The FY 2027 IPPS/LTCH PPS final rule was published on 4 August 2026 at 91 FR 49570 — 892 Federal Register pages, file codes CMS-1849-F and CMS-0062-F. It takes effect 1 October 2026. Most of the coverage will be about the rate. The rate is the least interesting thing in it.
Three items in this rule change what hospitals have to do, on timelines that are already running:
- A new mandatory nationwide bundled payment model for joint replacement starting 1 January 2028.
- A nondiscrimination requirement applied directly to residency and nursing and allied health education programmes, effective 1 October 2026.
- A substantial reshuffle of quality measures and Promoting Interoperability requirements, most of it landing in FY 2028–FY 2030 payment determinations — which means the data collection starts well before that.
CJR-X: joint replacement bundles become mandatory again, nationally
The Comprehensive Care for Joint Replacement Model ran from 1 April 2016 to 31 December 2024. CMS is now expanding it nationally as the CJR Expanded (CJR-X) Model, tested under section 1115A of the Act, beginning 1 January 2028 for acute care hospitals paid under the IPPS and OPPS, including U.S. Territories, with limited exclusions.
It is mandatory. The exclusions CMS names are hospitals participating in TEAM, and acute care hospitals located in Maryland.
Participating hospitals are accountable for cost and quality of lower extremity joint replacement (LEJR) episodes from the inpatient admission or hospital outpatient procedure through 90 days after discharge. Note the scope: this is not an inpatient-only model. An outpatient LEJR triggers an episode.
The policies CMS finalised include acute care hospitals as the participant and accountable entity; five quality measures rolled into a composite quality score; regional risk-adjusted target prices with capped normalisation and trend factors; pricing-specific policies for low volume and safety net hospitals; permitted provider and beneficiary overlap with most other models; permission for participant hospitals to enter financial arrangements; waivers of certain Medicare programme requirements; beneficiary-identifiable and regional aggregated data sharing; and options for Alternative Payment Model participation.
The practical point for a hospital that did not participate in the original CJR: you have roughly sixteen months, and the model is not optional. Target prices are regional and risk-adjusted, so the work that determines your position — post-acute care patterns, discharge destination, readmission rate, and documentation quality driving risk adjustment — is work that has to happen before the baseline is set, not after.
TEAM changes for hospitals already in it
TEAM is a five-year mandatory model that started on 1 January 2026 and runs to 31 December 2030, covering episodes beginning with coronary artery bypass graft, lower extremity joint replacement, major bowel procedure, surgical hip/femur fracture treatment, and spinal fusion. It was finalised in the FY 2025 IPPS/LTCH PPS final rule (89 FR 68986). This rule adjusts it:
- Three additional MS-DRGs will initiate a spinal fusion anchor hospitalisation — which widens the episode volume for hospitals doing spinal fusion work.
- Quality measure performance periods are clarified for certain measures, and a rolling concurrent Composite Quality Score baseline period is adopted for some of them.
- An APC and MS-DRG update factor is added to target prices.
- The full baseline period will be used to construct the prospective normalisation factor.
CMS also summarises comments on a request for information about a voluntary opt-in for hospitals with physician ownership, and states a policy intent for future rulemaking — a signal worth tracking rather than a change.
The GME and nursing education nondiscrimination requirement
This one arrives with an effective date of 1 October 2026 and applies directly to programmes rather than to accreditors.
Background: in the CY 2026 OPPS/ASC final rule (90 FR 54024 through 54027), CMS amended 42 CFR 412.105(f)(1)(i), 413.75(b) and 415.152 to provide that accrediting organisations may not use accreditation criteria that promote or encourage discrimination on the basis of race, colour, national origin, sex, age, disability or religion, “including the use of those characteristics or intentional proxies for those characteristics as a selection criterion for employment, program participation, resource allocation, or similar activities, opportunities, or benefits.” That rule bound accreditors.
