/ en Sat, 14 Jun 2025 12:54:21 -0500 Fri, 06 Jun 25 21:16:33 -0500 <div class="container"><div class="row"><div class="col-md-8"><p>The White House June 6 issued a <a href="https://www.whitehouse.gov/presidential-actions/2025/06/eliminating-waste-fraud-and-abuse-in-medicaid/" target="_blank" title="The White House Presidential Actions: Eliminating Waste, Fraud, and Abuse in Medicaid">Presidential memorandum</a> that directs the Secretary of the Department of Health and Human Services “to take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law.” In the memorandum, the Administration expresses its view that rapid growth in State Directed Payment (SDP) programs is a threat to the nation’s long-term stability, and that the “imbalance between Medicaid and Medicare payment rates under these programs jeopardizes access to care for seniors.”</p><p>This memorandum is in addition to the ongoing congressional reconciliation deliberations, which also include provisions impacting SDPs. AHA will provide additional updates to inform members of the impact of this action relative to congressional actions and next steps.</p><h2>Background on SDPs</h2><p>Many states use SDPs to ensure that Medicaid beneficiaries can access health care by mitigating low provider payment rates. Hospitals use these payments to maintain essential services, including labor and delivery, behavioral health, and cancer treatment. Without supplemental payments, Medicaid fee-for-service payments in 2023 nationally paid 58 cents for every dollar that hospitals spent caring for Medicaid patients, and Medicaid managed care organizations paid 65 cents. In total, including supplemental payments, Medicaid paid hospitals $27.5 billion less than hospitals spent providing care to Medicaid beneficiaries.</p><h2>Further Questions</h2><p>If you have further questions, please contact the AHA at 800-424-4301.</p></div><div class="col-md-4"><a href="/system/files/media/file/2025/06/Member-Advisory-White-House-Issues-Presidential-Memorandum-on%20-Eliminating-Waste-Fraud-and-Abuse-in-Medicaid.pdf"><img src="/sites/default/files/inline-images/Member-Advisory-White-House-Issues-Presidential-Memorandum-on%20-Eliminating-Waste-Fraud-and-Abuse-in-Medicaid.png" data-entity-uuid="50e7e42a-40a4-4d4c-aa6e-2d30b3269f45" data-entity-type="file" alt="Member Advisory: White House Issues Presidential Memorandum on ‘Eliminating Waste, Fraud and Abuse in Medicaid’ page 1." width="695" height="900"></a></div></div></div> Fri, 06 Jun 2025 21:16:33 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The AHA today released a new, comprehensive <a href="/system/files/media/file/2025/05/The-Burden-of-Violence-to-US-Hospitals.pdf" title="AHA comprehensive report">report</a> that measures the substantial financial resources hospitals and health systems spend on preventing and responding to violence in their facilities and communities.</p><p>The report was prepared for the AHA by Harborview Injury and Prevention Research Center, part of the University of Washington School of Medicine. It analyzed the financial costs and broader impacts of violence and threatening behavior and estimated the total financial cost of violence to hospitals in 2023 to be $18.27 billion. These costs include health care treatment for victims, security staffing for health care facilities, and violence prevention programs and training, among other costs. Not included in the total annual financial cost of violence but highlighted in the report are the cascading effects of violence in communities.</p><p>"It is an unacceptable reality that those who dedicate their lives to healing should face the threat of violence,” <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.aha.org%2Fpress-releases%2F2025-06-02-new-aha-report-finds-workplace-and-community-violence-cost-hospitals-more-18-billion-annually&data=05%7C02%7Cpdavis%40aha.org%7Ca2315b3f128e49d2e47708dd9e023227%7Cb9119340beb74e5e84b23cc18f7b36a6%7C0%7C0%7C638840454441128395%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=VhTEDTH6sm9ZkfRUwfA4Rr8jcy%2Bh4GCz%2FjAlO0trYlg%3D&reserved=0" title="AHA comprehensive report">said</a> AHA President and CEO Rick Pollack. “We know the enormous human and emotional toll violence takes on our communities and caregivers. This report goes beyond that to break down the significant related financial costs incurred upon hospitals and health systems. With the increase in violent events within clinical settings across the country, the resources needed to protect hospital workers and care for victims has grown exponentially. Every member of the health care team bears an enormous risk and burden of this violence. This report is yet another reminder we must do more to protect them.”</p><h2>What You Can Do</h2><ul><li><strong>Use the AHA Burden of Violence to U.S. Hospitals report</strong> in your advocacy efforts and to inform community leaders and lawmakers of the impact of violence on hospitals and caregivers.</li><li><strong>Join us for #HAVhope Friday. </strong>The ninth annual #HAVhope Friday on June 6, 2025, is a national day of awareness to highlight how America’s hospitals and health systems combat violence in their workplaces and communities. Download our <a href="/hospitals-against-violence">social media toolkit</a>, share your story using the hashtag #HAVhope and consider tagging the AHA (@ahahospitals) to send a collective message about hospitals’ efforts to create a safer environment for workers and patients.</li><li><strong>Download and share resources.</strong> The #HAVhope webpage also (<a href="/hospitals-against-violence" title="Hospitals Against Violence webpage">/hospitals-against-violence</a>) offers flyers, signs and information to support the efforts against violence. An updated <a href="/system/files/media/file/2022/09/Fact-Sheet-Workplace-Violence-and-Intimidation-and-the-Need-for-a-Federal-Legislative-Response.pdf">fact sheet</a> outlines the issue of workplace violence in health care settings and emphasizes the need for a federal legislative response.</li><li><strong>Ask Congress to support the Save Healthcare Workers Act. </strong>To help provide additional protections for hospital workers, the AHA strongly supports the Save Healthcare Workers Act (<a href="https://www.congress.gov/bill/119th-congress/senate-bill/1600" title="H.R. 3178/S.1600">H.R. 3178/S.1600</a>). This bipartisan legislation would make assaulting a hospital worker a federal crime, similar to current federal law protecting airline and airport workers.</li></ul><h2>Further Questions</h2><p>If you have further questions, please contact AHA at 800-424-4301.</p></div><div class="col-md-4"><a href="/system/files/media/file/2025/06/new-aha-report-finds-workplace-and-community-violence-costs-hospitals-more-than-18-billion-annually-advisory-6-2-25.pdf"><img src="/sites/default/files/2025-06/cover-new-aha-report-finds-workplace-and-community-violence-costs-hospitals-more-than-18-billion-annually-advisory-6-2-25.png" data-entity-uuid data-entity-type="file" alt="Cover Image of New AHA Report Finds Workplace and Community Violence Costs Hospitals More than $18 Billion Annually" width="NaN" height="NaN"></a></div></div></div> Mon, 02 Jun 2025 08:04:29 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The Departments of Labor, Health and Human Services, and the Treasury last week <a href="https://www.cms.gov/newsroom/press-releases/departments-labor-health-and-human-services-treasury-announce-move-strengthen-healthcare-price" title="Original URL: https://email.advocacy.aha.org/NzEwLVpMTC02NTEAAAGamPoobTykTl-7UWk9Aq_FCPDmvKVQm1NiC4yrfUT5irYfuTpqwsGoI9H2Ke-FprifWnEbC-w=. Click or tap if you trust this link.">released</a> several new guidance documents and requests for information (RFIs) on price transparency, following the February <a href="/news/headline/2025-02-26-administration-issues-executive-order-hospital-price-transparency" title="Original URL: https://email.advocacy.aha.org/NzEwLVpMTC02NTEAAAGamPoobZhvM6A6LPvxeyjTzOnFzUO3Do1TH7HM58st2c2MCd9eQbpWlVPj182ndkyQ6gAJj9M=. Click or tap if you trust this link.">executive order</a> on the same subject.</p><p>As part of this package, the Centers for Medicare & Medicaid Services (CMS) released <a href="https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf">new guidance</a> on calculating the estimated allowed amount values in the hospital machine-readable files. Whenever possible, hospitals should continue to use the average dollar amount received over the last 12-month period (or less, if the payment methodology was only used for part of the year), which should be derived from the electronic remittance data. However, going forward, if there is not enough historic data to calculate an average, hospitals should use an expected payment amount, encoded as a dollar figure. This replaces previous guidance that allowed hospitals to use a code of nine 9s to signify that there was not sufficient historic data for that item or service over the last year. In the guidance, CMS expressed its concern that the machine-readable files featured nine 9s more frequently than expected.</p><p>At the same time, CMS released an <a href="https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/accuracy-and-completeness-rfi">RFI</a> on hospital price transparency that seeks stakeholder input on assessing the accuracy and completeness of the machine-readable files. The RFI includes the following questions:</p><ol><li>Should CMS specifically define the terms “accuracy of data” and “completeness of data” in the context of these requirements, and if yes, then how?</li><li>What are your concerns about the accuracy and completeness of the hospital price transparency machine-readable file data? Please be as specific as possible.</li><li>Do concerns about accuracy and completeness of the machine-readable file data affect your ability to use hospital pricing information effectively? For example, are there additional data elements that could be added, or others modified, to improve your ability to use the data? Please provide examples.</li><li>Are there external sources of information that may be leveraged to evaluate the accuracy and completeness of the data in the machine-readable files? If so, please identify those sources and how they can be used.</li><li>What specific suggestions do you have for improving the hospital price transparency compliance and enforcement processes to ensure that the hospital pricing data is accurate, complete and meaningful? For example, are there any changes that CMS should consider making to the CMS validator tool, which is available to hospitals to help ensure they are complying with hospital price transparency requirements, so as to improve accuracy and completeness?</li><li>Do you have any other suggestions for CMS to help improve the overall quality of the hospital price transparency machine-readable file data?</li></ol><p>The Departments of Labor, Health and Human Services, and the Treasury also released additional guidance for insurers, including <a href="https://www.cms.gov/files/document/aca-faqs-part-70.pdf">announcing</a> that there would be a new schema for the insurer machine-readable file that would reduce the file size by decreasing duplicative data, resulting in more useable files, and an <a href="https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/rfi-regarding-prescription-drug-machine-readable-file-requirement-in-the-transparency-in-coverage-final-rule.pdf">RFI</a> on improving prescription drug price transparency.</p><h2>NEXT STEPS</h2><p>Responses to the Transparency in Coverage Prescription Drug Price Transparency RFI are due 30 days following publication in the Federal Register. Responses to the Hospital Price Transparency RFI are due July 21, 2025.</p><h2>FURTHER QUESTIONS</h2><p>If you have further questions, please contact the AHA at 800-424-4301.</p><p> </p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/departments-release-new-guidance-rfis-on-hospital-and-insurer-price-transparency-advisory-5-27-2025.pdf"><img src="/sites/default/files/inline-images/cover-departments-release-new-guidance-rfis-on-hospital-and-insurer-price-transparency-advisory-5-27-2025.png" data-entity-uuid="931300c2-58d4-4568-be2d-fc526efb5a11" data-entity-type="file" width="640" height="828" alt="Cover Image of Departments Release New Guidance, RFIs on Hospital and Insurer Price Transparency Advisory"></a></div></div></div> Tue, 27 May 2025 16:06:40 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The administration and Congress have expressed interest in reducing regulatory and administrative burdens, and the administration has released several requests for information (RFIs) on this topic. This creates an opportunity for hospitals and health systems to advance meaningful changes that will help reduce the cost of delivering care, expand patient access and facilitate innovation in care delivery.</p><p>Over the past several months, the AHA has worked with members to identify outdated, burdensome, duplicative and expensive regulations that do not improve quality and patient safety and, in some cases, impede hospitals’ ability to offer the highest quality, most efficient care. To help inform its comments on the RFIs, the AHA has gathered feedback from a March 2025 member survey, input from Regional Policy Board and Committee meetings, and many other discussions with hospital and health system leaders.</p><h2>COMMENTS TO DOJ AND FTC</h2><p>In response to RFIs from the Department of Justice and Federal Trade Commission on unnecessary or burdensome anticompetitive regulations, the AHA May 23 shared recommendations on addressing regulations that foster anticompetitive conduct by insurers and limit the ability of hospitals and health systems to thrive in a competitive free market, among others. “[T]he U.S. health care system imposes a bewildering array of regulations on hospitals and health systems, adding significant administrative costs, disincentivizing pro-competitive arrangements, and promoting vertical consolidation of large commercial insurers to the detriment of patients and providers across the country,” AHA wrote. <strong>See the letters to </strong><a href="/lettercomment/2025-05-23-aha-comments-doj-anticompetitive-deregulations-rfi" title="DOJ Letter"><strong>DOJ</strong></a><strong> and </strong><a href="/lettercomment/2025-05-23-aha-comments-ftc-anticompetitive-deregulations-rfi" title="FTC Letter"><strong>FTC</strong></a><strong> for specific actions AHA recommended.