Proposed Changes to Medicare Payment Systems Impacting Small Hospitals

On April 14, 2025, the Centers for Medicare & Medicaid Services (CMS) unveiled a proposed rule designed to adjust the Medicare hospital inpatient prospective payment systems. This update includes modifications for both the operating and capital expenses tied to acute care hospitals. The rule also aims to update Medicare graduate medical education policies in teaching hospitals and revamp payment policies for inpatient services in long-term care hospitals. Significant changes to specific quality program requirements are part of this comprehensive proposal.

The proposed rule is set to impact hospitals categorized under NAICS code 622, with approximately 48% qualifying as small entities. CMS is encouraging feedback from stakeholders on the economic effects these changes may present. Stakeholders are urged to examine the proposal thoroughly and submit feedback by the June 9, 2026, deadline.

Titled “Medicare Program: Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2027 Rates; Requirements for Quality Programs; and Other Policy Changes,” this proposal outlines all anticipated modifications. Interested parties with concerns about the implications for small businesses should contact Will Purcell via email at will.purcell@sba.gov.

The Office of Advocacy, which prioritizes businesses with fewer than 500 employees, along with non-profits and independent contractors, ensures regulatory compliance and considers small entities in the regulatory process. This office functions independently, advocating for small business interests distinct from other functions of the Small Business Administration, such as loans or disaster aid.