2026 IPPS proposed rule: Seven key takeaways for CDI, coding professionals

The FY 2026 IPPS proposed rule is out… what does it contain?

With the change in administration I wondered if we wouldn’t see a delay or even suspension of new IPPS rules. That wasn’t the case. The rule was published Friday, April 11.

Overall, no huge changes or surprises. I wouldn’t call the 2026 IPPS proposed rule a nothingburger, but no wild-axe work as I half expected. Here’s seven takeaways:

1. Moderate pay hike. CMS proposed a 2.4% payment increase and the AHA doesn’t like it. In my 20 years monitoring the IPPS rulemaking process I can’t recall a single instance of the AHA being happy with the payment update.
2. No wholesale CC/MCC severity changes. Per CMS, “At this time, we believe it is appropriate to continue to formulate future next steps in our comprehensive review of the severity designations of ICD-10-CM diagnosis codes, rather than proposing to change the designation of individual ICD-10-CM diagnosis codes. Therefore, we are not proposing any severity designation changes for FY 2026.”
3. Minor changes to the CC/MCC lists. See Table 6I.1- Proposed Additions to the MCC List; Table 6J.1- Proposed Additions to the CC List; and Table 6J.2 – Proposed Deletions to the CC List, for the complete lists.
   1. Proposed MCC additions include N00.B1 and B2 (IC-MPGN) and a series of S31 codes related to open abdominal wounds.
   2. Proposed CC additions include E72.530 (Primary hyperoxaluria, type 1 and other types) various L98 non-pressure chronic ulcers, several syndromes in the Q series relevant to the pediatric population (kabuki, usher, CTNNB1 syndrome, etc.) and some T series codes related to anaphylactic reactions.
4. TEAM tweaks. TEAM is a 5-year mandatory alternative payment model that begins January 1, 2026, and ends on December 31, 2030. It will test whether an episode-based pricing methodology linked with quality measure performance for Coronary Artery Bypass Graft Surgery (CABG), Lower Extremity Joint Replacement (LEJR), Major Bowel Procedure, Surgical Hip/Femur Fracture Treatment (SHFFT), and Spinal Fusion will reduce cost and improve quality of care. TEAM is proceeding but the rule made several tweaks. These include implementing a limited deferment period for certain hospitals, removing health equity plans, and applying a neutral quality measure score for TEAM participants with insufficient quality data. Also included in the changes: An increase in the look back period for risk adjustment from 90 days to 180. The episodic payments have an individualized target price that is risk adjusted based upon chronic disease burden. Thanks to Michelle Wieczorek for pointing this last change out. “A full 6 months to capture HCC’s in claim history is a great enhancement,” she notes.
5. Medicare Advantage (MA) merger. CMS is proposing to include MA patients in its calculations of hospital performance in the Hospital Readmission Reduction Program. Two quality measures will now also include MA patients—1) complication rate following THA/TKA; 2) mortality rate following acute ischemic stroke.
6. Quality cutbacks. CMS is proposing to remove four quality measures beginning with the CY 2024 reporting period/FY 2026 payment determination: 1) Hospital Commitment to Health Equity; 2) COVID-19 Vaccination Coverage among Health Care Personnel; both the (3) Screening for Social Drivers of Health and (4) Screen Positive Rate for Social Drivers of Health measures.
7. ICD-10-CM additions. The rule includes more than 500 proposed ICD-10-CM codes, far too many to list but here’s a handy table for reference.

CMS is also seeking input ways to streamline future regulations and reduce administrative burdens for hospitals and providers. You can submit your ideas here: https://www.cms.gov/medicare-regulatory-relief-rfi

References

• CMS, FY 2026 IPPS proposed rule: https://public-inspection.federalregister.gov/2025-06271.pdf
• CMS, FY 2026 IPPS proposed rule home page (includes tables with new/deleted CCs and MCCs, etc.): https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2026-ipps-proposed-rule-home-page
• AHA, CMS issues hospital IPPS proposed rule for FY 2026: https://www.aha.org/news/headline/2025-04-11-cms-issues-hospital-ipps-proposed-rule-fy-2026