NHC Submits Comments on CMS FY 2026 IPPS and LTCH PPS Proposed Rule (PDF)
June 10, 2025
Mehmet Oz, MD, MBA
Administrator
Centers for Medicare & Medicaid Services Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244
RE: Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes [CMS-1833-P]
Submitted via regulations.gov
Dear Administrator Oz:
The National Health Council (NHC) appreciates the opportunity to provide comments on the Fiscal Year (FY) 2026 Hospital Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule.
Created by and for patient organizations over 100 years ago, the NHC brings diverse organizations together to forge consensus and drive patient-centered health policy. We promote increased access to affordable, high-value, equitable, and sustainable health care. Made up of more than 180 national health-related organizations and businesses, the NHC’s core membership includes the nation’s leading patient organizations. Other members include health-related associations and nonprofit organizations including the provider, research, and family caregiver communities; and businesses and organizations representing biopharmaceuticals, devices, diagnostics, generics, and payers.
We appreciate CMS’ efforts to modernize and refine payment and quality reporting systems while supporting transparency and innovation. However, we have several comments and recommendations outlined by topic below, to ensure that the final rule advances policies that protect access for all people with chronic diseases and disabilities.
Market Basket and Payment Rate Updates
Hospital Inpatient Prospective Payment System Operating and Capital Payment Rate Updates
The NHC is concerned about whether CMS’ proposed 2.4 percent update to the operating payment rates for general acute care hospitals—reflecting a 3.2 percent market basket increase offset by a 0.8 percentage point productivity adjustment—will keep pace with the cost growth experienced by facilities treating high-acuity, medically complex, or high-need patient populations. These include safety-net and rural hospitals that often face higher fixed costs, narrower operating margins, and increased demand for services without corresponding payment flexibility.
Recent analysis by MedPAC found that in 2024, all-payer operating margins at three major nonprofit hospital systems ranged from –5.3 percent to 0.3 percent, highlighting the strain even well-established institutions face amid persistent inflation and workforce shortages.1 The NHC urges CMS to evaluate whether the proposed update sufficiently supports operational stability across hospitals with high social risk indicators or atypical cost structures. If disparities emerge, future rulemaking should explore targeted adjustments to preserve service availability and financial solvency.
With respect to capital-related payments, the NHC supports continued application of a prospective methodology adjusted by Diagnosis-Related Group (DRG) weight.
However, the agency should assess whether this approach captures the rising costs associated with necessary infrastructure investments—particularly those related to climate resiliency, cybersecurity modernization, and structural upgrades to accommodate infection control. Many of these costs are long-term in nature and cannot be met through base operating rate adjustments alone.
Long-Term Care Hospital Prospective Payment System Payment Update
The NHC is concerned about whether CMS’ proposed 2.6 percent update to the LTCH PPS standard federal rate—based on a projected 3.4 percent market basket increase offset by a 0.8 percentage point productivity adjustment—will adequately support the operational and clinical demands faced by LTCHs. These facilities provide extended inpatient care for patients with severe and complex conditions that often require prolonged mechanical ventilation, intensive wound management, or post-sepsis recovery. Unlike general acute care hospitals, LTCHs must sustain high staffing ratios and specialized clinical protocols for weeks or months at a time, yet are reimbursed under models that assume tighter, episodic cost predictability.
Since CMS implemented the dual-rate system in FY 2016, the number of LTCHs has declined steadily—a trend that reflects growing concerns about financial viability under the existing framework.2 The NHC urges CMS to assess whether the current MS-LTC DRG weighting methodology and outlier thresholds capture the intensity and unpredictability of extended LTCH care. If misalignment is identified, CMS should consider refinements that preserve care continuity, prevent premature discharges, and support hospitals managing high-acuity transfers from short-term acute care hospitals.
Further, CMS should evaluate whether the dual-rate system continues to incentivize appropriate clinical pathways or inadvertently discourages admission of patients with complex post-acute needs. Maintaining a viable LTCH infrastructure is essential to decompressing overburdened acute care systems and ensuring seamless care transitions for high-risk beneficiaries.
Proposed Policies and Structural Payment Reforms
Hospital Wage Index
The NHC is deeply concerned by CMS’ proposal to permanently discontinue the Low Wage Index Hospital Policy, which was originally implemented to reduce payment disparities in lower-wage regions through a budget-neutral adjustment. Following the US Court of Appeals for the DC Circuit’s decision in Bridgeport Hospital v. Becerra, which vacated the policy on the grounds that CMS lacked statutory authority to deviate from the formula set forth in the Social Security Act, the agency is rightfully complying with the court’s directive to remove the policy and its associated budget neutrality factor.
However, while the legal rationale for the policy’s discontinuation is clear, the potential consequences for hospitals in structurally disadvantaged labor markets remain serious. CMS’ proposed transitional relief for FY 2026—a one-time payment adjustment for hospitals facing wage index reductions greater than 9.75 percent—is narrow in scope and does not offer long-term protection for affected communities. The NHC urges CMS to use its existing statutory authority to explore alternative policies that promote wage index parity within the bounds of the law. This concern has been echoed by other stakeholders, including the American Hospital Association and the National Rural Health Association, who have warned of destabilizing impacts on rural and low-wage hospitals absent a more sustainable replacement policy.3,4
We further recommend that CMS publicly report on the projected and actual effects of this policy change—including impacts on access to care, staffing levels, and financial solvency—and disaggregate that data by region, hospital type, and community characteristics. Additionally, CMS should examine how concurrent wage index adjustments—such as occupational mix refinements, geographic reclassifications, and commuting pattern corrections—may compound or offset the effects of the policy’s removal. Analyses from health policy organizations have suggested that these interlocking methodologies could result in significant regional payment shifts if not evaluated holistically.5 A coordinated assessment of these methodologies is essential to avoid creating new disparities in Medicare inpatient payments.
Medicare Severity Diagnosis Related Group Classifications and New Technology Add-On Payments
The NHC supports CMS’ annual Medicare Severity Diagnosis Related Group (MS- DRG) recalibration process and values the agency’s continued openness to stakeholder input. Accurate DRG classification and weighting are essential to ensuring fair reimbursement for hospitals that treat complex or resource-intensive patients. However, we remain concerned that the current MS-DRG structure is not keeping pace with the clinical and technological evolution of inpatient care—particularly as it relates to high- cost, novel therapies used in the treatment of rare diseases, genetic conditions, and advanced cancers.
CMS has increasingly deferred or denied stakeholder proposals to create new DRGs or reassign procedures due to insufficient claims volume, even in cases where there is compelling clinical rationale and emerging evidence of patient benefit.6 This approach can delay access to innovation, under-reimburse hospitals that adopt cutting-edge treatments, and discourage uptake of therapies that are already constrained by access barriers. In the context of rare and orphan diseases, where case volumes will never meet conventional statistical thresholds, this methodology risks embedding structural inequities into the DRG system.
The NHC recommends that CMS establish more transparent criteria for DRG recognition of rare, low-volume, or highly specialized therapies.7 Specifically, the agency should consider flexible volume thresholds when evaluating proposals that involve life-saving or transformative treatments—particularly when there is strong clinical consensus or FDA designation as a breakthrough or fast-tracked therapy. CMS should also outline alternative evidentiary standards beyond claims volume that can support DRG reassignment, including published clinical guidelines, real-world data, and expert consensus.