</strong></p><h2>LETTER TO OMB</h2><p>The AHA earlier this month responded to the Office of Management and Budget's (OMB) RFI on regulatory relief, making 100 suggestions to the administration to help reduce burden on hospitals and health systems. The AHA’s recommendations fall under four categories: billing, payment and other administrative requirements; quality and patient safety; telehealth; and workforce. “The Trump administration has rightly pointed out that the health status of too many Americans does not reflect the greatness or wealth of our nation,” AHA wrote. “Excessive regulatory and administrative burdens are a key contributor, as they add unnecessary cost to the health care system, reduce patient access to care and stifle innovation.” <strong>View the full </strong><a href="/lettercomment/2025-05-12-aha-response-omb-deregulation-rfi" title="AHA letter to OMB"><strong>AHA letter </strong></a><strong>to OMB for its 100 recommendations.</strong></p><h2>ADDITIONAL COMMENTS TO HHS AND CMS</h2><p>The Department of Health and Human Services (HHS) May 13 <a href="https://www.hhs.gov/press-room/fda-10-to-1-deregulatory-plan-to-lower-costs-empower-patients.html" title="HHS May 13th announcement">announced</a> a 60-day public comment period for stakeholders regarding its RFI to remove outdated or unnecessary regulations. In addition, the Centers for Medicare & Medicaid Services’ fiscal year 2026 proposed rules for the inpatient prospective payment system, skilled nursing facility, inpatient rehabilitation facility, inpatient psychiatric facility and long-term care hospital payment rules also have similar RFIs that are due June 10. The AHA will submit comments and share them with the field.</p><h2>FURTHER QUESTIONS</h2><p>If you have further questions, please contact the AHA at 800-424-4301.</p><p> </p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/aha-provides-input-to-administration-on-efforts-to-provide-regulatory-relief-for-hospitals-and-health-systems-advisory-5-27-2025.pdf"><img src="/sites/default/files/2025-05/aha-provides-input-to-administration-on-efforts-to-provide-regulatory-relief-for-hospitals-and-health-systems-advisory-5-27-2025.png" data-entity-uuid data-entity-type="file" alt="Member Advisory Image" width="NaN" height="NaN"></a></div></div></div> Tue, 27 May 2025 13:48:15 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><h2>Summary</h2><p>The ���������� Association (AHA) and <a href="https://health-isac.org/" target="_blank">Health-ISAC</a> (Health Information Sharing and Analysis Center) today are releasing known Indicators of Compromise (IOCs), or malware signatures, related to recent attacks by the active and evolving ransomware group Interlock. This group has a history of targeting the global health sector and other sectors since at least September 2024.</p><p><strong>The AHA and Health-ISAC have created and are sharing this bulletin out of an abundance of caution to spread awareness of the ongoing threat posed by Interlock and provide the latest available threat intelligence.</strong> The Interlock group has not only been involved in ransomware attacks but has also routinely engaged in data theft and subsequent data extortion crimes, generally as a second layer of their encryption attacks.</p><h2>Analysis</h2><p>According to publicly available information, Interlock is a ransomware and data extortion group that primarily targets the health sector, the defense industrial base and other critical infrastructure sectors. The group appears to operate as a “ransomware as a service” organization and was also allegedly behind the recent attack on a national kidney dialysis service provider. Interlock operations involve encrypting sensitive data to disrupt critical services and exfiltrating data for extortion purposes. Their activities pose significant risks to patient safety, operational and clinical continuity and regulatory compliance, making them a high-priority threat for organizations in the health care sector.</p><h2>Mitigation Recommendations</h2><p>The following actions are recommended to mitigate the threat from the Interlock ransomware group.</p><ul><li><strong>Ingest Below Identified Inidicators of Compromsie Into Cybersecurity Defense and Detection Tools.</strong></li><li><strong>Implement MFA.</strong> Require multi-factor authentication for as many services as possible, especially for:<ul><li>Webmail</li><li>VPNs</li><li>Accounts that access critical systems</li><li>Privileged accounts that manage backups</li></ul></li><li><strong>Share</strong> this advisory with your IT and cyber infrastructure teams.</li><li><strong>Implement</strong> the voluntary consensus-based health care sector cybersecurity performance <a href="https://hhscyber.hhs.gov/" target="_blank">goals</a>.</li><li><strong>Review</strong> the Health Industry Cybersecurity Practices: Managing Threats and Protecting Patients <a href="https://405d.hhs.gov/" target="_blank">resources</a>.</li><li><strong>Update</strong> software and operating systems regularly to patch vulnerabilities.</li><li><strong>Implement</strong> strong email security measures to prevent phishing attacks.</li><li><strong>Limit</strong> account access privileges across organizations.</li><li><strong>Protect</strong> against threats using a combination of antivirus, anti-malware and firewall solutions.</li><li><strong>Back up</strong> data frequently and ensure backups are isolated and immutable.</li><li><strong>Conduct</strong> cybersecurity awareness training for employees to recognize and report suspicious activities such as phishing attempts.</li><li><strong>Monitor</strong> networks for suspicious activity and have an incident response plan in place.</li><li><strong>Establish and implement</strong> business and clinical continuity plans to ensure minimal clinical and operational disruptions in case of a ransomware incident.</li></ul><p>Additional details on the mitigation strategy can be found on the Cybersecurity and Infrastructure Security Agency’s <a href="https://www.cisa.gov/stopransomware/stopransomware" target="_blank">#StopRansomware</a> page.</p><p><a href="/system/files/media/file/2025/05/2025-05-23_AHA-HealthISAC-Bulletin_f.pdf"><span><em><strong>Download the full Cybersecurity Advisory.</strong></em></span></a></p></div></div></div> Fri, 23 May 2025 13:03:04 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The House of Representatives May 22 passed by a 215-214 vote H.R. 1, the <a href="https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/documents/rcp_119-3_final.pdf" target="_blank">One Big Beautiful Bill Act</a>, a sweeping package that would enact many of President Trump’s legislative priorities on taxes, border security, energy and deficit reduction. The bill, which Republicans are attempting to pass through reconciliation, includes significant policy changes to Medicaid and the Health Insurance Marketplaces. See AHA’s <a href="/press-releases/2025-05-21-aha-statement-house-reconciliation-legislation">statement</a> from AHA President and CEO Rick Pollack, sent late yesterday to congressional offices prior to the House vote. The action now moves to the Senate, which is expected to make changes to the bill.</p><p>Before House passage, the bill was <a href="https://amendments-rules.house.gov/amendments/RCP_119-3_Managers_xml (002)250521201648156.pdf" target="_blank">amended</a>, including several changes that were made on May 21. The following is a summary of provisions included in the bill that affect hospitals and health systems, as well as some resources from the Congressional Budget Office regarding the impact of the bill.</p><h2>Congressional Budget Office Resources</h2><ul><li><a href="https://www.cbo.gov/publication/61420" target="_blank">Estimated Budget Effects</a></li><li><a href="https://www.cbo.gov/system/files/2025-05/61423-PAYGO.pdf" target="_blank">Potential Statutory Pay-As-You-Go Effects</a></li><li><a href="https://www.cbo.gov/system/files/2025-05/61422-Reconciliation-Distributional-Analysis.pdf" target="_blank">Preliminary Analysis of the Distributional Effects</a></li></ul><h2>AHA Summary of Provisions Impacting Hospitals and Health Systems</h2><h3>Title III — Committee on Education and Workforce</h3><h4>Section 30011: Loan limits</h4><p>Terminates the Grad PLUS loan program effective July 1, 2026, and would prohibit any new Grad PLUS loans during the 2026-2027 school year, including a three-year exception for students who were enrolled in a program of study as of June 30, 2026, and had previously received a Grad PLUS loan.</p><p>Amends the maximum annual loan limit for unsubsidized loans disbursed to graduate students to $100,000 and for professional programs, including medical school, to $150,000.</p><h4>Section 30024: Public service loan forgiveness</h4><p>Clarifies that payments made by new borrowers on or after July 1, 2025, who are serving in a medical or dental residency would not count as qualifying payments toward public service loan forgiveness.</p><h3>Title IV — Energy and Commerce</h3><h4>Subtitle D — Health</h4><h4>SUBPART A: REDUCING FRAUD AND IMPROVING ENROLLMENT PROCESSES</h4><h4>Section 44101: Moratorium on implementation of rule relating to eligibility and enrollment in Medicare Savings Programs (Effective from enactment through Jan. 1, 2035)</h4><p>Prohibits the Department of Health and Human Services (HHS) Secretary from implementing, administering or enforcing the Medicare Savings Program (MSP) rule for 10 years. This would rollback requirements that states 1) automatically enroll certain Supplemental Security Income recipients in the qualified Medicare beneficiary eligibility group of the MSP program, 2) use data from the low-income subsidy program as an application for MSPs and align the family size definitions between the MSP and Low Income Subsidy programs, and 3) accept self-attestation for certain types of income and resources.</p><h4>Section 44102: Moratorium on implementation of rule relating to eligibility and enrollment for Medicaid, CHIP and the Basic Health Program (Effective from enactment through Jan. 1, 2035)</h4><p>Prohibits the HHS secretary from implementing, administering or enforcing the eligibility and enrollment rule for 10 years. This would limit states’ ability to use other data sources (such as payroll or state vital statistics data) to determine an individual’s eligibility for Medicaid and limit states’ use of prepopulated renewal forms. It would also allow states to impose annual and/or lifetime limits on Children’s Health Insurance Program (CHIP) benefits and to disenroll CHIP beneficiaries for failure to pay premiums or enrollment fees.  </p><h4>Section 44103: Ensuring appropriate address verification under the Medicaid and CHIP programs</h4><p>Requires regular (no less than once each month) enrollee address verification and is intended to prevent individuals from enrolling in two state Medicaid or CHIP programs simultaneously. This section would require state Medicaid agencies to establish a process to collect address information for Medicaid enrollees and report certain identifying information to the HHS secretary by Jan. 1, 2027. The secretary would be required to establish a system that would identify when an individual is enrolled in two state programs simultaneously, determine in which state the individual resides, and disenroll the individual from other state Medicaid or CHIP programs. The section appropriates $10 million for fiscal year (FY) 2026 to establish a system and $20 million for FY 2029 to maintain that system.</p><h4>Section 44104: Modifying certain state requirements for ensuring deceased individuals do not remain enrolled (Effective Jan. 1, 2028)</h4><p>Requires states to review the Social Security Administration’s Death Master File to determine whether any enrollees are deceased. If a beneficiary is disenrolled in error, the state must re-enroll them retroactively to the date of disenrollment.</p><h4>Section 44105: Medicaid provider screening requirements (Effective Jan. 1, 2028)</h4><p>Requires states to regularly (no less frequently than monthly) check provider eligibility to determine whether HHS or the state has terminated the provider’s participation.</p><h4>Section 44106: Additional Medicaid provider screening requirements (Effective Jan. 1, 2028)</h4><p>Requires states to regularly (no less than quarterly) check the Death Master File to determine whether providers are deceased.</p><h4>Section 44107: Removing good faith waiver for payment reduction related to certain erroneous excess payments under Medicaid (Effective FY 2030)</h4><p>Limits the authority of the HHS secretary to waive payment reductions and requires HHS to reduce federal funding to states derived from states making erroneous excess payments for ineligible individuals or services. </p><h4>Section 44108: Increasing frequency of eligibility redeterminations for certain individuals (Effective Dec. 31, 2026)</h4><p>Requires states to redetermine eligibility once every six months for beneficiaries enrolled through the Medicaid expansion eligibility pathway.</p><h4>Section 44109: Revising home equity limit for determining eligibility for long-term care services under the Medicaid program (Effective Jan. 1, 2028)</h4><p>Revises the permissible home equity interest limit to $1,000,000 to determine allowable assets for nursing facility services and long-term care. Asset disregards are prohibited. </p><h4>Section 44110: Prohibiting federal financial participation under Medicaid and CHIP for individuals without verified citizenship, nationality or satisfactory immigration status (Effective Oct. 1, 2026)</h4><p>Prohibits federal financial participation for Medicaid and CHIP enrollees in a reasonable opportunity period unless the individual successfully verifies their citizenship or immigration status. It is optional for states to provide coverage during the verification period.</p><h4>Section 44111: Reducing expansion Federal Medical Assistance Percentage for certain states providing payments for health care furnished to certain individuals (Effective Oct. 1, 2027)</h4><p>Reduces the Federal Medical Assistance Percentage (FMAP) to 80% for the expansion population in states that use state funds to cover aliens who are not qualified aliens or lawfully residing pregnant women and children (i.e., undocumented immigrants and certain lawfully residing adults). “Coverage” is not limited to Medicaid and may include other programs established by the state to offer financial assistance to purchase health insurance coverage or to provide comprehensive health benefits coverage.