2026 IPPS Proposed Rule | Medisolv

The Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the 2026 Inpatient Prospective Payment System (IPPS). The rule introduces significant changes to several key quality reporting and value-based purchasing programs. These updates reflect the current administration's priorities and aim to streamline reporting requirements, modernize data exchange, and align measures with current healthcare trends and challenges.

Even though the changes are significant, I've definitely seen proposals with more changes before. For the most part, you still must do everything that had been previously finalized with the exception of the health equity measures. 

I've given you a breakdown of the changes proposed for each program and a quick summary of the major changes up top in case you're short on time. 

Proposed Major Changes

In summary, your proposed major changes are:

• They are proposing to no longer require the HCHE, SDOH-1, SDOH-2, and HCP COVID-19- measures.
• They are lowering the thresholds for the Hybrid measures.
• They are keeping TEAM as previously finalized and adding in the Information Transfer PRO-PM.
• They are making several changes to select measures across all the programs to include MA patients, shorten the measurement period, remove COVID exclusions, and use ICD-10 codes rather than HCCs.
• They are updating the baseline year data for your HAI measures.
• They are requiring you to attest "yes" to the new SAFER guides and to conducting security risk management.

Let's dive into the details. I've organized this review by program.

2026 Inpatient Quality Reporting (IQR) Program

CMS has made several proposed changes to the 2026 IQR program requirements.

Decreasing Thresholds for Hybrid Measures

In response to significant negative feedback regarding the difficulty of meeting the current 90-95% threshold for the two hybrid measures, CMS is proposing to lower these thresholds for the first mandatory reporting year. Currently, hospitals are required to report Clinical Care Data Elements (CCDEs), including both vital signs and laboratory test results, on 90% of discharges, and to submit four linking variables on 95% of discharges for both hybrid measures. The proposed changes would reduce the threshold to 70% for both CCDEs and linking variables. Additionally, the proposal allows for up to two missing laboratory results and up to two missing vital signs among the required CCDE data elements. These adjustments apply to the Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (HWM) measures for the reporting year from July 1, 2025, through June 30, 2026.

Removal of Measures

CMS has proposed to remove four measures from the IQR program starting with program year 2024.

• Hospital Commitment to Health Equity (HCHE)
• Screening for Social Drivers of Health Measure (SDOH-1)
• Screen Positive Rate for Social Drivers of Health Measure (SDOH-2)
• COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) Measure (HCP COVID-19)

CMS has proposed removing certain measures, but hospitals are still required to submit the 2024 measure performance data. According to the proposed rule, failing to submit this data could result in a failure of the IQR program if the proposal is not finalized. This means that the 2024 submission remains mandatory, as the final decision on the proposal won't be known until August 2025, which is after most of the submission deadlines for these measures.

Updates to Existing Measures

CMS has proposed updates to a couple of claims measures too. The measures are the:

• Hospital-Level, Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Ischemic Stroke Hospitalization with Claims-Based Risk Adjustment for Stroke Severity

The proposed updates are as follows:

• 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).
• Removing the exclusion of patients with a secondary diagnosis of COVID-19.

Other Measure Updates

CMS is also removing the COVID-19 exclusion from all measures that include it, beginning with Fiscal Year (FY) 2027. This change applies to the current reporting year (2025), but the specific timeframe varies for each measure. The measures affected are:

• MORT-30-STK
• COMP-HIP-KNEE
• AMI Excess Days
• HF Excess Days
• PN Excess Days
• Hybrid Hospital-Wide All-Cause Readmission Measure (HWR)
• Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measure (HWM)

TEAM (Transforming Episode Accountability Model)

For those of you hoping that TEAM would be cut in this proposed rule, that won't be the case. CMS is keeping the TEAM model in place but has proposed several changes to finalize the program's requirements.

No hospitals have been removed from TEAM. If you were eligible, you still are. CMS has proposed a few changes to the requirements and has clarified some lingering questions.

TEAM Model Measures

• Hybrid Readmission Measure: CMS is proposing to use the full hybrid readmission measure (not just the claims portion) for the reporting year from July 1, 2025, through June 30, 2026, with the new thresholds in place.
• Information Transfer PRO-PM: They propose to add the new Information Transfer PRO-PM into the program.
• Equity Measures: They propose to remove the health equity plans and health-related social needs data reporting.
• Decarbonization and Resilience Initiative: They are proposing to remove the Decarbonization and Resilience Initiative.

Applying a Neutral Quality Score for Insufficient Measure Data

If your hospital has insufficient quality data, CMS will assign a 50% score, which will be a neutral quality measure score. Essentially, this means that your quality score will neither help nor harm your cost repayment amount.

A Grace Period for New Hospitals

Don’t get too excited. The grace period is only for hospitals with a newly established Certification Number (CCN) after December 31, 2024 AND the grace period does not apply to new hospitals resulting from a reorganization event. If you have a new CCN and it’s not from a reorganization, you have a one-year grace period to get up and running with TEAM. For example, if a hospital opened in a mandatory CBSA with a Medicare ID effective date of June 1, 2026, it would not be required to begin participation in TEAM until January 1, 2028.

