare Inpatient Prospective Payment System Rule

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 finalized in the rule. Denoted page numbers refer to the published PDF version of the final rule.

On July 31, the Centers for Medicare & Medicaid Services (CMS) released the Inpatient Prospective Payment System (IPPS) final rule (CMS-1833-F) for FY 2026. The agency finalized a 2.4% payment rate increase for FY 2026 for acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and qualify as meaningful users of electronic health records.

MDC MS-DRG 018 CHIMERIC ANTIGEN RECEPTOR (CAR) T-CELL AND OTHER IMMUNOTHERAPIES (P. 19)

Highlight: CMS reiterates methodology for MS-DRG assignments regarding CAR T-cell therapies.

In the final rule, CMS reiterated its responses 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. A detailed discussion of the methodology, along with current product mapping issues begins on PDF page 19 of the final rule.

No new policy or change in methodology was proposed, and therefore nothing needed to be finalized with this rule. However, the agency did note that it was appreciative of the continued engagement and that the comments submitted will be taken into consideration in future rule making cycles. 

NEW TECHNOLOGY ADD-ON PAYMENT (NTAP) APPLICATIONS

Highlight: CMS approves two blood disorder treatment products for NTAP. 

The final rule discusses NTAP applications for two CAR T-cell therapies, and one NTAP application 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 was deemed substantially similar to Tecartus, and therefore did not meet the newness criteria, and therefore is not available for NTAP. (p.139)
• 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) was deemed to have met the newness criteria, and therefore is approved for new technology add-on payment. (p.152)
• 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) was deemed to have met the newness criteria, and therefore is approved for new technology add-on payment. (p.172)

MEASURE CONCEPTS UNDER CONSIDERATION FOR FUTURE YEARS IN THE HOSPITAL INPATIENT QUALITY REPORTING PROGRAM – REQUEST FOR INFORMATION: WELL-BEING AND NUTRITION (P. 461)

Highlight: The agency highlights stakeholder feedback on quality measures to support RFK Jr’s Make America Healthy Again initiative and will consider comments in future rulemaking.  

The proposed rule provided background on the concepts of well-being and nutrition that the agency would like to incorporate the quality measure program in future years. There were no specific measures proposed, however, the agency sought 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.”

In addition to well-being measure concepts, the agency requested information on concepts that could be used to measure optimal nutrition. Currently, the Malnutrition Care Score is used to measure nutritional care that matches the level of malnutrition risk and malnutrition diagnoses of inpatients. 

In the final rule, CMS did not directly respond to any submitted comments but did thank stakeholders for the input and engagement. Submitted comments were summarized into broad themes including the following:

• Concerns were voiced about the applicability of well-being and nutrition measures in the inpatient hospital setting given that care in this setting is focused on treating acute conditions as opposed to addressing emotional health, social connections, and food access.
• Measures associated with well-being and nutrition may be overly burdensome to report.
• Some comments noted that assessing and measuring well-being during a hospital stay may yield unreliable data due to the stress and disruption inherent in inpatient care.
• The removal of the social determinants of health measures was mentioned in comments submitted regarding well-being and faced some criticism noting that “these screenings provide critical insights into patient needs and support holistic care delivery,” thereby supporting well-being.

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

Highlight: CMS removes 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, 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) will no longer be a part of the hospital IQR. 

The agency will remove the HCHE measure stating the high cost of meeting the reporting goals outweigh the benefits. Additionally, many commenters supported removal given the administrative burden of reporting on a measure that has little bearing on patient outcomes.

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. 

The agency finalized the removal of the above quality measures from the hospital IQR. Regarding the HCHE measure, many commenters supported removal given the administrative burden of reporting on a measure that has little bearing on patient outcomes. Regarding the SDHOH measures, while many commenters supported keeping the measures, others stated that the inpatient setting is not the appropriate care setting to collect and report this type of information, and therefore agreed with the agency that the administrative burden of reporting on SDOH measures far outweigh any clinical benefit.