Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year (FY) 2026 Rates; Changes to the FY 2025 IPPS Rates Due to Court Decision; Requirements for Quality Programs; and Other Policy Changes; Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit and Electronic Prior Authorization payments in FY 2026 as compared to FY 2025. See also the table in section I.G.2 of this Appendix. 6 This column displays the payment impact of Version 43 GROUPER, the changes to the relative weights and the recalibration of the MS-DRG weights based on FY 2024 MedPAR data, and the 10-percent cap where the relative weight for a MS–DRG will decrease by more than ten percent in a given fiscal year. This column displays the application of the recalibration budget neutrality factor and the 10-percent cap budget neutrality factor (which can be found in section II.A.4 of the Adden- dum of this final rule). 7 This column displays the effects of the changes to the FY 2026 wage index. This includes (1) the update to wage index data using FY 2022 cost report data, the application of the wage budget neutrality factor and the update to the labor and nonlabor shares. (2) The effects of geographic reclassifications by the Medicare Geo- graphic Classification Review Board (MGCRB), showing the payment impact of going from FY 2025 reclassifications to the reclassifications scheduled to be in effect for FY 2026. (3) The effects of the application of the rural floor. (4) The effects of urban to rural impact of going from FY 2025 reclassifications to the reclassifications scheduled to be in effect for FY 2026. (3) The effects of the application of the rural floor. (4) The effects of urban to rural reclassifications under section 1886(d)(8) of the Act on the wage index. (5) The effects of the application of ‘‘LUGAR’’ status under section 1886(d)(10) of the Act on the wage index. (6) The adjustments to the wage index driven by non-budget neutral policies. These include (a) the imputed floor for all-urban states; (b) the policy that requires hospitals located in frontier States have a wage index no less than 1.0; and (c) the policy which provides for an increase in a hospital’s wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes. The budget neutrality factors for the effects that are budget neutral can be found in sec- tion II.A.4 of the Addendum of this final rule. 8 For the traditional wage index information showing the effect of including or excluding particular wage index polices from the computation of the FY 2026 wage index instead of the impact of the wage index change ditional wage index information showing the effect of including or excluding particular wage index polices from the computation of the FY 2026 wage index instead of the impact of the wage index changes from FY 2025 to FY 2026 shown in Table I, we refer readers to the data file available at https://www.cms.gov/ Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (click on the link on the left side of the screen titled ‘‘FY 2026 IPPS Final Rule Home Page’’.) 9 We note that because the low wage index hospital policy was removed for FY 2025, the discontinuation of the policy effective FY 2026 has no impact on the esti- mated change in payments from FY 2025 to FY 2026. However, the budget neutral transition for the discontinuation of the low wage index hospital policy will redis- tribute payments from hospitals that do not benefit from the transition to hospitals that do benefit (primarily all the hospitals located in Puerto Rico) due to the associ- ated budget neutrality factor. The budget neutrality factor for the transition can be found in section II.A.4 of the Addendum of this final rule. 10 This column shows the estimated change in payments from FY 2025 to FY 202 factor. The budget neutrality factor for the transition can be found in section II.A.4 of the Addendum of this final rule. 10 This column shows the estimated change in payments from FY 2025 to FY 2026. a. Effects of the Outlier Adjustment (Column 1) This column reflects the effect of estimated outlier payments returning to their targeted levels in FY 2026 as compared to the estimated outlier payments for FY 2025 produced from our payment simulation model. As discussed in section II.A.4.i. of the Addendum to this final rule, the statute requires that outlier payments for any year are projected to be not less than 5 percent nor more than 6 percent of total operating DRG VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00722 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37257 payments plus outlier payments, and also requires that the average standardized amount be reduced by a factor to account for the estimated proportion of total DRG payments made to outlier cases. We continue to use a 5.1 percent target (or an outlier o hat the average standardized amount be reduced by a factor to account for the estimated proportion of total DRG payments made to outlier cases. We continue to use a 5.1 percent target (or an outlier offset factor of 0.949) in calculating the outlier offset to the standardized amount, just as we did for FY 2025. Therefore, our estimate of payments per discharge for FY 2026 from our payment simulation model reflects this 5.1 percent outlier payment target. Our payment simulation model shows that estimated outlier payments for FY 2025 were less than that target by approximately 0.5 percentage points. Overall, hospitals will experience a 0.3 percent increase in payments primarily due to the estimated 0.5 percent change in outlier payments produced by our payment simulation model when returning to the 5.1 percent outlier target for FY 2026 in combination with interactive effects among the various add-on payment factors. b. Effects of the Hospital Update (Column 2) As discussed in section VI.B. of the preamble of this final rule, this column includes the hospital update, including the 3.3 percent IPPS market basket rate-of- increase reduced by 0.7 percentage point for the productivity ad .B. of the preamble of this final rule, this column includes the hospital update, including the 3.3 percent IPPS market basket rate-of- increase reduced by 0.7 percentage point for the productivity adjustment. As a result, we are making a 2.6 percent update to the national standardized amount. This column also includes the update to the hospital- specific rates which includes the 3.3 percent market basket rate-of-increase reduced by 0.7 percentage point for the productivity adjustment. As a result, we are making a 2.6 percent update to the hospital-specific rates. This column also includes any applicable adjustments for hospitals that fail to comply with the quality data submission requirements and/or are not meaningful EHR users. Overall, hospitals are expected to experience a 2.5 percent increase in payments primarily due to the combined effects of the hospital update to the national standardized amount and the hospital update to the hospital-specific rates. c. Effects of the Expiration of MDH Special Payment Status (Column 3) Column 3 shows our estimate of the changes in payments due to the expiration of MDH status, a nonbudget neutral payment provision. Section 2202 of the Full ion of MDH Special Payment Status (Column 3) Column 3 shows our estimate of the changes in payments due to the expiration of MDH status, a nonbudget neutral payment provision. Section 2202 of the Full-Year Continuing Appropriations and Extensions Act, 2025 further extended the MDH program through FY 2025. Therefore, under current law, the MDH program will expire for discharges on or after October 1, 2025. Hospitals that qualify to be MDHs receive the higher of payments made based on the Federal rate or the payments made based on the Federal rate amount plus 75 percent of the difference between payments based on the Federal rate and payments based on the hospital-specific rate (a hospital-specific cost-based rate). Because this provision is not budget neutral, the expiration of this payment provision is estimated to result in a 0.1 percent decrease in IPPS payments overall. There are currently 162 MDHs, of which we estimate 82 would be paid under the blended payment of the Federal rate and hospital-specific rate if the MDH program were not set to expire. Because those 82 MDHs will no longer receive the blended payment and will be paid only under the Federal rate for FY 2026, it is e and hospital-specific rate if the MDH program were not set to expire. Because those 82 MDHs will no longer receive the blended payment and will be paid only under the Federal rate for FY 2026, it is estimated that those hospitals will experience an overall decrease in payments of approximately $154 million (relative to the MDH program payments they received for FY 2025 discharges). d. Effects of the Changes in Uncompensated Care Payments (UCP) (Column 4) Column 4 shows the effects of the changes in uncompensated care payments made to hospitals in FY 2026. As discussed in section IV.E. of the preamble of this final rule, the total UCP and supplemental payments equal approximately $7.8 billion. Overall, hospitals are expected to experience a 1.7 percent increase in total operating IPPS payments due to the change in uncompensated care payments. For a more detailed impact analysis of the changes to uncompensated care payments, we refer readers to section I.G.2 of appendix A to this final rule. e. Effects of the Changes to the MS–DRG Reclassifications and Relative Cost-Based Weights With Recalibration Budget Neutrality (Column 5) Column 5 shows the effects of the changes to the MS–DRGs ule. e. Effects of the Changes to the MS–DRG Reclassifications and Relative Cost-Based Weights With Recalibration Budget Neutrality (Column 5) Column 5 shows the effects of the changes to the MS–DRGs and relative weights with the application of the recalibration budget neutrality factor to the standardized amounts. Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate classification changes to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. Consistent with section 1886(d)(4)(C)(iii) of the Act, we calculated a recalibration budget neutrality factor to account for the changes in MS–DRGs and relative weights to ensure that the overall payment impact is budget neutral. We also applied the permanent 10-percent cap on the reduction in a MS–DRG’s relative weight in a given year and an associated recalibration cap budget neutrality factor to account for the 10-percent cap on relative weight reductions to ensure that the overall payment impact is budget neutral. As discussed in section II.D. of the preamble of this final rule, for FY 2026, we calculated the MS–DRG relative weights using reductions to ensure that the overall payment impact is budget neutral. As discussed in section II.D. of the preamble of this final rule, for FY 2026, we calculated the MS–DRG relative weights using the FY 2024 MedPAR data grouped to the Version 43 (FY 2026) MS–DRGs. The reclassification changes to the GROUPER are described in more detail in section II.C. of the preamble of this final rule. The ‘‘All Hospitals’’ line in Column 5 indicates that changes due to the MS–DRGs and relative weights are expected to result in a 0.0 percent change in payments with the application of the recalibration budget neutrality factor (discussed in section II.A.4.a. of the Addendum to this final rule) and the recalibration cap budget neutrality factor to the standardized amount (discussed in section II.A.4.b. of the Addendum to this final rule). f. Effects of the Wage Index Changes (Column 6) Column 6 shows the impact of the changes to hospitals’ FY 2026 wage index as compared to hospitals’ FY 2025 wage index. Overall, the FY 2026 wage index changes are expected to lead to a 0.1 percent decrease for all hospitals, as shown in Column 6. This change is a result of the updates to the wage data reported b ndex. Overall, the FY 2026 wage index changes are expected to lead to a 0.1 percent decrease for all hospitals, as shown in Column 6. This change is a result of the updates to the wage data reported by hospitals, the change to the labor and nonlabor shares, changes in the geographic reclassifications of hospitals, and the interactions of those changes with statutory wage index floors and exceptions. We combine these changes because the complex and interactive ways in which hospitals increasingly seek to maximize their wage index values in a given year render isolation of these effects in a year-over-year context less informative. For example, the impact of the updates to the wage data reported by hospitals in the absence of the changes in geographic reclassification and especially the interaction of both of those with statutory wage index floors and exceptions is less meaningful than showing the combined effect of those factors. For the traditional wage index information showing the effect of including or excluding particular wage index polices from the computation of the FY 2026 wage index instead of the impact of the wage index changes from FY 2025 to FY 2026 shown in Table I, we fect of including or excluding particular wage index polices from the computation of the FY 2026 wage index instead of the impact of the wage index changes from FY 2025 to FY 2026 shown in Table I, we refer readers to the data file available at https:// www.cms.gov/Medicare/Medicare-Fee-for- Service-Payment/AcuteInpatientPPS/ index.html (click on the link on the left side of the screen titled ‘‘FY 2026 IPPS Final Rule Home Page’’). Specifically, this column in Table I shows the combined effects of the application of the following FY 2026 wage index changes relative to FY 2025: (1) Effects of the Final Changes to the Wage Data Column 6 reflects the effects of the updated wage data and the labor and non-labor shares, with the application of the wage index budget neutrality factor for FY 2026 relative to FY 2025. Section 1886(d)(3)(E) of the Act requires that, beginning October 1, 1993, we annually update the wage data used to calculate the wage index. In accordance with this requirement, the wage index for acute care hospitals for FY 2026 is based on data submitted for hospital cost reporting periods, beginning on or after October 1, 2021, and before October 1, 2022. Column 6 reflect the wage index for acute care hospitals for FY 2026 is based on data submitted for hospital cost reporting periods, beginning on or after October 1, 2021, and before October 1, 2022. Column 6 reflects the percentage change in payments when going from a model using the FY 2025 wage index based on FY 2025 reclassifications and the FY 2025 labor-related share of 67.6 percent, to a model using the FY 2026 wage index based on FY 2026 reclassifications (as described in further detail in the next section) and the labor-related share of 66.0 percent, while holding other payment parameters, such as use of the Version 43 MS–DRG GROUPER, constant. In addition, the column incorporates the application of the wage budget neutrality to the national standardized amount. As discussed in section II.A.4.c. of the Addendum to this final rule, for FY 2026 we calculated the wage budget neutrality factor to ensure that payments under the updated wage data and the labor-related share of 66.0 percent are budget neutral, without regard to the lower labor-related share of 62 percent VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00723 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h et neutral, without regard to the lower labor-related share of 62 percent VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00723 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37258 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations applied to hospitals with a wage index less than or equal to 1.0. This budget neutrality factor can be found in the summary table of the FY 2026 budget neutrality factors in section II.A.4. of the Addendum to this final rule. (2) Effects of MGCRB, Urban to Rural and ‘‘Lugar’’ Reclassifications Column 6 reflects the impact of MGCRB reclassification decisions under section 1886(d)(10) of the Act, urban to rural reclassifications under section 1886(d)(8)(E) of the Act, and Lugar status redesignations under section 1886(d)(8)(B) of the Act on the wage index for FY 2026 relative to FY 2025. The overall effect of geographic reclassification is required by section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, as discussed in section II.A.4.d. of the Addendum to this final rule, we apply a reclassification budget neutrality adjustment to e by section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, as discussed in section II.A.4.d. of the Addendum to this final rule, we apply a reclassification budget neutrality adjustment to ensure that the effects of the reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are budget neutral. This budget neutrality factor can be found in the summary table of the final FY 2026 budget neutrality factors in section II.A.4. of the Addendum to this final rule. Table 2 listed in section VI. of the Addendum to this final rule and available on the CMS website reflects the reclassifications for FY 2026 at the time of development of this final rule. For further information on MGCRB reclassifications, urban to rural reclassifications and Lugar status redesignations, we refer readers to section III.E of the preamble of this final rule. (3) The Effects of the Rural Floor, Including Budget Neutrality Adjustment Column 6 reflects the effects of the application of the rural floor and the application of the rural floor budget neutrality on the wage index for FY 2026 relative to FY 2025. As discussed in section III.F.1. of the preamble of this final rule, sectio the rural floor and the application of the rural floor budget neutrality on the wage index for FY 2026 relative to FY 2025. As discussed in section III.F.1. of the preamble of this final rule, section 4410 of Pub. L. 105–33 established the rural floor by requiring that the wage index for a hospital in any urban area cannot be less than the wage index applicable to hospitals located in rural areas in the same state. We apply a uniform budget neutrality adjustment to the wage index as discussed in section II.A.4.e. of the Addendum to this final rule. All IPPS hospitals in our model have their wage indexes reduced by the rural floor budget neutrality adjustment. This budget neutrality factor can be found in the summary table of the FY 2026 budget neutrality factors in section II.A.4. of the Addendum to this final rule. (4) Effects the Application of the Imputed Floor, Frontier State Wage Index and Out- Migration Adjustment Lastly, this column also reflects the combined effects of the application of the following non-budget neutral provisions for FY 2026 relative to FY 2025: (a) the imputed floor under section 1886(d)(3)(E)(iv)(I) and (II) of the Act for certain all-urban States (as d lication of the following non-budget neutral provisions for FY 2026 relative to FY 2025: (a) the imputed floor under section 1886(d)(3)(E)(iv)(I) and (II) of the Act for certain all-urban States (as discussed in section III.F.2. of the preamble of this final rule); (b) the minimum post- reclassified wage index of 1.00 for all hospitals located in ‘‘frontier States’’ as required by section 1886(d)(3)(E)(iii) Act (as discussed in section III.F.3. of the preamble of this final rule); and (c) the effects of the out-migration adjustment under section 1886(d)(13) of the Act (as discussed in section III.F.4. of the preamble of this final rule). g. Effects of All FY 2026 Changes (Column 7) Column 7 shows our estimate of the changes in payments per discharge from FY 2025 and FY 2026, resulting from all changes for FY 2026 included in Table I. It includes the combined effects of the year-over-year change of the factors described in the previous columns in the table. The average increase in payments under the IPPS for all hospitals is approximately 4.3 percent for FY 2026 relative to FY 2025, which is primarily driven by the changes reflected in Column 2 (hospital update) and Column 4 (uncomp nts under the IPPS for all hospitals is approximately 4.3 percent for FY 2026 relative to FY 2025, which is primarily driven by the changes reflected in Column 2 (hospital update) and Column 4 (uncompensated care payments). As described in Column 2, the annual hospital update for hospitals paid under the national standardized amount, combined with the annual hospital update for hospitals paid under the hospital-specific rates are expected to result in a 2.5 percent increase in payments in FY 2026 relative to FY 2025 for all hospitals. As described in Column 4, uncompensated care payments are expected to result in a 1.7 percent increase in payments in FY 2026 relative to FY 2025 for all hospitals. Overall payments to hospitals paid under the IPPS are estimated to increase by 4.3 percent for FY 2026 (as compared to FY 2025) due to the outlier adjustment, the applicable percentage increase, the MDH program expiration, uncompensated care payments, and changes to the wage index and labor and nonlabor shares. Hospitals in urban areas are expected to experience a 4.4 percent increase in payments per discharge in FY 2026 compared to FY 2025. Hospital payments per discharge in rural areas a d nonlabor shares. Hospitals in urban areas are expected to experience a 4.4 percent increase in payments per discharge in FY 2026 compared to FY 2025. Hospital payments per discharge in rural areas are estimated to increase by 2.9 percent in FY 2026. The relatively lower projected increase for rural hospitals is due in part to the MDH program expiration (Column 3) and the MS– DRG and relative weight changes with application budget neutrality (Column 5). Hospital categories that generally treat relatively less complex cases, such as rural hospitals and smaller urban hospitals, are expected to experience a decrease in their payments, while hospitals that generally treat relatively more complex cases, such as larger urban hospitals, are expected to experience an increase in their payments as a result of the changes to the relative weights. 3. Estimated Average Payments per Discharge Table II displays the results of our analysis of the changes for FY 2026 on estimated average payments per discharge for IPPS operating costs and uncompensated care payments. It presents the impact for the categories of hospitals shown in Table I. It compares the estimated average payments per discharge f discharge for IPPS operating costs and uncompensated care payments. It presents the impact for the categories of hospitals shown in Table I. It compares the estimated average payments per discharge for FY 2025 with the estimated average payments per discharge for FY 2026, as calculated under our models. It reflects the combined effects of the changes presented in Table I, and therefore the estimated percentage changes shown in the last column of Table II equal the estimated percentage changes in average payments per discharge from Column 7 of Table I. TABLE II—IMPACT ANALYSIS OF CHANGES ON AVERAGE PAYMENTS PER DISCHARGE FOR OPERATING COSTS AND UNCOMPENSATED CARE Number of hospitals (1) Estimated average FY 2025 payment per discharge (2) Estimated average FY 2026 payment per discharge (3) FY 2026 changes (4) All Hospitals ..................................................................................................... By Geographic Location: Urban hospitals ......................................................................................... Rural hospitals .......................................................................................... Bed Size (Urban): 0–99 beds ................................................................. Rural hospitals .......................................................................................... Bed Size (Urban): 0–99 beds ................................................................................................. 100–199 beds ........................................................................................... 200–299 beds ........................................................................................... 