As CMS considers New Technology Add-On Payment (NTAP) applications in FY 2026—the highest to date—this underscores the urgency of reevaluating how CMS defines clinical improvement, budget neutrality, and access value in both the NTAP and MS-DRG frameworks. These parallel processes must be better aligned to ensure that DRG lag does not undermine the impact of NTAP approvals or impede timely integration of innovation into standard payment methodologies. The NHC encourages CMS to provide public-facing data on DRG reassignment timelines and NTAP-to-DRG conversion rates to increase transparency and stakeholder understanding of how innovation progresses through the system. Doing so would help ensure that reimbursement keeps pace with therapeutic advancement while preserving access for patients with rare, serious, or complex conditions.
The NHC views the NTAP program as a vital mechanism to bridge the gap between innovation and reimbursement by supporting hospital access to novel therapies during the period before MS-DRG realignment occurs. By offsetting the high upfront costs of cutting-edge treatments and technologies, NTAP is intended to ensure that patients— particularly those with rare, life-threatening, or treatment-resistant conditions—can benefit from timely clinical advances. However, mounting evidence suggests that the current NTAP structure often falls short of this objective.
Recent analyses have found that in many cases, hospitals continue to face substantial financial losses when delivering NTAP-eligible therapies, even after the add-on payment is applied.8 This misalignment between actual acquisition or administration costs and partial reimbursement may deter provider uptake, slow patient access, and ultimately weaken the NTAP program’s intended impact on clinical adoption. These effects are particularly concerning for therapies with narrow indications, such as gene therapies or immuno-oncology agents, where access delays can lead to irreversible disease progression.
The NHC recommends that CMS conduct and publish systematic post-market evaluations of access, utilization, and patient outcomes associated with previously approved NTAP technologies. These data should include comparisons between projected and actual uptake, as well as variation across hospital types and geographies. Transparent reporting on NTAP performance would help stakeholders assess whether the policy is functioning as intended and where it may need to be refined.
In addition, the NHC supports expanding the evidentiary framework used to evaluate NTAP applications beyond Medicare-only claims data. Many of the most impactful therapies target small or specialized populations that may not be well represented in early Medicare utilization data. CMS should formally consider supplemental sources such as FDA data, Phase III trial evidence, global regulatory submissions, real-world evidence from commercial payers, and clinical society guidelines. A more holistic view of innovation and value will help ensure that the NTAP program remains responsive to patient needs, clinical urgency, and evolving therapeutic standards.
Quality Reporting and Value-Based Purchasing Programs
Hospital Readmissions Reduction Program
The NHC supports CMS’ proposal to integrate Medicare Advantage (MA) patient data into all six readmission measures used in the Hospital Readmissions Reduction Program (HRRP). Including MA data represents a meaningful step toward modernizing
quality measurement and aligning payment incentives across the full spectrum of Medicare beneficiaries. As the MA program now serves more than half of all Medicare enrollees, its exclusion from major quality programs risks obscuring important performance trends and creating an incomplete picture of patient outcomes.
However, this integration must be approached with caution. Significant variation exists across MA plans in care coordination protocols, discharge planning, post-acute service coverage, and diagnostic coding practices—all of which may affect readmission risk in ways that are not attributable to hospital performance. Without appropriate risk adjustment or stratification, these differences could distort hospital performance scores and lead to unfair financial penalties.9
The NHC urges CMS to actively monitor for potential MA-driven bias in readmission rates and to share findings from ongoing impact assessments with stakeholders. CMS should also clearly communicate any shifts in benchmarks, distributions, or penalty thresholds that result from the inclusion of MA data. Transparent reporting and stakeholder engagement will be essential to ensure that this policy change enhances— rather than undermines—the fairness, accuracy, and utility of the HRRP.
Hospital-Acquired Condition Reduction Program
The NHC supports CMS’ proposed technical update to the baseline period for the National Healthcare Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures and the codification of the Extraordinary Circumstances Exceptions (ECE) policy. Regularly updating the baseline ensures that the program reflects current infection control standards and avoids penalizing hospitals based on outdated epidemiological conditions. Codifying the ECE process also provides needed structure for hospitals navigating unforeseen operational disruptions such as natural disasters, public health emergencies, or IT failures.
However, baseline shifts—while technically appropriate—can have significant effects on hospital performance scores, even in the absence of any actual decline in care quality. Without transparent reporting, hospitals may misinterpret score changes or face reputational and financial consequences due to recalibration effects rather than true performance trends. The NHC recommends that CMS publish side-by-side comparative data showing the impact of the updated baseline on historical performance, stratified by hospital type and size.
We also urge CMS to ensure that ECE eligibility criteria are applied equitably across all facilities, with particular attention to hospitals serving medically complex, high-risk, or underserved patient populations. The application process should be clear, timely, and accessible, with publicly available guidance that sets consistent expectations. Equitable access to relief mechanisms like ECE is critical to maintaining fairness in a program that carries financial penalties for hospitals in the bottom quartile of performance.
Hospital Value-Based Purchasing Program
The NHC strongly opposes CMS’ proposal to eliminate the Health Equity Adjustment (HEA) from the Hospital Value-Based Purchasing (VBP) Program. Introduced in FY 2023, the HEA was a meaningful advancement in aligning payment incentives with hospitals’ efforts to serve disadvantaged populations. By incorporating a hospital’s dual- eligible patient share and stratified performance into its scoring framework, the HEA reclassified many health equity-focused hospitals from penalty status to bonus eligibility. In its first year, this shift helped direct much-needed financial support toward institutions that often operate on thin margins while serving complex, high-risk communities.10
Removing the HEA at this stage—without a tested and fully developed replacement— risks reversing this progress and sending a discouraging signal to hospitals that have invested in targeted quality improvement and disparity reduction. It would also reduce the VBP Program’s alignment with CMS’ broader strategic goal of advancing health equity across Medicare programs.
The NHC urges CMS to delay the removal of the HEA until a robust, data-driven alternative is in place. We recommend that CMS convene patient organizations, safety- net providers, and health equity researchers to co-develop the next generation of health equity-linked payment measures. This consultation should be grounded in real-world data, allow for testing and simulation of new scoring models, and be accompanied by public reporting to ensure accountability and transparency. Incentivizing health equity should remain a central pillar of value-based purchasing—not a temporary enhancement.
Hospital Inpatient Quality Reporting Program
The NHC is concerned by CMS’ proposal to remove several key health equity- and public health-related measures from the Hospital Inpatient Quality Reporting (IQR) Program, including the Screening for Social Drivers of Health (SDOH), the Screen Positive Rate for SDOH, the Hospital Commitment to Health Equity, and the COVID-19 Vaccination Coverage among Health Care Personnel measure. While relatively new, these metrics provide critical insights into the structural and social barriers patients face—data that are essential for evaluating outcomes and designing interventions that reflect real-world risk and disparity.11
Eliminating these measures without clear replacements risks signaling a deprioritization of health equity and public health monitoring in federal quality programs. This is particularly concerning given CMS’ stated commitment to advancing health equity across Medicare and Medicaid. Removing the few existing metrics that track hospital- level engagement with SDOH, vaccination coverage, and institutional health equity strategies undermines the ability of stakeholders to monitor progress or hold systems accountable.
