Proposed Rules for Medicare Payments in FY 2027 Will Impact Healthcare Providers
The Centers for Medicare & Medicaid Services (CMS) recently unveiled proposed rules for the fiscal year 2027 targeting inpatient rehabilitation facilities (IRFs) and inpatient psychiatric facilities (IPFs) under the prospective payment system (PPS). These proposals serve as a blueprint for stakeholders intending to gauge their influence on financial strategy and healthcare delivery.
CMS forecasts a payment increment for IRFs amounting to approximately $355 million, or 2.8%, in FY 2027 due to several proposed modifications. The market basket update (MBU) is pegged at 2.4%, following a 3.2% increase adjusted by a 0.8% productivity trim. Additionally, the standard payment amount for IRFs is suggested to be $19,881, marking a 2.6% increase from the prior year.
The proposal to recalibrate case-mix group (CMG) weights involves leveraging FY 2025 claims and FY 2024 cost reports, anticipating minimal shifts for most CMGs. With the fixed loss outlier threshold set at $8,689, a decrease anticipated to result in a $55 million boost in outlier payments is expected.
CMS plans to conclude the phaseout of rural adjustments for facilities shifting to urban status, based on updated core-based statistical area (CBSA) delineations, fully integrating them into urban wage indices by FY 2027. Moreover, CMS continues its use of the IPPS pre-reclassification, pre-floor hospital wage index for FY 2027, proposing a 74.5% labor-related share. The body is seeking feedback on alternative sources for wage index data to refine geographic accuracy.
For IPFs, CMS projects a $50 million or 2.1% payment uptick for FY 2027, featuring a net MBU of 2.3%, tempered by productivity and budget neutrality adjustments. The proposed per diem rate is $912.58, with payments for electroconvulsive therapy (ECT) per treatment fixed at $688.73. Anticipated increases in outlier payments are driven by a lower fixed dollar loss threshold of $37,820.
New rules propose a cap on outlier payments to curtail excessive expenditures attributed to a few high-cost facilities. CMS also aims to finalize the shift from rural to urban wage indices for impacted IPFs, alongside a slight adjustment in labor-related share from 79.0% to 79.1%. Proposed adjustments for facilities in Alaska and Hawaii include aligning cost-of-living modifiers with Department of Defense data and removing previous caps on adjustments.
Professionals engaged in healthcare reimbursement and compliance should assess these proposed changes closely and seek expert consultation to determine their impact on operations and compliance with evolving Medicare payment policies.