2026 IPPS Final Rule: What Your Hospital Should Know

CMS finalized the 2026 IPPS ruling on August 1. With it come several important changes hospitals must prepare for. Below is a summary of the finalized updates by program. As always, review the official 2026 IPPS Final Rule for confirmation.

Major Finalized Changes

• Hospitals no longer need to track/report HCHE, SDOH-1, SDOH-2, or the HCP COVID-19 measure.
• Lower thresholds for Hybrid measures.
• TEAM remains in place, with the new Information Transfer PRO-PM added.
• Several measures now include MA patients, shorter measurement periods, ICD-10 coding, and no COVID exclusions.
• HAI measure baselines updated to 2022.
• Hospitals must attest “yes” to the updated SAFER Guides and to conducting security risk management.

Inpatient Quality Reporting (IQR) Program

Lower Hybrid Measure Thresholds

Hospitals previously had to submit CCDEs for both vital signs and laboratory test results on 90% of encounters, and submit four linking variables for 95%. CMS lowered both thresholds to 70% and will allow up to two missing vital signs and lab results. These changes apply to the Hybrid HWR and HWM measures for reporting year from July 1, 2025 – June 30, 2026.

Removal of Measures

Four measures are permanently removed starting with program year 2024:

• Hospital Commitment to Health Equity (HCHE)
• SDOH-1
• SDOH-2
• HCP COVID-19 Vaccination Coverage

Claims Measure Updates

For the THA/TKA Complications and Stroke (STK) Mortality measures, CMS will:

• Add Medicare Advantage (MA) patients.
• Shorten performance years from three to two.
• Use ICD-10 codes instead of HCCs.
• Remove the COVID-19 exclusion for patients with a secondary diagnosis of COVID-19.

Other Updates

CMS will remove COVID-19 exclusions from all remaining measures starting FY 2027.

The measures affected are:

1. MORT-30-STK
2. COMP-HIP-KNEE
3. AMI Excess Days
4. HF Excess Days
5. PN Excess Days
6. Hybrid Hospital-Wide All-Cause Readmission Measure (HWR)
7. Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measure (HWM)

Promoting Interoperability (PI) Program

• Security Risk Analysis: Hospitals must attest “yes” to conducting security risk management analysis and security risk analysis.
• SAFER Guides: Hospitals must attest “yes” to completing annual self-assessments using the updated version of the SAFER guides.
• Optional Bonus Measure: Beginning in 2026, hospitals have a new optional bonus measure under the Public Health and Clinical Data Exchange objective by submitting health information to a public health agency (PHA) using the Trusted Exchange Framework and Common Agreement (TEFCA).
• New Hospitals: New hospitals/CAHs participating in PI must report for any continuous 180-day period.

Hospital Readmission Reduction Program (HRRP)

Beginning FY 2027, all six readmission measures will:

• Add MA patients.
• Shorten performance years from three to two.
• Remove COVID exclusions for patients with a secondary diagnosis of COVID-19.

CMS proposed including MA data when calculating aggregate payments for excess readmissions but ultimately decided against it.

Hospital Value-Based Purchasing (HVBP)

CMS finalized changes to the Total Hip Arthroplasty (THA)/Total Knee Arthroplasty (TKA) Complications measure and all five mortality measures. They will remove the exclusion of patients with a secondary diagnosis of COVID-19.

CMS will also:

• Update HAI baseline data from 2015 to 2022
• Remove the Health Equity Adjustment beginning with FY 2026 (reporting year 2024)

For the FY 2033 program, CMS is finalizing more modifications to the THA/TKA Complications measure. The updates include:

• Adding Medicare Advantage (MA) patients to the measures

• Shortening the performance year from three years to two years

• Updating the risk adjustment model to use ICD-10 codes instead of Hierarchical Condition Categories (HCCs)

Hospital Acquired Condition Reduction Program (HACRP)

CMS will update HAI measure baselines from 2015 to 2022.

TEAM Program (Starts 2026)

The Transforming Episode Accountability Model (TEAM) remains in place, with several refinements:

• Information Transfer PRO-PM: Officially added, beginning in PY3 (2028).
• Low-Volume Threshold: New low-volume policy in place. Hospitals with fewer than 31 episodes per category face no downside risk but remain eligible for upside gains.
• Hybrid Readmission Measure: CMS will use claims-only data (CY 2025) for the baseline performance year.
• Equity and Decarbonization: CMS removed health equity plan reporting and the Decarbonization/Resilience initiative.
• Neutral Quality Score: Hospitals with insufficient data will receive a neutral 50% quality score. This means if you don't submit one of the quality measures you'll receive a 50% on that measure for your overall quality adjustment.
• Grace Period for New Hospitals: Applies only to new CCNs issued after Dec. 31, 2024 (not reorganizations). Eligible hospitals get a one-year delay.

Final Word

Hospitals must act now to adjust to these finalized rules. TEAM is here to stay, hybrid reporting thresholds are lower but still demanding, and CMS continues to align programs toward consistency across Medicare populations.

Medisolv offers Advisory Services to help hospitals prepare for TEAM and the broader IPPS changes. Learn more about how we can support your transition.