Federal Policy
CMS Releases FFY 2027 IPPS and LTCH Final Rule
On August 4, 2026, CMS published its final rule updating payment rates and policies for the inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS) for federal fiscal year 2027. The rule takes effect October 1, 2026, the start of FFY 2027. While the rule primarily governs Medicare hospital payments, it may affect Medicaid programs that use Medicare rates as a baseline for supplemental payments, upper payment limit calculations, or rate-setting for Medicaid managed care hospital contracts.
Why it mattersChanges to Medicare IPPS rates can influence Medicaid supplemental payment programs and managed care rate development where states benchmark to Medicare or negotiate hospital rates informed by Medicare methodology.