Medicare 2026 Rate Increases, Hospital Efficiency Push, and AI Advances in Healthcare

Medicare payments for inpatient rehabilitation facilities, hospice providers, and inpatient psychiatric hospitals will increase by approximately 2.5% to 2.6% starting October 1, 2025, as part of the Centers for Medicare and Medicaid Services (CMS) final rules for fiscal year 2026. This update includes a new requirement for face-to-face encounter attestations to carry clinician signatures and dates.

Amid rising operational costs and declining reimbursements driven by recent tax law changes and anticipated reductions in Medicaid enrollment, hospitals are reevaluating efficiency strategies. Providers are adopting technological advancements, adjusting staffing models, and optimizing supply chains to manage financial pressures and sustain care delivery. Agentic artificial intelligence (AI) technologies are increasingly implemented in healthcare to automate complex decision-making tasks traditionally performed by humans, particularly enhancing revenue cycle management and clinical care.

Major tech companies and healthcare startups are actively developing these AI solutions. In related industry developments, UnitedHealth Group announced a CFO transition, with Wayne DeVeydt succeeding John Rex. Additionally, Ohio is expanding its Program of All-Inclusive Care for the Elderly (PACE) through new centers funded by American Rescue Plan Act dollars, while a North Carolina hospital secured a temporary stay in a legal dispute over acute care bed allocations. These shifts underscore ongoing adaptation within healthcare financing and delivery systems responding to regulatory, workforce, and technological trends.