300–499 beds ........................................................................................... 500 or more beds ..................................................................................... Bed Size (Rural): 0–49 beds ................................................................................................. 50–99 beds ............................................................................................... 100–149 beds ........................................................................................... 3,033 2,372 661 647 673 406 392 252 313 180 95 17,751 18,187 12,893 12,982 14,325 16,073 17,903 22,804 11,002 12,339 12,218 18,515 18,986 13,269 ...................................................... 3,033 2,372 661 647 673 406 392 252 313 180 95 17,751 18,187 12,893 12,982 14,325 16,073 17,903 22,804 11,002 12,339 12,218 18,515 18,986 13,269 13,360 14,823 16,753 18,658 23,949 11,336 12,552 12,634 4.3 4.4 2.9 2.9 3.5 4.2 4.2 5.0 3.0 1.7 3.4 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00724 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37259 TABLE II—IMPACT ANALYSIS OF CHANGES ON AVERAGE PAYMENTS PER DISCHARGE FOR OPERATING COSTS AND UNCOMPENSATED CARE—Continued Number of hospitals (1) Estimated average FY 2025 payment per discharge (2) Estimated average FY 2026 payment per discharge (3) FY 2026 changes (4) 150–199 beds ........................................................................................... 200 or more beds ..................................................................................... Urban by Region: New England ............................................................................................ Middle Atlantic ............ ................................................. Urban by Region: New England ............................................................................................ Middle Atlantic .......................................................................................... East North Central .................................................................................... West North Central ................................................................................... South Atlantic ........................................................................................... East South Central ................................................................................... West South Central .................................................................................. Mountain ................................................................................................... Pacific ....................................................................................................... Rural by Region: New England ............................................................................................ Middle Atlantic ........................................... .................. Rural by Region: New England ............................................................................................ Middle Atlantic .......................................................................................... East North Central .................................................................................... West North Central ................................................................................... South Atlantic ........................................................................................... East South Central ................................................................................... West South Central .................................................................................. Mountain ................................................................................................... Pacific ....................................................................................................... Puerto Rico: Puerto Rico Hospitals ............................................................................... By Payment Classification: Urban hospitals ...................................................... Puerto Rico Hospitals ............................................................................... By Payment Classification: Urban hospitals ......................................................................................... Rural areas ............................................................................................... Teaching Status: Nonteaching .............................................................................................. Fewer than 100 residents ......................................................................... 100 or more residents .............................................................................. Urban DSH: Non-DSH .................................................................................................. 100 or more beds ..................................................................................... Less than 100 beds .................................................................................. Rural DSH: Non-DSH .................................................................................................. SCH ....................................................................................... : Non-DSH .................................................................................................. SCH .......................................................................................................... RRC .......................................................................................................... 100 or more beds ..................................................................................... Less than 100 beds .................................................................................. Urban teaching and DSH: Both teaching and DSH ............................................................................ Teaching and no DSH .............................................................................. No teaching and DSH .............................................................................. No teaching and no DSH ......................................................................... Special Hospital Types: RRC .......................................................................................................... RRC that reclassified from urban to rural in accordance with section 1886(d)(8)(E) as implemented at 42 CFR 412 ........................................................................................ RRC that reclassified from urban to rural in accordance with section 1886(d)(8)(E) as implemented at 42 CFR 412.103 .............................. SCH .......................................................................................................... SCH that reclassified from urban to rural in accordance with section 1886(d)(8)(E) as implemented at 42 CFR 412.103 .............................. SCH and RRC .......................................................................................... SCH and RRC that reclassified from urban to rural in accordance with section 1886(d)(8)(E) as implemented at 42 CFR 412.103 ................. Type of Ownership: Voluntary ................................................................................................... Proprietary ................................................................................................ Government .............................................................................................. Medicare Utilization as a Percent of Inpatient Days: 0–25 ........................................................... .................................................................................. Medicare Utilization as a Percent of Inpatient Days: 0–25 .......................................................................................................... 25–50 ........................................................................................................ 50–65 ........................................................................................................ Over 65 ..................................................................................................... Medicaid Utilization as a Percent of Inpatient Days: 0–25 .......................................................................................................... 42 31 104 274 366 156 393 141 355 180 351 19 48 106 74 108 127 116 39 24 52 1,611 1,422 1,756 986 291 346 909 356 93 227 863 41 198 527 58 738 288 131 657 218 37 119 49 1,902 724 406 1,548 1,388 65 13 1,917 14,079 15,559 19,617 21,119 17,263 16,846 16,104 14,936 16,776 17,643 22,188 17,347 14,481 12,601 12,828 12,218 11,264 11,006 14,739 17,337 13,988 15,990 19,107 13,357 15,905 26,535 13,132 16,804 12,361 16,180 13,778 19,792 17,825 10,645 18,326 14, 14,936 16,776 17,643 22,188 17,347 14,481 12,601 12,828 12,218 11,264 11,006 14,739 17,337 13,988 15,990 19,107 13,357 15,905 26,535 13,132 16,804 12,361 16,180 13,778 19,792 17,825 10,645 18,326 14,607 13,871 12,240 13,367 20,458 13,194 15,612 14,306 18,018 17,557 15,746 21,551 19,737 15,793 15,374 12,501 15,694 14,597 16,063 19,935 22,129 17,812 17,769 16,992 15,706 18,070 18,317 22,688 17,492 14,900 12,786 13,302 12,647 11,616 11,578 15,200 17,612 15,587 16,677 19,930 13,839 16,563 27,842 13,575 17,543 12,940 16,327 14,204 20,663 19,316 10,743 19,167 15,047 14,440 12,685 13,780 21,382 13,643 15,992 14,729 18,577 18,231 16,447 22,974 20,791 16,268 15,872 13,061 16,282 3.7 3.2 1.6 4.8 3.2 5.5 5.5 5.2 7.7 3.8 2.3 0.8 2.9 1.5 3.7 3.5 3.1 5.2 3.1 1.6 11.4 4.3 4.3 3.6 4.1 4.9 3.4 4.4 4.7 0.9 3.1 4.4 8.4 0.9 4.6 3.0 4.1 3.6 3.1 4.5 3.4 2.4 3.0 3.1 3.8 4.4 6.6 5.3 3.0 3.2 4.5 3.7 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00725 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37260 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations TABLE II—IMPACT ANALYSIS OF CHANGES ON A 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37260 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations TABLE II—IMPACT ANALYSIS OF CHANGES ON AVERAGE PAYMENTS PER DISCHARGE FOR OPERATING COSTS AND UNCOMPENSATED CARE—Continued Number of hospitals (1) Estimated average FY 2025 payment per discharge (2) Estimated average FY 2026 payment per discharge (3) FY 2026 changes (4) 25–50 ........................................................................................................ 50–65 ........................................................................................................ Over 65 ..................................................................................................... FY 2026 Reclassifications: All Reclassified Hospitals ......................................................................... Non-Reclassified Hospitals ....................................................................... Urban Hospitals Reclassified ................................................................... Urban Non-reclassified Hospitals ............................................................. Rural Hospitals Re itals Reclassified ................................................................... Urban Non-reclassified Hospitals ............................................................. Rural Hospitals Reclassified Full Year ..................................................... Rural Non-reclassified Hospitals Full Year ............................................... All hospitals that reclassified from urban to rural in accordance with section 1886(d)(8)(E) as implemented at 42 CFR 412.103 ................. Other Reclassified Hospitals (Section 1886(d)(8)(B), also known as Lugar hospitals) .................................................................................... 992 91 32 1,093 1,940 979 1,407 268 379 811 50 20,848 28,395 30,803 18,809 16,546 19,685 15,937 13,129 12,546 20,066 12,108 21,816 31,276 34,517 19,606 17,272 20,557 16,621 13,536 12,920 20,956 12,236 4.6 10.1 12.1 4.2 4.4 4.4 4.3 3.1 3.0 4.4 1.1 G. Effects of Other Policy Changes In addition to those policy changes discussed previously that we are able to model using our IPPS payment simulation model, we are making various other changes in this final rule. As noted in section I.D. of this Appendix, our payment simu cussed previously that we are able to model using our IPPS payment simulation model, we are making various other changes in this final rule. As noted in section I.D. of this Appendix, our payment simulation model uses the most recent available claims data to estimate the impacts on payments per case of certain changes in this final rule. Generally, we have limited or no specific data available with which to estimate the impacts of these changes using that payment simulation model. For these changes, we have attempted to predict the payment impacts based upon our experience and other more limited data. Our estimates of the likely impacts associated with these other changes are discussed in this section. 1. Effects of the Changes Relating to New Medical Service and Technology Add-On Payments a. FY 2026 Status of Technologies Approved for FY 2025 New Technology Add-On Payments In section II.E.4. of the preamble of this final rule, we are continuing to make new technology add-on payments for the technologies listed in the following table in FY 2026 because these technologies would still be considered new for purposes of new technology add-on payments. Under § 412.88(a)(2), the new tech or the technologies listed in the following table in FY 2026 because these technologies would still be considered new for purposes of new technology add-on payments. Under § 412.88(a)(2), the new technology add-on payment for each case would be limited to the lesser of: (1) 65 percent of the costs of the new technology (or 75 percent of the costs for technologies designated as Qualified Infectious Disease Products (QIDPs) or approved under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) pathway, or for the gene therapies, CasgevyTM (exagamglogene autotemcel) and LyfgeniaTM (lovotibeglogene autotemcel), when indicated and used specifically for the treatment of SCD, which were approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69128 through 69135, and 89 FR 69188 through 69196)); or (2) 65 percent of the amount by which the costs of the case exceed the standard MS–DRG payment for the case (or 75 percent of the amount for technologies designated as QIDPs; for technologies approved under the LPAD pathway; or for the gene therapies, CasgevyTM and LyfgeniaTM, when indicated and used specifically for the treatment of SCD r technologies designated as QIDPs; for technologies approved under the LPAD pathway; or for the gene therapies, CasgevyTM and LyfgeniaTM, when indicated and used specifically for the treatment of SCD, which were approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69128 through 69135, and 89 FR 69188 through 69196)). Because it is difficult to predict the actual new technology add-on payment for each case, our estimates in this final rule are based on the applicant’s estimate at the time they submitted their original application (or based on updated figures provided during the public comment period) and the increase in new technology add-on payments for FY 2026 as if every claim that would qualify for a new technology add-on payment would receive the maximum add-on payment. In the following table are estimates for the 27 new technology add-on payments which we are continuing in FY 2026: FY 2026 ESTIMATES FOR NEW TECHNOLOGY ADD-ON PAYMENTS TO CONTINUE FOR FY 2026 Technology name CYTALUX® (pafolacianine) (lung indication) .......................................................................................................... EPKINLYTM (epcorit NUE FOR FY 2026 Technology name CYTALUX® (pafolacianine) (lung indication) .......................................................................................................... EPKINLYTM (epcoritamab-bysp) and COLUMVITM (glofitamab-gxbm) * ................................................................ AveirTM AR Leadless Pacemaker ........................................................................................................................... AveirTM Dual-Chamber Leadless Pacemaker ......................................................................................................... Ceribell Status Epilepticus Monitor ......................................................................................................................... DETOUR System .................................................................................................................................................... DefenCathTM (taurolidine/heparin) .......................................................................................................................... Phagenyx® System ............................................................................................... ....................................................................................... Phagenyx® System ................................................................................................................................................. REZZAYOTM (rezafungin for injection) ................................................................................................................... SAINT Neuromodulation System ............................................................................................................................ TOPSTM System ..................................................................................................................................................... XACDURO® (sulbactam/durlobactam) ................................................................................................................... Annalise Enterprise CTB Triage—OH .................................................................................................................... ASTar® System ....................................................................................................................................................... Edwards EVOQ ..................... ASTar® System ....................................................................................................................................................... Edwards EVOQUETM Tricuspid Valve Replacement System ................................................................................ GORE® EXCLUDER® Thoracoabdominal Branch Endoprosthesis (TAMBE Device) ........................................... LimFlowTM System .................................................................................................................................................. ParadiseTM Ultrasound Renal Denervation System ............................................................................................... Estimated cases FY 2026 NTAP amount (65% or 75%) Estimated total FY 2026 impact 300 157 245 2,250 2,477 600 12,000 294 795 25 1,200 654 271,200 69,000 800 518 561 200 $2,762.50 6,504.07 10,725.00 15,600.00 913.90 16,250.00 3,656.10 3,250.00 4,387.50 12,675.00 11,375.00 13,680.00 241.39 97.50 31,850.00 47,238.75 16,250.00 14,950.00 $828,750.00 1,021,138.99 2,627,625.00 35,100,000.00 2,263,730.30 9,750,000.00 43,873,200.00 955,500.00 3,488,062.50 316,875.0 0 11,375.00 13,680.00 241.39 97.50 31,850.00 47,238.75 16,250.00 14,950.00 $828,750.00 1,021,138.99 2,627,625.00 35,100,000.00 2,263,730.30 9,750,000.00 43,873,200.00 955,500.00 3,488,062.50 316,875.00 13,650,000.00 8,946,720.00 65,464,968.00 6,727,500.00 25,480,000.00 24,469,672.50 9,116,250.00 2,990,000.00 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00726 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37261 FY 2026 ESTIMATES FOR NEW TECHNOLOGY ADD-ON PAYMENTS TO CONTINUE FOR FY 2026—Continued Technology name PulseSelectTM Pulsed Field Ablation (PFA) Loop Catheter ................................................................................... Symplicity SpyralTM Multi-Electrode Renal Denervation Catheter ......................................................................... TriClipTM G4 ............................................................................................................................................................ VADER® Pedicle System ............................................... .................................................................................................................................. VADER® Pedicle System ........................................................................................................................................ ZEVTERATM (ceftobiprole medocaril); ABSSSI and CABP indications ................................................................. ZEVTERATM (ceftobiprole medocaril); SAB indication ........................................................................................... CASGEVYTM (exagamglogene autotemcel); Sickle Cell Disease indication ......................................................... HEPZATOTM KIT (melphalan for injection/hepatic delivery system) ...................................................................... LYFGENIATM (lovotibeglogene autotemcel)) .......................................................................................................... Estimated cases 3,402 55 150 200 245 571 117 149 40 FY 2026 NTAP amount (65% or 75%) 6,337.50 10,400.00 26,000.00 28,242.50 5,287.50 16,215.00 1,650,000.00 118,625.00 $2,325,000.00 Estimated total FY 2026 impact 21,560,175.00 5 0 200 245 571 117 149 40 FY 2026 NTAP amount (65% or 75%) 6,337.50 10,400.00 26,000.00 28,242.50 5,287.50 16,215.00 1,650,000.00 118,625.00 $2,325,000.00 Estimated total FY 2026 impact 21,560,175.00 572,000.00 3,900,000.00 5,648,500.00 1,295,437.50 9,258,765.00 193,050,000.00 17,675,125.00 $93,000,000.00 Aggregate Estimated Total FY 2026 Impact ................................................................................................... ........................ ........................ 603,029,994.79 * These two technologies were determined to be substantially similar to each other and were therefore evaluated as one application for new technology add-on pay- ments under the IPPS. b. FY 2026 Applications for New Technology Add-On Payments of the Act are not required to be budget neutral. In sections II.E.5. and 6. of the preamble to this final rule are 35 discussions of technologies with respect to add-on payments for new medical services and technologies for FY 2026. We note that of the 53 applications (34 alternative and 19 traditional) we received, 18 applicants either withdrew their applications or were not eligible for consideration for new technology add-on payment for t of the 53 applications (34 alternative and 19 traditional) we received, 18 applicants either withdrew their applications or were not eligible for consideration for new technology add-on payment for FY 2026 (12 alternative and 6 traditional). Of the 35 discussions of technologies in the preamble of this final rule, we are not approving the new technology add-on payment for 8 technologies. This results in a total of 27 new approvals or conditional approvals (5 traditional and 22 alternative) for new technology add-on payments for FY 2026. As explained in the preamble to this final rule, add-on payments for new medical services and technologies under section 1886(d)(5)(K) As discussed in section II.E.6. of the preamble of this final rule, under the alternative pathway for new technology add- on payments, new technologies that are medical products with a QIDP designation, approved through the FDA LPAD pathway, or are designated under the Breakthrough Device program will be considered not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to demonstrate that the technology represents a substantial clinica substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to demonstrate that the technology represents a substantial clinical improvement. These technologies must still be within the 2- to 3-year newness period, as discussed in section II.E.1.a.