The NHC urges CMS to retain these measures or, at minimum, delay their removal until concrete alternative indicators are finalized, tested, and implemented. Maintaining some continuity in health equity tracking is essential to avoid data gaps and to sustain momentum in reducing avoidable disparities in care and outcomes. We also support CMS’ request for information (RFI) on future domains such as well-being and nutrition and encourage the agency to publish a formal roadmap for how these measures will be integrated into the IQR Program. That roadmap should include timelines, pilot initiatives, and opportunities for stakeholder engagement to ensure that new domains reflect both clinical relevance and patient experience.
Prospective Payment System-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The NHC supports CMS’ proposal to expand the visibility of Prospective Payment System-Exempt Cancer Hospital Quality Reporting (PCHQR) data by publishing results on Care Compare and the Provider Data Catalog. Increased transparency is critical for patients, caregivers, and referring providers navigating complex decisions about cancer care. However, we oppose CMS’ concurrent proposal to remove key health equity- focused measures, including the Hospital Commitment to Health Equity, the Screening for Social Drivers of Health, and the Screen Positive Rate for SDOH.
These measures play an important role in identifying and addressing persistent disparities in cancer outcomes that span race, income, geography, and social vulnerability. Patients receiving treatment at PPS-exempt cancer hospitals often face serious and life-threatening conditions, and those from underserved communities may encounter additional barriers to timely diagnosis, treatment access, and supportive care. Eliminating these health equity metrics—without offering validated replacements—risks obscuring disparities at precisely the moment they require closer scrutiny.
The NHC urges CMS to retain the current health equity-related measures in the PCHQR Program, or, at minimum, to commit to replacing them with alternative metrics that can meaningfully track disparities in oncological care. If the removal proceeds, CMS should articulate a clear transition plan that includes timelines, measure development strategies, and stakeholder engagement. The agency should also consider how health equity can be integrated into future outcome, patient experience, or quality-of-life measures specific to cancer treatment. Sustained attention to health equity in oncology is essential to ensuring that progress in innovation and survivorship benefits all patients—not just those with fewer barriers to care.
Long-Term Care Hospital Quality Reporting Program
The NHC supports CMS’ proposal to improve the LTCH Quality Reporting Program (QRP) reconsideration process, including greater clarity around timelines and eligibility for data submission extensions. These changes will help hospitals better navigate the program’s compliance framework and reduce the risk of unintentional payment penalties. However, we are concerned about the proposed removal of five data elements from the Long-Term Care Hospital Continuity Assessment Record and Evaluation (LCDS), particularly those related to SDOH and immunization status.
LTCHs serve some of the most medically complex, functionally impaired, and socioeconomically vulnerable patient populations in the Medicare program. Elements such as SDOH screening and vaccination coverage provide vital context for interpreting patient outcomes and evaluating care quality in these settings. Removing these data points without clear alternatives risks weakening the LTCH QRP’s ability to support quality improvement, public reporting, and health equity monitoring.
The NHC urges CMS to carefully assess whether the proposed removals would compromise the validity or completeness of LTCH quality measurement, particularly for hospitals serving high-risk populations. CMS should publish that analysis for public comment prior to finalizing the rule. In addition, we recommend that CMS use feedback gathered through its RFIs on digital quality measurement and future quality domains to inform a clear roadmap for modernizing the LTCH QRP without narrowing its focus. Any transition away from current metrics should be transparent, evidence-based, and aligned with the needs of complex patient populations.
Medicare Promoting Interoperability Program
The NHC supports CMS’ continued efforts to strengthen cybersecurity and promote interoperable data exchange through updates to the Medicare Promoting Interoperability Program. The proposed requirement for eligible hospitals and critical access hospitals (CAHs) to complete all eight “SAFER Guides”—voluntary self- assessments that help organizations identify and address electronic health record (EHR) safety risks—is an important step toward promoting system-wide vigilance around digital infrastructure and patient safety. Similarly, the introduction of an optional bonus measure tied to participation in the Trusted Exchange Framework and Common Agreement (TEFCA)—a new national data-sharing network—could accelerate progress toward seamless and secure information exchange across health systems.
However, the NHC remains concerned about the disproportionate burden these requirements may impose on small, rural, or under-resourced providers. Many of these facilities lack dedicated information technology staff or the financial capacity to implement cybersecurity safeguards at scale.12 Without adequate support, federal efforts to promote data modernization risk reinforcing systemic disparities in EHR adoption, information exchange, and data security.
We urge CMS to expand and clearly advertise technical assistance resources, including hands-on training modules, direct implementation support, and peer learning collaboratives designed for smaller hospitals. In addition, CMS should explore grant opportunities to help resource-limited institutions comply with the SAFER Guide requirement and participate in TEFCA. To monitor equitable implementation, the agency should collect and publish data on TEFCA enrollment and SAFER completion disaggregated by hospital size, location, and ownership types.
New Model and Demonstrations
Transforming Episode Accountability Model
The NHC is concerned by CMS’ proposal to eliminate both the health equity plan and the decarbonization reporting requirement from the Transforming Episode Accountability Model (TEAM). These elements were key features of the model’s original design and signaled CMS’ intent to align episode-based payment with broader goals of health system equity and environmental sustainability. The removal of these requirements risks sending a message that social risk and climate-related vulnerabilities are no longer priorities in Medicare payment innovation—at a time when both are increasingly linked to long-term health outcomes and cost pressures.
Health care delivery contributes nearly 9 percent of US greenhouse gas emissions, with a disproportionate impact on medically underserved communities. Likewise, social drivers of health—including housing, transportation, and income security—directly influence episode-level cost and recovery, particularly for populations that TEAM was designed to support. Removing formal accountability for these domains could limit CMS’ ability to evaluate how system-level disparities and environmental factors shape the success of episode-based models.13
The NHC urges CMS to preserve at least passive data collection related to both health equity and sustainability in TEAM, even if these elements are no longer tied to payment or performance scoring. Continued tracking would allow the agency to monitor trends, refine future model iterations, and remain aligned with HHS-wide objectives on health equity and climate resilience.
In addition, CMS should ensure that the proposed patient-reported outcome-based performance measure (PRO-PM) for information transfer is thoroughly validated across diverse patient populations and provider settings. This includes public reporting of validation results and stakeholder input into its implementation. Similarly, the shift from the Area Deprivation Index (ADI) to the Community Deprivation Index (CDI) for risk adjustment should be accompanied by transparency in methodology and bias testing to ensure it does not inadvertently disadvantage high-risk patient populations or under- resourced hospitals.
Request for Information on Reducing Administrative Burden
The NHC welcomes CMS’ ongoing focus on reducing unnecessary administrative burden in the Medicare program and appreciates the agency’s solicitation of stakeholder input. Streamlining regulatory and reporting requirements has the potential to improve provider focus on direct patient care, reduce compliance costs, and ease staffing constraints—especially in hospitals operating under financial and workforce strain. However, CMS’ internal estimates of time and cost savings often do not fully reflect the complexity of implementing new or revised policies in real-world settings.