</p><h3>SUBPART B: PREVENTING WASTEFUL SPENDING</h3><h4>Section 44121: Moratorium on Minimum Staffing Rule for long-term care facilities (Effective from enactment through Jan. 1, 2035)</h4><p>Prohibits HHS from implementing the Minimum Staffing Standards for long-term care facilities and the Medicaid Institutional Payment Transparency Reporting regulation for 10 years.</p><h4>Section 44122: Modifying retroactive under the Medicaid and CHIP programs (Effective Dec. 31, 2026)</h4><p>Limits the timeframe for retroactive Medicaid and CHIP eligibility to 30 days prior to the application date, as opposed to the current 90-day period.</p><h4>Section 44123: Ensuring accurate payments to pharmacies under Medicaid (Effective first day of the first quarter that begins six months after enactment)</h4><p>Expands transparency requirements regarding Medicaid payments to pharmacies for covered outpatient drugs. The secretary is required to conduct a survey to determine, and make publicly available, national average drug acquisition prices and cost benchmarks. Monetary penalties may be imposed on retail community pharmacies or non-retail pharmacies for failing to comply with a survey request, providing false information or otherwise failing to comply with requirements.</p><h4>Section 44124: Preventing the use of abusive spread pricing in Medicaid (Effective for contracts that begin 18 months after the date of enactment)</h4><p>This section requires that payment for drugs and related administrative services is based on a transparent prescription drug pass-through pricing model and prohibits any form of spread pricing. Payment made by the entity or pharmacy benefit manager (PBM) is limited to ingredient cost and a professional dispensing fee. The payment must be passed through in its entirety by the entity or PBM to the pharmacy or provider dispensing the drug.</p><h4>Section 44125: Prohibiting federal Medicaid and CHIP funding for gender transition procedures</h4><p>Prohibits states from receiving federal funds for specified gender transition procedures. This does not apply to certain services provided by a health care provider with parental/legal guardian consent, including puberty suppression, blocking prescription drugs to normalize puberty or an individual experiencing precocious puberty, and certain medically necessary procedures.</p><h4>Section 44126: Federal payment to prohibited entities (Effective from enactment for 10 years)</h4><p>Prohibits states from receiving federal matching funds for services rendered by providers that provide abortions (other than Hyde Amendment exceptions) and receive more than $1 million in Medicaid payments in 2024. This applies to not-for-profit, essential community providers primarily engaged in family planning services, reproductive health and related medical care. This provision would apply for 10 years, beginning on the date of enactment.</p><h3>SUBPART C: STOPPING ABUSIVE FINANCING PRACTICES</h3><h4>Section 44131: Sunsetting eligibility for increased FMAP for expansion states (Effective Jan. 1, 2026)</h4><p>Repeals the ability for states that have not yet expanded Medicaid to receive 5% enhanced FMAP funds should they later choose to expand.</p><h4>Section 44132: Moratorium on new or increased provider taxes (Effective from enactment)</h4><p>Disallows federal matching funds for state provider taxes imposed after the date of enactment or any provider taxes that were increased (in amount or rate) after the date of enactment. The draft legislation also includes a provision that prohibits states from increasing the tax base by expanding items or services, or expanding the tax base to include providers that were previously not included. This would effectively cap provider taxes at the amount in place on the date of enactment.</p><h4>Section 44133: Revising the payment limit for certain directed payments (Effective from enactment)</h4><p>Limits state-directed payments (SDPs) to no more than 110% of the published Medicare payment rate for non-expansion states and 100% of the published Medicare payment rate for expansion states, except for previously approved SDPs or preprints submitted to the HHS secretary prior to the date of enactment. However, states with SDPs in place could not increase the amount and would be required to submit grandfathered SDP preprints for CMS approval when seeking renewal. In the absence of a published Medicare rate, an equivalent rate could be used. If a state expands Medicaid after the date of enactment, SDPs would be subject to the 100% Medicare upper payment limit, including preprints for which prior approval was made before the state expanded Medicaid.  </p><h4>Section 44134: Requirements regarding waiver of uniform tax requirement for Medicaid provider tax</h4><p>Modifies the requirements regarding uniformity of provider taxes and, specifically, whether a state’s tax is considered “generally redistributive.” Under the draft legislation, a tax is not considered generally redistributive if:</p><ol type="a"><li>Lower volume Medicaid health care entities are taxed at a lower rate than higher volume Medicaid health care entities.</li><li>High Medicaid volume health care entities are taxed more heavily than non-Medicaid health care entities.</li><li>The tax establishes any target or exclusion related to a health care entity’s Medicaid participation status.</li></ol><h4>Section 44135: Requiring budget neutrality for Medicaid demonstration projects under Section 1115</h4><p>Codifies CMS practice of requiring that Section 1115 waivers not increase federal spending compared to what a state would have spent without the waiver. It also requires the secretary to specify a methodology for using waiver savings for subsequent approvals.</p><h3>SUBPART D: INCREASING PERSONAL ACCOUNTABILITY</h3><h4>Section 44141: Community engagement (work) requirements (Effective December 31, 2026)</h4><p>Establishes work requirements for certain Medicaid beneficiaries. Beginning Dec. 31, 2026, or earlier at the option of the state, states are required to establish work requirements for non-exempt expansion adults aged 19-64. Individuals must work or engage in qualifying activities (e.g., community service, educational programs, job training) for no less than 80 hours/month. Mandatory exceptions include individuals under the age of 19, pregnant or post-partum women, individuals enrolled in Medicare Part A or Part B, and institutionalized individuals. Optional exceptions for short-term hardship events include individuals receiving inpatient hospital services, nursing facility services or inpatient psychiatric services; individuals in disaster zones; and individuals in areas with high unemployment. Compliance is verified during the initial eligibility determination, as well as part of subsequent eligibility redetermination, or more frequently as determined by the state. States may use data sources like payroll data to verify compliance. If the state is unable to verify that the individual has met the community engagement requirements, the individual will have 30 days to demonstrate compliance before they are disenrolled. States must determine whether an individual would qualify for Medicaid under other eligibility pathways before disenrolling. Grants totaling $100 million are provided in FY 2026 for system development. The amended section changes a requirement that the secretary promulgate rules regarding the implementation and instead directs the secretary to issue guidance not later than Dec. 31, 2025.</p><h4>Section 44142: Modifying cost-sharing requirements for certain expansion individuals under the Medicaid program (Effective Oct. 1, 2028)</h4><p>Requires states to impose cost-sharing requirements at an amount greater than $0 and not exceeding $35 on Medicaid expansion enrollees, as determined by the state. Total cost sharing may not exceed 5% of family income. Cost-sharing requirements cannot be imposed on pregnancy-related services, primary care, mental health or substance use disorder services. States may allow providers to require payment as a condition of providing services. Providers may waive cost-sharing requirements on a case-by-case basis. This section also prohibits states from requiring Medicaid expansion enrollees to pay a premium, enrollment fee, or other such charge.</p><h3>Other Provisions Related to Medicaid</h3><h4>Section 44302: Streamlined enrollment process for eligible out-of-state providers under Medicaid and CHIP</h4><p>Streamlines enrollment requirements for eligible out-of-state providers. Eligible out-of-state providers are those who are determined by the secretary or another state Medicaid program to have limited risk of fraud, waste and abuse and have not been excluded from participation in a state Medicaid program or other federal health program.</p><h4>Section 44303: Delaying disproportionate share hospital reductions</h4><p>Delays the Medicaid disproportionate share hospital (DSH) reductions to FYs 2029 through 2031. Under current law, federal allotments for Medicaid DSH would be reduced by $8 billion for FYs 2026 through 2028. The section also extends Tennessee’s DSH allotment through 2028.</p><h3>Other Provisions Unrelated to Medicaid</h3><h4>Section 44304: Modifying update to the conversion factor under the physician fee schedule under the Medicare program</h4><p>Creates a single conversion factor for Physician Fee Schedule services under the Medicare program starting in 2026 (as opposed to the two distinct ones in place today — one for physicians participating in alternative payment models and another for those who are not). For 2026, the update to the single conversion factor would be 75% of the Medicare Economic Index (MEI), and, for 2027, it would be 10% of the MEI. This provision would not be retroactive.</p><h4>Section 44201: Addressing waste, fraud and abuse in the Accountable Care Act exchanges</h4><p>Codifies most of the proposed policies in the 2025 Marketplace Integrity rule, including:</p><ul><li>Shortening the Health Insurance Marketplace open enrollment period.</li><li>Removing the low-income special enrollment period.</li><li>Changes to the premium adjustment percentage methodology.</li><li>Allowing insurers to require that enrollees pay past-due premiums before renewing coverage.</li><li>Disallowing DACA recipients from receiving premium tax credits or cost-sharing reductions.</li><li>Prohibiting gender-affirming care as an essential health benefit.</li><li>Greater eligibility verification processes.</li></ul><p>The draft legislation does not include the proposal to improve transparency of agency, broker and web-broker behavior, and varies in its language regarding the de minimus range, which impacts the value of coverage within each metal tier.</p><h4>Section 44202: Funding cost-sharing reduction payments</h4><p>Restores federal funding for the cost-sharing reduction (CSR) payments, which reduce costs for low-income marketplace enrollees. The federal government stopped funding these payments beginning in the 2018 plan year, as Congress did not appropriate the funds. To address the lack of funding, insurers increased the cost of silver plan premiums in a practice known as "silver-loading." This increased the cost of premium tax credits, which are based on the second-lowest cost silver plan premium. By funding the CSR payments, insurers will no longer need to silver load, which will lower the value of the premium tax credits and generate savings for the federal government.</p><h3>Title XI — Committee on Ways and Means, ‘‘The One, Big, Beautiful Bill’’</h3><h4>SUBPART A: MAKE AMERICAN FAMILIES AND WORKERS THRIVE AGAIN</h4><h4>Section 110112: Reinstatement of partial deduction for charitable contributions of individuals who do not elect to itemize</h4><p>Creates a temporary deduction for non-itemizing taxpayers up to $150 for single filers ($300 for married filing jointly) for charitable cash contributions for tax years 2025 through 2028. The charitable contribution must be made to a qualified charity and cannot be made to Donor-Advised Funds or supporting organizations.</p><h4>Sections 110201-110203: Custom Health Option and Individual Care Expense (CHOICE) arrangements</h4><p>Regulations finalized in 2019 created “individual coverage health reimbursement arrangements (ICHRAs),” which allow employers to offer their employees financial support to purchase health insurance on the individual markets, in addition to other medical expenses. This bill would codify those regulations, rename ICHRAs as Custom Health Option and Individual Care Expense (CHOICE) arrangements, and remove some of the administrative barriers to implementation. In addition, the bill would create a tax credit for businesses with fewer than 50 employees to implement CHOICE arrangements by offering a $100 per employee tax credit in the first year of implementation and a $50 per employee tax credit in the second year.</p><h4>Sections 110204, 110206, 110208-110213: Health savings account provisions</h4><p>Health savings accounts (HSAs) are tax-advantaged savings accounts for high-deductible health plan (HDHP) enrollees. There are strict regulations around who can utilize HSAs and how their funds can be used. This bill would expand HSA access to individuals enrolled in Medicare Part A if they are also still enrolled in their private HDHP, and to individuals enrolled in bronze or catastrophic health plans in the individual market. The bill would also create more flexibility in how individuals contribute, for example, by allowing eligible individuals to contribute even if their spouse has a flexible spending arrangement, and what services can be covered by HSA funds. Finally, the bill would increase HSA contribution limits for individuals with annual income that is less than $75,000 individually or $150,000 for a family.</p><h4>Section 110205: Treatment of direct primary care service arrangements</h4><p>Excludes direct primary care (DPC) service arrangements from classification as a health plan for the purposes of HSA eligibility so long as the primary care arrangement is for only primary care services, the individual pays a fixed monthly fee, and that amount doesn’t exceed $150 for an individual (twice the amount for coverage of more than one person). Would clarify that anesthesia, prescription drugs and lab services would not qualify as DPC services. Would allow for DPC services to be qualified medical expenses by excluding DPC arrangements from the definition of “health insurance” for which HSAs could not be utilized. Would also provide for cost-of-living adjustments for DPC arrangements. In general, this provides additional flexibility for HSAs to be used for DPC arrangements, which may increase beneficiary enrollment in these types of plans.