(1). of the preamble this final rule, and must also still meet the cost criterion. As fully discussed in section II.E.6. of the preamble of this final rule, we are approving or conditionally approving 22 new technology add-on payments for the alternative pathway applications submitted for FY 2026 new technology add-on payments. The approvals include 20 technologies that received a Breakthrough Device designation from FDA and 2 that were designated as a QIDP by FDA. We did not receive any LPAD applications for add-on payments for new technologies for FY 2026. Based on information from the applicants at the time of this final rule, we estimate that total payments for the technologies approved under the alternative pathway will be approximately $219 million for FY 2026. Total estimated FY 2026 payments for new technologies that are designated as a QIDP are approximately echnologies approved under the alternative pathway will be approximately $219 million for FY 2026. Total estimated FY 2026 payments for new technologies that are designated as a QIDP are approximately $7 million, and the total estimated FY 2026 payments for new technologies that are part of the Breakthrough Device program are approximately $212 million. In the following table, we present detailed estimates for the 22 technologies for which we are approving new technology add-on payments under the alternative pathway in FY 2026: FY 2026 ESTIMATES FOR NEW TECHNOLOGY ADD-ON PAYMENTS FOR TECHNOLOGIES UNDER THE ALTERNATIVE PATHWAY FOR FY 2026 Technology name Pathway (QIDP, LPAD, or breakthrough device) Estimated cases FY 2026 NTAP amount (65% or 75%) Estimated total FY 2026 impact EMBLAVEOTM (aztreonam-avibactam) ..................................................... QIDP ............................................... CONTEPOTM (fosfomycin) ........................................................................ QIDP ............................................... 4WEB Medical Ankle Truss System ......................................................... Breakthrough Device .............. ...................... QIDP ............................................... 4WEB Medical Ankle Truss System ......................................................... Breakthrough Device ...................... AeroPace® System .................................................................................... Breakthrough Device ...................... AGENTTM Paclitaxel-Coated Balloon Catheter ......................................... Breakthrough Device ...................... alfapump® system ..................................................................................... Breakthrough Device ...................... aprevo® -C cervical interbody fusion device .............................................. Breakthrough Device ...................... CERAMENT® G ........................................................................................ Breakthrough Device ...................... Emily’s Care Nourish Test System (Model 1) * ......................................... Breakthrough Device ...................... EspritTM BTK Everolimus Eluting Resorbable Scaffold System ............... Breakthrough Device ...................... EUROPATM Posterior Cervical Fusion System .... rough Device ...................... EspritTM BTK Everolimus Eluting Resorbable Scaffold System ............... Breakthrough Device ...................... EUROPATM Posterior Cervical Fusion System ......................................... Breakthrough Device ...................... iFuse TORQ TNTTM Implant System ........................................................ Breakthrough Device ...................... Merit Wrapsody® Cell Impermeable Endoprosthesis (CIE) ...................... Breakthrough Device ...................... Minima Stent System ** ............................................................................. Breakthrough Device ...................... MY01 Continuous Compartmental Pressure Monitor ............................... Breakthrough Device ...................... PBC Separator with Selux AST System ................................................... Breakthrough Device ...................... RECELL® Autologous Cell Harvesting Device ......................................... Breakthrough Device ...................... restor3d TIDALTM Fusion Cage ................................................................ Breakthrough Device ...................... ShortC ............. Breakthrough Device ...................... restor3d TIDALTM Fusion Cage ................................................................ Breakthrough Device ...................... ShortCutTM ................................................................................................. Breakthrough Device ...................... The WiSE CRT System ............................................................................. Breakthrough Device ...................... TriVerity Test ............................................................................................. Breakthrough Device ...................... VITEK® REVEALTM AST System ............................................................. Breakthrough Device ...................... 207 573 124 550 9,010 200 400 466 11 5,300 849 1,392 936 10 2,000 68,149 412 96 550 209 5,755 19,000 $9,000.68 8,775.00 15,275.00 23,650.90 4,013.75 21,450.00 21,125.00 5,687.50 3,347.50 6,922.50 80,548.00 4,135.95 3,770.00 22,685.00 2,112.50 87.78 4,875.00 18,196.75 9,750.00 41,145.00 243.75 81.25 $1,863,140.76 5,028,075.00 1,894,100.00 13,007,995.00 36,163,887.50 4,290,000.00 8,450,000.00 2,650,375.00 36,822.50 36,689,250.0 5.00 2,112.50 87.78 4,875.00 18,196.75 9,750.00 41,145.00 243.75 81.25 $1,863,140.76 5,028,075.00 1,894,100.00 13,007,995.00 36,163,887.50 4,290,000.00 8,450,000.00 2,650,375.00 36,822.50 36,689,250.00 68,385,252.00 5,757,242.40 3,528,720.00 226,850.00 4,225,000.00 5,982,119.22 2,008,500.00 1,746,888.00 5,362,500.00 8,599,305.00 1,402,781.25 1,543,750.00 Estimated Total FY 2026 Impact ....................................................... ......................................................... ........................ ........................ 218,842,533.63 * The applicant did not provide an updated volume during the public comment period. Therefore, based on the volume of claims identified by the applicant in FY 2024 MedPAR data and the expected patient population for this technology (VLBW infants and neonates), we are imputing a volume of 11 for fewer than 11 esti- mated cases for the purposes of estimating the impact of the technology. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00727 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37262 Federal Register / Vol. 90, No. 147 / Monday, August 4, 20 01 PO 00000 Frm 00727 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37262 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations ** During the public comment period, the applicant stated that Medicare coverage for this technology is expected to be rare with fewer than 10 anticipated cases (medically complex children) during the new technology add-on payment period. Therefore, for the purposes of estimating the impact of the technology, we are imput- ing a volume of 10. As fully discussed in section II.E.5. of the preamble of this final rule, we are approving new technology add-on payments for 5 technologies that applied under the traditional pathway for new technology add- on payments for FY 2026. Based on information from the applicants at the time of rulemaking, we estimate that total payments for the technologies for which we are making new technology add-on payments is approximately $139 million for FY 2026. In the following table, we present detailed estimates for the 5 technologies for which we are approving new technology add-on payments under the traditional pathway in FY 2026: 39 million for FY 2026. In the following table, we present detailed estimates for the 5 technologies for which we are approving new technology add-on payments under the traditional pathway in FY 2026: FY 2026 ESTIMATES FOR NEW TECHNOLOGY ADD-ON PAYMENTS FOR TECHNOLOGIES UNDER THE TRADITIONAL Technology name Estimated cases FY 2026 NTAP amount (65%) Estimated total FY 2026 impact AURLUMYNTM (iloprost injection) ........................................................................................................................... BREYANZI® (lisocabtagene maraleucel) ................................................................................................................ GRAFAPEXTM (treosulfan) ..................................................................................................................................... IMDELLTRA® (tarlatamab-dlle) ............................................................................................................................... TECELRA® (afamitresgene autoleucel) .................................................................................................................. 300 290 368 692 55 $28,600.00 316,860.05 21,41 .. TECELRA® (afamitresgene autoleucel) .................................................................................................................. 300 290 368 692 55 $28,600.00 316,860.05 21,411.00 7,117.50 472,550.00 $8,580,000.00 91,889,414.50 7,879,248.00 4,925,310.00 25,990,250.00 Estimated Total FY 2026 Impact ..................................................................................................................... ........................ ........................ 139,264,222.50 c. Total Estimated Costs for NTAP in FY 2026 In the following table, we present summary estimates for all new technology add-on payments for FY 2026: FY 2026 ESTIMATES FOR NEW TECHNOLOGY ADD-ON PAYMENTS FOR FY 2026 Category Estimated total FY 2026 impact Technologies Continuing New Technology Add-on Payments in FY 2026 ................................................................................................................... Alternative Pathway Applications .................................................................................................................................................................................... Traditional Pathway Applications ......... ............................................................................................................................................................. Traditional Pathway Applications .................................................................................................................................................................................... $603,029,994.79 218,842,553.63 139,264,222.50 Aggregate Estimated Total FY 2026 Impact ........................................................................................................................................................... 961,136,770.92 2. Medicare DSH Uncompensated Care Payments and Supplemental Payment for Indian Health Service Hospitals and Tribal Hospitals and Hospitals Located in Puerto Rico As discussed in section V.E. of the preamble of this final rule, under section 3133 of the Affordable Care Act, hospitals that are eligible to receive Medicare DSH payments will receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments under section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what formerly unt they previously would have received under the statutory formula for Medicare DSH payments under section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what formerly would have been paid as Medicare DSH payments (Factor 1), reduced to reflect changes in the percentage of uninsured individuals (Factor 2), is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has reported uncompensated care. Each hospital that is eligible for Medicare DSH payments will receive an additional payment based on its estimated share of the total amount of uncompensated care for all hospitals eligible for Medicare DSH payments. The uncompensated care payment methodology has redistributive effects based on the proportion of a hospital’s amount of uncompensated care relative to the aggregate amount of uncompensated care of all hospitals eligible for Medicare DSH payments (Factor 3). The change to Medicare DSH payments under section 3133 of the Affordable Care Act is not budget neutral. In this final rule, we are establishing the amount to be distributed as uncompensated care payments (UCP) to DSH-eligible hospitals for FY ection 3133 of the Affordable Care Act is not budget neutral. In this final rule, we are establishing the amount to be distributed as uncompensated care payments (UCP) to DSH-eligible hospitals for FY 2026, which is $7,713,127,500. This figure represents 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a Factor 2 of 62.14 percent. For FY 2025, the amount available to be distributed for uncompensated care was $5,705,743,275 or 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a Factor 2 of 54.29 percent. In addition, eligible IHS/Tribal hospitals and hospitals located in Puerto Rico are estimated to receive approximately $107,842,748.53 in supplemental payments in FY 2026, based on the difference between each hospital’s FY 2022 UCP (increased by 35.2 percent, which is the projected change between the FY 2026 total UCP amount and the total UCP amount for FY 2025) and its FY 2026 UCP as calculated using the methodology for FY 2026. If this difference is less than or equal to zero, the hospital will not receive a supplemental payment. For this final rule, the total U ts FY 2026 UCP as calculated using the methodology for FY 2026. If this difference is less than or equal to zero, the hospital will not receive a supplemental payment. For this final rule, the total UCP and supplemental payments equal approximately $7.821 billion. For FY 2026, we are using 3 years of data on uncompensated care costs from Worksheet S–10 of the FYs 2020, 2021, and 2022 cost reports to calculate Factor 3 for all DSH- eligible hospitals, including IHS/Tribal hospitals and Puerto Rico hospitals. For a complete discussion regarding the methodology for calculating Factor 3 for FY 2026, we refer readers to section V.E. of the preamble of this final rule. For a discussion regarding the methodology for calculating the supplemental payments, we refer readers to section V.D. of the preamble of this final rule. To estimate the impact of the combined effect of the changes in Factors 1 and 2, as well as the changes to the data used in determining Factor 3, on the calculation of Medicare UCP along with changes to supplemental payments for IHS/Tribal hospitals and hospitals located in Puerto Rico, we compared total UCP and supplemental payments estimated in the FY 2025 IPPS/LTCH PP are UCP along with changes to supplemental payments for IHS/Tribal hospitals and hospitals located in Puerto Rico, we compared total UCP and supplemental payments estimated in the FY 2025 IPPS/LTCH PPS final rule correction notice (89 FR 68986) to the combined total of the UCP and the supplemental payments estimated in this FY 2026 IPPS/LTCH PPS final rule. For FY 2025, we calculated 75 percent of the estimated amount that would be paid as Medicare DSH payments absent section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 54.29 percent and multiplied by a Factor 3 calculated using the methodology described in the FY 2025 IPPS/ LTCH PPS final rule. For FY 2026, we calculated 75 percent of the estimated amount that would be paid as Medicare DSH payments during FY 2025 absent section VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00728 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37263 3133 of the Affordable Care Act, adjusted by a Factor 2 of 62.14 percent and multiplied by a Factor 3 calculated using the me / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37263 3133 of the Affordable Care Act, adjusted by a Factor 2 of 62.14 percent and multiplied by a Factor 3 calculated using the methodology described previously. For this final rule, the supplemental payments for IHS/Tribal hospitals and Puerto Rico hospitals are calculated as the difference between the hospital’s adjusted base year amount (as determined based on the hospital’s FY 2022 UCP) and the hospital’s FY 2026 UCP. Our analysis included 2,364 hospitals that are projected to be DSH-eligible in FY 2026. Our analysis did not include hospitals that had terminated their participation in the Medicare program as of January 22, 2025, Maryland hospitals, new hospitals, and SCHs that are expected to be paid based on their hospital-specific rates. The 30 hospitals that are anticipated to be participating in the Rural Community Hospital Demonstration Program were also excluded from this analysis, as participating hospitals are not eligible to receive empirically justified Medicare DSH payments and UCP. In addition, the data from merged or acquired hospitals were combined under the surviving hospital’s CMS certificatio s are not eligible to receive empirically justified Medicare DSH payments and UCP. In addition, the data from merged or acquired hospitals were combined under the surviving hospital’s CMS certification number (CCN), and the non-surviving CCN was excluded from the analysis. The estimated impact of the changes in Factors 1, 2, and 3 on UCP and supplemental payments for eligible IHS/ Tribal hospitals and Puerto Rico hospitals across all hospitals projected to be DSH- eligible in FY 2026, by hospital characteristic, is presented in the following table: MODELED UNCOMPENSATED CARE PAYMENTS * AND SUPPLEMENTAL PAYMENTS FOR ESTIMATED FY 2026 DSHS BY HOSPITAL TYPE Number of estimated DSHs FY 2025 estimated uncompensated care payments and supplemental payments ($ in millions) FY 2026 estimated uncompensated care payments and supplemental payments ** ($ in millions) Dollar difference: FY 2025–FY 2026 ($ in millions) Percent change *** (1) (2) (3) (4) (5) ............................................................................ Total By Geographic Location: Urban Hospitals ................................................... Other Urban Areas ............................................... La ................................. Total By Geographic Location: Urban Hospitals ................................................... Other Urban Areas ............................................... Large Urban Areas .............................................. Rural Hospitals ..................................................... Bed Size (Urban): 0 to 99 Beds ........................................................ 100 to 249 Beds .................................................. 250+ Beds ............................................................ Bed Size (Rural): 0 to 99 Beds ........................................................ 100 to 249 Beds .................................................. 250+ Beds ............................................................ Urban by Region: New England ........................................................ Middle Atlantic ...................................................... South Atlantic ....................................................... East North Central ............................................... East South Central ............................................... West North Central .................................. ............ East North Central ............................................... East South Central ............................................... West North Central .............................................. West South Central .............................................. Mountain .............................................................. Pacific ................................................................... Puerto Rico .......................................................... Rural by Region: New England ........................................................ Middle Atlantic ...................................................... South Atlantic ....................................................... East North Central ............................................... East South Central ............................................... West North Central .............................................. West South Central .............................................. Mountain .............................................................. Pacific ................................................................... By Payment Classification: Urban Hospitals ................. .............................................................. Pacific ................................................................... By Payment Classification: Urban Hospitals ................................................... Large Urban Areas .............................................. Other Urban Areas ............................................... Rural Hospitals ..................................................... Teaching Status: Nonteaching ......................................................... Fewer than 100 residents .................................... 100 or more residents .......................................... Type of Ownership: Voluntary .............................................................. Proprietary ............................................................ ......................................................... Government Medicare Utilization Percent: **** 0 to 25 .................................................................. 25 to 50 ................................................................ 50 to 65 ................................................................ Greater than 65 .......................................... 50 ................................................................ 50 to 65 ................................................................ Greater than 65 .................................................... Medicaid Utilization Percent: **** 0 to 25 .................................................................. 25 to 50 ................................................................ 50 to 65 ................................................................ Greater than 65 .................................................... 2,364 1,905 984 921 459 371 775 759 344 105 10 85 222 303 105 319 124 245 148 308 46 8 34 70 31 82 104 103 20 7 1,243 661 582 1,121 1,246 828 290 1,509 497 358 1,389 948 25 2 1,308 930 93 33 $5,786 $7,821 $2,035 5,456 2,433 3,023 329 244 1,198 4,014 177 122 30 145 618 576 289 1,406 348 1,248 245 508 72 9 17 42 20 95 61 70 10 6 2,585 1,546 1,039 3,201 1,412 2,086 2,288 3,347 811 1,628 4,478 1,298 10 0 2,479 2,646 491 169 7,384 3,240 4,144 437 310 1,594 5,480 233 164 40 203 867 738 363 1,896 471 1,729 348 670 98 11 25 55 27 124 82 92 13 7 3,469 2,093 1,375 4,352 1,872 2,760 3,189 4,440 1,089 2,292 6,100 1,707 13 0 3,289 3,582 712 238 1,928 807 1,121 107 66 233 164 40 203 867 738 363 1,896 471 1,729 348 670 98 11 25 55 27 124 82 92 13 7 3,469 2,093 1,375 4,352 1,872 2,760 3,189 4,440 1,089 2,292 6,100 1,707 13 0 3,289 3,582 712 238 1,928 807 1,121 107 66 396 1,466 56 42 9 58 249 162 75 490 123 481 103 162 25 2 7 13 7 29 21 22 3 2 884 548 336 1,151 460 674 901 1,093 278 664 1,623 410 3 0 810 936 221 69 35.2 35.3 33.2 37.1 32.6 27.3 33.0 36.5 31.6 34.5 30.8 40.1 40.4 28.0 25.9 34.9 35.2 38.6 41.8 31.9 35.1 22.7 42.2 31.1 35.3 31.0 34.3 32.4 35.1 27.6 34.2 35.4 32.4 36.0 32.6 32.3 39.4 32.7 34.3 40.8 36.2 31.6 31.3 ¥100.0 32.7 35.4 44.9 41.1 Source: Dobson √ DaVanzo analysis of 2020, 2021 and 2022 Hospital Cost Reports. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00729 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37264 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations * Dollar UCP calculated by [0.75 * estimated section 1886(d)(5)(F) payments * Factor 2 * Factor 3]. When summed across all hospitals projected to receive DSH payments, UCP and supplemental payments are estimated to be $5.786 million in FY 2025, and UCP and 6(d)(5)(F) payments * Factor 2 * Factor 3]. When summed across all hospitals projected to receive DSH payments, UCP and supplemental payments are estimated to be $5.786 million in FY 2025, and UCP and supplemental payments are estimated to be $7.821 million in FY 2026. ** For IHS/Tribal hospitals and Puerto Rico hospitals, this impact table reflects the supplemental payments. *** Percentage change is determined as the difference between Medicare UCP and supplemental payments modeled for this FY 2026 IPPS/LTCH PPS final rule (column 3) and Medicare UCP and supplemental payments modeled for the FY 2025 IPPS/LTCH PPS final rule correction notice (column 2) divided by Medicare UCP and supplemental payments modeled for the FY 2025 IPPS/LTCH PPS final rule correction notice (column 2) times 100 percent. **** Hospitals with missing or unknown Medicare utilization or Medicaid utilization are not shown in the table. The changes in projected FY 2026 UCP and supplemental payments compared to the total of UCP and supplemental payments in FY 2025 are driven by increases in Factor 1 and Factor 2. Factor 1 has increased from the FY 2025 final rule’s Factor 1 of $10.509 billion to this final rule’ total of UCP and supplemental payments in FY 2025 are driven by increases in Factor 1 and Factor 2. Factor 1 has increased from the FY 2025 final rule’s Factor 1 of $10.509 billion to this final rule’s Factor 1 of $11.843 billion. Factor 2 has increased from the FY 2025 final rule’s Factor 2 of 54.29 percent to this final rule’s Factor 2 of 62.14 percent. In addition, we note that there is a decrease in the number of projected DSH-eligible hospitals to 2,364 at the time of the development of this final rule compared to the 2,398 DSHs at the time of development of the FY 2025 IPPS/LTCH PPS final rule (88 FR 58640). Based on the changes, the impact analysis found that, across all projected DSH- eligible hospitals, FY 2026 UCP and supplemental payments are estimated at approximately $7.821 billion, or an increase of approximately 35.2 percent from FY 2025 UCP and supplemental payments (approximately $5.786 billion). While the changes would result in a net increase in the total amount available to be distributed in UCP and supplemental payments, the projected payment increases vary by hospital type. This redistribution of payments is caused by changes in Factor 3 and the amount of the lable to be distributed in UCP and supplemental payments, the projected payment increases vary by hospital type. This redistribution of payments is caused by changes in Factor 3 and the amount of the supplemental payment for DSH-eligible IHS/Tribal hospitals and Puerto Rico hospitals. As seen in the previous table, a percent change of less than 35.2 percent indicates that hospitals within the specified category are projected to experience a smaller increase in payments, on average, compared to the universe of projected FY 2026 DSH- eligible hospitals. Conversely, a percentage change greater than 35.2 percent indicates that a hospital type is projected to have a larger increase compared to the overall average. The variation in the distribution of overall payments by hospital characteristic is largely dependent on a given hospital’s uncompensated care costs as reported on the Worksheet S–10 and used in the Factor 3 computation and whether the hospital is eligible to receive the supplemental payment. Urban hospitals, in general, are projected to experience a slightly larger increase in UCP compared to the increase their rural counterparts are projected to experience. Overall, urban ho tal payment. Urban hospitals, in general, are projected to experience a slightly larger increase in UCP compared to the increase their rural counterparts are projected to experience. Overall, urban hospitals are projected to receive a 35.3 percent increase in payments, while rural hospitals are projected to receive a 32.6 percent increase in payments, which is slightly less than the overall hospital average. By bed size, rural hospitals with 0 to 99 beds, 100 to 249 beds, and 250+ beds are projected to receive a smaller than average increase of approximately 31.6 percent, 34.5 percent, and 30.8 percent, respectively. Among urban hospitals, the largest urban hospitals, those with 250+ beds, are projected to receive an increase in payments (36.5 percent) that is greater than the overall hospital average. In contrast, smaller urban hospitals with 0–99 beds and 100–249 beds are projected to receive smaller than average increases in payments of 27.3 and 33.0 percent, respectively. By region, rural hospitals are projected to receive a varied range of payment changes. Rural hospitals in the New England, South Atlantic, East South Central, West North Central, West South Central, Mountain, , rural hospitals are projected to receive a varied range of payment changes. Rural hospitals in the New England, South Atlantic, East South Central, West North Central, West South Central, Mountain, and Pacific regions are projected to receive smaller than average increases in payments. Rural hospitals in all other regions are projected to receive larger than average increases in payments. Urban hospitals in the South Atlantic, East North Central, East South Central, Pacific regions, and Puerto Rico are projected to receive smaller than average increases in payments, while urban hospitals in all other regions are projected to receive larger than average increases in payments. By payment classification, hospitals in urban payment areas overall are expected to receive a smaller than average increase in UCP and supplemental payments of 34.2 percent. Hospitals in large urban payment areas are projected to receive a larger than average increase in payments (35.4 percent), while other urban payment areas are projected to receive a smaller than average increase in payments of 32.4 percent. In contrast, hospitals in rural payment areas are projected to receive a larger than average increa payment areas are projected to receive a smaller than average increase in payments of 32.4 percent. In contrast, hospitals in rural payment areas are projected to receive a larger than average increase in payments of 36.0 percent. Nonteaching hospitals and teaching hospitals with fewer than 100 residents are projected to receive smaller than average payment increases of 32.6 percent and 32.3 percent, respectively. Teaching hospitals with 100+ residents are projected to receive larger than average payment increases of 39.4 percent. Voluntary hospitals and proprietary hospitals are projected to receive smaller than average increases of 32.7 percent and 34.3 percent, respectively, while government- owned hospitals are expected to receive a larger than average payment increase of 40.8 percent. Hospitals with less than 25 percent Medicare utilization are projected to receive larger than average increases of 36.2 percent, while hospitals with Medicare utilization between 25–50 percent and 50–65 percent are projected to receive smaller than average payment increases of 31.6 percent and 31.3 percent, respectively. There are 2 hospitals with greater than 65 percent Medicare utilization, an 0–65 percent are projected to receive smaller than average payment increases of 31.6 percent and 31.3 percent, respectively. There are 2 hospitals with greater than 65 percent Medicare utilization, and the hospitals (250002 and 250017) are projected to have a decrease in payments of 100.0 percent, which reflects the hospitals’ projected DSH eligibility. Hospitals with 20–50 percent Medicaid utilization, those with 50–65 percent Medicaid utilization and those with greater than 65 percent Medicaid utilization are projected to receive larger than average increases in payments of 35.4, 44.9 and 41.1 percent, respectively. Hospitals with less than 25 percent Medicaid utilization are projected to receive a smaller than average increase of 32.7 percent. The impact table reflects the modeled FY 2026 UCP and supplemental payments for IHS/Tribal and Puerto Rico hospitals. We note that the supplemental payments to IHS/ Tribal hospitals and Puerto Rico hospitals are estimated to be approximately $107.8 million in FY 2026. 3. Effects of Expiration of the Temporary Changes to the Low-Volume Hospital Payment Policy In section V.D. of the preamble of this final rule, we discuss the extension of th 107.8 million in FY 2026. 3. Effects of Expiration of the Temporary Changes to the Low-Volume Hospital Payment Policy In section V.D. of the preamble of this final rule, we discuss the extension of the temporary changes to the low-volume hospital payment policy originally provided for by the Affordable Care Act and extended by subsequent legislation. Specifically, section 2201 of the Full-Year Continuing Appropriations and Extensions, 2025 further extended the modified definition of low- volume hospital and the methodology for calculating the payment adjustment for low- volume hospitals under section 1886(d)(12) through September 30, 2025. Prior to the enactment of the Full-Year Continuing Appropriations and Extensions, 2025, the temporary changes to the low-volume hospital payment adjustment were set to expire on April 1, 2025. Under the extension provided by section 2201 of the Full-Year Continuing Appropriations and Extensions, 2025, FY 2025 payments to IPPS hospitals are projected to increase by approximately $90 million relative to what the payments would have been in the absence of section 2201. Beginning October 1, 2025, the low-volume hospital qualifying criteria and paymen to increase by approximately $90 million relative to what the payments would have been in the absence of section 2201. Beginning October 1, 2025, the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011, and the preexisting low-volume hospital payment adjustment methodology and qualifying criteria, as implemented in FY 2005, will resume. Therefore, absent further Congressional action, effective for FY 2026 and subsequent years, in order to qualify as a low-volume hospital, a subsection (d) hospital must be more than 25 road miles from another subsection (d) hospital and have less than 200 discharges (that is, less than 200 discharges total, including both Medicare and non-Medicare discharges) during the fiscal year. Using the same methodology used in developing the quantitative analyses of changes in payments per case discussed previously in section I.G. of this Appendix A of this final rule, based upon the best available data at this time, we estimate the expiration of the temporary changes to the low-volume hospital payment policy effective for discharges occurring on or after October 1, 2025 upon the best available data at this time, we estimate the expiration of the temporary changes to the low-volume hospital payment policy effective for discharges occurring on or after October 1, 2025, and subsequent years would decrease aggregate low-volume hospital payments by $375 million in FY 2026 as VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00730 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37265 compared to FY 2025. This payment estimate was determined based on the estimated payments for the approximately 579 providers that are expected to no longer qualify under the criteria that are effective beginning on October 1, 2025. Of those 579 hospitals, currently approximately 97 hospitals have a low- volume hospital payment adjustment based on 500 or fewer total discharges, while the remaining approximately 482 hospitals have an adjustment based on having between 500 and 3,800 total discharges. Approximately 55 of the 579 hospitals that currently qualify for a low-volume hospital payment adjustment in FY 2025 h pitals have an adjustment based on having between 500 and 3,800 total discharges. Approximately 55 of the 579 hospitals that currently qualify for a low-volume hospital payment adjustment in FY 2025 have 200 or fewer total discharges. However, the distance information needed to project whether those hospitals are more than 25 road miles from another subsection (d) hospital (instead of 15 road miles), and therefore would continue to qualify for a low-volume hospital payment adjustment for FY 2026, is evaluated by each hospitals’ MAC. Therefore, we are unable to estimate how many of these 55 hospitals would continue to qualify for the low-volume hospital payment adjustment for FY 2026. 4. Impact for Proposed Revision to Regulation Text Regarding Calculation of Net Cost of NAH Education Programs (42 CFR 413.85(d)(2)(i)) In section V.G. of the preamble of this final rule, we discussed our proposal to revise our regulations at 42 CFR 413.85(d)(2)(i) to state clearly that when calculating the allowable net cost of approved nursing and allied health (NAH) education programs, the correct order of operations is to determine direct costs, subtract tuition and fees, and then add indirect cost e allowable net cost of approved nursing and allied health (NAH) education programs, the correct order of operations is to determine direct costs, subtract tuition and fees, and then add indirect costs. This is in response to an adverse ruling in the U.S. District Court for the District of Columbia (DC) involving five plaintiff hospitals (Mercy Health—St. Vincent Medical Center LLC d/b/a Mercy St. Vincent Medical Center, et al., v. Becerra (717 F.Supp.3d 33 (D.D.C. 2024). We are not finalizing this proposed change; and therefore, there are no costs. 5. Effects Under the Hospital Readmissions Reduction Program for FY 2026 In section VI.K. of the preamble of the FY 2026 IPPS/LTCH PPS final rule, we are modifying the six readmission measures in the program to include Medicare Advantage (MA) beneficiaries into the patient cohorts and modify the applicable performance period from a 3-year period to a 2-year period beginning with the FY 2027 program year. We are also updating the Extraordinary Circumstance Exception Policy. The remaining policies finalized in FY 2025 IPPS/LTCH PPS final rule (89 FR 69400) continue to apply. We refer readers to TABLE VI.K–04 in section VI.K. of this final ry Circumstance Exception Policy. The remaining policies finalized in FY 2025 IPPS/LTCH PPS final rule (89 FR 69400) continue to apply. We refer readers to TABLE VI.K–04 in section VI.K. of this final rule for an estimate of the financial impact reflecting the newly finalized program updates that will begin in FY 2027. The Hospital Readmissions Reduction Program requires a reduction to a hospital’s base operating diagnosis-related group (DRG) payments to account for excess readmissions of selected applicable conditions and procedures. The table and analysis in this section illustrate the estimated financial impact of the Hospital Readmissions Reduction Program payment adjustment methodology by hospital characteristic for the FY 2026 program year. Hospitals are sorted into quintiles based on the proportion of dual-eligible stays among Medicare fee-for- service (FFS) and managed care stays between July 1, 2021 and June 30, 2024 (that is, the FY 2026 Hospital Readmissions Reduction Program’s applicable period, which is the most recently available data at the time of publication of this final rule). Hospitals’ excess readmission ratios (ERRs) are assessed relative to their peer group m m’s applicable period, which is the most recently available data at the time of publication of this final rule). Hospitals’ excess readmission ratios (ERRs) are assessed relative to their peer group median and a neutrality modifier is applied in the payment adjustment factor calculation to maintain budget neutrality. In this FY 2026 IPPS/LTCH PPS final rule, we are providing an updated estimate of the financial impact using the proportion of dually-eligible beneficiaries, ERRs, and aggregate payments for each condition/ procedure and all discharges for applicable hospitals from the FY 2026 Hospital Readmissions Reduction Program applicable period (that is, July 1, 2021, through June 30, 2024). The results in Table I.G.7.–01 include 2,797 non-Maryland hospitals estimated as eligible to receive a penalty during the performance period. Hospitals are eligible to receive a penalty if they have 25 or more eligible discharges for at least one measure between July 1, 2021, and June 30, 2024. The second column in Table I.G.7.–01 indicates the total number of non-Maryland hospitals with available data for each characteristic that have an estimated payment adjustment factor less than 1 (that he second column in Table I.G.7.–01 indicates the total number of non-Maryland hospitals with available data for each characteristic that have an estimated payment adjustment factor less than 1 (that is, penalized hospitals). The third column in Table I.G.7.–01 indicates the estimated percentage of penalized hospitals among those eligible to receive a penalty by hospital characteristic. For example, 77.76 percent of eligible hospitals characterized as non-teaching hospitals are expected to be penalized. Among teaching hospitals, 88.53 percent of eligible hospitals with fewer than 100 residents and 87.76 percent of eligible hospitals with 100 or more residents are expected to be penalized. The fourth column in Table I.G.7.–01 estimates the financial impact on hospitals by hospital characteristic. Table I.G.7.–01 also shows the share of penalties as a percentage of all base operating DRG payments for hospitals with each characteristic. This is calculated as the sum of penalties for all hospitals with that characteristic over the sum of all base operating DRG payments for those hospitals between October 1, 2023, through September 30, 2024 (FY 2024). For example, the penalty as a share ospitals with that characteristic over the sum of all base operating DRG payments for those hospitals between October 1, 2023, through September 30, 2024 (FY 2024). For example, the penalty as a share of payments for non-teaching hospitals is 0.48 percent. This means that total penalties for all non-teaching hospitals are 0.48 percent of total payments for non- teaching hospitals. Measuring the financial impact on hospitals as a percentage of total base operating DRG payments accounts for differences in the amount of base operating DRG payments for hospitals with the characteristic when comparing the financial impact of the program on different groups of hospitals. ESTIMATED PERCENTAGE OF HOSPITALS PENALIZED AND PENALTY AS SHARE OF PAYMENTS FOR FY 2026 HOSPITAL READMISSIONS REDUCTION PROGRAM BY HOSPITAL CHARACTERISTIC Hospital characteristic Number of eligible hospitals a Number of penalized hospitals b Percentage of hospitals penalized c (%) Penalty as a share of payments d (%) All Hospitals ...................................................................................................................................... By Geographic Location (n=2,792): Urban hospitals ....... spitals ...................................................................................................................................... By Geographic Location (n=2,792): Urban hospitals .......................................................................................................................... 1–99 beds ........................................................................................................................... 100–199 beds ..................................................................................................................... 200–299 beds ..................................................................................................................... 300–399 beds ..................................................................................................................... 400–499 beds ..................................................................................................................... 500 or more beds ............................................................................................................... Rural hospitals ................................................................................. ...................................................................................................... Rural hospitals ........................................................................................................................... 1–49 beds ........................................................................................................................... 50–99 beds ......................................................................................................................... 100–149 beds ..................................................................................................................... 150–199 beds ..................................................................................................................... 200 or more beds ............................................................................................................... By Teaching Status e (n=2,792): Non-teaching .............................................................................................................................. Fewer than 100 Residents ...................................................................................................... ........................................................................ Fewer than 100 Residents ......................................................................................................... 100 or more Residents .............................................................................................................. 2,797 2,147 497 626 385 269 117 253 645 294 184 94 42 31 1,565 933 294 2,304 1,802 326 553 354 246 106 217 499 195 155 85 35 29 1,217 826 258 82.37 83.93 65.59 88.34 91.95 91.45 90.60 85.77 77.36 66.33 84.24 90.43 83.33 93.55 77.76 88.53 87.76 0.44 0.44 0.43 0.50 0.53 0.45 0.40 0.38 0.42 0.38 0.43 0.46 0.43 0.39 0.48 0.47 0.37 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00731 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37266 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations ESTIMATED PERCENTAGE OF HOSPITALS PENALIZED AND PENALTY AS SHARE OF PAYMENTS FOR FY 2026 HOSPITAL READMISSIONS REDUCTION PROGRAM BY HOSPITAL CHARACTERISTIC—Continued Hospital characteristic Number of eligible hospitals a Number of penalized hospitals b Percentage E OF PAYMENTS FOR FY 2026 HOSPITAL READMISSIONS REDUCTION PROGRAM BY HOSPITAL CHARACTERISTIC—Continued Hospital characteristic Number of eligible hospitals a Number of penalized hospitals b Percentage of hospitals penalized c (%) Penalty as a share of payments d (%) By Ownership Type (n=2,792): ............................................................................................................................... Government Proprietary .................................................................................................................................. Voluntary .................................................................................................................................... By Safety-Net Status f (n=2,792): Safety-net hospitals ................................................................................................................... Non-safety-net hospitals ............................................................................................................ By Disproportionate Share Hospital (DSH) Patient Percentage g (n=2,792): 0–24 ................................................................................................ ......................... By Disproportionate Share Hospital (DSH) Patient Percentage g (n=2,792): 0–24 ........................................................................................................................................... 25–49 ......................................................................................................................................... 50–64 ......................................................................................................................................... 