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 re data with public health agencies? Does your facility use any Substitutable Medical Applications and Reusable Technologies (SMART) on FHIR® applications? If so, are the SMART on FHIR® applications integrated with your EHR or other health IT? • How do you anticipate the adoption of technology using FHIR® -based APIs to facilitate the reporting of patient assessment data could impact provider workflows? What impact, if any, do you anticipate it will have on quality of care? • What benefits or challenges have you experienced with implementing technology using FHIR® -based APIs? How can adopting technology using FHIR® -based APIs to facilitate the reporting of patient assessment data impact provider workflows? What impact, if any, does adopting this technology have on quality of care? • Does your facility have any experience using technology that shares electronic health information using one or more versions of the United States VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00508 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 Regul m 00508 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 37043 Core Data for Interoperability (USCDI) standard? 377 • Would your LTCH and/or vendors be interested in participating in testing to explore options for transmission of assessments, for example testing the transmission of a FHIR® -based assessment to CMS? • How could the Trusted Exchange Framework and Common AgreementTM (TEFCATM) support CMS quality programs’ adoption of FHIR® -based assessment submissions consistent with the FHIR® Roadmap (available here: https://rce.sequoiaproject.org/three- year-fhir-roadmap-for-tefca/)? How might patient assessment data hold secondary uses for treatment or other TEFCA exchange purposes? • What other information should we consider to facilitate successful adoption and integration of FHIR® - based technologies and standardized data for patient assessment instruments like the LCDS? We invited any feedback, suggestions, best practices, or success stories related to the implementation of these technologies. We invited any feedback, suggestion assessment instruments like the LCDS? We invited any feedback, suggestions, best practices, or success stories related to the implementation of these technologies. We invited any feedback, suggestions, best practices, or success stories related to the implementation of these technologies and will use this input to inform our future dQM transition efforts. The following is a summary of the comments we received. Comment: Several commenters were supportive of the transition to dQM for the LTCH QRP, stating that this will support more timely and actionable insights. A commenter stated that this transition will reduce the effort needed to develop measures and collect data as well as facilitate payers sharing with providers to inform care delivery in real time. A few of these commenters were supportive but encouraged a phased or ‘‘glide path’’ approach to implementation, along with pilot testing and technical assistance. Many commenters had concerns about barriers to dQM. A commenter was concerned that post-acute care (PAC) providers and vendors lack uniform technology capabilities and the IT workforce required for this transition. Another commenter recommended updates to CMS billing, C ncerned that post-acute care (PAC) providers and vendors lack uniform technology capabilities and the IT workforce required for this transition. Another commenter recommended updates to CMS billing, CDC/NHSN and iQIES systems’ technical capabilities to support consistency and direct transfer of data from providers. A few commenters recommended that CMS provide technical assistance and adequate timelines for LTCHs to transition. Another supported dQMs but suggested that national infrastructure 377 For more information about USCDI see https:// www.healthit.gov/isp/united-states-core-data- interoperability-uscdi. . A few commenters stated that should be developed first, so that EHRs contain all the necessary data elements specified in FHIR® . Several commenters recommended that CMS provide funding for LTCHs to update and modernize their systems for FHIR® LTCHs were not included in Meaningful Use funding through the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009. A commenter stated that LTCHs have a lower level of IT maturity and may need considerable development resources to implement FHIR® -based APIs. This commenter cited costs related to program t of 2009. A commenter stated that LTCHs have a lower level of IT maturity and may need considerable development resources to implement FHIR® -based APIs. This commenter cited costs related to program evaluation, technology development, and staffing, training, and certification costs, which are difficult for LTCHs with tight margins. Commenters recommended grants, direct funding, or incentive opportunities. Response: We thank commenters for their feedback. While we will not be responding to specific comments submitted in response to this RFI in this final rule, we intend to use this information to