Hospitals that serve large numbers of uninsured, Medicaid, or clinically complex patients—many of which are safety-net or rural institutions—face disproportionate challenges in adapting to changing reporting systems, technology standards, and quality frameworks. These providers may lack the infrastructure or administrative staffing to respond rapidly to revised data collection or attestation requirements, even when the changes are intended to simplify processes. Without formal mechanisms to test assumptions, burden reduction strategies risk inadvertently shifting responsibilities onto providers least equipped to absorb them.14
The NHC recommends that CMS adopt a structured stakeholder consultation process to validate burden reduction estimates prior to finalizing major changes. This process should include representation from hospitals of varying sizes, geographies, and operational capacities. Additionally, CMS should conduct pilot testing of proposed reporting changes with safety-net and resource-limited hospitals to ensure that reforms are realistically implementable and do not result in unintended disruptions in participation or compliance. Simplification efforts must be informed by the real-world constraints of hospitals across the care delivery spectrum to avoid shifting administrative burdens onto providers least equipped to absorb them.
Legislative Expirations and Rural Supports
Low-Volume and Medicare-Dependent Hospital Expirations
The NHC urges CMS to actively engage with Congress and provide timely technical input to support the reauthorization of the Low-Volume Hospital Adjustment and Medicare-Dependent Hospital (MDH) programs, which are scheduled to expire after FY 2025. These programs provide crucial support for rural hospitals that serve high- Medicare populations and often operate with limited margins and geographic isolation. Their expiration could lead to sudden and significant financial instability for affected facilities, jeopardizing access to inpatient care for vulnerable populations.
While CMS lacks the statutory authority to extend these programs independently, the agency can play a vital role by publishing disaggregated impact analyses to help stakeholders and legislators understand the projected consequences of expiration.
Such transparency would allow state agencies, provider organizations, and rural health advocates to engage in informed advocacy and preparedness planning. CMS should also ensure that affected hospitals have access to technical assistance and timely guidance during any transition period.
Frontier Community Health Integration Demonstration
The NHC supports CMS’ continued implementation of the Frontier Community Health Integration Project (FCHIP) demonstration and appreciates the inclusion of related provisions in the FY 2026 proposed rule. This initiative enables a select group of CAHs in frontier areas to test new care delivery and payment models, including increased flexibility in the use of telehealth, swing beds, and ambulance services. These waivers are vital for improving access and care coordination in extremely rural communities, where workforce shortages, travel distances, and infrastructure limitations pose persistent barriers to timely, high-quality care.
As the demonstration progresses, the NHC recommends that CMS publicly report key findings from the FCHIP evaluation, including metrics on patient outcomes, health care utilization, and equity impacts. Disaggregated data—such as by patient race, geography, payer type, and service category—will be essential to understanding whether the model has improved access and reduced disparities in the targeted regions.
Additionally, the NHC urges CMS to clearly communicate any potential future budget neutrality adjustments associated with FCHIP waivers. While no offset is proposed for FY 2026, CAHs participating in the demonstration—as well as non-participating facilities affected by broader rural payment adjustments—should be fully informed about the methodology used to calculate budget neutrality and the timeline for any potential adjustments. Transparency in this area is critical to building trust and maintaining stable participation.
If the demonstration continues to yield positive results, CMS should explore options for scaling successful components of the FCHIP model more broadly, particularly to other rural areas with similar access challenges. Lessons learned from this demonstration could help inform future innovations in rural health care delivery and ensure that Medicare payment policy supports sustainable models of care in frontier communities.
Conclusion
Thank you for the opportunity to provide feedback on the FY 2026 IPPS and LTCH PPS Proposed Rule. We stand ready to collaborate with CMS to ensure these policies promote health equity, sustainability, and improved outcomes for patients living with chronic diseases and disabilities. Please do not hesitate to contact Kimberly Beer, Senior Vice President, Policy & External Affairs at kbeer@nhcouncil.org or Shion Chang, Senior Director, Policy & Regulatory Affairs at schang@nhcouncil.org, if you or your staff would like to discuss these comments in greater detail.
Sincerely,
Randall L. Rutta
Chief Executive Officer
1 Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy, March 2025, 78–79. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch3_MedPAC_Report_To_Congress_SEC.pdf
2 Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy, March 2025, Chapter 8. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_Report_To_Congress_SEC.pdf
3 American Hospital Association. “AHA Comments on CMS’ FY 2025 IPPS Low Wage Policy.” AHA News, November 26, 2024. https://www.aha.org/news/headline/2024-11-26-aha-comments-cms-fy-2025-ipps- low-wage-policy.
4 National Rural Health Association. Comment Letter on CMS Interim Final Rule Rescinding the Low Wage Index Policy. October 2024.
5 Health Management Associates. “FY 2026 Medicare Hospital Inpatient Proposed Regulation Signals Several Changes Lie Ahead for the Hospital Industry and Beneficiaries.” HMA In Focus, April 17, 2025. https://www.healthmanagement.com/blog/fy-2026-medicare-hospital-inpatient-proposed-regulation- signals-several-changes-lie-ahead-for-the-hospital-industry-and-beneficiaries/.
6 National Organization for Rare Disorders. Letter to CMS Re: Inpatient Access to Rare Disease Therapies. February 21, 2024.
7 Manz, Christopher R., Justin E. Bekelman, and Jalpa A. Doshi. “The Changing Characteristics of Technologies Covered by Medicare’s New Technology Add-on Payment Program.” JAMA Network Open 3, no. 8 (August 27, 2020): e2012569. https://doi.org/10.1001/jamanetworkopen.2020.12569.
8 Manz, Bekelman, and Doshi, “Changing Characteristics of Technologies.”
9 Health Management Associates, “FY 2026 Medicare Hospital Inpatient Proposed Regulation.”
10 Liu, Michael, Sahil Sandhu, Karen E. Joynt Maddox, and Rishi K. Wadhera. “Health Equity Adjustment and Hospital Performance in the Medicare Value-Based Purchasing Program.” JAMA 331, no. 16 (April 23, 2024): 1387–1396. https://doi.org/10.1001/jama.2024.2440.
11 Ferguson, Tiffany. “The Undoing of SDoH Reporting.” ICD10monitor (Medlearn Media), April 15, 2025. https://icd10monitor.medlearn.com/the-undoing-of-sdoh-reporting/.
12 U.S. Government Accountability Office. Electronic Health Information Exchange: Use Has Increased, but Is Lower for Small and Rural Providers. GAO-23-105540. Washington, DC: GAO, April 2023. https://www.gao.gov/products/gao-23-105540.
13 Hardeep Singh, Walt Vernon, Terri Scannell, and Kathy Gerwig, “Crossing the Decarbonization Chasm: A Call to Action for Hospital and Health System Leaders to Reduce Their Greenhouse Gas Emissions,” NAM Perspectives (November 29, 2023): 2023:10.31478/202311g, https://doi.org/10.31478/202311g.
14 U.S. Health Care Climate Council. Comment Letter on TEAM Model Decarbonization and Resilience Initiative. June 10, 2023.