65 and over ................................................................................................................................ By Medicare Cost Report (MCR) Percentage h (n=2,792): 0–24 ........................................................................................................................................... 25–49 ......................................................................................................................................... 50–64 ......................................................................................................................................... 65 and over ............................ ............... 50–64 ......................................................................................................................................... 65 and over ................................................................................................................................ By Region (n=2,797): New England .............................................................................................................................. Middle Atlantic ............................................................................................................................ East North Central ..................................................................................................................... West North Central .................................................................................................................... South Atlantic ............................................................................................................................. East South Central ..................................................................................................................... West South Central ............................ ............... East South Central ..................................................................................................................... West South Central .................................................................................................................... Mountain .................................................................................................................................... Pacific ......................................................................................................................................... 388 608 1,796 556 2,236 1,051 1,461 162 118 1,371 1,354 59 8 120 312 441 222 485 247 416 205 349 315 492 1,494 458 1,843 838 1,236 133 94 1,142 1,116 38 5 100 274 376 164 424 219 324 144 279 81.19 80.92 83.18 82.37 82.42 79.73 84.60 82.10 79.66 83.30 82.42 64.41 62.50 83.33 87.82 85.26 73.87 87.42 88.66 77.88 70.24 79.94 0.31 0.59 0.43 0.41 0.45 0.49 0.41 0.41 0.51 0.36 0.52 0.69 1.81 0.68 0.55 0.43 0.29 0.45 0.53 0.41 0.32 0.35 Source: The table results are based on the data used to calculate the FY 2026 payment adjustment factors of open, non-Maryland, subsection (d) hospitals only. The FY 2026 payment adjustment 0.32 0.35 Source: The table results are based on the data used to calculate the FY 2026 payment adjustment factors of open, non-Maryland, subsection (d) hospitals only. The FY 2026 payment adjustment factors are based on discharges from July 1, 2021, through June 30, 2024. Although data from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s ERR, this table does not include results for Maryland hospitals and hospitals that are not open as of the October 2025 public reporting open hospital list because these hospitals are not eligible for a penalty under the program. Hospitals are sorted into five peer groups based on the proportion of FFS and managed care dual-eligible stays for the multi-year performance period. Hospital characteristics are from the FY 2026 IPPS Proposed Rule Impact File. Note: The total number of hospitals with hospital characteristics data may not add up to the total number of hospitals because not all hospitals have data for all characteristics. Not all hospitals had data for geographic location, teaching status, ownership type, safety-net status, DSH percentage, and MCR percentage (n=2,792; missing=5). a This column is the nu haracteristics. Not all hospitals had data for geographic location, teaching status, ownership type, safety-net status, DSH percentage, and MCR percentage (n=2,792; missing=5). a This column is the number of applicable hospitals within the characteristic that are eligible for a penalty (that is, they have 25 or more eligible discharges for at least one measure). b This column is the number of applicable hospitals that are penalized (that is, they have 25 or more eligible discharges for at least one measure and an estimated payment adjustment factor less than 1) within the characteristic. c This column is the percentage of applicable hospitals that are penalized among hospitals that are eligible to receive a penalty by characteristic. d This column is calculated as the sum of all penalties for the group of hospitals with that characteristic divided by total base operating DRG payments for all those hospitals. Measuring the financial impact on hospitals as a percentage of total base operating DRG payments in this way allows for comparisons across hospital char- acteristics that accounts for differences in the amount of base operating DRG payments for different groups of hospitals. Me ating DRG payments in this way allows for comparisons across hospital char- acteristics that accounts for differences in the amount of base operating DRG payments for different groups of hospitals. MedPAR data from October 1, 2023, through September 30, 2024 (FY 2024), are used to estimate the total base operating DRG payments. e A hospital is considered a teaching hospital if it has an Indirect Medical Education adjustment factor for Operation PPS (TCHOP) greater than zero. f A hospital is considered a safety-net hospital if it is in the top DSH quintile. g DSH patient percentage is the sum of the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Secu- rity Income (SSI), and the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A. h MCR (Medicare Cost Report) percentage is the percentage of total inpatient stays from Medicare patients. 6. Effects of Changes Under the FY 2026 Hospital Value-Based Purchasing (VBP) Program The Secretary makes value-based incentive payments to hospitals under the Hospital Value-Based Purchasing Program based on their performance on mea Y 2026 Hospital Value-Based Purchasing (VBP) Program The Secretary makes value-based incentive payments to hospitals under the Hospital Value-Based Purchasing Program based on their performance on measures during the performance period with respect to a fiscal year. These incentive payments will be funded for FY 2026 through a reduction to the FY 2026 base operating DRG payment amount for hospital discharges for such fiscal year, as required by section 1886(o)(7)(B) of the Act. The applicable percentage for FY 2026 and subsequent years is two percent. The total amount available for value-based incentive payments must be equal to the total amount of reduced payments for all hospitals for the fiscal year, as estimated by the Secretary. In section VI.L.1.b. of the preamble of this final rule, we estimate the available pool of funds for value-based incentive payments in the FY 2026 program year, which, in accordance with section 1886(o)(7)(C)(v) of the Act, will be 2.00 percent of base operating DRG payments, or a total of approximately $1.7 billion. This estimated available pool for FY 2026 is based on the historical pool of hospitals that were eligible to participate in the FY 2025 p rating DRG payments, or a total of approximately $1.7 billion. This estimated available pool for FY 2026 is based on the historical pool of hospitals that were eligible to participate in the FY 2025 program year and the payment information from the March 2025 update to the FY 2024 MedPAR file. The estimated impacts of the FY 2026 program year by hospital characteristic, found in Table I.G.6.–01., are based on historical TPSs and sepsis measure results, and reflect removal of the Health Equity Adjustment as discussed in section VI.L.6. We used the FY 2025 program year’s TPSs to calculate the proxy adjustment factors used for this impact analysis. These are the most recently available scores that hospitals were given an opportunity to review and correct. The proxy adjustment factors use estimated annual base operating DRG payment amounts derived from the March 2025 update to the FY 2024 MedPAR file. The proxy adjustment factors can be found in Table 16 associated with this final rule (available via the internet on the CMS website). The estimated impact analysis shows that, for the FY 2026 program year, the number of hospitals with a positive percent change in base operating DRG (49.2 ailable via the internet on the CMS website). The estimated impact analysis shows that, for the FY 2026 program year, the number of hospitals with a positive percent change in base operating DRG (49.25 percent) is lower than the number of hospitals with a negative percent change (50.75 percent). Approximately half of all hospitals experience a percent change in base operating DRG between ¥1.9 percent and 0.0 percent. On average, urban hospitals in the West North Central region and rural hospitals in the Mountain region have the highest positive percent change in base operating DRG. Urban hospitals in the Middle Atlantic, East South Central, and West South Central regions experience an average negative percent change in base operating DRG. All other regions (both urban and rural) experience an average positive percent change in base operating DRG. As the MCR percent increases, the average percent change VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00732 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37267 in base opera E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37267 in base operating DRG generally increases, except for the four hospitals with the highest MCR percentage. As DSH percent increases, the average percent change in base operating DRG decreases except for hospitals with greater than 65 DSH percent. On average, non-teaching hospitals have a higher percent change in base operating DRG compared to teaching hospitals. TABLE I.G.6.–01—IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNTS RESULTING FROM THE FY 2026 HOSPITAL VBP PROGRAM Number of hospitals Average net percentage payment adjustment By Geographic Location: All Hospitals ........................................................................................................................................................................... Urban Area ..................................................................................................................................................................... Rural Area ....................................................................... ..................................................................................................................... Rural Area ....................................................................................................................................................................... Missing ............................................................................................................................................................................ Urban Hospitals ..................................................................................................................................................................... 0–99 beds ....................................................................................................................................................................... 100–199 beds ................................................................................................................................................................. 200–299 beds ................................................................................................................................................................. 300–499 beds ............ 200–299 beds ................................................................................................................................................................. 300–499 beds ................................................................................................................................................................. 500 or more beds ........................................................................................................................................................... Rural Hospitals ....................................................................................................................................................................... 0–49 beds ....................................................................................................................................................................... 50–99 beds ..................................................................................................................................................................... 100–149 beds ................................................................................................................ .......................................................................... 100–149 beds ................................................................................................................................................................. 150–199 beds ................................................................................................................................................................. 200 or more beds ........................................................................................................................................................... By Region: Urban By Region ................................................................................................................................................................... New England .................................................................................................................................................................. Middle Atlantic ................................................................................................................................................................ South Atlantic ............................................ ............................................................................................................................................ South Atlantic .................................................................................................................................................................. East North Central .......................................................................................................................................................... East South Central ......................................................................................................................................................... West North Central ......................................................................................................................................................... West South Central ........................................................................................................................................................ Mountain ......................................................................................................................................................................... Pacific .. .......... Mountain ......................................................................................................................................................................... Pacific ............................................................................................................................................................................. Rural By Region ..................................................................................................................................................................... New England .................................................................................................................................................................. Middle Atlantic ................................................................................................................................................................ South Atlantic .................................................................................................................................................................. East North Central ................................................................................................. ................................................................................... East North Central .......................................................................................................................................................... East South Central ......................................................................................................................................................... West North Central ......................................................................................................................................................... ........................................................................................................................................................ West South Central Mountain ......................................................................................................................................................................... Pacific ............................................................................................................................................................................. By MCR Percent: 0–25 .......................................... ........................................................................................................................................ By MCR Percent: 0–25 ....................................................................................................................................................................................... 25–50 ..................................................................................................................................................................................... 50–65 ..................................................................................................................................................................................... Over 65 .................................................................................................................................................................................. Missing ................................................................................................................................................................................... By DSH Percent: 0–25 ...................................................................................... ............................................................................................ By DSH Percent: 0–25 ....................................................................................................................................................................................... 25–50 ..................................................................................................................................................................................... 50–65 ..................................................................................................................................................................................... Over 65 .................................................................................................................................................................................. Missing ................................................................................................................................................................................... By Teaching Status: Non-Teaching ...................................................................................................................... ................................................ By Teaching Status: Non-Teaching ......................................................................................................................................................................... Teaching ................................................................................................................................................................................ Missing ................................................................................................................................................................................... 2,532 1,984 547 1 1,984 364 602 402 379 237 547 212 178 86 41 30 1,984 96 244 365 311 117 131 246 154 320 547 19 41 90 100 100 68 73 32 24 1,118 1,369 38 4 3 887 1,394 146 104 1 1,370 1,161 1 0.169 0.077 0.500 0.466 0.077 0.713 0.137 ¥0.130 ¥0.244 ¥0.186 0.500 0.824 0.478 0.288 ¥0.077 ¥0.267 0.077 0.103 ¥0.095 0.025 0.107 ¥0.131 0.302 ¥0.002 0.143 0.246 0.500 0.444 0.491 0.375 0.699 0.121 0.688 0.273 1.243 0.936 0.086 0.222 0.533 0.474 1.683 0.418 0.059 ¥0.178 0.000 0.466 0.360 ¥0.058 0.466 The actual FY 2026 program year’s TPSs will not be reviewed and corrected by h 0.375 0.699 0.121 0.688 0.273 1.243 0.936 0.086 0.222 0.533 0.474 1.683 0.418 0.059 ¥0.178 0.000 0.466 0.360 ¥0.058 0.466 The actual FY 2026 program year’s TPSs will not be reviewed and corrected by hospitals until after the FY 2026 IPPS/LTCH PPS final rule has published. Therefore, the same historical universe of eligible hospitals and corresponding TPSs from the FY 2025 program year have been used for the updated impact analysis in this final rule. 7. Effects of Requirements Under the Hospital-Acquired Condition (HAC) Reduction Program for FY 2026 We present the estimated impact of the FY 2026 HAC Reduction Program on hospitals by hospital characteristic based on previously adopted policies for the program. In this final rule, we did not add or remove any measures from the HAC Reduction Program, nor did we finalize any changes to reporting or submission requirements which would have any significant economic impact for the FY 2026 program year. The table in this section presents the estimated proportion of hospitals in the worst- performing quartile of Total HAC Scores by hospital characteristic. Hospitals’ CMS Patient Safety and Adverse Events Composite (CMS PSI 90) measure resul stimated proportion of hospitals in the worst- performing quartile of Total HAC Scores by hospital characteristic. Hospitals’ CMS Patient Safety and Adverse Events Composite (CMS PSI 90) measure results are based on Medicare fee-for-service (FFS) discharges from July 1, 2022, through June 30, 2024, and version 15.0 of the CMS PSI software. Hospitals’ measure results for Centers for Disease Control and Prevention (CDC) Central Line-Associated Bloodstream Infection (CLABSI), Catheter-Associated Urinary Tract Infection (CAUTI), Colon and Abdominal Hysterectomy Surgical Site Infection (SSI), Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia, and Clostridium difficile Infection (CDI) are derived from standardized infection ratios (SIRs) calculated with hospital surveillance data reported to the CDC’s National Healthcare Safety Network (NHSN) for infections occurring between January 1, 2023, VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00733 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37268 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations and December 31, 2 R\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37268 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations and December 31, 2024. Hospital characteristics are based on the FY 2026 IPPS proposed rule Impact File. This table includes 2,891 non-Maryland hospitals with an estimated FY 2026 Total HAC Score based on the most recently available data at the time of publication of this final rule. Maryland hospitals and hospitals without a Total HAC Score are excluded from the table. Actual results for FY 2026 will be determined in the fall of 2025 after a 30-day review and corrections period for hospitals to review their program results. The first column presents a breakdown of each characteristic, and the second column indicates the number of hospitals for the respective characteristic. The third column in the table indicates the estimated number of hospitals for each characteristic that would be in the worst- performing quartile of Total HAC Scores. For example, with regard to teaching status, 401 hospitals out of 1,620 hospitals characterized as non-teaching hospitals would be subject to a payment reduction. Amon ng quartile of Total HAC Scores. For example, with regard to teaching status, 401 hospitals out of 1,620 hospitals characterized as non-teaching hospitals would be subject to a payment reduction. Among teaching hospitals, 210 out of 959 hospitals with fewer than 100 residents and 100 out of 295 hospitals with 100 or more residents would be subject to a payment reduction. The fourth column in the table indicates the estimated proportion of hospitals for each characteristic that would be in the worst performing quartile of Total HAC Scores and thus receive a payment reduction under the FY 2026 HAC Reduction Program. For example, 24.8 percent of the 1,620 hospitals characterized as non-teaching hospitals, 21.9 percent of the 959 teaching hospitals with fewer than 100 residents, and 33.9 percent of the 295 teaching hospitals with 100 or more residents would be subject to a payment reduction. TABLE I.G.7.