Other TEAM Model Refinements

The rest of the modifications to TEAM are quite technical and focus on how target prices are constructed and how eligible beneficiaries are risk-adjusted. Here are the key changes:

• They introduced a methodology to adjust target prices when there are coding changes.
• They revised the normalization factor and prospective trend factor, which are used to set your target prices.
• They replaced the Area Deprivation Index (ADI) with the Community Deprivation Index (CDI).
• They decided to use a 180-Day Lookback Period and Hierarchical Condition Categories (HCC) Version 28 for Beneficiary Risk Adjustment.
• They are expanding the Skilled Nursing Facility (SNF) 3-Day Rule waiver for hospitals and Critical Access Hospitals (CAHs) with swing beds.
• They confirmed that the discharge date determines the reconciliation year.
• They explained how they will handle hospitals that were part of the Medicare Dependent Hospital (MDH) program, which now expires in September 2025.

Are you ready for TEAM? Medisolv has an offering to help hospitals prepare for the TEAM model using our Advisory Services. Learn more today and talk to us about how to get prepared for TEAM.

2026 Hospital Readmissions Reduction Program (HRRP)

CMS has proposed updates to align with the changes made to the IQR program beginning FY 2027. Although we are currently in reporting year 2025, the specific time frame for each measure may vary. They propose to refine all measures in HRRP with the following changes:

• 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).
• Removing the exclusion of patients with a secondary diagnosis of COVID-19.

2026 Hospital Value-Based Purchasing (HVBP) Program

CMS has proposed several changes to the 2026 HVBP program requirements. For the FY 2033 program, CMS is proposing to modify the Total Hip Arthroplasty (THA)/Total Knee Arthroplasty (TKA) Complications measure. This later date aligns with public reporting of the same measure (with modifications) under the IQR program. The updates would 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).
• Removing the exclusion of patients with a secondary diagnosis of COVID-19.

In addition, CMS is proposing to update the baseline data used for the National Healthcare Safety Network (NHSN) Hospital-Acquired Infection (HAI) measures within the HVBP program. The current baseline is 2015 data, but CMS proposes to use a new baseline of 2022. This change will affect the benchmark score your hospital aims to achieve under the HVBP program.

And finally, CMS is proposing to remove the Health Equity Adjustment from the HVBP program starting with the Fiscal Year 2026 program year, which corresponds to the 2024 HVBP program.

2026 Hospital Acquired Condition (HAC) Reduction Program

CMS has proposed similar changes to your 2026 HACRP requirements. CMS is proposing to update the baseline data used for the NHSN Hospital-Acquired Infection (HAI) measures within the HACRP. The baseline was 2015 data. They propose to use a new baseline of 2022.

Cross-Program Update

CMS has proposed changes to the Extraordinary Circumstances Exception (ECE) policy for IQR, HRRP, HVBP, and HACRP, which would allow CMS to use their judgment to approve a request for an extension from a hospital.

2026 Promoting Interoperability (PI) Program

CMS did propose several updates to the PI program for 2026.

Modification of Security Risk Analysis Measure: CMS proposed to modify the Security Risk Analysis measure to require you to attest "yes" to having conducted security risk management in addition to the existing measure's requirement to attest "yes" to having conducted security risk analysis.

Modification of SAFER Guides Measure: CMS did a comprehensive update to the Safety Assurance Factors for EHR Resilience (SAFER) Guides. In 2026, they propose to require you attest "yes" to completing an annual self-assessment using the modified eight SAFER Guides.

Optional Bonus Measure: They proposed an optional bonus measure under the Public Health and Clinical Data Exchange objective for eligible hospitals and CAHs that submit health information to a public health agency (PHA) using the Trusted Exchange Framework and Common Agreement (TEFCA), beginning in 2026.

And finally, they clarified that for NEW hospitals and CAHs participating in PI, the minimum reporting period is any continuous 180-day period within that calendar year.

CMS's Requests for Information

In addition to the changes CMS proposed, they also had several RFI requests, which I think are telling.

Well-Being & Nutrition

They asked for ideas about tools and measures designed to assess the overall health, happiness, and satisfaction in life for patients. Additionally, they want to create measures to assess optimal nutrition and preventive care.

Digital Quality Measures (dQMs) & FHIR-based eCQMs

CMS is requesting public comments on the development and implementation of dQMs and specifically FHIR-based eCQMs. They mentioned in the ruling that they think there will be a time soon when the current version of eCQMs and the FHIR eCQMs will live together and your hospital could submit one or the other.

The changes proposed in the 2026 IPPS proposed rule reflect the current administration’s priorities. They removed the health equity initiatives across any applicable programs and instead requested information about how they could create measures focused on well-being. They kept TEAM which indicates lowering costs and ensuring optimal quality results is a priority for them. They homed in on dQMs and FHIR eCQMs which indicates they want to modernize the quality reporting process.

So, there you have it. Keep in mind this is just proposed changes so they may go back and change the requirements for 2026.

We know that keeping up with these yearly regulatory changes can be overwhelming. That’s why we have dedicated quality advisors who can help you better understand what each change means for your organization and ensure you have a comprehensive quality program.

Let’s conquer your quality goals together. Send us a note today.