CMS Adjusts Medicare Payments for 2027, Expands CJR Model
The Centers for Medicare & Medicaid Services (CMS) recently announced a final rule to adjust Medicare payment rates for fiscal year 2027, leading to a net increase of 2.3% for hospitals that qualify as meaningful users of electronic health records and report quality measures. This adjustment includes a 3.2% rise due to the hospital market basket, offset by a 0.9% productivity cut. Hospital payments are projected to increase by approximately $2.9 billion from the previous fiscal year, with additional allocations for disproportionate share, uncompensated care payments, and new medical technology.
CMS aims to expand the Comprehensive Care for Joint Replacement (CJR) model nationwide starting January 1, 2028. The model will hold hospitals accountable for costs and quality of lower extremity joint replacements, extending responsibility from inpatient stays or outpatient procedures to 90 days post-discharge. Participation will be mandatory for all acute care hospitals, excluding those involved in the Transforming Episode Accountability Model or located in Maryland.
Joanna Hiatt Kim, Vice President of Payment Policy at the American Hospital Association (AHA), stated, "The AHA appreciates CMS's efforts to enhance the effectiveness of value-based models." However, she raised concerns over model mandates, citing financial strain when care costs exceed government reimbursements. She also critiqued the significant productivity reductions in payment rates.
CMS has finalized changes in regulations regarding residency programs, organ acquisition, and cost payments. The Transforming Episode Accountability Model (TEAM) will undergo adjustments concerning episode triggers, quality measure evaluation, and target price calculations. CMS addressed physician-owned hospitals' participation concerns, planning further policy revisions in future rulemaking.
In quality program revisions, CMS has modified the Inpatient Quality Reporting Program by removing and adding several measures, impacting Medicare Advantage beneficiaries. Changes align with the Hospital Value-based Purchasing Program, including a new readmission measure for sepsis. The CMS will phase this measure into the Hospital Readmissions Reduction Program, delaying its financial impact to enable hospital preparation.
Finally, CMS plans to introduce an electronic prior authorization measure as an optional bonus starting the 2027 EHR reporting period, mandating it by 2028. The electronic prior authorization requirement extends to drugs under medical benefits. A detailed Regulatory Advisory will be provided to AHA members with specific information regarding these rule changes.