–01—ESTIMATED PROPORTION OF HOSPITALS IN THE WORST-PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC SCORES FOR THE FY 2026 HAC REDUCTION PROGRAM [By hospital characteristic] Hospital characteristic Number of hospitals Number of hospitals in the worst-performing quartile a Percent E) OF THE TOTAL HAC SCORES FOR THE FY 2026 HAC REDUCTION PROGRAM [By hospital characteristic] Hospital characteristic Number of hospitals Number of hospitals in the worst-performing quartile a Percent of hospitals in the worst-performing quartile b All Hospitals c ................................................................................................................................................ By Geographic Location (n=2,874): d Urban hospitals ...................................................................................................................................... 1–99 beds ....................................................................................................................................... 100–199 beds ................................................................................................................................. 200–299 beds ................................................................................................................................. 300–399 beds ................................................................................................................................. 400–499 beds ............... ............................ 300–399 beds ................................................................................................................................. 400–499 beds ................................................................................................................................. 500 or more beds ........................................................................................................................... Rural hospitals ....................................................................................................................................... 1–49 beds ....................................................................................................................................... 50–99 beds ..................................................................................................................................... 100–149 beds ................................................................................................................................. 150–199 beds ................................................................................................................................. 200 or more bed ......................................... 150–199 beds ................................................................................................................................. 200 or more beds ........................................................................................................................... By Teaching Status d (n=2,874): d Non-teaching .......................................................................................................................................... Fewer than 100 residents ...................................................................................................................... 100 or more residents ............................................................................................................................ By Ownership (n=2,874): Government ........................................................................................................................................... Proprietary .............................................................................................................................................. Voluntary ......................................................... .................................................................................................................................... Voluntary ................................................................................................................................................ By Safety-Net Status e (n=2,874): d Safety-net ............................................................................................................................................... Non-safety net ........................................................................................................................................ By Disproportionate Share Hospital (DSH) Patient Percentage f (n=2,874): 0–24 ....................................................................................................................................................... 25–49 ..................................................................................................................................................... 50–64 ..................................................................................................................................................... 65 and over ............... ................ 50–64 ..................................................................................................................................................... 65 and over ............................................................................................................................................ By Medicare Cost Report (MCR) Percentage (n=2,872): 0–24 ....................................................................................................................................................... 25–49 ..................................................................................................................................................... 50–64 ..................................................................................................................................................... 65 and over ............................................................................................................................................ By Region (n=2,891): New England .......................................................................................................................................... Middle Atlantic ............ By Region (n=2,891): New England .......................................................................................................................................... Middle Atlantic ........................................................................................................................................ East North Central ................................................................................................................................. West North Central ................................................................................................................................ South Atlantic ......................................................................................................................................... East South Central ................................................................................................................................. West South Central ................................................................................................................................ Mountain ....................................................................................................................... ....................................................................... Mountain ................................................................................................................................................ Pacific ..................................................................................................................................................... 2,891 2,245 562 645 396 271 118 253 629 276 186 94 42 31 1,620 959 295 390 655 1,829 583 2,291 1,103 1,465 164 142 1,455 1,350 56 11 120 318 456 227 491 248 438 219 374 721 510 129 144 85 55 26 71 201 93 59 23 12 14 401 210 100 146 94 471 162 549 232 387 45 47 352 339 14 4 38 86 118 56 97 83 86 45 112 25 22.7 23.0 22.3 21.5 20.3 22.0 28.1 32.0 33.7 31.7 24.5 28.6 45.2 24.8 21.9 33.9 37.4 14.4 25.8 27.8 24.0 21.0 26.4 27.4 33.1 24.2 25.1 25.0 36.4 31.7 27.0 25.9 24.7 19.8 33.5 19.6 20.5 29.9 Source: FY 2026 HAC Reduction Program estimated final rule results are based on CMS PSI 90 data from July 1, 2022, through June 30, 2024, and CDC’s NHSN HAI results from January 1, 2023, through December 31, 2024. Hospital Characteristics are based on the FY 2026 IPPS proposed rule Impact File. Note: The total number o gh June 30, 2024, and CDC’s NHSN HAI results from January 1, 2023, through December 31, 2024. Hospital Characteristics are based on the FY 2026 IPPS proposed rule Impact File. Note: The total number of hospitals with hospital characteristic data may not add up to the total number of hospitals because not all hospitals have data for all characteristics. Not all hospitals had data for geographic location, teaching status, ownership, Safety-net status, and DSH percent (n=2,874; missing=17), and MCR percent (n=2,872; missing=19). a This column is the number of non-Maryland hospitals with a Total HAC Score within the corresponding characteristic that are estimated to be in the worst-per- forming quartile. b This column is the percent of non-Maryland hospitals within each characteristic that are estimated to be in the worst-performing quartile. The percentages are cal- culated by dividing the number of non-Maryland hospitals with a Total HAC Score in the worst-performing quartile by the total number of non-Maryland hospitals with a Total HAC Score within that characteristic. c The number of non-Maryland hospitals with a Total HAC Score (N=2,891). d A hospital is considered a teaching hos l number of non-Maryland hospitals with a Total HAC Score within that characteristic. c The number of non-Maryland hospitals with a Total HAC Score (N=2,891). d A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero. e A hospital is considered a Safety-net hospital if it is in the top quintile for DSH percent. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00734 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37269 f The DSH patient percentage is equal to the sum of: (1) the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Security Income; and (2) the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A. We received no comments on our assumptions regarding these effects. 8. Effects of the Implementation of the Rural Community Hospital Demonstration (RCHD) Program in FY 2026 In section VI.N.2 of the preamble of this final rule for FY 2026 tions regarding these effects. 8. Effects of the Implementation of the Rural Community Hospital Demonstration (RCHD) Program in FY 2026 In section VI.N.2 of the preamble of this final rule for FY 2026, we discussed our budget neutrality methodology for section 410A of Public Law 108–173, as amended by sections 3123 and 10313 of Public Law 111– 148, by section 15003 of Public Law 114–255, and most recently, by section 128 of Public Law 116–260, which requires the Secretary to conduct a demonstration that would modify payments for inpatient services for up to 30 rural hospitals. Section 128 of Public Law 116–260 requires the Secretary to conduct the Rural Community Hospital Demonstration for a 15- year extension period (that is, for an additional 5 years beyond the previous extension period). In addition, the statute provides for continued participation for all hospitals participating in the demonstration program as of December 30, 2019. While the statute does not call for any new hospitals to join the demonstration, CMMI issued a notice on December 20, 2024, in the Federal Register for a solicitation (89 FR 105049) for up to 10 additional eligible hospitals to participate in the RCH als to join the demonstration, CMMI issued a notice on December 20, 2024, in the Federal Register for a solicitation (89 FR 105049) for up to 10 additional eligible hospitals to participate in the RCHD. Applications were due March 1, 2025. These hospitals have been selected under this solicitation and will be able to participate from May 1, 2025, through June 30, 2028. Section 410A(c)(2) of Public Law 108–173 requires that in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented (budget neutrality). To ensure budget neutrality, we propose to adopt the general methodology used in previous years, whereby we estimated the additional payments made by the program for each of the participating hospitals as a result of the demonstration, and then adjusted the national IPPS rates by an amount sufficient to account for the added costs of this demonstration. This proposed methodology applies budget neutrality across the payment system as a whole rather than across the participants of th ount sufficient to account for the added costs of this demonstration. This proposed methodology applies budget neutrality across the payment system as a whole rather than across the participants of this demonstration. The language of the statutory budget neutrality requirement permits the agency to implement the budget neutrality provision in this manner. The statutory language requires that aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration was not implemented but does not identify the range across which aggregate payments must be held equal. For this final rule, the resulting amount applicable to FY 2026 is $47,586,847, which we proposed as the budget neutrality offset adjustment for FY 2026. This estimated amount is based on the specific assumptions regarding the data sources used, that is, recently available ‘‘as submitted’’ cost reports and historical and currently finalized update factors for cost and payment. In previous years, we have incorporated a second component into the budget neutrality offset amounts identified in the IPPS/LTCH PPS final rules. As finalized cost reports became available, we deter . In previous years, we have incorporated a second component into the budget neutrality offset amounts identified in the IPPS/LTCH PPS final rules. As finalized cost reports became available, we determined the amount by which the actual costs of the demonstration for an earlier, given year differed from the estimated costs for the demonstration set forth in the IPPS/LTCH PPS final rule for the corresponding fiscal year, and we incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. We have calculated this difference for FYs 2005 through 2018 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS/LTCH PPS final rules for these years. With the extension of the demonstration for another 5-year period, as authorized by section 128 of Public Law 116–260, we proposed to continue this general procedure. At this time, for the FY2026 final rule, all of the FY2020 finalized cost reports are available and will be reconciled in FY2026. We received no public comments related to the RCHD regulatory impact analysis in the proposed r 026 final rule, all of the FY2020 finalized cost reports are available and will be reconciled in FY2026. We received no public comments related to the RCHD regulatory impact analysis in the proposed rule. We are finalizing our policies as proposed. 9. Effects of Continued Implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration In section VIII.B.2. of the preamble of this final rule, we discuss the implementation of the FCHIP Demonstration, which was authorized under section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110–275), as amended by section 3126 of the Affordable Care Act of 2010 (Pub. L. 114–158), and most recently re- authorized and extended by the section 129 of the Consolidated Appropriations Act of 2021 (Pub. L. 116–260). The legislation authorized a demonstration project to allow eligible entities to develop and test new models for the delivery of health care in order to improve access to and better integrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries in certain rural areas. The FCHIP demonstration initial period was conducted in 10 critical a tegrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries in certain rural areas. The FCHIP demonstration initial period was conducted in 10 critical access hospitals (CAHs) from August 1, 2016, to July 31, 2019, and the demonstration ‘‘extension period’’ began on January 1, 2022, to run through June 30, 2027. Section 123(g)(1)(B) of Public Law 110–275 required that the demonstration be budget neutral. Specifically, this provision stated that, in conducting the demonstration project, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project under the section were not implemented. Budget neutrality estimates for the demonstration described in the preamble of this final rule are based on the demonstration extension period. As described in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69416 through 69419), CMS waived certain Medicare rules for CAHs participating in the demonstration extension period to allow for alternative reasonable cost-based payment methods in the three distinct intervention service areas: telehe tain Medicare rules for CAHs participating in the demonstration extension period to allow for alternative reasonable cost-based payment methods in the three distinct intervention service areas: telehealth services, ambulance services, and skilled nursing facility/nursing facility services. These waivers were implemented with the goal of increasing access to care with no net increase in costs. As we explained in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69416 through 69419), section 129 of Public Law 116–260 stipulates that only the 10 CAHs that participated in the initial period of the FCHIP Demonstration are eligible to participate during the extension period. Among the eligible CAHs, five elected to participate in the extension period. The selected CAHs are located in two states— Montana and North Dakota—and are implementing the three intervention services. As explained in the FY 2025 IPPS/LTCH PPS final rule, we based our selection of CAHs for participation in the demonstration with the goal of maintaining the budget neutrality of the demonstration on its own terms meaning that the demonstration would produce savings from reduced transfers and admissions to other health care p th the goal of maintaining the budget neutrality of the demonstration on its own terms meaning that the demonstration would produce savings from reduced transfers and admissions to other health care providers, offsetting any increase in Medicare payments as a result of the demonstration. However, because of the small size of the demonstration and uncertainty associated with the projected Medicare utilization and costs, the policy we finalized for the demonstration extension period of performance in the FY 2025 IPPS/LTCH PPS final rule provides a contingency plan to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met. In the FY 2025 IPPS/LTCH PPS final rule, we adopted the same budget neutrality policy contingency plan used during the demonstration initial period to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met during the demonstration extension period. If analysis of claims data for Medicare beneficiaries receiving services at each of the participating CAHs, as well as from other data sources, including cost reports for the participating CAHs, shows that increases in Medicare payments under the demons receiving services at each of the participating CAHs, as well as from other data sources, including cost reports for the participating CAHs, shows that increases in Medicare payments under the demonstration during the 5-year extension period is not sufficiently offset by reductions elsewhere, we will recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide. As explained in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69416 through 69419), because of the small scale of the demonstration, we indicated that we did not believe it would be feasible to implement budget neutrality for the demonstration extension period by reducing payments to only the participating CAHs. Therefore, in the event that this demonstration extension period is found to result in aggregate payments in excess of the amount that would have been paid if this demonstration VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00735 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37270 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations extension p 00 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37270 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations extension period were not implemented, CMS policy is to comply with the budget neutrality requirement finalized in the FY 2025 IPPS/LTCH PPS final rule, by reducing payments to all CAHs, not just those participating in the demonstration extension period. In the FY 2025 IPPS/LTCH PPS final rule, we stated that we believe it is appropriate to make any payment reductions across all CAHs because the FCHIP Demonstration was specifically designed to test innovations that affect delivery of services by the CAH provider category. As we explained in the FY 2025 IPPS/LTCH PPS final rule, we believe that the language of the statutory budget neutrality requirement at section 123(g)(1)(B) of Public Law 110–275 permits the agency to implement the budget neutrality provision in this manner. The statutory language merely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented and erely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented and does not identify the range across which aggregate payments must be held equal. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), CMS concluded that the initial period of the FCHIP Demonstration had satisfied the budget neutrality requirement described in section 123(g)(1)(B) of Public Law 110–275. Therefore, CMS did not apply a budget neutrality payment offset policy for the initial period of the demonstration. As explained in the FY 2022 IPPS/LTCH PPS final rule, we finalized a policy to address the demonstration budget neutrality methodology and analytical approach for the initial period of the demonstration. In the FY 2025 IPPS/LTCH PPS final rule, we finalized a policy to adopt the same budget neutrality methodology and analytical approach used during the demonstration initial period to be used for the demonstration extension period. As stated in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69416 through 69419), our policy for implementing the 5-year extension pe ion initial period to be used for the demonstration extension period. As stated in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69416 through 69419), our policy for implementing the 5-year extension period for section 129 of Public Law 116–260 follows same budget neutrality methodology and analytical approach as the demonstration initial period methodology. While we expect to use the same methodology that was used to assess the budget neutrality of the FCHIP Demonstration during initial period of the demonstration to assess the financial impact of the demonstration during this extension period, upon receiving data for the extension period, we may update and/or modify the FCHIP budget neutrality methodology and analytical approach to ensure that the full impact of the demonstration is appropriately captured. Therefore, we did not apply a budget neutrality payment offset to payments to CAHs in FY 2026. This policy will have no impact on any national payment system for FY 2026. We received no comments on this provision and therefore are finalizing this provision without modification. 10. Effects of the Transforming Episode Accountability Model (TEAM) In section XI.A. of the preamble of no comments on this provision and therefore are finalizing this provision without modification. 10. Effects of the Transforming Episode Accountability Model (TEAM) In section XI.A. of the preamble of this final rule, we discuss testing the mandatory episode-based payment model titled the Transforming Episode Accountability Model (TEAM) under the authority of the CMS Center for Medicare and Medicaid Innovation (CMS Innovation Center). Section 1115A of the Act authorizes the CMS Innovation Center to test innovative payment and service delivery models that preserve or enhance the quality of care furnished to Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries while reducing program expenditures. The intent of TEAM is to improve beneficiary care through financial accountability for episode categories that begin with one of the following procedures: coronary artery bypass graft, lower extremity joint replacement, major bowel procedure, surgical hip/femur fracture treatment, and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare bene tment, and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipate that TEAM will benefit Medicare beneficiaries through improving the coordination of items and services paid for through Medicare fee-for-service (FFS) payments, encouraging provider investment in health care infrastructure and redesigned care processes, and incentivizing higher value care across the inpatient and post-acute care settings for the episode. As finalized in the FY 2025 IPPS/LTCH PPS final rule (89 FR 68986), TEAM will be mandatory for acute care hospitals located within mandatory CBSAs and will also include acute care hospitals that were eligible for voluntary opt-in participation.6 TEAM will begin on January 1, 2026, and end on December 31, 2030. Payment approaches that hold providers accountable for episode cost and performance can potentially create incentives for the implementation and coordination of care redesign between participants and other providers and suppliers such as physicians and post-acute care providers. We anticipate TEAM will en incentives for the implementation and coordination of care redesign between participants and other providers and suppliers such as physicians and post-acute care providers. We anticipate TEAM will enable hospitals to consider the most appropriate strategies for care redesign, including (1) increasing post-hospitalization follow-up and medical management for patients; (2) coordinating care across the inpatient and post-acute care spectrum; (3) conducting appropriate discharge planning; (4) improving adherence to treatment or drug regimens; (5) reducing readmissions and complications during the post-discharge period; (6) managing chronic diseases and conditions that may be related to the episodes; (7) choosing the most appropriate post-acute care setting; and (8) coordinating between providers and suppliers such as hospitals, physicians, and post-acute care providers. Under TEAM, TEAM participants will continue to bill Medicare under the traditional FFS system for items and services furnished to Medicare FFS beneficiaries. The TEAM participant may receive a reconciliation payment from CMS if 6 Acute care hospitals that participate in the BPCI Advanced or the CJR model, that are not nished to Medicare FFS beneficiaries. The TEAM participant may receive a reconciliation payment from CMS if 6 Acute care hospitals that participate in the BPCI Advanced or the CJR model, that are not located in a mandatory CBSA selected for TEAM participation, and continue to participate in BPCI Advanced or CJR until the last day of the last performance period or last performance year of the respective model, were eligible to voluntarily opt into TEAM. Medicare FFS expenditures for a performance year are less than the reconciliation target price, subject to a quality adjustment. TEAM will not have downside risk for Track 1, meaning TEAM participants will only be accountable for performance year spending below their reconciliation target price, subject to a quality adjustment, that would result in a reconciliation payment amount. For Track 2 and Track 3, TEAM will be a two-sided risk model that requires TEAM participants to be accountable for performance year spending above or below their reconciliation target price, subject to a quality adjustment, that would result in a reconciliation payment amount or a repayment amount. a. Effects on the Medicare Program TEAM is a mandatory epis ir reconciliation target price, subject to a quality adjustment, that would result in a reconciliation payment amount or a repayment amount. a. Effects on the Medicare Program TEAM is a mandatory episode-based payment model which will have a direct effect on the Medicare program because TEAM participants will be incentivized to reduce Medicare spending. Additionally, TEAM participants could receive a reconciliation payment amount from CMS or have to pay CMS a repayment amount based on their spending and quality performance. In the FY 2025 IPPS/LTCH PPS final rule (89 FR 70026), we estimated and projected financial impacts of TEAM over the course of the five-year model test. We estimated that on net, TEAM participants would pay CMS $442 million, and that TEAM would save the Medicare program approximately $481 million over the five performance years (2026 through 2030). In this final rule, we are finalizing several policies that we proposed and finalizing some policies where we solicited comments on policy considerations. We believe most of the policies that are being finalized would not have a material impact on the Medicare savings estimate. For example, we do not anticipate there comments on policy considerations. We believe most of the policies that are being finalized would not have a material impact on the Medicare savings estimate. For example, we do not anticipate there will be many new hospitals that would be affected by a deferred participation period, nor would capturing an additional quality measure in the model or allowing TEAM participants to use swing- bed arrangements in the 3-Day SNF Rule waiver have a significant effect on Medicare spending or savings. Additionally, many of the proposals that affect the pricing methodology that we are finalizing in this final rule, such as changes to the construction of the prospective trend factor and normalization factors or using a 180-day lookback period for risk adjustment, aim to improve the accuracy of target prices but we do not anticipate they will result in dramatic shifts to the Medicare savings estimate. We noted in the proposed rule that certain policy considerations that we are seeking comment on and not proposing, such as a low volume hospital policy could impact the Medicare savings estimate in magnitude, but we anticipated the direction of the Medicare savings to remain the same. In the prop nd not proposing, such as a low volume hospital policy could impact the Medicare savings estimate in magnitude, but we anticipated the direction of the Medicare savings to remain the same. In the proposed rule we stated that generally, Medicare savings estimates are based on the proposed policies to reflect the potential financial implications of the proposals and are not generally updated based on policies that are only soliciting comments. Therefore, in the proposed rule TEAM’s financial impact to the Medicare program remained unchanged from the FY 2025 IPPS/LTCH PPS final rule. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00736 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37271 While the Medicare savings estimate remained unchanged for TEAM in the proposed rule, we noted in section I.O. of this Appendix, that we assessed the potential financial impact of a low volume policy on the model. Further, we indicated in the proposed rule that we would update the Medicare savings estimate for the final rule to reflect act ssed the potential financial impact of a low volume policy on the model. Further, we indicated in the proposed rule that we would update the Medicare savings estimate for the final rule to reflect actual TEAM participants participating in the model, inclusive of those hospitals that voluntarily opted into the model, and updated baseline spending assumptions. Additionally, we noted that should a policy that we considered become finalized, such as the low volume hospital policy, we would update the Medicare savings estimate to reflect that policy as well. Given the policies we are finalizing in this final rule, and our desire to account for all TEAM participants, inclusive of the hospitals that have voluntarily joined the model, we have updated the Medicare savings estimate as a result of implementing TEAM. Table J.G.12–01 shows the projected financial impacts of TEAM over the course of the five- year model test. The first performance year (2026) of TEAM is expected to cost the Medicare program $28 million because we assume most TEAM participants will elect participation in Track 1, which is not subject to downside risk. In performance year 2 (2027), TEAM participants in Track 1 will program $28 million because we assume most TEAM participants will elect participation in Track 1, which is not subject to downside risk. In performance year 2 (2027), TEAM participants in Track 1 will have no downside risk while TEAM participants in Track 2 and Track 3 will be subject to both upside and downside risk, and we estimate TEAM participants on net (that is, repayment amounts less reconciliation payments) will pay $16 million to CMS, and that TEAM will save the Medicare program $71 million. In performance year 3 (2028), we estimate TEAM participants on net will pay $33 million to CMS, and that TEAM will save the Medicare program $89 million. We estimate that TEAM participants on net will pay CMS $60 million in performance year 4 (2029) and $61 million in performance year 5 (2030), and that TEAM will save the Medicare program $117 million and $119 million for these performance years, respectively. We estimate that CMS will pay TEAM participants $381 million and TEAM participants will pay CMS $469 million, and that TEAM will save the Medicare program approximately $368 million over the 5 performance years (2026 through 2030). TABLE J.G.12.—01: PROJECTED FINANCIAL IMPACTS OF ts will pay CMS $469 million, and that TEAM will save the Medicare program approximately $368 million over the 5 performance years (2026 through 2030). TABLE J.G.12.—01: PROJECTED FINANCIAL IMPACTS OF TEAM [In Millions] 2026 2027 2028 2029 2030 TEAM episode spending .......................................................................... (+) Reconciliation payment amounts (positive) ....................................... (+) Reconciliation repayment amounts (negative) ................................... ¥ Baseline episode spending ................................................................. Impact ...................................................................................................... Impact as % of Baseline .......................................................................... $5,398 $82 0 $5,452 $28 0.5% $5,478 $81 ¥$97 $5,533 ¥$71 ¥1.3% $5,567 $75 ¥$108 $5,623 ¥$89 ¥1.6% $5,661 $71 ¥$131 $5,718 ¥$117 ¥2.0% $5,751 $72 ¥$133 $5,809 ¥$119 ¥2.0% * These estimates are before financial interactions with Part B premium or the Medicare Advantage program. (1) Assumptions We assumed TEAM episode volume is estimated to grow at the same rate as projected Medicare F es are before financial interactions with Part B premium or the Medicare Advantage program. (1) Assumptions We assumed TEAM episode volume is estimated to grow at the same rate as projected Medicare FFS enrollment as indicated in the 2025 Medicare Trustees Report.510 We also assumed that TEAM participants are estimated to reduce episode spending by 1 percent as a result of participating in TEAM. We note in the sixth annual evaluation report of the Comprehensive Care for Joint Replacement (CJR) model indicated that CJR resulted in roughly a 3.5 percent reduction in lower extremity joint replacement (LEJR) spending (not including reconciliation payments) for participants in performance year 6.511 Since participation in CJR is mandatory in 34 metropolitan statistical areas, and LEJR episodes make up a significant portion of the episodes included in TEAM, the CJR evaluation results appear to be a reasonable proxy for what to expect in TEAM. However, the episode length in CJR is 90 days, whereas in TEAM the finalized length is 30 days. Internal analysis indicated that the 30-day episode is approximately 75 percent as costly as a 90-day episode for LEJR procedures. In addition, post-acut ereas in TEAM the finalized length is 30 days. Internal analysis indicated that the 30-day episode is approximately 75 percent as costly as a 90-day episode for LEJR procedures. In addition, post-acute care spending has been declining in recent years for episodes that we are testing in TEAM, which could limit the potential for TEAM participants to achieve significant improvements in efficiency. Thus, 510 https://www.cms.gov/oact/tr/2025. 511 https://www.cms.gov/priorities/innovation/ data-and-reports/2024/cjr-py6-annual-report. we believe that the intervention effect of TEAM on episode spending will be a reduction of 0 to 3 percent (see Table J.G.12– 02 for a sensitivity analysis for how the financial impact is affected by changes in this assumption). We also note that starting from actual episode spending that occurred in the first half of 2023, average baseline spending per episode is estimated to increase by 1.5 percent every year. The national average per episode spending growth for all TEAM episode types in years 2018, 2019, 2022, and 2023 was approximately 1.3 percent. Annual growth rates for each episode type were weighted by spending, and historical experience during 2020 a r all TEAM episode types in years 2018, 2019, 2022, and 2023 was approximately 1.3 percent. Annual growth rates for each episode type were weighted by spending, and historical experience during 2020 and 2021 were excluded due to possible impacts from the peak of the COVID–19 pandemic. Since some of the historical experience in these years includes Medicare policy changes for LEJR episodes that resulted in surgeries occurring in more efficient care settings, translating to spending decreases that may not be duplicated in future years, the assumed annual trend is slightly greater than the observed average trend from the historical experience. Additionally, our estimates do not include the impact of TEAM beneficiary overlap with total cost of care models, such as when a TEAM beneficiary is also assigned to a Medicare Shared Savings Program ACO. However, given the precision in the Shared Savings Program projections, we do not anticipate a practical difference in the ACO’s shared savings estimates. Nor do we anticipate TEAM beneficiary overlap with total cost of care models having a meaningful effect to TEAM’s projected financial impacts, described in Table J.G.12–01. Because the financ timates. Nor do we anticipate TEAM beneficiary overlap with total cost of care models having a meaningful effect to TEAM’s projected financial impacts, described in Table J.G.12–01. Because the financial impact is based on projections of spending, the estimates implicitly assume that there will be no meaningful difference between the projected episode spending used to calculate the prospective target prices and actual episode spending, as observed in an internal analysis of simulated reconciliation results using the first three quarters of 2024. This assumption has a large degree of uncertainty, and the actual TEAM financial impacts will be sensitive to this difference. However, some of the financial risk of the projection error is mitigated by the retrospective trend factor. Target prices will still be susceptible to some error risk if the projection error exceeds the retrospective trend factor cap. The direction, magnitude and timing of projection inaccuracies would all affect the overall financial impact estimate. (2) Sensitivity Analysis We also performed a sensitivity analysis to assess various intervention effects on TEAM. Overall financial impacts are sensitive to the interv erall financial impact estimate. (2) Sensitivity Analysis We also performed a sensitivity analysis to assess various intervention effects on TEAM. Overall financial impacts are sensitive to the intervention effect TEAM would have on TEAM participants’ episode spending. Table J.G.12–02 includes financial impacts at various intervention effect assumptions (note that negative values indicate savings): VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00737 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37272 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations TABLE J.G.12—02: TEAM SENSITIVITY ANALYSIS AT VARIOUS INTERVENTION EFFECTS Intervention effect (%) 2026 (%) 2027 (%) 2028 (%) 2029 (%) 2030 (%) ¥3.0 ........................................................................................................ ¥1.0 ........................................................................................................ 0.0 ............................................................................................................ ¥0.7 0.5 1.2 ¥1.8 ¥1.3 ¥1.0 ¥2.7 ¥1.6 ¥1.0 ¥3.1 ¥2 .................................... 0.0 ............................................................................................................ ¥0.7 0.5 1.2 ¥1.8 ¥1.3 ¥1.0 ¥2.7 ¥1.6 ¥1.0 ¥3.1 ¥2.0 ¥1.5 ¥3.1 ¥2.0 ¥1.5 The sensitivity is due to the lack of the requirement that TEAM participants participate in downside risk during performance year 1 and the effect that reductions in episode spending during performance years would have on target prices for future performance years. b. Effects on Medicare Beneficiaries We believe the refinements to TEAM finalized in this final rule will not materially alter the potential effects of the model on beneficiaries that we had initially indicated in the FY 2025 IPPS/LTCH PPS final rule (89 FR 70028). We believe the majority of the changes will not alter the effects of the model on beneficiaries because the changes predominantly alter how hospitals interact with the model, rather than how beneficiaries receive care. However, we believe any changes finalized that may have a direct effect on TEAM beneficiaries are positive. In section XI.A.2.b.(3) of the preamble of this final rule, we finalized the policy to include the Information Transfe anges finalized that may have a direct effect on TEAM beneficiaries are positive. In section XI.A.2.b.(3) of the preamble of this final rule, we finalized the policy to include the Information Transfer PRO–PM, specific to episodes initiated in the hospital outpatient department setting, in the quality measure set that will be tied to payment with the belief that doing so will encourage TEAM participants to focus on and deliver improved quality of care for Medicare beneficiaries. We also note in section XI.A.2.f. of the preamble of this final rule that we finalized the policy to allow TEAM participants to use the SNF 3-day rule waiver for TEAM beneficiaries discharged to hospitals and CAHs providing PAC under swing bed arrangements. This finalized policy will help improve beneficiary freedom of choice and access to care, such that beneficiaries in rural or underserved areas could receive PAC services closer to their home. We welcomed public comments on our impact of TEAM on Medicare beneficiaries. We received no comments and therefore are finalizing this provision without modification. 12. Effects of the Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Tim eficiaries. We received no comments and therefore are finalizing this provision without modification. 