Long-Term Care Hospital PPS

May 5, 2026

The Centers for Medicare & Medicaid Services (CMS) on April 10 issued a proposed rule for the inpatient and long-term care hospital (LTCH) prospective payment systems (PPS) for fiscal year (FY) 2027. This Regulatory Advisory reviews highlights of the LTCH provisions in the rule, while the inpatient PPS (IPPS) provisions are covered in a separate advisory. In addition, the AHA issued a separate advisory on the rule’s proposed Center for Medicare and Medicaid Innovation Comprehensive Care for Joint Replacement Expanded Model.

Key Highlights

The proposed rule would:

Increase standard rate LTCH payments by a net 2.3%, or $55 million, in FY 2027 relative to FY 2026. This includes a 3.2% market-basket increase, reduced by a 0.8 percentage point productivity cut, as well as projected changes to short-stay outlier cases.
Maintain the standard rate fixed-loss amount for high-cost outlier (HCO) cases at $78,936, the same level as FY 2026.
Remove two measures related to COVID-19 vaccination among staff and patients from the LTCH Quality Reporting Program.