CMS on April 10 proposed a 2.4% pay increase for hospitals under the fiscal 2027 Inpatient Prospective Payment System, but hospitals are concerned that the update does not keep pace with the mounting financial challenges.
“CMS has proposed another inadequate update to inpatient payment rates, another extremely high productivity cut, and reductions to disproportionate share payments — in the face of rising need for care and higher uninsured rates,” Ashley Thompson, the American Hospital Association’s vice president of public policy analysis and development, said in an April 10 statement.
Beth Feldpush, America’s Essential Hospitals’ senior vice president of policy and advocacy told Becker’s in an April 11 statement that the proposed DSH payment cuts “fails to acknowledge the growing number of uninsured individuals due to recent Congressional actions.”
Charlene McDonald, president and CEO of the Federation of American Hospitals, said in an April 10 statement that CMS’ proposal is a step in the right direction, but added it “does not negate the compounding effects of rising inflation, record levels of uncompensated care and a growing uninsured population.”
National hospital group leaders also raised concerns about another aspect of the proposal: the introduction of the first mandatory nationwide episode-based payment model.
CMS plans to expand the Comprehensive Care for Joint Replacement Model into a mandatory, nationwide program called CJR-X, which would begin Oct. 1, 2027. Under the model, most hospitals would be required to take financial accountability for hip, knee and ankle replacements, including the surgery and the first 90 days of recovery.
The agency said the model would incentivize hospitals to coordinate care more effectively and avoid unnecessary services such as rehospitalization and emergency care.
Ms. McDonald said the use of mandatory models destabilizes the care delivery system by interfering with clinical decision-making, fails to reflect how care is delivered across providers and limits providers’ ability to determine the best course of care for each patient.
Ms. Thompson said the AHA appreciates CMS’ efforts to expand the reach of value-based care models, but mandatory participation presents significant challenges, especially for hospitals that lack the scale or financial capacity to make the necessary investments in care redesign.
“A phased or voluntary approach would better support success, allowing organizations to build the infrastructure and partnerships needed to achieve shared savings and improved outcomes,” Ms. Thompson said.
Ms. Feldpush said AEH also appreciates CMS’ efforts to advance value-based payment models, but said mandatory participation in the joint replacement program would be financially problematic for many essential hospitals.
Read more details on the proposed rule here.
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