MedPAC Recommends 7% Medicare Payment Cut for Inpatient Rehabilitation Facilities in FY 2027

At the December 4, 2025 Medicare Payment Advisory Commission (MedPAC) session, draft payment recommendations for Fiscal Year (FY) 2027 were presented, focusing on inpatient rehabilitation facilities (IRFs). The Commission reviewed comprehensive data including admissions, financial performance by IRF types, quality metrics, and broader post-acute care trends across various provider types such as skilled nursing facilities (SNFs) and home health agencies (HHAs). MedPAC proposed a 7 percent reduction in the Medicare base payment rate for IRFs in FY 2027, an increase from previous years' proposed cuts of 5 percent for FY 2025 and 3 percent for FY 2024. These recommendations aim to adjust payments based on assessments of adequacy and trend analysis but require Congressional approval for implementation. The Rehabilitation and Community Providers Association (RCPA) is actively monitoring these developments in partnership with the American Medical Rehabilitation Providers Association (AMRPA) to assess impact and influence future regulatory outcomes. This session reflects ongoing efforts to balance provider financial performance with sustainable Medicare expenditures within the post-acute care landscape.