The FY 2027 rule extends the same standard to approved medical residency training programmes themselves, on CMS’s stated reasoning that even absent discriminatory accreditation standards, individual programmes should not implement policies constituting unlawful discrimination under federal law. Conforming policies apply to approved nursing and allied health education programmes and their accrediting bodies under 42 CFR 413.85.
CMS finalised the consolidation “without modification”: the antidiscrimination requirements are codified in a new 42 CFR 413.84, cross-referenced from 412.105(f)(1)(i), 413.75(b) and 415.152. The preamble states that prohibited practices under this policy include all other conduct violating federal antidiscrimination laws, including any “unlawful practices” under the Attorney General’s Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination of 29 July 2025.
Because direct GME and IME payments turn on a programme being an “approved medical residency training program” as defined at section 1886(h)(5)(A) of the Act, this is a condition attached to payment, not a general policy statement. Teaching hospitals should have designated institutional officials review selection, resource allocation and programme participation criteria against 42 CFR 413.84 before 1 October. Institutions that also hold federal contracts will want to read this alongside the separate OFCCP rulemaking that takes effect in September and October — different agencies, different authorities, overlapping subject matter.
Residency programme “newness” criteria tightened
Separately, CMS modified the criteria for identifying new residency programmes at 42 CFR 413.79(l). To count as new for cap-building purposes, a programme must receive initial accreditation from the appropriate accrediting body and at least 90 percent of individual residents must not have previous training experience in another programme in the same specialty. Exceptions exist for small residency programmes, displaced residents, and residents admitted through a binding third-party matching programme. CMS will also no longer consider the previous employment of the programme director or faculty in determining whether a programme is genuinely new.
For institutions building a cap through new programme development, this changes the eligibility arithmetic and should be modelled before any new programme is submitted.
Quality programmes: what to start collecting
The measure churn is extensive. The items with the widest reach:
Hospital Inpatient Quality Reporting. Three new measures: Excess Days in Acute Care After Hospitalization for Diabetes (FY 2029 payment determination); the Advance Care Planning eCQM (FY 2030); and the Hospital Harm – Postoperative Venous Thromboembolism eCQM (FY 2030). Five condition- and procedure-specific 30-day mortality measures (AMI, heart failure, pneumonia, COPD, CABG) are adopted in modified form beginning with FY 2028, as a step towards modifying the same measures in Hospital VBP beginning with FY 2032. Three Excess Days in Acute Care claims-based measures (AMI, heart failure, pneumonia) are modified from FY 2028. Three eCQMs are removed beginning FY 2030: VTE-1, VTE-2 and STK-02. Reporting changes: mandatory reporting for the Malnutrition Care Score eCQM from FY 2030; mandatory reporting for the Hospital Harm eCQMs after two years of self-selected reporting, from FY 2030 with modifications; and an update to Maternal Morbidity structural measure reporting from FY 2028.
Hospital Readmissions Reduction Program. CMS adopts, with modifications, the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Sepsis Hospitalization measure — with two years of early look reports for FY 2028 and FY 2029 programme years, and use beginning with FY 2030. Two years of preview before it affects payment is unusually generous, and it is the window in which to find out where you stand. Existing HRRP measure mechanics are otherwise unchanged.
Medicare Promoting Interoperability. CMS finalises revised CEHRT definitions based on ONC proposals to update the ONC Health IT Certification Program; removes attestations relating to ONC Direct Review and ONC-ACB Surveillance; removes both Support Electronic Referral Loops measures (sending, and receiving and reconciling); modifies the Electronic Prior Authorization measure; and adopts a Unique Device Identifiers for Implantable Medical Devices measure within the Public Health and Clinical Data Exchange objective. Two eCQMs are added and three removed in alignment with Inpatient Quality Reporting.
The UDI measure deserves a flag. Capturing unique device identifiers for implantable devices is a supply-chain and documentation workflow before it is a reporting workflow, and hospitals that have not implemented UDI capture in the OR will need lead time.
