AHA Comments on CMS FY 2026 Inpatient Prospective Payment System Proposed Rule

June 10, 2025

The Honorable Mehmet Oz, M.D.
Administrator
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Room 445-G
Washington, DC 20201 

RE: CMS-1833-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes, (Vol. 90, No. 82), April 30, 2025.

Dear Administrator Oz:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services (CMS) hospital inpatient prospective payment system (PPS) proposed rule for fiscal year (FY) 2026. We are submitting separate comments on the agency’s proposed changes to the long-term care hospital PPS and Transforming Episode Accountability Model.

Hospitals are the backbone of America’s healthcare system, providing essential, life-saving care 24/7 to millions of people each year. They serve as critical centers for emergency response, specialized treatment, and chronic disease management, while also acting as major employers and economic engines within their communities. As communities across the country face demand for health services, it is essential that Medicare payment policies support the sustainability and availability of these providers.

To that end, we support several of the inpatient PPS proposed rule provisions, including the proposed increase in disproportionate share hospital (DSH) payments. We also appreciate the agency’s interest in deregulatory activities in the Medicare program and have submitted our comments through the request for information website. We also support several aspects of CMS’ quality-related proposals, including CMS’ recognition of the importance of striking an appropriate balance of burden and value in quality measurement programs and the removal of certain quality measures in the quality reporting programs.

At the same time, we continue to have strong concerns about the proposed payment updates. The proposed net payment update of 2.4% is simply inadequate given the unrelenting financial headwinds faced by hospitals and health systems. We are particularly concerned with the inappropriately large productivity cut that is being proposed. We urge the agency to re-examine the magnitude of this adjustment and its impact on Medicare payments.

Finally, we have concerns over the agency’s proposal to include Medicare Advantage patients in the Hospital Readmissions Reduction Program. Specifically, we are concerned that by including MA patients in calculating readmissions penalties, CMS effectively would be holding hospitals accountable for excessive and inappropriate coverage delays and denials on the part of MA plans.

We appreciate your consideration of these issues. Our detailed comments are attached. Please contact me if you have questions or feel free to have a member of your team contact Shannon Wu, AHA’s director for payment policy, at (202) 626-2963 or swu@aha.org.

Sincerely,

/s/

Ashley Thompson
Senior Vice President
Public Policy Analysis and Development

Attachment: Hospital Inpatient Prospective Payment System