NHC Submits Comments on CMS FY 2026 IPPS and LTCH PPS Proposed Rule (PDF)
June 10, 2025
Mehmet Oz, MD, MBA
Administrator
Centers for Medicare & Medicaid Services Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244
RE: Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes [CMS-1833-P]
Submitted via regulations.gov
Dear Administrator Oz:
The National Health Council (NHC) appreciates the opportunity to provide comments on the Fiscal Year (FY) 2026 Hospital Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule.
Created by and for patient organizations over 100 years ago, the NHC brings diverse organizations together to forge consensus and drive patient-centered health policy. We promote increased access to affordable, high-value, equitable, and sustainable health care. Made up of more than 180 national health-related organizations and businesses, the NHC’s core membership includes the nation’s leading patient organizations. Other members include health-related associations and nonprofit organizations including the provider, research, and family caregiver communities; and businesses and organizations representing biopharmaceuticals, devices, diagnostics, generics, and payers.
We appreciate CMS’ efforts to modernize and refine payment and quality reporting systems while supporting transparency and innovation. However, we have several comments and recommendations outlined by topic below, to ensure that the final rule advances policies that protect access for all people with chronic diseases and disabilities.
Market Basket and Payment Rate Updates
Hospital Inpatient Prospective Payment System Operating and Capital Payment Rate Updates
The NHC is concerned about whether CMS’ proposed 2.4 percent update to the operating payment rates for general acute care hospitals—reflecting a 3.2 percent market basket increase offset by a 0.8 percentage point productivity adjustment—will keep pace with the cost growth experienced by facilities treating high-acuity, medically complex, or high-need patient populations. These include safety-net and rural hospitals that often face higher fixed costs, narrower operating margins, and increased demand for services without corresponding payment flexibility.
Recent analysis by MedPAC found that in 2024, all-payer operating margins at three major nonprofit hospital systems ranged from –5.3 percent to 0.3 percent, highlighting the strain even well-established institutions face amid persistent inflation and workforce shortages.1 The NHC urges CMS to evaluate whether the proposed update sufficiently supports operational stability across hospitals with high social risk indicators or atypical cost structures. If disparities emerge, future rulemaking should explore targeted adjustments to preserve service availability and financial solvency.
With respect to capital-related payments, the NHC supports continued application of a prospective methodology adjusted by Diagnosis-Related Group (DRG) weight.
However, the agency should assess whether this approach captures the rising costs associated with necessary infrastructure investments—particularly those related to climate resiliency, cybersecurity modernization, and structural upgrades to accommodate infection control. Many of these costs are long-term in nature and cannot be met through base operating rate adjustments alone.
Long-Term Care Hospital Prospective Payment System Payment Update
The NHC is concerned about whether CMS’ proposed 2.6 percent update to the LTCH PPS standard federal rate—based on a projected 3.4 percent market basket increase offset by a 0.8 percentage point productivity adjustment—will adequately support the operational and clinical demands faced by LTCHs. These facilities provide extended inpatient care for patients with severe and complex conditions that often require prolonged mechanical ventilation, intensive wound management, or post-sepsis recovery. Unlike general acute care hospitals, LTCHs must sustain high staffing ratios and specialized clinical protocols for weeks or months at a time, yet are reimbursed under models that assume tighter, episodic cost predictability.
Since CMS implemented the dual-rate system in FY 2016, the number of LTCHs has declined steadily—a trend that reflects growing concerns about financial viability under the existing framework.2 The NHC urges CMS to assess whether the current MS-LTC DRG weighting methodology and outlier thresholds capture the intensity and unpredictability of extended LTCH care. If misalignment is identified, CMS should consider refinements that preserve care continuity, prevent premature discharges, and support hospitals managing high-acuity transfers from short-term acute care hospitals.
Further, CMS should evaluate whether the dual-rate system continues to incentivize appropriate clinical pathways or inadvertently discourages admission of patients with complex post-acute needs. Maintaining a viable LTCH infrastructure is essential to decompressing overburdened acute care systems and ensuring seamless care transitions for high-risk beneficiaries.
Proposed Policies and Structural Payment Reforms
Hospital Wage Index
The NHC is deeply concerned by CMS’ proposal to permanently discontinue the Low Wage Index Hospital Policy, which was originally implemented to reduce payment disparities in lower-wage regions through a budget-neutral adjustment. Following the US Court of Appeals for the DC Circuit’s decision in Bridgeport Hospital v. Becerra, which vacated the policy on the grounds that CMS lacked statutory authority to deviate from the formula set forth in the Social Security Act, the agency is rightfully complying with the court’s directive to remove the policy and its associated budget neutrality factor.
However, while the legal rationale for the policy’s discontinuation is clear, the potential consequences for hospitals in structurally disadvantaged labor markets remain serious. CMS’ proposed transitional relief for FY 2026—a one-time payment adjustment for hospitals facing wage index reductions greater than 9.75 percent—is narrow in scope and does not offer long-term protection for affected communities. The NHC urges CMS to use its existing statutory authority to explore alternative policies that promote wage index parity within the bounds of the law. This concern has been echoed by other stakeholders, including the American Hospital Association and the National Rural Health Association, who have warned of destabilizing impacts on rural and low-wage hospitals absent a more sustainable replacement policy.3,4
We further recommend that CMS publicly report on the projected and actual effects of this policy change—including impacts on access to care, staffing levels, and financial solvency—and disaggregate that data by region, hospital type, and community characteristics. Additionally, CMS should examine how concurrent wage index adjustments—such as occupational mix refinements, geographic reclassifications, and commuting pattern corrections—may compound or offset the effects of the policy’s removal. Analyses from health policy organizations have suggested that these interlocking methodologies could result in significant regional payment shifts if not evaluated holistically.5 A coordinated assessment of these methodologies is essential to avoid creating new disparities in Medicare inpatient payments.
Medicare Severity Diagnosis Related Group Classifications and New Technology Add-On Payments
The NHC supports CMS’ annual Medicare Severity Diagnosis Related Group (MS- DRG) recalibration process and values the agency’s continued openness to stakeholder input. Accurate DRG classification and weighting are essential to ensuring fair reimbursement for hospitals that treat complex or resource-intensive patients. However, we remain concerned that the current MS-DRG structure is not keeping pace with the clinical and technological evolution of inpatient care—particularly as it relates to high- cost, novel therapies used in the treatment of rare diseases, genetic conditions, and advanced cancers.
CMS has increasingly deferred or denied stakeholder proposals to create new DRGs or reassign procedures due to insufficient claims volume, even in cases where there is compelling clinical rationale and emerging evidence of patient benefit.6 This approach can delay access to innovation, under-reimburse hospitals that adopt cutting-edge treatments, and discourage uptake of therapies that are already constrained by access barriers. In the context of rare and orphan diseases, where case volumes will never meet conventional statistical thresholds, this methodology risks embedding structural inequities into the DRG system.
The NHC recommends that CMS establish more transparent criteria for DRG recognition of rare, low-volume, or highly specialized therapies.7 Specifically, the agency should consider flexible volume thresholds when evaluating proposals that involve life-saving or transformative treatments—particularly when there is strong clinical consensus or FDA designation as a breakthrough or fast-tracked therapy. CMS should also outline alternative evidentiary standards beyond claims volume that can support DRG reassignment, including published clinical guidelines, real-world data, and expert consensus.