</p><h4>SUBPART B: MAKE RURAL AMERICA AND MAIN STREET GROW AGAIN</h4><h4>Section 111201: Expanding the definition of rural emergency hospital under the Medicare program</h4><p>This provision allows for the conversion to a rural emergency hospital (REH) if state licensure is not currently provided but will be licensed as such within one year of the state providing such licensure. It also allows for a facility located less than 35 miles away from another hospital, critical access hospital (CAH) or REH, to be an REH, provided that annually, the facility must demonstrate more than 50% of the services provided are emergency and observation care for Medicare Part A and B patients. The provision permits eligibility for conversion from CAHs and small rural (<50 beds) hospitals opened between Jan. 1, 2014, and Dec. 26, 2020. Additionally, outpatient prospective payment system plus 5% payment to facilities located less than 35 miles away from another hospital, CAH or REH are disallowed. The provision also disallows a monthly facility payment to facilities located less than 10 miles away from another hospital, CAH or REH.</p><h4>SUBPART C: MAKE AMERICA WIN AGAIN</h4><h4>Section 112003: Termination of qualified commercial clean vehicles credit</h4><p>Eliminates the qualified commercial clean vehicles credit at the end of 2025. Provides an exception for vehicles placed in service before 2033 and under a binding contract entered into before May 2025.</p><h4>Section 112004: Termination of alternative fuel vehicle refueling property credit</h4><p>Eliminates the alternative fuel vehicle refueling property credit at the end of 2025.</p><h4>Section 112009: Restrictions on clean electricity investment credit</h4><p>Restricts the clean electricity investment credit by making zero credit available after Dec. 31, 2028. This provision restricts access to the credit for certain prohibited foreign entities.</p><p>This provision restricts access to the credit for certain prohibited foreign entities. Specifically:</p><ol type="1"><li>No credit is allowed for a facility that commences construction a year after the enactment of this bill that includes any material assistance from a prohibited foreign entity.</li><li>No credit is allowed for taxable years beginning after enactment if the taxpayer is a specified foreign entity.</li><li>No credit is allowed for tax years that begin two years after the date of enactment for foreign influence entities or if the taxpayer makes fixed, determinable, annual or periodic (FDAP) amount payments to a prohibited foreign entity that are more than 5% of total expenditures related to the credit generating activity or 15% in aggregate</li></ol><h4>Section 112015: Phase-out of credit for certain energy property</h4><p>Aligns the expiration of the investment tax credit for geothermal heat pumps with the clean electricity investment tax credit. There is a 20% credit reduction for facilities placed in service in calendar year 2029, a 40% reduction for facilities placed in service in 2030, a 60% reduction for facilities placed in service in 2031 and no credit available after Dec. 31, 2031.</p><p>This provision restricts access to the credit for certain prohibited foreign entities. Specifically:</p><ol type="1"><li>No credit is allowed for taxable years beginning after enactment if the taxpayer is a specified foreign entity.</li><li>No credit is allowed for tax years that begin two years after the date of enactment for a foreign-influenced entity.</li></ol><h4>Section 112019: Excessive employee renumeration from controlled group members and allocation of deduction</h4><p>Applies aggregation rules for the deduction limitation and allocation of deduction applied under Internal Revenue Code (IRC) section 162(m) as it relates to certain excessive employee remuneration.</p><h4>Section 112021: Modification of excise tax on investment income of certain private colleges and universities</h4><p>Amends the current excise tax on net investment income framework for certain private colleges and universities under IRC section 4968 with a tiered system based on an institution’s student-adjusted endowment (see table below). For purposes of calculating an institution's student-adjusted endowment, this section amends such calculation by excluding students who do not meet the requirements under Section 484(a)(5) of the Higher Education Act of 1965. This section also provides an exemption from being considered an applicable educational institution, provided the institution meets certain requirements related to being a qualified religious institution. Additionally, this section includes student loan interest income and certain royalty income to calculate a school’s net investment income.</p><table><thead><tr><th>Student-Adjusted Endowment</th><th>Excise Tax Rate</th></tr></thead><tbody><tr><td>$500,000-$749,999</td><td>1.4% (current rate)</td></tr><tr><td>$750,000-$1,249,999</td><td>7%</td></tr><tr><td>$1,250,000-$1,999,999</td><td>14%</td></tr><tr><td>$2,000,000+</td><td>21%</td></tr></tbody></table><h4>Section 112022: Increase tax rate on net investment income of certain private foundations</h4><p>Amends the current excise tax on net investment income framework for tax-exempt private foundations under IRC section 4940(a) with a tiered system that maintains the current excise tax rate for private foundations with less than $50 million in total assets but applies higher excise tax rates on private foundations reporting $50 million or more in total assets (see table below).</p><table><thead><tr><th>Size of Private Foundation (in assets)</th><th>Excise Tax Rate</th></tr></thead><tbody><tr><td>$0-$49,999,999</td><td>1.39% (current rate)</td></tr><tr><td>$50,000,000-$249,999,999</td><td>2.78%</td></tr><tr><td>$250,000,000-$4,999,999,999</td><td>5%</td></tr><tr><td>$5,000,000,000+</td><td>10%</td></tr></tbody></table><h4>Section 112024: Unrelated business taxable income increased by the amount of certain fringe benefit expenses for which deduction is disallowed</h4><p>Amends IRC section 512 to increase the unrelated business taxable income of a tax-exempt organization by including the amount paid or incurred for any qualified transportation fringe benefit.</p><h4>Section 112025: Name and logo royalties treated as unrelated business taxable income</h4><p>Amends IRC sections 512 and 513 to increase the unrelated business taxable income of a tax-exempt organization by including the income from any sale or licensing by an organization of its name or logo.</p><h4>Section 112026: Exclusion of research income limited to publicly available research</h4><p>Amends IRC section 512 to increase the unrelated business taxable income of a tax-exempt organization by including the income generated from non-public research for an organization whose tax-exempt purpose is to provide publicly available research as unrelated business income.</p><h4>Section 112101: Permitting premium tax credit only for certain individuals</h4><p>Eliminates premium tax credit eligibility for undocumented immigrants and only allows eligibility for Lawful Permanent Residents, certain Cuban immigrants, and individuals living in the U.S. through a Compact of Free Association.</p><h4>Section 112102: Certain aliens treated as ineligible for premium tax credit</h4><p>Prohibits individuals with immigration status granted by asylum (or pending an asylum application), parole, temporary protected status, deferred enforced departure and withholding of removal from receiving premium tax credits.</p><h4>Section 112103: Disallowing premium tax credit during periods of Medicaid ineligibility due to alien status</h4><p>Strikes the loophole that allows undocumented immigrants who report income below 100 percent of the federal poverty level and are in their five-year Medicaid waiting period (due to immigration status) to receive premium tax credits to purchase health insurance on the Exchange.</p><h4>Section 112201: Requiring Exchange verification of eligibility for health plan</h4><p>Prohibits an individual from claiming the premium tax credit if the individual’s eligibility related to income, enrollment and other requirements is not actively verified annually. This would prohibit automatic reenrollment for enrollees receiving premium tax credits by requiring them to actively prove tax credit eligibility each year. Over half of all returning enrollees in 2025 enrolled through automatic reenrollment.</p><h4>Section 112202: Disallowing premium tax credit in case of certain coverage enrolled in during the special enrollment period</h4><p>Prohibits individuals from receiving premium tax credits if they enroll in health coverage on the Exchange through a special enrollment period associated with their income.</p><h4>Section 112203: Eliminating limitation on recapture of advance payment of premium tax credit</h4><p>Removes the repayment limits and requires affected individuals to reimburse the Internal Revenue Service for the full amount of excess tax credit received.</p><h4>Section 112204: Implementing artificial intelligence tools to reduce and recoup improper payments under Medicare</h4><p>Provides $25 million for the HHS secretary to contract with artificial intelligence contractors and data scientists to examine Medicare improper payments and recoup overpayments. Additionally, the secretary is required to report to Congress on progress in decreasing the number of Medicare improper payments.</p><h4>SUBPART D: INCREASE IN DEBT LIMIT</h4><h4>Section 113001: Modification of limitation on the public debt</h4><p>Increases the statutory debt limit by $4 trillion.</p><h2>Further Questions</h2><p>If you have further questions, please contact AHA at <a href="tel:1-800-424-4301">800-424-4301</a>.</p><p><a href="/system/files/media/file/2025/05/Legislative-Advisory-AHA-Summary-of-One-Big-Beautiful-Bill-Acts-Provisions-Impacting-Hospitals-and-Health-Systems.pdf"><span><em><strong>Read the complete Legislative Advisory.</strong></em></span></a></p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/Legislative-Advisory-AHA-Summary-of-One-Big-Beautiful-Bill-Acts-Provisions-Impacting-Hospitals-and-Health-Systems.pdf"><img src="/sites/default/files/inline-images/Page-1-Legislative-Advisory-AHA-Summary-of-One-Big-Beautiful-Bill-Acts-Provisions-Impacting-Hospitals-and-Health-Systems.png" data-entity-uuid="7b4d504a-d7a3-4f38-b807-ac4bd58ba5fb" data-entity-type="file" alt="Legislative Advisory: AHA Summary of One Big Beautiful Bill Act’s Provisions Impacting Hospitals and Health Systems page 1." width="696" height="900"></a></div></div></div> table, th, td { border: 1px solid; } Thu, 22 May 2025 15:08:44 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The Centers for Medicare & Medicaid Services (CMS) April 11 issued its fiscal year (FY) 2026 <a href="https://www.federalregister.gov/documents/2025/04/30/2025-06348/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities" target="_blank" title="April 11 proposed rule">proposed rule</a> for the skilled nursing facility (SNF) prospective payment system (PPS). This rule proposes to update SNF payments and modify the SNF quality reporting program (QRP) measures and reporting requirements.</p><div class="panel module-typeC"><div class="panel-heading"><p><strong>KEY HIGHLIGHTS</strong></p><p>The proposed rule would:</p><ul><li>Increase aggregate SNF payments by an estimated 2.8% ($997 million) in<br>FY 2026 relative to FY 2025. This includes a 3.0% market basket update<br>reduced by a 0.8% productivity cut and a 0.6% increase due to a FY 2024<br>market basket forecast error.</li><li>For the SNF QRP, remove four patient assessment data elements.</li><li>For the SNF value-based purchasing program (VBP), remove the program’s health equity adjustment.</li><li>Solicit comments on approaches and opportunities to streamline regulations and reduce administrative burdens on hospitals and other providers.</li></ul></div></div><h2>AHA TAKE</h2><p>This proposed rule does not make any major or unexpected payment changes to the SNF PPS. AHA remains concerned about lagging market basket updates in the face of increasing financial pressures and staffing requirements on SNFs. Nonetheless, we appreciate CMS’ interest in regulatory relief and will be pursuing opportunities to lessen burdens on providers.</p><h2>WHAT YOU CAN DO</h2><ul><li><strong>Share this advisory </strong>with your senior management team to examine the impact these payment changes would have on your organization in FY 2026.</li><li><strong>Attend an</strong> <a href="https://aha-org.zoom.us/webinar/register/WN_QVOCu7XTTFygFK9Ey9aZAw#/registration" target="_blank" title="AHA May 20th webinar">upcoming AHA webinar on May 20</a> on the proposed rule.</li><li><strong>Submit to CMS by June 10 a comment letter</strong> explaining the rule’s impact on your patients, staff, facility and local health care partners. Comments may be submitted at <a href="http://www.regulations.gov/" target="_blank">www.regulations.gov</a>. The final rule will be effective Oct. 1, 2025.</li></ul><h2>PROPOSED FY 2026 SNF PPS PAYMENT AND COVERAGE UPDATES</h2><p>CMS estimates that this proposed rule would increase SNF PPS payments by 2.8%, or $997 million in FY 2026 relative to FY 2025. This update is the result of a market basket update, a productivity adjustment and a market basket forecast error adjustment. CMS also proposes updated standardized payment rates, updated case-mix weights, adjustments to the labor-related share of payment and new categories for primary ICD-10 diagnosis codes. In addition, CMS is requesting feedback on items and services to be excluded from consolidated billing requirements.</p><p><strong>Proposed FY 2026 Payment Updates. </strong>The proposed rule would increase net payments to SNFs by an estimated 2.8% or $997 million in FY 2026. This includes a 3.0% market-basket update offset by a statutorily-mandated productivity cut of 0.8%. It also includes a positive 0.6% market basket forecast error adjustment for FY 2024, in which the actual market basket change has been shown to be higher than what was implemented in that year.