Inpatient and long-term care hospitals

For FY 2026, CMS proposed increasing payments for inpatient hospitals by 2.4%, or $4 billion. The proposed rule includes a $1.5 billion increase in disproportionate share hospital payments and a $234 million increase in new medical technology payments. The payment increase includes a 3.2% market basket increase reduced by a 0.8 percentage point productivity adjustment.

According to Fierce Healthcare, the 2.4% payment increase is lower than the 2.6% increase that CMS initially proposed last year and the 2.9% increase that was later finalized. Several organizations have also called the proposed inpatient payment update insufficient.

"While CMS's proposed update reflects the inflation formulas established by law, the reality is that patient care still faces the twin problems of hangover cost increases from hyperinflation and the cumulative effect of inadequate payment over time from Medicare and Medicaid," said the Federation of American Hospitals. "This is why it's missioncritical Congress protects Medicaid coverage by avoiding funding cuts as well as extends the enhanced tax credits to protect individual coverage."

Separately, Ashley Thompson, SVP for public policy analysis and development at the American Hospital Association (AHA), said the organization was disappointed by CMS' "inadequate" payment increase and expressed concerns that it would "hurt our ability to care for our communities."

"We urge CMS to reconsider its policy in the final rule to enable all hospitals to provide high-quality, around-the-clock, essential care for their patients and communities," Thompson added. 

Skilled nursing facilities

For skilled nursing facilities (SNFs), CMS proposed increasing payments by 2.8% for FY 2026. This includes a 3% market basket update, a 0.6 percentage point increase for a market basket forecast error for FY 2024, and a 0.8 percentage point decrease for productivity adjustment.

According to Modern Healthcare, the 2.8% payment increase is much lower than the 4.2% increase CMS gave SNFs in FY 2025. However, Clifton Porter, president of the American Health Care Association, praised the Medicare rate increase and urged the Trump administration to ensure that SNFs also receive healthy Medicaid and Medicare Advantage reimbursements.

"We will continue to encourage policymakers to consider this tapestry of government programs that contribute to our providers' ability to maintain access, enhance quality care, and invest in improvements," Porter said. "Our nation's leaders must ensure that our Medicare and Medicaid programs are strong, so that nursing homes can continue to care for America's seniors and the most vulnerable."

Inpatient rehabilitation facilities

CMS proposed increasing payments for inpatient rehabilitation facilities (IRFs) by 2.6%, or $295 million, for FY 2026. This payment increase includes a 3.4% market basket update reduced by a 0.8 percentage point productivity adjustment. The agency also proposed slightly decreasing the outlier threshold from $12,043 to $11,971.

Inpatient psychiatric facilities

CMS proposed increasing payments for inpatient psychiatric facilities (IPFs) by a net 2.4%, or $70 million, in FY 2026. This payment increase reflects a proposed market-basket update of 3.2% reduced by a 0.8 percentage point productivity adjustment.

The agency also proposed updating the outlier threshold so estimate outlier payments continue to be 2% of total payments. CMS would also increase the adjustment factors for IPFs with teaching status and rural location, as well as recognize increases to IPF teaching caps.

Hospices

For hospices, CMS proposed increasing payments by 2.4%, or $695 million, for FY 2026. This includes a 3.2% market basket reduced by a 0.8 percentage point productivity adjustment. The proposed hospice aggregate cap was also increased from $34,465.34 to $35,292.51.

Hospices that don't meet quality reporting requirements would see a 4-percentage point reduction in payments, which would result in a 1.6% net decrease compared to the year before.