As CMS considers New Technology Add-On Payment (NTAP) applications in FY 2026—the highest to date—this underscores the urgency of reevaluating how CMS defines clinical improvement, budget neutrality, and access value in both the NTAP and MS-DRG frameworks. These parallel processes must be better aligned to ensure that DRG lag does not undermine the impact of NTAP approvals or impede timely integration of innovation into standard payment methodologies. The NHC encourages CMS to provide public-facing data on DRG reassignment timelines and NTAP-to-DRG conversion rates to increase transparency and stakeholder understanding of how innovation progresses through the system. Doing so would help ensure that reimbursement keeps pace with therapeutic advancement while preserving access for patients with rare, serious, or complex conditions.
The NHC views the NTAP program as a vital mechanism to bridge the gap between innovation and reimbursement by supporting hospital access to novel therapies during the period before MS-DRG realignment occurs. By offsetting the high upfront costs of cutting-edge treatments and technologies, NTAP is intended to ensure that patients— particularly those with rare, life-threatening, or treatment-resistant conditions—can benefit from timely clinical advances. However, mounting evidence suggests that the current NTAP structure often falls short of this objective.
Recent analyses have found that in many cases, hospitals continue to face substantial financial losses when delivering NTAP-eligible therapies, even after the add-on payment is applied.8 This misalignment between actual acquisition or administration costs and partial reimbursement may deter provider uptake, slow patient access, and ultimately weaken the NTAP program’s intended impact on clinical adoption. These effects are particularly concerning for therapies with narrow indications, such as gene therapies or immuno-oncology agents, where access delays can lead to irreversible disease progression.
The NHC recommends that CMS conduct and publish systematic post-market evaluations of access, utilization, and patient outcomes associated with previously approved NTAP technologies. These data should include comparisons between projected and actual uptake, as well as variation across hospital types and geographies. Transparent reporting on NTAP performance would help stakeholders assess whether the policy is functioning as intended and where it may need to be refined.
In addition, the NHC supports expanding the evidentiary framework used to evaluate NTAP applications beyond Medicare-only claims data. Many of the most impactful therapies target small or specialized populations that may not be well represented in early Medicare utilization data. CMS should formally consider supplemental sources such as FDA data, Phase III trial evidence, global regulatory submissions, real-world evidence from commercial payers, and clinical society guidelines. A more holistic view of innovation and value will help ensure that the NTAP program remains responsive to patient needs, clinical urgency, and evolving therapeutic standards.
Quality Reporting and Value-Based Purchasing Programs
Hospital Readmissions Reduction Program
The NHC supports CMS’ proposal to integrate Medicare Advantage (MA) patient data into all six readmission measures used in the Hospital Readmissions Reduction Program (HRRP). Including MA data represents a meaningful step toward modernizing
quality measurement and aligning payment incentives across the full spectrum of Medicare beneficiaries. As the MA program now serves more than half of all Medicare enrollees, its exclusion from major quality programs risks obscuring important performance trends and creating an incomplete picture of patient outcomes.
However, this integration must be approached with caution. Significant variation exists across MA plans in care coordination protocols, discharge planning, post-acute service coverage, and diagnostic coding practices—all of which may affect readmission risk in ways that are not attributable to hospital performance. Without appropriate risk adjustment or stratification, these differences could distort hospital performance scores and lead to unfair financial penalties.9
The NHC urges CMS to actively monitor for potential MA-driven bias in readmission rates and to share findings from ongoing impact assessments with stakeholders. CMS should also clearly communicate any shifts in benchmarks, distributions, or penalty thresholds that result from the inclusion of MA data. Transparent reporting and stakeholder engagement will be essential to ensure that this policy change enhances— rather than undermines—the fairness, accuracy, and utility of the HRRP.
Hospital-Acquired Condition Reduction Program
The NHC supports CMS’ proposed technical update to the baseline period for the National Healthcare Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures and the codification of the Extraordinary Circumstances Exceptions (ECE) policy. Regularly updating the baseline ensures that the program reflects current infection control standards and avoids penalizing hospitals based on outdated epidemiological conditions. Codifying the ECE process also provides needed structure for hospitals navigating unforeseen operational disruptions such as natural disasters, public health emergencies, or IT failures.
However, baseline shifts—while technically appropriate—can have significant effects on hospital performance scores, even in the absence of any actual decline in care quality. Without transparent reporting, hospitals may misinterpret score changes or face reputational and financial consequences due to recalibration effects rather than true performance trends. The NHC recommends that CMS publish side-by-side comparative data showing the impact of the updated baseline on historical performance, stratified by hospital type and size.
We also urge CMS to ensure that ECE eligibility criteria are applied equitably across all facilities, with particular attention to hospitals serving medically complex, high-risk, or underserved patient populations. The application process should be clear, timely, and accessible, with publicly available guidance that sets consistent expectations. Equitable access to relief mechanisms like ECE is critical to maintaining fairness in a program that carries financial penalties for hospitals in the bottom quartile of performance.
Hospital Value-Based Purchasing Program
The NHC strongly opposes CMS’ proposal to eliminate the Health Equity Adjustment (HEA) from the Hospital Value-Based Purchasing (VBP) Program. Introduced in FY 2023, the HEA was a meaningful advancement in aligning payment incentives with hospitals’ efforts to serve disadvantaged populations. By incorporating a hospital’s dual- eligible patient share and stratified performance into its scoring framework, the HEA reclassified many health equity-focused hospitals from penalty status to bonus eligibility. In its first year, this shift helped direct much-needed financial support toward institutions that often operate on thin margins while serving complex, high-risk communities.10
Removing the HEA at this stage—without a tested and fully developed replacement— risks reversing this progress and sending a discouraging signal to hospitals that have invested in targeted quality improvement and disparity reduction. It would also reduce the VBP Program’s alignment with CMS’ broader strategic goal of advancing health equity across Medicare programs.
The NHC urges CMS to delay the removal of the HEA until a robust, data-driven alternative is in place. We recommend that CMS convene patient organizations, safety- net providers, and health equity researchers to co-develop the next generation of health equity-linked payment measures. This consultation should be grounded in real-world data, allow for testing and simulation of new scoring models, and be accompanied by public reporting to ensure accountability and transparency. Incentivizing health equity should remain a central pillar of value-based purchasing—not a temporary enhancement.
Hospital Inpatient Quality Reporting Program
The NHC is concerned by CMS’ proposal to remove several key health equity- and public health-related measures from the Hospital Inpatient Quality Reporting (IQR) Program, including the Screening for Social Drivers of Health (SDOH), the Screen Positive Rate for SDOH, the Hospital Commitment to Health Equity, and the COVID-19 Vaccination Coverage among Health Care Personnel measure. While relatively new, these metrics provide critical insights into the structural and social barriers patients face—data that are essential for evaluating outcomes and designing interventions that reflect real-world risk and disparity.11
Eliminating these measures without clear replacements risks signaling a deprioritization of health equity and public health monitoring in federal quality programs. This is particularly concerning given CMS’ stated commitment to advancing health equity across Medicare and Medicaid. Removing the few existing metrics that track hospital- level engagement with SDOH, vaccination coverage, and institutional health equity strategies undermines the ability of stakeholders to monitor progress or hold systems accountable.