</p><p>After applying these updates, as well as a budget neutrality factor for proposed changes to the wage indexes (discussed below), CMS provides the following unadjusted per-diem rates for the various components of the Patient-Driven Payment Model (PDPM), found in Tables 3 and 4 of the proposed rule. These proposed increases are approximately 2.96% higher than the current per diem rates.</p><img src="/sites/default/files/inline-images/image_73.png" data-entity-uuid="e2187ce0-6ce1-49ab-9710-5375285244ee" data-entity-type="file" alt="Table 3 image" width="1017" height="544"><p>Five of the six component per-diem payment rates listed above are adjusted by case mix in determining the payment for a specific patient. Table 5 and 6 below, reproduced from the proposed rule, provide CMS’ proposed updated case-mix weights and resulting adjusted payment for each PDPM grouping. Table 5 provides the figures for urban facilities, and Table 6 provides the information for rural facilities.</p><img src="/sites/default/files/inline-images/image_76.png" data-entity-uuid="e1f36db5-ec81-4783-bdf4-f610db6ea707" data-entity-type="file" width="1117" height="511"><img src="/sites/default/files/inline-images/image_80.png" data-entity-uuid="3e24f506-2245-4a80-8d8b-7e0ed7199668" data-entity-type="file" alt="TABLE 6" width="1178" height="508"><p><strong>Wage Index Update</strong>s. CMS uses wage indexes to adjust SNF payments regionally to account for variation in labor cost. To do this, it utilizes core-based statistical areas (CBSAs) established by the Office of Management and Budget (OMB). Each county or county equivalent is assigned to a CBSA, and each CBSA is assigned a wage index. CBSAs are also designated as either urban or rural. A rural state-wide index applies to all rural facilities in a state. In July 2023, OMB issued <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf" target="_blank" title="OMB Bulletin">a bulletin</a> that updated the CBSAs, and CMS proposes continuing to utilize the CBSAs from this update.</p><p>Wage indexes fluctuate from year to year based upon updated data presented to CMS. However, the agency has an existing policy of applying a 5% year-to-year cap on any reductions in an individual SNF’s wage index. CMS also applies a budget neutrality factor based on the estimated effects of updates to the wage indexes. This year, CMS proposes a budget neutrality factor of 1.0016, or 0.16%.</p><p><strong>Labor-related Share</strong>. The labor-related share is the portion of payment that is adjusted by the area wage index. The agency proposes a small decrease to this labor-related share, from 72.0% to 71.9%.</p><p><strong>PDPM ICD-10 Code Mappings</strong>. Under the PDPM, CMS uses patients’ primary ICD-10 diagnoses to classify them into certain clinical categories for purposes of the physical therapy (PT), occupational therapy (OT), speech-language pathology (SLP) and non-therapy ancillary (NTA) component payments. In this rule, the agency proposes changing the category to which certain ICD-10 codes are mapped, including Type 1 diabetes mellitus, hypoglycemia, obesity, anorexia nervosa, bulimia nervosa, binge eating disorder and pica. Specifically, it would change these codes from the Medical Management category to the Return to Provider category. CMS says these diagnoses would not be adequate justification for a covered Part A SNF stay and therefore should not be grouped into the Medical Management category. CMS also proposes reassigning serotonin syndrome from the Acute Neurologic to the Medical Management category.</p><p><strong>Request for Comment on Items and Services to be Excluded from Consolidated Billing</strong>. CMS generally requires all services provided to a SNF beneficiary during a covered stay to be consolidated and submitted by the SNF to its Medicare administrative contractor. SNFs are only permitted to separately bill for items and services that fall within certain categories — generally high-cost, low-frequency services that would place a financial hardship on a SNF if included in its standard payment. In an effort to update these excluded services, CMS is seeking comment on specific codes in the five permitted categories — chemotherapy items, chemotherapy administration services, radioisotope services, customized prosthetic devices and blood clotting factors — that would fit these criteria and are not already included on the excluded services list.</p><h2>SNF QUALITY REPORTING PROGRAM</h2><p>As mandated by the Affordable Care Act, SNFs receiving Medicare payments have been required to participate in the SNF QRP since 2014. The Improving Medicare Post-Acute Care Transformation (IMPACT) Act required that, starting FY 2019, providers must report standardized patient assessment data elements (SPADEs) as part of the SNF QRP. Failure to comply with these requirements results in a 2-percentage point reduction to the SNF’s annual market basket update.</p><p>CMS did not propose to adopt, modify or remove any measures from the SNF QRP. For FY 2026, the SNF QRP will comprise 14 measures based on updates to the QRP in previous rulemaking.</p><p><strong>Table 1: Previously Finalized Measures for the SNF QRP, FY 2024-FY</strong></p><div align="center"><table border="1" cellspacing="0" cellpadding="0" width="708"><thead><tr><th width="120"><p class="text-align-center"><strong>Data Source</strong></p></th><th width="360"><p class="text-align-center"><strong>Measure</strong></p></th><th width="76"><p class="text-align-center"><strong>FY 2024</strong></p></th><th width="76"><p class="text-align-center"><strong>FY 2025</strong></p></th><th width="76"><p class="text-align-center"><strong>FY 2026</strong></p></th></tr></thead><tbody><tr><td rowspan="2" width="120">National Healthcare Safety Network</td><td width="360">COVID-19 Vaccination Coverage Among Health Care Personnel</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Influenza Vaccination Coverage Among Health Care Personnel</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td rowspan="12" width="120">SNF Minimum Data Set</td><td width="360">Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function</td><td width="76">X</td><td width="76"><p class="text-align-center"> </p></td><td width="76"><p class="text-align-center"> </p></td></tr><tr><td width="360">Change in Self-Care Score for Medical Rehabilitation Patients</td><td width="76">X</td><td width="76"><p class="text-align-center"> </p></td><td width="76"><p class="text-align-center"> </p></td></tr><tr><td width="360">Change in Mobility Score for Medical Rehabilitation Patients</td><td width="76">X</td><td width="76"><p class="text-align-center"> </p></td><td width="76"><p class="text-align-center"> </p></td></tr><tr><td width="360">Discharge Self-Care Score for Medical Rehabilitation Patients</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Discharge Mobility Score for Medical Rehabilitation Patients</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Drug Regimen Review Conducted with Follow-up for Identified Issues</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Transfer of Health Information to Provider</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Transfer of Health Information to Patient</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Percent of Patients/Residents Who Are Up to Date with COVID-19 Vaccination</td><td width="76"> </td><td width="76"> </td><td width="76">X</td></tr><tr><td width="360">Discharge Function Score</td><td width="76"> </td><td width="76">X</td><td width="76">X</td></tr><tr><td rowspan="4" width="120">Claims</td><td width="360">Medicare Spending Per Beneficiary for Post-Acute Care SNF QRP</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Discharge to Community</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">Potentially Preventable 30-day Post-discharge Readmission Measure</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr><tr><td width="360">SNF Healthcare-associated Infections Requiring Hospitalization</td><td width="76">X</td><td width="76">X</td><td width="76">X</td></tr></tbody></table></div><p>X=Measure required for reporting</p><p><strong>Proposed Removal of Four Social Determinants of Health (SDOH) SPADEs. </strong>Beginning with the FY 2027 SNF QRP, CMS proposes to remove four new SPADEs under the SDOH category. This category was finalized in the FY/CY 2020 final rules for the inpatient rehabilitation facility, SNF, LTCH and home health QRPs, and currently comprises SPADEs addressing the following topics:</p><ul type="disc"><li>Race.</li><li>Ethnicity.</li><li>Preferred language.</li><li>Interpreter services.</li><li>Health literacy.</li><li>Social isolation.</li><li>Transportation.</li></ul><p>With a stated purpose of reducing administrative burden to SNFs, CMS proposes removing four SPADEs it adopted in the FY 2025 SNF PPS final rule that are focused on:</p><ul><li>Living situation.</li><li>Food security.</li><li>Utilities.</li></ul><p><strong>Reconsideration Process. </strong>Most CMS quality reporting and value programs — including the SNF QRP — include a reconsideration process permitting providers to appeal a CMS initial determination of noncompliance with reporting or other programmatic requirements. CMS proposes allowing SNFs to request an extension to file a request for reconsideration in the event the organization experiences an extraordinary circumstance (e.g., natural disaster) that overlaps with the deadline for filing a reconsideration request.</p><p>Secondly, CMS proposes clarifying the basis on which the agency can grant a reconsideration request and reverse an initial determination of noncompliance. Specifically, CMS would reverse a finding of noncompliance only if it determines that the SNF was in full compliance with the SNF QRP requirements for the applicable program year, including following CMS’ established policies for requesting and receiving an extraordinary circumstance exception from reporting.</p><p><strong>Request for Information.</strong> The proposed rule includes requests for information on three key areas. First, CMS asks for input on new measure concepts focused on interoperability, well-being, nutrition and delirium. Second, CMS seeks input on how to advance the uptake of digital quality measures in the SNF QRP. CMS is particularly interested in the extent to which SNFs are using application programming interfaces based on the Fast Healthcare Interoperability Resource (FHIR) standard to support any data reporting or exchange functions.  Third, the agency seeks input on decreasing the amount of time that SNFs have to submit quarterly quality measure and SPADE data to CMS. Currently, SNFs have four and a half months after a quarter closes to submit data to CMS. CMS seeks input on potentially requiring that quality and SPADE data be submitted 45 days after the close of a quarter. The agency believes this would result in more timely publicly-reported data on SNF performance.</p><h2>SNF VALUE-BASED PURCHASING PROGRAM</h2><p>Please see AHA’s FY 2024 <a href="/2023-08-21-skilled-nursing-facility-pps-final-rule-fy-2024" target="_blank" title="AHA regulatory advisory">Regulatory Advisory</a> for the most recent updates to the SNF VBP Program, including the adoption of four new quality measures and several policy changes.</p><p><strong>Table 2. Previously Finalized SNF VBP Measures</strong></p><table border="1" cellspacing="0" cellpadding="0"><tbody><tr><td width="250"><strong>Measure</strong></td><td width="70"><strong>FY 25</strong></td><td width="70"><strong>FY 26</strong></td><td width="70"><strong>FY 27</strong></td><td width="70"><strong>FY 28</strong></td><td width="94"><strong>Used in SNF QRP?</strong></td></tr><tr><td width="250">SNF 30-Day All-Cause Readmissions</td><td width="70">X</td><td width="70">X</td><td width="70">X</td><td width="70"> </td><td width="94">No</td></tr><tr><td width="250">SNF Healthcare-associated Infections Requiring Hospitalization</td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="70">X</td><td width="94">Yes</td></tr><tr><td width="250">Total Nurse Staffing Hours per Resident Day</td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="70">X</td><td width="94">No</td></tr><tr><td width="250">Total Nursing Staff Turnover</td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="70">X</td><td width="94">No</td></tr><tr><td width="250">Discharge to Community</td><td width="70"> </td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="94">Yes</td></tr><tr><td width="250">Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)</td><td width="70"> </td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="94">Similar</td></tr><tr><td width="250">Discharge Function Score</td><td width="70"> </td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="94">Yes</td></tr><tr><td width="250">Number of Hospitalizations per 1,000 Long Stay Resident Days</td><td width="70"> </td><td width="70"> </td><td width="70">X</td><td width="70">X</td><td width="94">No</td></tr><tr><td width="250">SNF Within-Stay Potentially Preventable Readmissions</td><td width="70"> </td><td width="70"> </td><td width="70"> </td><td width="70">X</td><td width="94">No</td></tr></tbody></table><p><strong>Removal of Health Equity Adjustment. </strong>Beginning with the FY 2027 SNF VBP program, CMS proposes to remove the health equity adjustment from the SNF VBP scoring methodology. The health equity adjustment awarded bonus points to SNFs based on a combination of quality performance and proportion of dual-eligible patients cared for by SNFs. CMS believes that the removal of the adjustment would simplify program scoring and “provide clearer incentives to hospitals as they seek to improve the quality of care for all patients.” CMS also believes the impact of the adjustment would be small.</p><p><strong>REQUEST FOR INFORMATION: EXECUTIVE ORDER 14192 “UNLEASHING PROSPERITY THROUGH DEREGULATION”</strong></p><p>On Jan. 31, 2025, President Trump issued Executive Order (EO) 14192, "Unleashing Prosperity Through Deregulation," which states the administration’s policy to significantly reduce the private expenditures required to comply with federal regulations. Accordingly, CMS is soliciting public input on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries and other interested parties participating in the Medicare program. CMS is collecting responses at <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Fmedicare-regulatory-relief-rfi&data=05%7C02%7Cjgold%40aha.org%7C4cd60274604142c4278308dd7b7460c2%7Cb9119340beb74e5e84b23cc18f7b36a6%7C0%7C0%7C638802461951091442%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=oVpGbZYA%2Bop4qTxZ4eXdtgj417%2BP2swWi8qUj%2FsAsYw%3D&reserved=0" title="Original URL: https://www.cms.gov/medicare-regulatory-relief-rfi. Click or tap if you trust this link.">https://www.cms.gov/medicare-regulatory-relief-rfi</a> and requests stakeholders submit comments through the provided web link by June 10.