12. Effects of the Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit, and Electronic Prior Authorization a. Regulatory Planning and Review Analysis This final rule implements relevant policy priorities outlined in Executive Orders (E.O.) 12866, 13563, 14221, and 14192. In 1993 E.O. 12866 was issued to ensure that regulations are cost-effective, necessary, and minimally burdensome. To build upon this, E.O. 13563, called for grounding in the best available science to ensure objectivity and transparency in rulemaking. In addition, this final rule reinforces the administration’s policy goals set forth in E.O. 14221 to support pricing transparency, automation, patient empowerment through accessible and actionable information. Finally, this rule aligns with E.O. 14192, Unleashing Prosperity Through Deregulation, which seeks to reduce the private expenditures required to comply with federal regulations. (1) Costs and Benefits ASTP/ONC has estimated the potential monetary costs and benefits of this final rule for health IT developers, hea ivate expenditures required to comply with federal regulations. (1) Costs and Benefits ASTP/ONC has estimated the potential monetary costs and benefits of this final rule for health IT developers, health care providers, patients, and the Federal Government (that is, ASTP/ONC), and have broken those costs and benefits out by section. The impact analysis primarily assesses the costs and benefits of finalized changes to the Certification Program as applicable for certified health IT developers and the health care providers purchasing health IT. We expect the undiscounted costs to developers of certified health IT and health IT purchasers equal to $228 million. The Certification Program, as described elsewhere in this rule, is voluntary. Developers who present technology for certification do so for varied reasons such as supporting health IT users engaged in quality improvement programs and demonstrating conformance with federally adopted standards. However, we recognize there are real costs associated with any changes to certified health IT and requirements for developers of certified health IT to maintain certification. We estimate these costs to the best of our ability, examining th ts associated with any changes to certified health IT and requirements for developers of certified health IT to maintain certification. We estimate these costs to the best of our ability, examining the development tasks and burden associated with each proposal. We also estimate and articulate the expected cost savings and benefits of these proposals. Whereas we estimate the costs and cost savings associated with development tasks for developers of certified health IT, benefits and less-direct costs can be more far reaching—affecting developers directly through standards harmonization and well-delineated processes for technology development while also affecting health care providers, patients, and payers by providing for electronic health information exchange, access to electronic health information, and automation of clinical and administrative processes. Although participation in the Certification Program is voluntary, we believe that requirements to use certified health IT by Federal programs, to adopt health IT standards, and to make data available to health care providers, patients, and payers provide reasons for developers to present health IT for certification. Certification programs, to adopt health IT standards, and to make data available to health care providers, patients, and payers provide reasons for developers to present health IT for certification. Certification Program requirements are meant to harmonize health IT development and promote interoperability through common health IT standards and rules of information exchange and access. The benefits described more thoroughly, later in this section, such as those for interoperability that we have described in prior rulemaking (for example, ONC Cures Act Final Rule (85 FR 25642)), are derived from more universal adoption of these standards and from rules that enable data to be electronically recorded, stored, exchanged, and accessed more harmoniously. These actions may remove artificial barriers to information exchange that often result in the duplication of diagnostic and laboratory testing, fragmented care, missing medical record information, and less consumer choice in the healthcare market.512 513 The benefits, both quantifiable and not quantifiable, articulated in this impact analysis have the potential to remove barriers to interoperability and EHI exchange, improve the efficiency of and red The benefits, both quantifiable and not quantifiable, articulated in this impact analysis have the potential to remove barriers to interoperability and EHI exchange, improve the efficiency of and reduce the administrative overhead involved in health care delivery. These policies first require effort by developers of certified health IT to reflect the policies in their software. Software must then be implemented by end-users to achieve the stated benefits—improving healthcare delivery and improving the overall ability of technology to document, transmit, and integrate EHI across multiple data systems. Our cost calculations quantify health IT developers’ time and effort necessary to implement these policies through new development and administrative activities. Our cost estimates use publicly available data and information to estimate time and effort. We also, where applicable, carry forward cost estimates from prior rulemakings to be consistent in time and effort estimates. Novel cost estimates also use a mix of subject matter expertise and appropriate proxies to quantify costs and cost savings. We note these methods and sources in the tables. We recognize that the costs developers estimates also use a mix of subject matter expertise and appropriate proxies to quantify costs and cost savings. We note these methods and sources in the tables. We recognize that the costs developers incur as a result of these policies may be passed on to certified health IT end-users. These end- users include but are not limited to the nearly 5,000 non-federal hospitals who provide acute, inpatient care and the over 1 million clinicians who provide outpatient care to all Americans. Official statistics show that nearly all U.S. non-federal acute care hospitals and the vast majority of outpatient 512 Jones S.S., Rudin R.S., Perry T., Shekelle P.G. Health information technology: an updated systematic review with a focus on meaningful use. Ann Intern Med. 2014 Jan 7;160(1):48–54. doi: 10.7326/M13–1531. PMID: 24573664. https:// pubmed.ncbi.nlm.nih.gov/24573664/. 513 Everson J., Adler-Milstein J. Sharing information electronically with other hospitals is associated with increased sharing of patients. Health Serv Res. 2020 Feb;55(1):128–135. doi: 10.1111/1475–6773.13240. Epub 2019 Nov 12. PMID: 31721183; PMCID: PMC6980958. https:// pubmed.ncbi.nlm.nih.gov/31721183/. VerDate Sep 2014 00: f patients. Health Serv Res. 2020 Feb;55(1):128–135. doi: 10.1111/1475–6773.13240. Epub 2019 Nov 12. PMID: 31721183; PMCID: PMC6980958. https:// pubmed.ncbi.nlm.nih.gov/31721183/. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00738 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 37273 physicians use certified health IT.514 515 These policies affect the technology that all of these health care providers use. In our analysis and estimates of costs in the proposed rule, we did not assess the costs that health care providers incur in using certified health IT. Such costs may include changes in how the provider electronically documents information in the medical record, changes to workflow, or the costs incurred by a particular implementation of the technology at a care delivery site. The costs estimated the expected burden on health IT developers in developing and providing the revised technology to their users, not the expected burden on users incurred in implementing and using the revised technology. We noted that the cos ealth IT developers in developing and providing the revised technology to their users, not the expected burden on users incurred in implementing and using the revised technology. We noted that the costs and benefits of requirements imposed by Federal agencies on health care providers are often estimated and explained in those rules’ regulatory impact analysis. However, in this final rule we have determined it appropriate to consider the costs and benefits for certified health IT purchasers. We believe it is appropriate to include these costs because, while there are HHS programs incentivizing electronic transactions, this final rule is directly applicable for the specific requirements for certified health IT developed by health IT developers to meet the adopted standards and purchased by health care providers. We have limited data on the fees and costs charged by health IT developers and how those fees and costs are distributed across various health IT purchasers. The estimated costs described for health IT developers are not solely borne by developers of certified health IT and could be passed on to health IT purchasers through health IT developers’ licensing, maintenance, and oth escribed for health IT developers are not solely borne by developers of certified health IT and could be passed on to health IT purchasers through health IT developers’ licensing, maintenance, and other operating fees and costs, not including additional training to learn the new software and process or workflow changes to integrate the new software into daily practice. Given the ongoing nature of updates made by ASTP/ ONC to the Certification Program, health IT developers may have already included the costs associated with making these updates in their existing contracts. Where they have not already been incorporated, these costs may be passed on to health IT purchasers in different ways by developers of certified health IT and across different health care provider organization types. In the section, ‘‘Number of End Users that Will Be Impacted by ASTP/ONC’s Required Regulations,’’ we estimate the number of health IT purchasers impacted by these new requirements and the estimated share of total costs quantified in this impact analysis that could be passed on from developers of certified health IT to them. Large integrated healthcare systems may face different fees and other pricing of total costs quantified in this impact analysis that could be passed on from developers of certified health IT to them. Large integrated healthcare systems may face different fees and other pricing structures than smaller health care provider organizations. The diversity of the healthcare system also limits our ability to accurately model how these costs could be passed on, even if there were data available (much of 514 https://www.healthit.gov/data/quickstats/ national-trends-hospital-and-physician-adoption- electronic-health-records 515 https://www.healthit.gov/data/quickstats/ office-based-physician-electronic-health-record- adoption this data is considered proprietary or trade secrets). Finally, we recognize there may be non-purchase related costs for health care provider use of the certified technology such as staff training. However, the use of the adopted standards within the health IT dramatically limits any necessary manual interaction with the technical processes. What we can describe with more certainty is the overall impact of these policies on the healthcare system as a whole. These policies affect the certified technology used by health care providers that care for an describe with more certainty is the overall impact of these policies on the healthcare system as a whole. These policies affect the certified technology used by health care providers that care for the vast majority of Americans. Nearly all emergency room visits, hospital stays, and regular check-ups are documented and managed using certified health IT. These policies affect the interoperability of EHI for these care events and patients’ electronic access to their health information. Certified health IT is a nearly ubiquitous part of U.S. healthcare, and the costs and benefits estimated here encompass the widespread use of these technologies and their impact on all facets of care. Overall, it is highly speculative to quantify , which benefits or cost savings associated with the new technical requirements and standards for certification criteria we have proposed in this final rule. Emerging technologies may be used in ways not originally predicted. For example, ASTP/ONC supported the development of SMART on FHIR® defines a process for an application to securely request, receive and use data. ASTP/ ONC could not have predicted the scale this technical advancement achieved. Today, i development of SMART on FHIR® defines a process for an application to securely request, receive and use data. ASTP/ ONC could not have predicted the scale this technical advancement achieved. Today, it is used to support major health IT products and utilized by numerous digital health and technology companies to connect and integrate with health IT products to provide healthcare and other services to health app users.516 It is speculative to quantify benefits for specific stakeholders because benefits owing to advancements in interoperability do not necessarily accrue to stakeholders developing and implementing the technologies. Benefits related to interoperability are spread across the healthcare ecosystem and can be considered a societal benefit. We have sought to describe benefits for each of the specific policies, using the best available data and studies to support our analysis. All estimates are rounded to the nearest dollar and all estimates are expressed in 2024 dollars. The wages used to derive cost estimates are from the May 2024 National Occupational Employment and Wage Estimates reported by the U.S. Bureau of Labor Statistics.517 Estimates presented in sections titled ‘ ges used to derive cost estimates are from the May 2024 National Occupational Employment and Wage Estimates reported by the U.S. Bureau of Labor Statistics.517 Estimates presented in sections titled ‘‘Employee Assumptions and Hourly Wage,’’ ‘‘Quantifying the Estimated Number of Health IT Developers and Products,’’ ‘‘Number of End Users that Will Be Impacted by ASTP/ONC’s Required Regulations’’, and ‘‘Comparative Analysis Between Standardized and Non-standardized Application Programming Interfaces’’ are used throughout. In this final rule, we estimate direct benefits wherever research supports such direct estimates of impact. For policies where no such research was identified to be available, we developed estimates based on a reasonable proxy. We note that interoperability can positively impact patient safety, efficacy, care coordination, and improve healthcare processes and other health-related outcomes.518 However, interoperability is a function of several factors including the capabilities of the technology used by health care providers. Therefore, to assess the benefits of our policies, we must first consider how to assess their respective effects on interoperability, holding ot lities of the technology used by health care providers. Therefore, to assess the benefits of our policies, we must first consider how to assess their respective effects on interoperability, holding other factors constant. Comment: We requested comment on the increase in software licensing costs and other fees resulting from these finalized policies, and if ongoing licensing costs and fees already encompass the costs of meeting new regulations and certification requirements (that is, some or none of the estimated costs of the proposed rule would be passed on to technology end-users). We received no comments regarding the impact on software licensing costs and other fees resulting from these policies. Response: The final impact analysis updates costs based on new information on the number of products that are likely to require new functionality and the impact of these finalized policies. Cost estimates were updated to reflect wages of software developers as of 2024. Quantified cost savings were updated in this final impact analysis, given new information and availability of data. (a) Employee Assumptions and Hourly Wage Unless otherwise noted, we have consistently used the May 2024 N gs were updated in this final impact analysis, given new information and availability of data. (a) Employee Assumptions and Hourly Wage Unless otherwise noted, we have consistently used the May 2024 National Occupational Employment and Wage Estimates reported by the U.S. Bureau of Labor Statistics (BLS) to calculate private sector employee wage estimates.519 These wage estimates are a national average and do not represent any possible regional variation in wages. We also do not account for possible variation in the average wages for software developers in health care IT positions versus IT positions, more generally, which the BLS wage estimate is based upon. We updated average wages used in the proposed rule, which were based upon May 2022 BLS statistics. We most commonly use the mean hourly wage for a Software Developer (Standard Occupational Code: 15–1252), which is $69.50, to measure costs associated with our finalized policies. We have concluded that a 100 percent expenditure on 516 Wesley Barker, Natalya Maisel, Catherine E Strawley, Grace K Israelit, Julia Adler-Milstein, Benjamin Rosner, A national survey of digital health company experiences with electronic health record ap 6 Wesley Barker, Natalya Maisel, Catherine E Strawley, Grace K Israelit, Julia Adler-Milstein, Benjamin Rosner, A national survey of digital health company experiences with electronic health record application programming interfaces, Journal of the American Medical Informatics Association, Volume 31, Issue 4, April 2024, Pages 866–874, https://doi.org/10.1093/jamia/ocae006. 518 Nir Menachemi, Saurabh Rahurkar, Christopher A Harle, Joshua R Vest, The benefits of health information exchange: an updated systematic review, Journal of the American Medical Informatics Association, Volume 25, Issue 9, September 2018, Pages 1259–1265, https://doi.org/ 10.1093/jamia/ocy035. 517 BLS. Occupational Employment and Wage 519 BLS. Occupational Employment and Wage Statistics: https://data.bls.gov/oes/#/industry/ 000000. Statistics: https://data.bls.gov/oes/#/industry/ 000000. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00739 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37274 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations benefits and overhead is an appropriate estimate based on i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 37274 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations benefits and overhead is an appropriate estimate based on research conducted by HHS.520 (b) Quantifying the Estimated Number of Health IT Developers and Products As we described in the HTI–2 proposed rule (89 FR 63498), we do not assume that all developers of certified health IT and their products would be affected by this final rule.521 We estimate that, in total, 395 health IT developers will certify 520 health IT products impacted by this final rule. These totals reflect revisions from the original proposals, using up to date data. The analysis and models used to estimate the totals remain the same, as proposed. We received no comments on our quantification of developers and products affected by this final rule. (c) Number of End Users That Will Be Impacted by ASTP/ONC’s Required Regulations As previously noted in ASTP/ONC rulemaking (89 FR 63667 and 89 FR 63498), for the purpose of this impact analysis, the population of end users impacted are the number of health care providers that possess certified health IT. Due to data limitations, 3667 and 89 FR 63498), for the purpose of this impact analysis, the population of end users impacted are the number of health care providers that possess certified health IT. Due to data limitations, our analysis is based on the number of hospitals and clinicians who participate in Medicare and who may be required to use certified health IT to participate in various CMS programs, inclusive of those providers who received incentive payments to adopt certified health IT as part of the Medicare EHR Incentive Program (now known as the Medicare Promoting Interoperability Program and the Promoting Interoperability performance category under MIPS). One limitation of this approach is that we are unable to account for the impact of our provisions on users of certified health IT that were ineligible or did not participate in the CMS EHR Incentive Programs or current Medicare programs (for example, the Medicare Promoting Interoperability Program). For example, in 2017, 78 percent of home health agencies and 66 percent of skilled nursing facilities reported adopting an EHR.522 Nearly half of these facilities reported engaging in aspects of health information exchange. However, we are unable to gencies and 66 percent of skilled nursing facilities reported adopting an EHR.522 Nearly half of these facilities reported engaging in aspects of health information exchange. However, we are unable to quantify, specifically, the use of certified health IT products among these provider types. Despite these limitations, these Medicare program participants represent an adequate sample on which to base our estimates. An analysis of the CMS Provider of Services file for Hospitals and CMS National Downloadable File of Doctors and Clinicians provides a current accounting of Medicare- participating hospitals and practice 520 See U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (ASPE), Guidelines for Regulatory Impact Analysis, at 28–30 (2016), available at https://aspe.hhs.gov/reports/guidelines- regulatory-impact-analysis. 521 https://www.federalregister.gov/d/2024-14975/ p-2051. 522 https://www.healthit.gov/data/data-briefs/ electronic-health-record-adoption-and- interoperability-among-us-skilled-nursing. locations.523 524 In total, we estimated about 4,800 non-Federal acute care hospitals from the Provider of Services file and 1 ic-health-record-adoption-and- interoperability-among-us-skilled-nursing. locations.523 524 In total, we estimated about 4,800 non-Federal acute care hospitals from the Provider of Services file and 1.25 million clinicians (including doctors and advanced nurse practitioners) across over 350,000 practice locations. If we assume that 96 percent of these hospitals and 80 percent of these practice locations use certified health IT, as survey data estimate, approximately 4,600 hospitals and 283,000 practice locations may face some passed-on costs from these requirements.525 526 As detailed in the Accounting Statement, we estimate the total undiscounted costs to developers of certified health IT over a 10- year period to be $228 million or about $577K per developer of certified health IT (n=395) and $438K per certified health IT product (n=580). Replicating prior modeling work (85 FR 25642 and 89 FR 63667), the average hospital user (n=4,600) of certified health IT is expected to face up to $16,519.00 on average additional costs associated with implementing technology that adopt these policies.527 The average clinician practice site (n=283,000) will face up to $537.00 on average addition $16,519.00 on average additional costs associated with implementing technology that adopt these policies.527 The average clinician practice site (n=283,000) will face up to $537.00 on average additional costs associated with implementing technology that adopt these policies.528 Described in later sections are the quantifiable cost savings to health IT purchasers of these finalized policies and the average pass-through costs from developers of certified health IT to purchasers. These costs are not expected to be borne at once. Requirements from this finalized rulemaking may be implemented over several years, so in some cases an individual hospital or health IT purchaser’s share of pass- through costs from their health IT developer may be distributed over one or more years. We reiterate that some of these costs may have already been incorporated within existing contracts and thus it is possible that the actual additional costs experienced by hospitals and clinicians may be lower than what is estimated. We do not have insights into proprietary contracts between EHR developers and their clients, and thus cannot speculate on the extent to which the estimated additional costs will be pas t is estimated. We do not have insights into proprietary contracts between EHR developers and their clients, and thus cannot speculate on the extent to which the estimated additional costs will be passed on to clients. It is unknown if the estimated cost savings will have the same distribution. A single clinician may not benefit the same as a single hospital, nor will one hospital benefit the same as another. However, given the same constraints to model costs across different provider types, we choose to assume a similar distribution for benefits as we propose for costs. 523 https://data.cms.gov/provider-characteristics/ hospitals-and-other-facilities/provider-of-services- file-hospital-non-hospital-facilities. 524 https://data.cms.gov/provider-data/dataset/ mj5m-pzi6. 525 https://www.healthit.gov/data/quickstats/ national-trends-hospital-and-physician-adoption- electronic-health-records. 526 https://www.healthit.gov/data/quickstats/ office-based-physician-electronic-health-record- adoption. 527 Formula: [$228m * (1⁄3)]/4,600. 528 Formula: [$228m * (2⁄3)]/283,000. (d) Comparative Analysis Between Standardized and Non-Standardized Application Programming Interfaces Standardization, ption. 527 Formula: [$228m * (1⁄3)]/4,600. 528 Formula: [$228m * (2⁄3)]/283,000. (d) Comparative Analysis Between Standardized and Non-Standardized Application Programming Interfaces Standardization, by its nature, enables predictable, programmable methods of communication between IT systems. When a receiving IT system can ingest, parse, and translate a payload from a transmitting IT system, it can do so automatically with little to no manual intervention. Furthermore, when this process is built on common, industry standards the receiving and transmitting IT systems can be built with this interoperability in mind. The receiving system does not have to predict or intuit the payload’s form, structure, and purpose, it knows what it is automatically because the receiving and transmitting systems speak the same computer language and share an information payload that conforms to each system’s specifications. For example, one health IT product, built with standards-based application programming interface (API) specifications (developed once and deployed enterprise wide) can be connected to another IT system (for example, an app or information database) that supports these same specificati