The NHC urges CMS to retain these measures or, at minimum, delay their removal until concrete alternative indicators are finalized, tested, and implemented. Maintaining some continuity in health equity tracking is essential to avoid data gaps and to sustain momentum in reducing avoidable disparities in care and outcomes. We also support CMS’ request for information (RFI) on future domains such as well-being and nutrition and encourage the agency to publish a formal roadmap for how these measures will be integrated into the IQR Program. That roadmap should include timelines, pilot initiatives, and opportunities for stakeholder engagement to ensure that new domains reflect both clinical relevance and patient experience.
Prospective Payment System-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The NHC supports CMS’ proposal to expand the visibility of Prospective Payment System-Exempt Cancer Hospital Quality Reporting (PCHQR) data by publishing results on Care Compare and the Provider Data Catalog. Increased transparency is critical for patients, caregivers, and referring providers navigating complex decisions about cancer care. However, we oppose CMS’ concurrent proposal to remove key health equity- focused measures, including the Hospital Commitment to Health Equity, the Screening for Social Drivers of Health, and the Screen Positive Rate for SDOH.
These measures play an important role in identifying and addressing persistent disparities in cancer outcomes that span race, income, geography, and social vulnerability. Patients receiving treatment at PPS-exempt cancer hospitals often face serious and life-threatening conditions, and those from underserved communities may encounter additional barriers to timely diagnosis, treatment access, and supportive care. Eliminating these health equity metrics—without offering validated replacements—risks obscuring disparities at precisely the moment they require closer scrutiny.
The NHC urges CMS to retain the current health equity-related measures in the PCHQR Program, or, at minimum, to commit to replacing them with alternative metrics that can meaningfully track disparities in oncological care. If the removal proceeds, CMS should articulate a clear transition plan that includes timelines, measure development strategies, and stakeholder engagement. The agency should also consider how health equity can be integrated into future outcome, patient experience, or quality-of-life measures specific to cancer treatment. Sustained attention to health equity in oncology is essential to ensuring that progress in innovation and survivorship benefits all patients—not just those with fewer barriers to care.
Long-Term Care Hospital Quality Reporting Program
The NHC supports CMS’ proposal to improve the LTCH Quality Reporting Program (QRP) reconsideration process, including greater clarity around timelines and eligibility for data submission extensions. These changes will help hospitals better navigate the program’s compliance framework and reduce the risk of unintentional payment penalties. However, we are concerned about the proposed removal of five data elements from the Long-Term Care Hospital Continuity Assessment Record and Evaluation (LCDS), particularly those related to SDOH and immunization status.
LTCHs serve some of the most medically complex, functionally impaired, and socioeconomically vulnerable patient populations in the Medicare program. Elements such as SDOH screening and vaccination coverage provide vital context for interpreting patient outcomes and evaluating care quality in these settings. Removing these data points without clear alternatives risks weakening the LTCH QRP’s ability to support quality improvement, public reporting, and health equity monitoring.
The NHC urges CMS to carefully assess whether the proposed removals would compromise the validity or completeness of LTCH quality measurement, particularly for hospitals serving high-risk populations. CMS should publish that analysis for public comment prior to finalizing the rule. In addition, we recommend that CMS use feedback gathered through its RFIs on digital quality measurement and future quality domains to inform a clear roadmap for modernizing the LTCH QRP without narrowing its focus. Any transition away from current metrics should be transparent, evidence-based, and aligned with the needs of complex patient populations.
Medicare Promoting Interoperability Program
The NHC supports CMS’ continued efforts to strengthen cybersecurity and promote interoperable data exchange through updates to the Medicare Promoting Interoperability Program. The proposed requirement for eligible hospitals and critical access hospitals (CAHs) to complete all eight “SAFER Guides”—voluntary self- assessments that help organizations identify and address electronic health record (EHR) safety risks—is an important step toward promoting system-wide vigilance around digital infrastructure and patient safety. Similarly, the introduction of an optional bonus measure tied to participation in the Trusted Exchange Framework and Common Agreement (TEFCA)—a new national data-sharing network—could accelerate progress toward seamless and secure information exchange across health systems.
However, the NHC remains concerned about the disproportionate burden these requirements may impose on small, rural, or under-resourced providers. Many of these facilities lack dedicated information technology staff or the financial capacity to implement cybersecurity safeguards at scale.12 Without adequate support, federal efforts to promote data modernization risk reinforcing systemic disparities in EHR adoption, information exchange, and data security.
We urge CMS to expand and clearly advertise technical assistance resources, including hands-on training modules, direct implementation support, and peer learning collaboratives designed for smaller hospitals. In addition, CMS should explore grant opportunities to help resource-limited institutions comply with the SAFER Guide requirement and participate in TEFCA. To monitor equitable implementation, the agency should collect and publish data on TEFCA enrollment and SAFER completion disaggregated by hospital size, location, and ownership types.
New Model and Demonstrations
Transforming Episode Accountability Model
The NHC is concerned by CMS’ proposal to eliminate both the health equity plan and the decarbonization reporting requirement from the Transforming Episode Accountability Model (TEAM). These elements were key features of the model’s original design and signaled CMS’ intent to align episode-based payment with broader goals of health system equity and environmental sustainability. The removal of these requirements risks sending a message that social risk and climate-related vulnerabilities are no longer priorities in Medicare payment innovation—at a time when both are increasingly linked to long-term health outcomes and cost pressures.
Health care delivery contributes nearly 9 percent of US greenhouse gas emissions, with a disproportionate impact on medically underserved communities. Likewise, social drivers of health—including housing, transportation, and income security—directly influence episode-level cost and recovery, particularly for populations that TEAM was designed to support. Removing formal accountability for these domains could limit CMS’ ability to evaluate how system-level disparities and environmental factors shape the success of episode-based models.13
The NHC urges CMS to preserve at least passive data collection related to both health equity and sustainability in TEAM, even if these elements are no longer tied to payment or performance scoring. Continued tracking would allow the agency to monitor trends, refine future model iterations, and remain aligned with HHS-wide objectives on health equity and climate resilience.
In addition, CMS should ensure that the proposed patient-reported outcome-based performance measure (PRO-PM) for information transfer is thoroughly validated across diverse patient populations and provider settings. This includes public reporting of validation results and stakeholder input into its implementation. Similarly, the shift from the Area Deprivation Index (ADI) to the Community Deprivation Index (CDI) for risk adjustment should be accompanied by transparency in methodology and bias testing to ensure it does not inadvertently disadvantage high-risk patient populations or under- resourced hospitals.
Request for Information on Reducing Administrative Burden
The NHC welcomes CMS’ ongoing focus on reducing unnecessary administrative burden in the Medicare program and appreciates the agency’s solicitation of stakeholder input. Streamlining regulatory and reporting requirements has the potential to improve provider focus on direct patient care, reduce compliance costs, and ease staffing constraints—especially in hospitals operating under financial and workforce strain. However, CMS’ internal estimates of time and cost savings often do not fully reflect the complexity of implementing new or revised policies in real-world settings.