</p><h2>FURTHER QUESTIONS</h2><p>Please contact Jonathan Gold, the AHA’s senior associate director of policy, at <a href="mailto:jgold@aha.org">jgold@aha.org</a>, with any questions related to payment, and Akin Demehin, the AHA’s vice president of quality and safety policy, at <a href="mailto:ademehin@aha.org">ademehin@aha.org</a>, regarding any quality-related questions.</p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/skilled-nursing-facility-pps-proposed-rule-for-fy-2026-advisory-5-15-2025.pdf"><img src="/sites/default/files/2025-05/cover-skilled-nursing-facility-pps-proposed-rule-for-fy-2026-advisory-5-15-2025.png" data-entity-uuid data-entity-type="file" alt="Advisory Cover Image" width="NaN" height="NaN"></a></div></div></div> Thu, 15 May 2025 16:18:03 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The Centers for Medicare & Medicaid Services (CMS) April 11 issued its fiscal year (FY) 2026 <a href="https://www.federalregister.gov/documents/2025/04/30/2025-06336/medicare-program-inpatient-rehabilitation-facility-prospective-payment-system-for-federal-fiscal" target="_blank" title="Proposed Rule Text">proposed rule</a> for the inpatient rehabilitation facility (IRF) prospective payment system (PPS). This rule proposes to update IRF payments and modify the IRF quality reporting program (QRP) measures and reporting requirements.</p><p> </p><div class="panel module-typeC"><div class="panel-heading"><p><strong>KEY HIGHLIGHTS</strong></p><p>The proposed rule would:</p><ul><li>Increase overall payments by a net 2.8%. This includes a proposed market basket update of 3.4%, less a productivity cut of 0.8%, as well as a 0.2% increase related to outlier payments.</li><li>Make a minor upward adjustment to the labor-related share.</li><li>Remove two measures and four SPADEs from the IRF QRP.</li><li>Solicit comments on approaches and opportunities to streamline regulations and reduce administrative burdens on hospitals and other providers.</li></ul></div><div> </div></div><h2>AHA TAKE</h2><p>The proposed rule includes routine payment updates to the IRF PPS. However, the AHA remains concerned that market basket increases have not kept pace with the rise in hospital expenses in recent years. We will continue to highlight the financial and other pressures facing hospitals and pursue opportunities for regulatory relief.</p><h2>WHAT YOU CAN DO</h2><ul><li><strong>Share this advisory</strong> with your senior management team to examine the impact these payment changes would have on your organization in FY 2026.</li><li><strong>Attend an </strong><a href="https://aha-org.zoom.us/webinar/register/WN_QVOCu7XTTFygFK9Ey9aZAw#/registration"><strong>upcoming AHA webinar on May 20</strong></a> on the proposed rule.</li><li><strong>Submit to CMS by June 10 a comment letter</strong> on the proposed rule explaining the rule’s impact on your patients, staff, facility and local health care partners. Comments may be submitted at <a href="http://www.regulations.gov/">www.regulations.gov</a>. The final rule will be effective Oct. 1, 2025.</li></ul><h2>PROPOSED FY 2026 IRF PPS PAYMENT UPDATES </h2><p><strong>Proposed IRF Market Basket Update for FY 2026. </strong>On an annual basis, CMS updates IRF PPS rates by the market basket increase, which is an estimate of the cost of goods and services provided by IRFs. The agency currently forecasts a market basket increase of 3.4% for FY 2026. However, it is also required under law to apply a productivity cut to the update factor, which for FY 2026 is currently 0.8%. It also proposes a 0.2% increase related to outlier payments, as described further below. Therefore, the net update would be 2.8% in FY 2026 as compared to FY 2025. CMS states that, as it has done historically, it will utilize any updated market basket and productivity estimates that are available for the final rule. Therefore, IRFs can expect that there may be changes to these figures.</p><p><strong>Proposed Case-mix Weights and Average Lengths of Stay. </strong>Every IRF claim is assigned to a case-mix group (CMG) and tier. Each CMG and tier are assigned a weight based upon the estimated cost of providing care relative to other cases. That weight is multiplied by the standard payment conversion factor and other adjustments, such as a wage index and several others, to determine payment for the case. CMS also assigns each CMG an average length of stay (ALOS). The ALOS is used to determine whether that discharge is subject to the short-stay transfer policy, which necessitates a per-diem payment for the case. CMS proposes using FY 2024 IRF claims and FY 2023 IRF cost report data, which are the most recently available data, to update the CMG and tier relative weights and ALOS values for FY 2026. The new proposed CMG weights and ALOS values are available in Table 2 of the proposed rule.</p><p>According to CMS’ analysis in Table 3 of the proposed rule, CMG changes would result in 99.2% of cases falling into CMGs and tiers that would receive a less than 5% increase or decrease in weight. ‎In addition, CMS says that the proposed changes in the ALOS values “are small and do not show any particular trends in IRF length of stay patterns.”<span> </span><a><span>CMS also applies a budget neutrality factor to its updated standard payment rate (discussed below) for any overall aggregate payment changes estimated to result from CMG weight changes. The proposed budget neutrality factor for FY 2026 is 0.9985, or -0.15%.</span></a></p><p>As it typically does, CMS states that it will use updated claims and cost report data in the final rule if such data becomes available. This typically has resulted in small adjustments in the final rule from what was originally proposed.</p><p><strong>Proposed Labor-related Share. </strong>CMS proposes a small increase to the labor-related share of the IRF PPS rate. The labor-related share is the percentage of a payment that is adjusted by a wage index factor to account for regional variation in labor costs. This year, CMS proposes increasing the labor-related share by 0.1%, from 74.4% to 74.5%. Consistent with other payment elements, CMS will use any updated data that becomes available prior to the final rule being released to update the final labor-related share, as appropriate. </p><p><strong>Proposed Wage Index Adjustments. </strong>CMS uses wage indexes to adjust IRF payments regionally to account for variation in labor cost. To do this, CMS utilizes core-based statistical areas (CBSAs) established by the Office of Management and Budget (OMB). Each county or county equivalent is assigned to a CBSA. Further, each CBSA is assigned a wage index. CBSAs also are designated as either urban or rural, and rural hospitals receive a 14.9% payment increase under the IRF PPS. CMS currently uses CBSAs adopted from a July 2023 <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf" target="_blank">bulletin</a> issued by OMB. It proposes continuing to utilize these CBSAs for wage index purposes. </p><p>Wage index levels can vary from year to year based on updated wage index data. However, CMS states that it will continue to apply its existing policy of applying a 5% year-to-year cap on any reductions in an individual IRF’s wage index. Further, CMS says it would continue its transition policy for IRFs that lost their rural status effective FY 2025. Specifically, these IRFs would receive one-third of the FY 2024 rural adjustment in FY 2026, and the full FY 2027 wage index without a rural adjustment in FY 2027. These changes would continue to be made in a budget neutral fashion.</p><p>As with changes to CMG weights, CMS applies a budget neutrality factor to its updated standard payment rate (discussed below) for any overall aggregate payment changes estimated to result from wage index and labor-related share changes. The proposed budget neutrality factor for wage index and labor-related charge changes for FY 2026 is 0.9997, or -0.03%.</p><p><strong>Proposed Outlier Thresholds. </strong>CMS sets the outlier threshold with the goal of outlier payments accounting for 3% of total payments to IRFs in a FY. A case qualifies for an outlier payment if the estimated cost of the case exceeds the adjusted outlier threshold for that case. However, CMS estimates that the current outlier threshold of $12,043 will result in outlier payments accounting for 2.8% of total IRF payments in FY 2025. Therefore, the agency proposes to lower the threshold to $11,971 for FY 2026 to enable outlier payments to make up 3% of total payments. This 0.2% increase in outlier payments would result in an estimated $20 million reduction in aggregate payments to IRFs compared to FY 2025.</p><p><strong>Proposed Updated Standard Payment Conversion Factor. </strong>The Standard Payment Conversion Factor (SPCF) is the amount by which CMG weights and other payment adjustments are multiplied to determine a final payment amount for an IRF discharge. Updates to the SPCF reflect updates to the <a>IRF PPS market basket </a>and budget neutrality factors to account for changes in the CMG weights, labor-related share and wage adjustments. Table 5 in the rule, shown below, illustrates the various adjustments that lead to the proposed FY 2026 SPCF of $19,364.</p><p> </p><img src="/sites/default/files/inline-images/image_71.png" data-entity-uuid="082c9203-9141-4b13-be8d-c5c791d5446d" data-entity-type="file" alt="Table 5 image" width="893" height="383"><p>Table 6 in the proposed rule provides the payment rates for all proposed FY 2026 CMGs and tiers after applying the proposed updated SPCF and proposed updated CMG relative weights.</p><p><strong>Overall Estimated Payment Changes. </strong>CMS provides an estimated breakdown of how each proposal would impact payments overall and for different types of IRFs. As shown in a portion of Table 15 of the rule reproduced below, both urban and rural facilities would receive similar overall updates for FY 2026, with small differences attributable to how the change in the outlier threshold and the new wage policies would affect rural and urban facilities differently.</p><img src="/sites/default/files/inline-images/image_72.png" data-entity-uuid="63e506d5-3ceb-41b9-a0c7-3430eaca35c4" data-entity-type="file" alt="Table 15 Image" width="963" height="798"><h2>IRF QUALITY REPORTING PROGRAM</h2><p>As mandated by the Affordable Care Act, IRFs receiving Medicare payments have been required to participate in the IRF QRP since 2014. The Improving Medicare Post-Acute Care Transformation (IMPACT) Act requires that, starting FY 2019, providers must report standardized patient assessment data elements (SPADEs) as part of the IRF QRP. Failure to comply with these requirements results in a 2-percentage point reduction to the IRF’s annual market-basket update.</p><p>CMS proposes to <a><span>remove two measures and four SPADEs from the IRF QRP</span></a>. The rule also includes proposed administrative changes and several requests for information.</p><p><strong>Table 1: Proposed and Finalized Measures for the IRF QRP, FY 2024-FY 2026</strong></p><div align="center"><table border="1" cellspacing="0" cellpadding="0" width="684"><thead><tr><th width="120"><p class="text-align-center"><strong>Data Source</strong></p></th><th width="354"><p class="text-align-center"><strong>Measure</strong></p></th><th width="66"><p class="text-align-center"><strong>FY 24</strong></p></th><th width="66"><p class="text-align-center"><strong>FY 25</strong></p></th><th width="78"><p class="text-align-center"><strong>FY 26</strong></p></th></tr></thead><tbody><tr><td rowspan="4" width="120">National Healthcare Safety Network</td><td width="354">Catheter-associated Urinary Tract Infection</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354"><em>Clostridium difficile </em>Infection</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Influenza Vaccination Coverage Among Health Care Personnel  </td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">COVID-19 Vaccination Coverage Among Health Care Personnel</td><td width="66">X</td><td width="66">X</td><td width="78">Removal*</td></tr><tr><td rowspan="12" width="120">IRF Patient Assessment Instrument</td><td width="354">Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Functional Status: Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function</td><td width="66">X</td><td width="66"><p class="text-align-center"> </p></td><td width="78"><p class="text-align-center"> </p></td></tr><tr><td width="354">Change in Self-Care Score for Medical Rehabilitation Patients</td><td width="66">X</td><td width="66"><p class="text-align-center"> </p></td><td width="78"><p class="text-align-center"> </p></td></tr><tr><td width="354">Change in Mobility Score for Medical Rehabilitation Patients</td><td width="66">X</td><td width="66"><p class="text-align-center"> </p></td><td width="78"><p class="text-align-center"> </p></td></tr><tr><td width="354">Discharge Self-Care Score for Medical Rehabilitation Patients</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Discharge Mobility Score for Medical Rehabilitation Patients</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Drug Regimen Review Conducted with Follow-up for Identified Issues</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Transfer of Health Information to Provider</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Transfer of Health Information to Patient</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Discharge Function Score</td><td width="66"> </td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Percent of Patients/Residents Who Are Up to Date with COVID-19 Vaccination</td><td width="66"> </td><td width="66"> </td><td width="78">Removal*</td></tr><tr><td rowspan="4" width="120">Claims</td><td width="354">Medicare Spending Per Beneficiary for Post-acute Care IRF QRP</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Discharge to Community</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Potentially Preventable 30-day Post-discharge Readmission Measure for IRF QRP</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr><tr><td width="354">Potentially Preventable Within Stay Readmission Measure for IRFs</td><td width="66">X</td><td width="66">X</td><td width="78">X</td></tr></tbody></table></div><p>X= Measure required for reporting as previously finalized *Proposed</p><p><strong>Proposed Removal of Two COVID-19 Vaccination Measures. </strong>For the FY 2026 IRF QRP, CMS proposes to remove two COVID-19 vaccination measures — one focused on patients and the other on health care personnel. CMS believes removing these two measures would reduce burden to IRFs and they are no longer necessary given the conclusion of the COVID-19 public health emergency.