Stay ahead of the latest regulatory shifts and healthcare breaking news with Headlines from the Hill.
In this month’s edition you will find:
- Psych and Rehab Payment Systems: CMS releases final rules.
- Congressional Update: Government funding bill.
- $50 Billion Rural Health Transformational Program: States can apply in September.
Psych and Rehab Payment Systems: CMS releases final rules.
CMS released final rules for the fiscal year (FY) 2026 Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) and the FY 2026 Inpatient Rehabilitation Facility (IRF) PPS final rules. The rules largely remain unchanged from the proposals and the updated payment rates become effective on October 1.
Changes of note include:
- IRF IPPS Update: CMS finalized a hospital update of 2.6% - or $340 million – which reflects a projected market basket increase of 3.3%. Actual payments are expected to increase by 4.3% - up from 3.4% in the proposed rule. Tax paying hospitals are expected to see an increase of 4.4%.
This is a significant win for in IRFs and acute rehabilitation units (ARUs). The payment increase will help offset rising costs or labor and supplies, as well as other operational expenses. By improving financial stability, IRFs/ARUs are able to maintain accessible, high-quality care, which in turn enhances community outcomes and reduces the risk of readmission for patients. - Inpatient Psych PPS Update: CMS finalizes a net rate update of 2.5% - or $70 million – for Inpatient Psychiatric Facilities in FY 2026. CMS also finalizes its proposal to update the facility adjustment factors for teaching status and rural location, in a budget neutral manner.
Congressional Update: Government funding bill.
Senate and House Democratic leaders recently called on their Republican counterparts, demanding a “Big Four” meeting to discuss a bipartisan path forward on government funding.
The letter frames the upcoming talks around two key issues: the September 30th funding deadline and a “healthcare crisis” that Democrats claim will impact millions of Americans. Leader Schumer and Leader Jeffries wrote, “As a result of your choice to pursue a partisan agenda this Congress, 15 million Americans will now lose their healthcare.” While a bipartisan spending package recently passed the Senate, the Democratic leaders are urging Republicans to continue that spirit of cooperation, rather than pursuing a partisan path.
With the deadline to pass all 12 annual appropriations bills fast approaching, the push for a “Big Four” meeting signals the start of what could be a contentious battle over government spending and policy priorities.
$50 Billion Rural Health Transformational Program: States can apply in September.
States will be able to apply in early September for a portion of a $50 billion fund designed to help rural hospitals weather federal funding cuts and CMS must approve applications by Dec. 31.
The rural health fund was created after concerns were raised about the impact of Medicaid and Medicare cuts in President Trump’s tax law. The Rural Health Transformation Program requires states, working with hospitals and other providers seeking a portion of the fund, to explain to regulators how they plan to use the monies.
An analysis by KFF last month found the $50 billion could offset 37% of the potential cuts to Medicaid spending in rural areas.
