CMS has released three final payment rules with various updates for inpatient rehabilitation facilities, hospices and inpatient psychiatric facilities for fiscal year 2026.
Fifteen things to know:
1. IRFs will receive a 2.6% payment rate increase in 2026, reflecting a 3.3% market basket update offset by a 0.7 percentage point productivity adjustment. CMS estimates the change will result in a $340 million aggregate payment increase.
2. CMS is removing two COVID-19 vaccination quality measures from the IRF Quality Reporting Program:
- COVID-19 vaccination coverage among healthcare personnel: removed beginning with the 2026 IRF QRP.
- COVID-19 Vaccine: percent of patients/residents who are up to date: removed beginning with the FY 2028 IRF QRP. Submission of data for this measure becomes optional starting Oct. 1, with no penalties for non-submission.
3. Four social determinants of health data elements — including those related to living situation, food insecurity and utilities — will be removed from the IRF-Patient Assessment Instrument starting Oct. 1, 2026.
4. CMS is revising its reconsideration policy, allowing IRFs affected by extraordinary events (e.g., natural or man-made disasters) to request extensions for compliance appeals. The updates also clarify the criteria CMS will use to overturn non-compliance determinations.
5. The agency is soliciting further input on potential future quality measures, reduced reporting burdens, revised data deadlines and the use of digital health standards such as Fast Healthcare Interoperability Resources.
The 153-page final rule is available here.
Inpatient psychiatric facilities
6. CMS finalized a 2.5% payment update for IPFs in 2026, reflecting a 3.2% market basket increase offset by a 0.7 percentage point productivity adjustment. Overall IPF payments are expected to rise by $70 million.
7. Adjustment factors for teaching and rural IPFs are increasing for the first time since 2005, using updated cost and claims data from 2020–2022. These changes are designed to better reflect the cost of care and are implemented in a budget-neutral manner, according to CMS.
8. Four quality measures are being removed from the IPF Quality Reporting Program starting with the 2024 reporting period/FY 2026 payment determination:
- Facility commitment to health equity;
- COVID-19 vaccination coverage among healthcare personnel;
- Screening for social drivers of health; and
- Screen positive rate for social drivers of health.
9. CMS is codifying a revised policy for extraordinary circumstance exceptions, allowing extensions in cases such as natural disasters. The deadline to submit requests is also being reduced from 90 days to 60 days.
10. CMS is exploring future program changes through requests for information, including the potential addition of a five-star quality rating system for IPFs on Medicare’s Care Compare, new measures related to well-being and nutrition, and use of FHIR standards for digital quality reporting.
The 86-page final rule is available here.
11. Hospice payment rates will increase by 2.6% in 2026, translating to an estimated $750 million increase in Medicare payments. Hospices that fail to meet quality reporting requirements will receive a 1.4% rate reduction.
12. The 2026 hospice aggregate cap is set at $35,361.44, up from $34,465.34 in 2025, reflecting the same 2.6% pay bump. The hospice aggregate cap is a statutory limit on the total Medicare payments a hospice can receive in a fiscal year; if a hospice exceeds the cap, it must repay the excess to CMS.
13. CMS finalized a regulatory change allowing physician members of the hospice interdisciplinary group to recommend admission to hospice care, aligning with certification and conditions of participation requirements.
14. CMS restored signature and date requirements for face-to-face encounter attestations, while easing documentation rules. A signed and dated clinical note can now satisfy the attestation requirement, eliminating the need for a separate document.
15. CMS is preparing for the Oct. 1, 2025 rollout of the Hope quality tool and reviewed RFIs on future measure concepts and advancing digital quality reporting in the Hospice Quality Reporting Program.
The 86-page final rule is available here.
Becker’s coverage of CMS’ final payment rule for inpatient hospitals and long-term care facilities is available here. Coverage of the agency’s skilled nursing facility final payment rule is available here.