</p><p><strong>Proposed Removal of Four Social Determinants of Health (SDOH) SPADEs. </strong>Beginning with the FY 2028 IRF QRP, CMS proposes to remove four SPADEs under the SDOH category. This category was finalized in the FY/CY 2020 final rules for the IRF, skilled nursing facility, LTCH and home health QRPs and currently comprises SPADEs addressing the following topics:</p><ul type="disc"><li>Race.</li><li>Ethnicity.</li><li>Preferred language.</li><li>Interpreter services.</li><li>Health literacy.</li><li>Social isolation.</li><li>Transportation.</li></ul><p>With a stated purpose of reducing administrative burden to IRFs, CMS proposes removing four SPADEs it adopted in the FY 2025 IRF PPS final rule that are focused on:</p><ul type="disc"><li>Living situation.</li><li>Food security.</li><li>Utilities.</li></ul><p>CMS indicates that the items would become optional for reporting beginning Oct. 1, 2025, and be phased out of the IRF QRP altogether by FY 2028.</p><p><strong>Reconsideration Process. </strong>Most CMS quality reporting and value programs — including the IRF QRP — include a reconsideration process permitting providers to appeal a CMS initial determination of noncompliance with reporting or other programmatic requirements. In the rule, CMS proposes allowing IRFs to request an extension to file a request for reconsideration in the event the organization experiences an extraordinary circumstance (e.g., natural disaster) that overlaps with the deadline for filing a reconsideration request.</p><p>CMS also proposes to clarify the basis on which the agency can grant a reconsideration request and reverse an initial determination of noncompliance. Specifically, CMS would reverse a finding of noncompliance only if it determines that the IRF was in full compliance with the IRF QRP requirements for the applicable program year. This includes, when relevant, complying with CMS’ established policies for requesting and receiving an extraordinary circumstance exception from reporting.</p><p><strong>Request for Information.</strong> The proposed rule includes requests for information on three key areas. First, CMS asks for input on new measure concepts focused on interoperability, well-being, nutrition, and delirium. Second, CMS seeks input on how to advance the uptake of digital quality measures in the IRF QRP. CMS is particularly interested in the extent to which IRFs are using application programming interfaces based on the Fast Healthcare Interoperability Resource (FHIR) standard to support any data reporting or exchange functions. Third, CMS seeks input on decreasing the amount of time that IRFs have to submit quarterly quality measure and SPADE data to CMS. Currently, IRFs have four and a half months after a quarter closes to submit data to CMS. CMS seeks input on potentially requiring that quality and SPADE data be submitted 45 days after the close of a quarter. The agency believes this would result in more timely publicly-reported data on IRF performance.</p><h2>REQUEST FOR INFORMATION: EXECUTIVE ORDER 14192 “UNLEASHING PROSPERITY THROUGH DEREGULATION”</h2><p>On Jan. 31, 2025, President Trump issued Executive Order (EO) 14192, "Unleashing Prosperity Through Deregulation," which states the administration’s policy to significantly reduce the private expenditures required to comply with federal regulations. Accordingly, CMS is soliciting public input on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries and other interested parties participating in the Medicare program. CMS is collecting responses at <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Fmedicare-regulatory-relief-rfi&data=05%7C02%7Cjgold%40aha.org%7C4cd60274604142c4278308dd7b7460c2%7Cb9119340beb74e5e84b23cc18f7b36a6%7C0%7C0%7C638802461951091442%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=oVpGbZYA%2Bop4qTxZ4eXdtgj417%2BP2swWi8qUj%2FsAsYw%3D&reserved=0" target="_blank" title="Original URL: https://www.cms.gov/medicare-regulatory-relief-rfi. Click or tap if you trust this link.">https://www.cms.gov/medicare-regulatory-relief-rfi</a> and requests stakeholders submit comments through the provided web link by June 10.</p><h2>FURTHER QUESTIONS</h2><p>Please contact Jonathan Gold, the AHA’s senior associate director of policy, at <a href="mailto:jgold@aha.org">jgold@aha.org</a>, with any questions related to payment, and Akin Demehin, the AHA’s vice president of quality and safety policy, at <a href="mailto:ademehin@aha.org">ademehin@aha.org</a>, regarding any quality-related questions.</p><p> </p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/inpatient-rehabilitation-facility-prospective-payment-system-proposed-rule-for-fy-2026-advisory-5-15-2025.pdf"><img src="/sites/default/files/2025-05/cover-inpatient-rehabilitation-facility-prospective-payment-system-proposed-rule-for-fy-2026-advisory-5-15-2025.png" data-entity-uuid data-entity-type="file" alt="Advisory Cover Image" width="NaN" height="NaN"></a><p> </p></div><div class="col-md-4"> </div></div></div> Thu, 15 May 2025 15:38:25 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The Centers for Medicare & Medicaid Services (CMS) on April 11 issued a <a href="https://www.federalregister.gov/documents/2025/04/30/2025-06271/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the" target="_blank" title="April 11 proposed rule text">proposed rule</a> for the inpatient and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2026. This Regulatory Advisory reviews highlights of the LTCH provisions in the rule, while the inpatient PPS provisions are covered in a <a href="/advisory/2025-05-07-inpatient-pps-proposed-rule-fy-2026?check_logged_in=1" target="_blank" title="Inpatient PPS provisions advisory">separate advisory</a>. In addition, the AHA issued a <a href="/advisory/2025-05-07-fy-2026-transforming-episode-accountability-model-proposed-rule" target="_blank" title="AHA advisory on the CMS Innovation Transforming Episode Accountability Model">separate advisory</a> on the proposed Center for Medicare and Medicaid Innovation Transforming Episode Accountability Model alternative payment model, which was addressed in this rule.</p><div class="panel module-typeC"><div class="panel-heading"><p><strong>KEY HIGHLIGHTS</strong></p><p>The rule proposes to:</p><ul><li>Increase net LTCH payments by 2.5% or $61 million in FY 2026, relative to FY 2025, including both standard rate payments and site-neutral payments.<ul><li>Standard rate LTCH PPS payments would increase by 2.2%, or $52 million.</li><li>Site-neutral LTCH PPS payments would increase by 4.7%, or $9 million.</li></ul></li><li>Increase the standard rate fixed-loss amount for high-cost outlier (HCO) cases from $77,048 to $91,247 for FY 2026.</li><li>Remove four patient assessment data elements from the LTCH quality reporting program (QRP) and modify the COVID-19 vaccine among patients and residents measure.</li><li>Solicit comments on approaches and opportunities to streamline regulations and reduce administrative burdens on hospitals and other providers.</li></ul></div></div><h2>AHA TAKE</h2><p>CMS’ proposed revisions to the LTCH PPS fall far short amid ongoing financial strain and other pressures facing providers. The proposed increase in the fixed‐loss threshold for HCO payments risks restricting care access for the sickest Medicare beneficiaries. In addition, LTCHs continue to be woefully underpaid for site-neutral cases. The AHA will continue to urge CMS to modernize its outlier payment policy to safeguard critical services for those with the most severe illnesses.</p><h2>WHAT YOU CAN DO</h2><ul><li><strong>Share this advisory</strong> with your senior management team to examine the impact these payment changes would have on your organization in FY 2026.</li><li><strong>Participate in an </strong><a href="https://aha-org.zoom.us/webinar/register/WN_QVOCu7XTTFygFK9Ey9aZAw#/registration" target="_blank" title="May 20th AHA Members-only webinar "><strong>AHA members-only webinar May 20</strong></a><strong> </strong>to hear a summary of this regulation, ask questions and provide your organization’s perspective on the proposed policies.</li><li><strong>Submit to CMS a comment letter</strong> on the proposed rule by June 10 explaining the rule’s impact on your patients, staff and facility, and local health care partners. Comments may be submitted at <a href="http://www.regulations.gov" target="_blank" title="Information to submit the CMS comment letter">www.regulations.gov</a>. The final rule will take effect Oct. 1, 2025.</li></ul><h2>PROPOSED LTCH PPS PAYMENT CHANGES</h2><p>Overall, CMS estimates that aggregate net spending on LTCH services would increase by 2.5% or $61 million in FY 2026 compared to FY 2025. This update includes an increase to standard rate payments of 2.2%, or $52 million, and an increase to site-neutral payments of 4.7%, or $9 million. As discussed below, the lower increase to standard rate payments is attributable to a proposed increase in the fixed-loss amount for high-cost outlier cases.</p><h3>Standard LTCH PPS Payment Updates</h3><p>Cases are eligible for payment at the standard LTCH PPS rate if they meet the site-neutral payment policy exclusion criteria. In order to meet these exclusion criteria, a discharge must not have a principal diagnosis related to a psychiatric diagnosis or rehabilitation, must be immediately preceded by a discharge from an acute care hospital, and must have included at least three days in the ICU <em>or</em> be assigned to a Medicare-Severity-LTC-Diagnosis-Related Group (MS-LTC-DRG) that is based on the patient receiving at least 96 hours of ventilator services in the LTCH.</p><p>CMS found that 90% of all LTCH discharges met the criteria for a standard rate payment in FY 2024, and it presumes the same percentage would be eligible in FY 2026. This figure has risen in recent years, with CMS finding 68% of cases being eligible for standard rates in FY 2022, and 88% in FY 2023.</p><p><strong>Market Basket Update.</strong> CMS proposes updating the market basket using the same forecasting it has used in prior years. This year, it proposes a 3.4% increase to the LTCH market basket, which would be reduced by a statutorily mandated 0.8% productivity adjustment, resulting in a proposed 2.6% net market basket update. Providers that fail to report quality data would be subject to a 2-percentage point reduction in the market basket update. As it always does, CMS will use updated forecast data for the market basket update in the final rule.</p><p><strong>MS-LTC-DRG Relative Weights Updates. </strong>CMS proposes using the most recently available claims and cost data to recalibrate the weighting assigned to each MS-LTC-DRG for FY 2026, as it normally would. More specifically, it would use the most recently available claims and cost data for cases that meet the site-neutral exclusion criteria and not exclude any COVID-19 cases or timeframes from its methodology. CMS retains its previously finalized methodology to apply a 10% cap on any decreases in a DRG weight and would continue to remove any cases with a length of stay of less than seven days from its calculations. The proposed updated DRG weights are available at the CMS proposed rule <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/long-term-care-hospital/regulations-notices/cms-1833-p">webpage</a>.</p><p><strong>HCO Threshold. </strong>CMS is required to update outlier thresholds yearly so that estimated outlier payments make up 7.975% of aggregate payments to LTCHs. More specifically, CMS must set a fixed-loss amount (FLA) that would trigger eligibility for outlier payments that results in it hitting its target percentage for total outlier payments. CMS says that its most recent data indicate that outlier payments will equal approximately 8.2% of total payments in FY 2025.</p><p>As part of its methodology, CMS calculates a charge inflation factor (CIF) to estimate the rate at which charges would continue to increase. It found that charges increased 12.6% from FY 2023 to FY 2024, the most recent data available. Therefore, it uses a CIF of 1.126 to calculate a two-year CIF of 1.267 (1.126 squared) to estimate charges for FY 2026.</p><p>To target its statutory threshold, CMS proposes an updated FLA of $91,247. CMS acknowledges the continued drastic increase in the FLA in past years and is requesting comment on its approach. The AHA has conducted extensive analysis on this issue in recent years and is doing so again. </p><p><strong>Labor-related Share</strong>. The labor-related share is the portion of LTCH payments that is adjusted by a hospital’s wage index in determining a final payment amount. This year, CMS proposes increasing the labor-related share from 72.8% to 73.1%. This follows a significant increase from 68.5% in FY 2024 and is the result of using the most recently available market basket data.</p><p><strong>Wage Index Changes</strong>. CMS uses wage indexes to adjust LTCH payments regionally to account for variation in labor cost. In doing so, CMS utilizes core-based statistical areas (CBSAs) established by the Office of Management and Budget (OMB). Each county or county-equivalent is assigned to a CBSA and each CBSA is assigned a wage index. CBSAs are also designated as either urban or rural. In July 2023, OMB issued <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf">a bulletin</a> that updated these CBSAs, and CMS proposes continuing to utilize them. CMS implements wage index updates in a budget neutral manner and this year is proposing a budget neutrality factor of 1.0012146 (0.12%).</p><p><strong>Proposed Standard Payment Rate. </strong>The standard payment rate is the amount by which DRG weights and other payment adjustments are multiplied to determine a final payment amount for a discharge. After applying the market basket update and wage index budget neutrality factor, CMS proposes to increase the standard payment rate from $49,383.26 to $50,728.77.