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Healthcare Policy
April 30, 2025
2026 IPPS Proposed Rule: Quality Programs

2026 IPPS Proposed Rule: Quality Programs

The Centers for Medicare and Medicaid Services (CMS) released earlier this month its Inpatient Prospective Payment System (IPPS) proposed rule for 2026. Last week, we covered the government’s proposals concerning payment for inpatient services. In this alert, we will address what CMS has in mind relative to hospital quality and other incentive programs. Again, much of this material is based on the fact sheet released by CMS in tandem with the IPPS proposed rule.

2026 IPPS Proposed Rule: Quality Programs

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Quality Reporting

The Hospital Inpatient Quality Reporting (IQR) Program is a pay-for-reporting quality arrangement that reduces payments to hospitals that do not meet program requirements. Hospitals that do not submit quality data or do not meet all IQR requirements are subject to a one-fourth reduction in their Annual Payment Update under the IPPS. 

In the FY 2026 IPPS proposed rule, CMS is proposing to modify four current measures: 

    • Hospital-Level, Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) to add Medicare Advantage patients to the current cohort of patients, shorten the performance period from three to two years, and change the risk adjustment methodology
    • Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Ischemic Stroke Hospitalization with Claims-Based Risk Adjustment for Stroke Severity to add Medicare Advantage patients to the current cohort of patients, shorten the performance period from three to two years, and make changes to the risk adjustment methodology
    • Hybrid Hospital-Wide Readmission (HWR) and
    • Hybrid Hospital-Wide Mortality (HWM) measures to lower the submission thresholds to allow for up to two missing laboratory results and up to two missing vital signs, reduce the core clinical data elements (CCDEs) submission requirement to 70% or more of discharges, and reduce the submission requirement of linking variables to 70% or more of discharges

CMS is proposing to remove four measures: 

    • Hospital Commitment to Health Equity beginning with the CY 2024 reporting period/FY 2026 payment determination
    • (2) COVID-19 Vaccination Coverage among Health Care Personnel measure, beginning with the CY 2024 reporting period/FY 2026 payment determination
    • Both the (3) Screening for Social Drivers of Health and (4) Screen Positive Rate for Social Drivers of Health measures, beginning with the CY 2024 reporting period/FY 2026 payment determination 

CMS is also proposing to update and codify the ECE policy to clarify that it has the discretion to grant an extension rather than only a full exception in response to ECE requests.

Promoting Interoperability

In 2011, CMS established the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (now known as the Medicare Promoting Interoperability Program and the Promoting Interoperability performance category of the Merit-based Incentive Payment System) to encourage eligible professionals, eligible hospitals and critical access hospitals (CAHs) to adopt, implement, upgrade and demonstrate the meaningful use of certified EHR technology (CEHRT). 

In the FY 2026 IPPS proposed rule, CMS is proposing to: 

    • Define the EHR reporting period in CY 2026 and subsequent years as a minimum of any continuous 180-day period within that CY for eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program and make corresponding revisions at 42 CFR 495.4
    • Modify the Security Risk Analysis measure for eligible hospitals and CAHs to attest “Yes” to having conducted security risk management in addition to security risk analysis, beginning with the EHR reporting period in CY 2026
    • Modify the Safety Assurance Factors for EHR Resilience (SAFER) Guides measure by requiring eligible hospitals and CAHs to attest “Yes” to completing an annual self-assessment using all eight 2025 SAFER Guides, beginning with the EHR reporting period in CY 2026
    • Add an optional bonus measure under the Public Health and Clinical Data Exchange objective for data exchange to occur with a public health agency (PHA) using the Trusted Exchange Framework and Common Agreement®(TEFCA), beginning with the EHR reporting period in CY 2026

CMS is not proposing any changes to the previously finalized performance-based scoring threshold of 80 points, beginning with the EHR reporting period in CY 2026.