PPS-Exempt Cancer Hospital QRP. Advance Care Planning eCQM and Malnutrition Care Score eCQM adopted with modifications from FY 2030; the COVID-19 Vaccination Coverage Among Healthcare Personnel measure removed from FY 2028; eCQM reporting and submission requirements established.
LTCH QRP. Two measures removed beginning FY 2028; data submission deadlines revised beginning FY 2029.
CMS also sought comment on measuring emergency room access and timeliness, on possible future use of an Adult Community-Onset Sepsis Standardized Mortality Ratio measure, and on expanding the Birthing-Friendly Hospital designation criteria. Those are signals of future rulemaking, not current requirements.
And the rate
For hospitals that are meaningful EHR users and submit quality data, the applicable percentage increase to the operating standardized amount for FY 2027 is 2.3 percent — a market basket increase of 3.2 percent less a 0.9 percentage point productivity adjustment, based on IHS Global Inc.’s second quarter 2026 forecast of the 2023-based IPPS market basket with historical data through the first quarter of 2026.
The statutory penalties behind those two conditions are worth restating because they are not symmetrical: a hospital that fails to submit quality data loses one quarter of the applicable percentage increase under section 1886(b)(3)(B)(viii) of the Act, while a hospital not considered a meaningful EHR user loses three quarters of it under section 1886(b)(3)(B)(ix).
Commenters argued the increase is too low given inflation, contract labour costs, administrative burden from prior authorisation and denials, pharmaceutical and supply costs, and tariffs; several asked CMS to use its special exceptions and adjustments authority. CMS finalised 2.3 percent.
Frequently asked questions
When does this rule take effect?
1 October 2026. Certain material incorporated by reference is approved as of that date; other material was approved as of 1 October 2025.
Can our hospital opt out of CJR-X?
No. CJR-X is finalised as a mandatory model for acute care hospitals paid under the IPPS and OPPS, with limited exclusions — CMS names hospitals participating in TEAM and acute care hospitals located in Maryland. It begins 1 January 2028.
Does CJR-X cover outpatient joint replacements?
Yes. The episode runs from the inpatient admission or the hospital outpatient procedure through 90 days after discharge.
Is the GME nondiscrimination requirement new, or was it already in place?
Both, in stages. The CY 2026 OPPS/ASC final rule applied the standard to graduate medical education accrediting bodies. This rule extends it to approved medical residency training programmes themselves and to nursing and allied health education programmes and their accreditors, and consolidates the requirements into new 42 CFR 413.84, effective 1 October 2026.
When does the sepsis readmission measure start affecting payment?
The FY 2030 programme year. FY 2028 and FY 2029 are early look report years only.
What happened to VTE-1 and VTE-2?
Both are removed from the Hospital Inpatient Quality Reporting Program beginning with the FY 2030 payment determination, along with STK-02. Note that a new Hospital Harm – Postoperative Venous Thromboembolism eCQM is adopted from the same FY 2030 payment determination, so venous thromboembolism does not leave the programme — the measurement approach changes from process to harm.
Primary source: Centers for Medicare & Medicaid Services, “Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year (FY) 2027 Rates; Requirements for Quality Programs; Other Policy Changes; and Adoption of Updated Versions of Certain Health Information Technology Standards,” final rule, 91 FR 49570 (4 August 2026), file codes CMS-1849-F and CMS-0062-F, effective 1 October 2026. Cited within: 89 FR 68986 (FY 2025 IPPS/LTCH PPS final rule, TEAM); 90 FR 54024–54027 (CY 2026 OPPS/ASC final rule); 91 FR 19504 and 91 FR 19520 (FY 2027 IPPS/LTCH PPS proposed rule); sections 1115A, 1886(b)(3)(B)(viii), 1886(b)(3)(B)(ix) and 1886(h)(5)(A) of the Social Security Act; 42 CFR 412.105(f)(1)(i), 413.75(b), 413.79(l), 413.84, 413.85 and 415.152.