</p><h3>Site-neutral LTCH PPS Payment Updates</h3><p>Claims that do not meet the site-neutral exclusion criteria referenced above are paid at the site-neutral rate, which is the lower of the inpatient PPS-comparable per-diem amount, including any outlier payments, or 100% of the estimated cost of the case.</p><p>For this category of cases, CMS estimates payments would increase by 4.7%, or $9 million, in FY 2026 compared to FY 2025. This update largely reflects CMS’ proposed updates under the inpatient PPS. However, the agency does not provide a detailed breakdown of these increases. In addition, the proposed HCO threshold for site-neutral cases would continue to mirror the proposed inpatient PPS threshold of a $44,305.</p><h2>LTCH QUALITY REPORTING PROGRAM</h2><p>As mandated by the Affordable Care Act, LTCHs receiving Medicare payments have been required to participate in the LTCH QRP since 2014. The Improving Medicare Post-Acute Care Transformation (IMPACT) Act requires that, starting FY 2019, providers must report standardized patient assessment data elements (SPADEs) as part of the LTCH QRP. Failure to comply with these requirements results in a 2-percentage point reduction to the LTCH’s annual market-basket update.</p><p>The FY 2026 LTCH QRP comprises 17 measures based on updates to the QRP in previous rulemaking. In this rule, CMS proposed to modify one LTCH QRP measure and remove four SPADEs effective with the FY 2026 program year.</p><p><strong>Table 1: Finalized Measures for the LTCH QRP, FY 2024-FY 2026</strong></p><div align="center"><table border="1" cellspacing="0" cellpadding="0" width="684"><thead><tr><th width="120"><p class="text-align-center"><strong>Data Source</strong></p></th><th width="402"><p class="text-align-center"><strong>Measure</strong></p></th><th width="54"><p class="text-align-center"><strong>FY 24</strong></p></th><th width="54"><p class="text-align-center"><strong>FY 25</strong></p></th><th width="54"><p class="text-align-center"><strong>FY 26</strong></p></th></tr></thead><tbody><tr><td rowspan="5" width="120">National Healthcare Safety Network (NHSN)</td><td width="402">Catheter-associated Urinary Tract Infection</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Central Line-associated Blood Stream Infection</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402"><em>Clostridium difficile Infection</em></td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Influenza Vaccination Coverage Among Health Care Personnel</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">COVID-19 Vaccination Coverage Among Health Care Personnel</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td rowspan="12" width="120">LTCH CARE Data Set (LCDS)</td><td width="402">Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Application of Percent of Long-term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan that Addresses Function</td><td width="54">X</td><td width="54"><p class="text-align-center"> </p></td><td width="54"><p class="text-align-center"> </p></td></tr><tr><td width="402">LTCH Patients with an Admission and Discharge Functional Assessment and a Care Plan</td><td width="54">X</td><td width="54"><p class="text-align-center"> </p></td><td width="54"><p class="text-align-center"> </p></td></tr><tr><td width="402">Change in Mobility Among LTCH Patients Requiring Ventilator Support</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Ventilator Liberation Rate</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Compliance with Spontaneous Breathing Trial by Day 2 of LTCH Stay</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Drug Regimen Review Conducted with Follow-up for Identified Issues</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Changes in Skin Integrity Post-acute Care: Pressure Ulcer/Injury</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Transfer of Health Information to Provider</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Transfer of Health Information to Patient</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Discharge Function Score</td><td width="54"> </td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Percent of Patients/Residents Who Are Up to Date with COVID-19 Vaccination</td><td width="54"> </td><td width="54"> </td><td width="54">X</td></tr><tr><td rowspan="3" width="120">Claims</td><td width="402">Medicare Spending per Beneficiary</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Discharge to Community</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr><tr><td width="402">Potentially Preventable 30-day Post-discharge Readmission</td><td width="54">X</td><td width="54">X</td><td width="54">X</td></tr></tbody></table></div><p><small class="sm">X= Measure required for reporting as previously finalized</small></p><p><strong>Proposed Removal of Four Social Determinants of Health (SDOH) SPADEs. </strong>Beginning with the FY 2028 LTCH QRP, CMS proposes removing four SPADEs under the SDOH category. This category was finalized in the FY/CY 2020 final rules for the inpatient rehabilitation facility, skilled nursing facility, LTCH and home health QRPs and currently comprises SPADEs addressing the following topics:</p><ul><li>Race.</li><li>Ethnicity.</li><li>Preferred Language.</li><li>Interpreter Services.</li><li>Health Literacy.</li><li>Social Isolation.</li><li>Transportation.</li></ul><p>With a stated purpose of reducing administrative burden to LTCHs, CMS would remove four SPADEs it adopted in the FY 2025 IRF PPS final rule that are focused on:</p><ul><li>Living situation.</li><li>Food security.</li><li>Utilities.</li></ul><p>CMS indicates that the items would become optional for reporting beginning Oct. 1, 2025, and be phased out of the LTCH QRP altogether by FY 2028.</p><p><strong>Modification of Percent of Patients/Residents Up to Date with COVID-19 Vaccination. </strong>CMS proposes to modify this measure by excluding patients who expire during their LTCH stay. The change is being proposed in response to stakeholder feedback noting that collecting accurate information on vaccination from this patient population is often impossible.</p><p><strong>Reconsideration Process. </strong>Most CMS quality reporting and value programs — including the LTCH QRP — include a reconsideration process permitting providers to appeal a CMS initial determination of noncompliance with reporting or other programmatic requirements. In the rule, CMS proposes allowing LTCHs to request an extension to file a request for reconsideration in the event the organization experiences an extraordinary circumstance (e.g., natural disaster) that overlaps with the deadline for filing a reconsideration request.</p><p>CMS also proposes clarifying the basis on which the agency can grant a reconsideration request and reverse an initial determination of noncompliance. Specifically, CMS would reverse a finding of noncompliance only if it determines that the LTCH was in full compliance with the LTCH QRP requirements for the applicable program year. When relevant, this includes complying with CMS’ established policies for requesting and receiving an extraordinary circumstance exception from reporting.</p><p><strong>Request for Information.</strong> The proposed rule includes requests for information on three key areas. First, CMS asks for input on new measure concepts focused on interoperability, well-being, nutrition and delirium. Second, CMS seeks input on how to advance the uptake of digital quality measures in the LTCH QRP. CMS is particularly interested in the extent to which LTCHs are using application programming interfaces based on the Fast Healthcare Interoperability Resource standard to support any data reporting or exchange functions. Third, CMS seeks input on decreasing the amount of time that LTCHs have to submit quarterly quality measure and SPADE data to CMS. Currently, LTCHs have four and a half months after a quarter closes to submit data to CMS. CMS seeks input on potentially requiring that quality and SPADE data be submitted 45 days after the close of a quarter. The agency believes this would result in more timely publicly-reported data on LTCH performance.</p><h2>REQUEST FOR INFORMATION: EXECUTIVE ORDER 14192 “UNLEASHING PROSPERITY THROUGH DEREGULATION”</h2><p>On Jan. 31, 2025, President Trump issued Executive Order (EO) 14192, "Unleashing Prosperity Through Deregulation," which states the administration’s policy to significantly reduce the private expenditures required to comply with federal regulations. Accordingly, CMS is soliciting public input on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries and other interested parties participating in the Medicare program. CMS is collecting responses at <a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Fmedicare-regulatory-relief-rfi&data=05%7C02%7Cjgold%40aha.org%7C4cd60274604142c4278308dd7b7460c2%7Cb9119340beb74e5e84b23cc18f7b36a6%7C0%7C0%7C638802461951091442%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=oVpGbZYA%2Bop4qTxZ4eXdtgj417%2BP2swWi8qUj%2FsAsYw%3D&reserved=0" target="_blank" title="CMS website to submit responses">https://www.cms.gov/medicare-regulatory-relief-rfi</a> and requests stakeholders submit comments through the provided web link by June 10.</p><h2>FURTHER QUESTIONS</h2><p>Please contact Jonathan Gold, the AHA’s senior associate director of policy, at <a href="mailto:jgold@aha.org" target="_blank" title="Johnathan Gold email">jgold@aha.org</a>, with any questions related to payment, and Akin Demehin, the AHA’s vice president of quality and safety policy, at <a href="mailto:ademehin@aha.org" target="_blank" title="Akin Demehin email">ademehin@aha.org</a>, regarding any quality-related questions.</p></div><div class="col-md-4"><a href="/system/files/media/file/2025/05/long-term-care-hospital-prospective-payment-system-proposed-rule-for-fy-2026-advisory-5-15-2025-f.pdf"><img src="/sites/default/files/2025-05/cover-long-term-care-hospital-prospective-payment-system-proposed-rule-for-fy-2026-advisory-5-15-2025.png" data-entity-uuid data-entity-type="file" alt="Advisory Cover Image" width="NaN" height="NaN"></a></div></div></div> Thu, 15 May 2025 14:27:38 -0500 Advisory <div class="container"><div class="row"><div class="col-md-8"><p>The Centers for Medicare & Medicaid Services (CMS) May 12 released a <a href="https://www.federalregister.gov/public-inspection/2025-08566/medicaid-program-preserving-medicaid-funding-for-vulnerable-populations--closing-a-health" target="_blank" title="Proposed rule web page">proposed rule</a> that would modify federal regulations on health care-related taxes that states use to help finance their Medicaid programs (“provider taxes”). The changes would modify how CMS assesses whether a state’s provider tax is “broad-based” and “uniform,” consistent with statutory requirements. If finalized, the rule would prohibit health care-related taxes that tax Medicaid providers at a higher rate than non-Medicaid providers, or tax high-volume Medicaid providers at a different rate than low-volume Medicaid providers. The regulation would apply to all types of Medicaid provider taxes, including those imposed on hospitals, Medicaid managed care organizations and other providers.</p><h2>AHA TAKE</h2><p>Health care-related taxes are a legitimate, longstanding method that 49 states and the District of Columbia use to finance their Medicaid programs. States have broad authority to generate state revenue that meets the needs of their programs. These changes are likely to limit some states’ use of health care-related taxes to fund the non-federal share of Medicaid spending, which could undermine state financing arrangements and therefore impact eligibility levels, payment rates and benefits. If finalized, these policy adjustments could occur almost immediately in some states, given that CMS proposes no transition period for newer provider tax arrangements upon codification of these rules.</p><p>The AHA is continuing to evaluate the proposal to better understand the potential implications for hospitals.</p><h2>BACKGROUND</h2><p>Federal law permits states to impose provider taxes on defined classes of health care services that are broad-based (all services within the class are taxed), uniform (all providers in the class pay the same tax rate), and do not hold providers harmless for the cost of the tax. States can request tax waivers from the broad-based and uniformity requirements. The tax waivers require that states meet specific statistical tests to demonstrate that the tax is generally redistributive in nature.</p><p>In the proposed rule, CMS expresses its concern that current policies allow states to implement tax arrangements that may pass regulatory tests but cannot be considered generally redistributive.</p><h2>SUMMARY OF KEY PROVISIONS</h2><p>This rule would effectively sunset CMS-approved waivers of the broad-based and uniform requirements for provider taxes. The rule is intended to clarify the circumstances under which CMS will consider a tax to be generally redistributive. CMS proposes to define Medicaid and non-Medicaid taxable units and tax groups.</p><p>CMS also proposes to:</p><ul><li>Prohibit states from taxing Medicaid businesses at higher rates than non-Medicaid businesses.</li><li>Prohibit states from using “vague language” to tax Medicaid businesses at higher rates than non-Medicaid businesses.</li><li>Change the statistical tests used to approve waivers of uniformity.</li><li>Provide a transition period for certain states. This transition period would not be available for states that received approval two years or less before the final rule publication date.</li></ul><p>The rule proposes to make these changes effective upon publication of the final rule.</p><h2>FURTHER QUESTIONS</h2><p>Comments on the proposed rule are due 60 days following publication in the Federal Register. For more information, contact Krista Geier, AHA’s senior associate director of Medicaid policy, at <a href="mailto:kgeier@aha.org" target="_blank" title="Krista Geirer email ">kgeier@aha.org</a>.</p><p> </p></div><div class="col-md-4"><p><a href="/system/files/media/file/2025/05/cms-issues-provider-tax-uniformity-proposed-rule-advisory-5-13-2025.pdf" target="_blank" title="Click her to download the Regulatory Advisory: CMS Issues Provider Tax Uniformity Proposed Rule PDF."><img src="/sites/default/files/2025-05/cover-cms-issues-provider-tax-uniformity-proposed-rule-advisory-5-13-2025.png" data-entity-uuid data-entity-type="file" alt="Regulatory Advisory: Cover Image CMS Issues Provider Tax Uniformity Proposed Rule" width="NaN" height="NaN"></a></p></div></div></div> Tue, 13 May 2025 15:20:44 -0500 Advisory