Hospitals that serve large numbers of uninsured, Medicaid, or clinically complex patients—many of which are safety-net or rural institutions—face disproportionate challenges in adapting to changing reporting systems, technology standards, and quality frameworks. These providers may lack the infrastructure or administrative staffing to respond rapidly to revised data collection or attestation requirements, even when the changes are intended to simplify processes. Without formal mechanisms to test assumptions, burden reduction strategies risk inadvertently shifting responsibilities onto providers least equipped to absorb them.14
The NHC recommends that CMS adopt a structured stakeholder consultation process to validate burden reduction estimates prior to finalizing major changes. This process should include representation from hospitals of varying sizes, geographies, and operational capacities. Additionally, CMS should conduct pilot testing of proposed reporting changes with safety-net and resource-limited hospitals to ensure that reforms are realistically implementable and do not result in unintended disruptions in participation or compliance. Simplification efforts must be informed by the real-world constraints of hospitals across the care delivery spectrum to avoid shifting administrative burdens onto providers least equipped to absorb them.
Legislative Expirations and Rural Supports
Low-Volume and Medicare-Dependent Hospital Expirations
The NHC urges CMS to actively engage with Congress and provide timely technical input to support the reauthorization of the Low-Volume Hospital Adjustment and Medicare-Dependent Hospital (MDH) programs, which are scheduled to expire after FY 2025. These programs provide crucial support for rural hospitals that serve high- Medicare populations and often operate with limited margins and geographic isolation. Their expiration could lead to sudden and significant financial instability for affected facilities, jeopardizing access to inpatient care for vulnerable populations.
While CMS lacks the statutory authority to extend these programs independently, the agency can play a vital role by publishing disaggregated impact analyses to help stakeholders and legislators understand the projected consequences of expiration.
Such transparency would allow state agencies, provider organizations, and rural health advocates to engage in informed advocacy and preparedness planning. CMS should also ensure that affected hospitals have access to technical assistance and timely guidance during any transition period.
Frontier Community Health Integration Demonstration
The NHC supports CMS’ continued implementation of the Frontier Community Health Integration Project (FCHIP) demonstration and appreciates the inclusion of related provisions in the FY 2026 proposed rule. This initiative enables a select group of CAHs in frontier areas to test new care delivery and payment models, including increased flexibility in the use of telehealth, swing beds, and ambulance services. These waivers are vital for improving access and care coordination in extremely rural communities, where workforce shortages, travel distances, and infrastructure limitations pose persistent barriers to timely, high-quality care.
As the demonstration progresses, the NHC recommends that CMS publicly report key findings from the FCHIP evaluation, including metrics on patient outcomes, health care utilization, and equity impacts. Disaggregated data—such as by patient race, geography, payer type, and service category—will be essential to understanding whether the model has improved access and reduced disparities in the targeted regions.
Additionally, the NHC urges CMS to clearly communicate any potential future budget neutrality adjustments associated with FCHIP waivers. While no offset is proposed for FY 2026, CAHs participating in the demonstration—as well as non-participating facilities affected by broader rural payment adjustments—should be fully informed about the methodology used to calculate budget neutrality and the timeline for any potential adjustments. Transparency in this area is critical to building trust and maintaining stable participation.
If the demonstration continues to yield positive results, CMS should explore options for scaling successful components of the FCHIP model more broadly, particularly to other rural areas with similar access challenges. Lessons learned from this demonstration could help inform future innovations in rural health care delivery and ensure that Medicare payment policy supports sustainable models of care in frontier communities.
Conclusion
Thank you for the opportunity to provide feedback on the FY 2026 IPPS and LTCH PPS Proposed Rule. We stand ready to collaborate with CMS to ensure these policies promote health equity, sustainability, and improved outcomes for patients living with chronic diseases and disabilities. Please do not hesitate to contact Kimberly Beer, Senior Vice President, Policy & External Affairs at kbeer@nhcouncil.org or Shion Chang, Senior Director, Policy & Regulatory Affairs at schang@nhcouncil.org, if you or your staff would like to discuss these comments in greater detail.
Sincerely,
Randall L. Rutta
Chief Executive Officer
1 Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy, March 2025, 78–79. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch3_MedPAC_Report_To_Congress_SEC.pdf
2 Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy, March 2025, Chapter 8. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_MedPAC_Report_To_Congress_SEC.pdf
3 American Hospital Association. “AHA Comments on CMS’ FY 2025 IPPS Low Wage Policy.” AHA News, November 26, 2024. https://www.aha.org/news/headline/2024-11-26-aha-comments-cms-fy-2025-ipps- low-wage-policy.
4 National Rural Health Association. Comment Letter on CMS Interim Final Rule Rescinding the Low Wage Index Policy. October 2024.
5 Health Management Associates. “FY 2026 Medicare Hospital Inpatient Proposed Regulation Signals Several Changes Lie Ahead for the Hospital Industry and Beneficiaries.” HMA In Focus, April 17, 2025. https://www.healthmanagement.com/blog/fy-2026-medicare-hospital-inpatient-proposed-regulation- signals-several-changes-lie-ahead-for-the-hospital-industry-and-beneficiaries/.
6 National Organization for Rare Disorders. Letter to CMS Re: Inpatient Access to Rare Disease Therapies. February 21, 2024.
7 Manz, Christopher R., Justin E. Bekelman, and Jalpa A. Doshi. “The Changing Characteristics of Technologies Covered by Medicare’s New Technology Add-on Payment Program.” JAMA Network Open 3, no. 8 (August 27, 2020): e2012569. https://doi.org/10.1001/jamanetworkopen.2020.12569.
8 Manz, Bekelman, and Doshi, “Changing Characteristics of Technologies.”
9 Health Management Associates, “FY 2026 Medicare Hospital Inpatient Proposed Regulation.”
10 Liu, Michael, Sahil Sandhu, Karen E. Joynt Maddox, and Rishi K. Wadhera. “Health Equity Adjustment and Hospital Performance in the Medicare Value-Based Purchasing Program.” JAMA 331, no. 16 (April 23, 2024): 1387–1396. https://doi.org/10.1001/jama.2024.2440.
11 Ferguson, Tiffany. “The Undoing of SDoH Reporting.” ICD10monitor (Medlearn Media), April 15, 2025. https://icd10monitor.medlearn.com/the-undoing-of-sdoh-reporting/.
12 U.S. Government Accountability Office. Electronic Health Information Exchange: Use Has Increased, but Is Lower for Small and Rural Providers. GAO-23-105540. Washington, DC: GAO, April 2023. https://www.gao.gov/products/gao-23-105540.
13 Hardeep Singh, Walt Vernon, Terri Scannell, and Kathy Gerwig, “Crossing the Decarbonization Chasm: A Call to Action for Hospital and Health System Leaders to Reduce Their Greenhouse Gas Emissions,” NAM Perspectives (November 29, 2023): 2023:10.31478/202311g, https://doi.org/10.31478/202311g.
14 U.S. Health Care Climate Council. Comment Letter on TEAM Model Decarbonization and Resilience Initiative. June 10, 2023.