AHA Statement on FY 2027 Final IPPS & LTCH Payment Rule

Joanna Hiatt Kim
Vice President, Payment Policy
American Hospital Association

July 31, 2026

AHA appreciates efforts to partner with CMS to expand the effectiveness of value-based models. We believe that flexibility is critical, as some hospitals lack the scale or financial capacity to make the investments in care redesign that are necessary for success. As such, we are disappointed CMS failed to make meaningful improvements to its expanded joint replacement bundled payment program. Mandatory models present significant challenges, and CMS' low-volume threshold fails to ensure that hospitals have enough cases to integrate changes in care delivery and actually determine if they had an impact. In addition, certain pricing policies in the model will make continued savings unachievable for hospitals.

Additionally, it cannot be overlooked that many hospitals face intense financial pressures, in part because the costs they incur for providing care far outpace government reimbursements. Despite this, CMS has made another inadequate update to inpatient payment rates, with an extremely high productivity cut even larger than proposed. This is in the face of rising need for care and higher uninsured rates.

Finally, we remain concerned about continued inadequacies in the LTCH payment system that have contributed to declining patient volumes and the closure of facilities across the country, threatening access to care for medically complex patients. Although the AHA appreciates that CMS did not further raise the outlier threshold in this final rule, broader reforms are needed to support the LTCH field. We remain committed to working with the Administration and Congress to advance the AHA's LTCH reform principles and promote a more sustainable payment framework that preserves patient access to LTCH services.

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