Key takeaways from the FY 2027 IPPS proposed rule

CMS recently published the fiscal year (FY) 2027 Inpatient Prospective Payment System (IPPS) proposed rule, detailing its tentative plans to update Medicare inpatient coding and billing.

CMS is proposing a 2.4% increase to IPPS payments for FY 2027, reflecting a 3.2% hospital market basket increase and -0.8% productivity adjustment. Overall, the agency estimates that the proposed updates will increase hospital payments by approximately $1.4 billion in FY 2027, and new technology payments are expected to increase by $464 million.

A key provision in the proposed rule is a nationwide expansion of the Comprehensive Care for Joint Replacement (CJR) model, which ended in December 2024 and generated significant Medicare savings. Proposed to launch on October 1, 2027, the CJR Expanded (CJR-X) model would hold hospitals responsible for spending and care during a patient’s lower extremity joint replacement procedure through 90 days post-discharge. If finalized, the CJR-X model would be the first nationwide test of a mandatory episode-based payment model. However, hospitals participating in the Transforming Episode Accountability Model (TEAM) would be excluded.

Other proposals in the rule include various quality and reporting program updates, several TEAM modifications, codification of certain organ procurement payment policies, and more.

Comments on the FY 2027 IPPS proposed rule are due by June 9. Revenue cycle professionals can view CMS’ press release and fact sheet for more information.