inform future dQM transition work. 9. Form, Manner, and Timing of Data Submission Under the LTCH QRP a. Background We refer readers to the regulatory text at § 412.560(b) for information regarding the current policies for reporting specified data for the LTCH QRP. b. Modification of Reporting Requirements for the Patient/Resident COVID–19 Vaccine Measure Beginning with the FY 2028 LTCH QRP. As discussed previously in section X.E.3. of this final rule, we proposed to modify reporting requirements for the Patient/Resident COVID–19 Vaccine measure in the LTCH QRP to exclude patients who have s discussed previously in section X.E.3. of this final rule, we proposed to modify reporting requirements for the Patient/Resident COVID–19 Vaccine measure in the LTCH QRP to exclude patients who have expired in the LTCH beginning with the FY 2028 LTCH QRP. Specifically, we proposed that, beginning with patients admitted on or after October 1, 2026, LTCHs would no longer be required to submit the Patient/ Resident COVID–19 Vaccine item (O0350) on the LCDS with respect to patients who have expired in the LTCH. We also proposed to remove the Patient/ Resident COVID–19 Vaccine item (O0350) from future LCDS forms that LTCHs use for expired patients. The remaining LCDS forms used for Planned Discharge and Unplanned Discharge would continue to include the Patient/ Resident COVID–19 Vaccine item (O0350) for purposes of collecting and reporting data on the Patient/Resident COVID–19 Vaccine measure. We invited public comment on our proposal to modify reporting requirements for the Patient/Resident COVID–19 Vaccine measure in the LTCH QRP to exclude patients who have expired in the LTCH beginning patients who have expired on or after October 1, 2026, for the FY 2028 LTCH QRP. We have summari ent COVID–19 Vaccine measure in the LTCH QRP to exclude patients who have expired in the LTCH beginning patients who have expired on or after October 1, 2026, for the FY 2028 LTCH QRP. We have summarized the comments we received about modifying reporting requirements for the Patient/Resident COVID–19 Vaccine measure in section X.E.3. of this final rule and provided responses. After consideration of the public comments, we are finalizing our proposal to modify reporting requirements for the Patient/Resident COVID–19 Vaccine measure in the LTCH QRP to exclude patients who have expired in the LTCH beginning with the FY 2028 LTCH QRP. 10. Policies Regarding Public Display of Measure Data for the LTCH QRP We did not propose any new policies regarding the public display of measure data in this final rule. For a more detailed discussion about our policies regarding public display of LTCH QRP measure data and procedures for the opportunity to review and correct data and information, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57231 through 57236). F. Changes to the Medicare Promoting Interoperability Program 1. Statutory Authority for the Medicare Promoting Interoperabi eaders to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57231 through 57236). F. Changes to the Medicare Promoting Interoperability Program 1. Statutory Authority for the Medicare Promoting Interoperability Program for Eligible Hospitals and Critical Access Hospitals (CAHs) Sections 1886(b)(3)(B)(ix) and 1814(l)(4) of the Act (as amended by the Health Information Technology for Economic and Clinical Health Act, Title XII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 (ARRA), (Pub. L. 111–5)) authorize downward payment adjustments under Medicare, beginning with FY 2015 for eligible hospitals and CAHs that do not successfully demonstrate meaningful use of certified electronic health record technology (CEHRT) for the applicable electronic health record (EHR) reporting periods. Section 602 of Title VI, Division O of the Consolidated Appropriations Act, 2016 (Pub. L. 114– 113) added subsection (d) hospitals in Puerto Rico as eligible hospitals under the Medicare EHR Incentive Program and extended the participation timeline for these hospitals such that downward payment adjustments were authorized beginning in FY 2022 for section (d) Puerto R nder the Medicare EHR Incentive Program and extended the participation timeline for these hospitals such that downward payment adjustments were authorized beginning in FY 2022 for section (d) Puerto Rico hospitals that do not successfully demonstrate meaningful VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00509 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 37044 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations use of CEHRT for the applicable EHR reporting periods. In addition to the policies discussed in this final rule, we also refer readers to the CY 2026 Physician Fee Schedule (PFS) proposed rule, where we have proposed to adopt a measure scoring suppression policy beginning with the EHR reporting period in CY 2026 and proposed to suppress the Electronic Case Reporting measure from scoring for the EHR reporting period in CY 2025 (90 FR 32732 through 32736). We invite public comment on those proposals through the CY 2026 PFS proposed rule. 2. EHR Reporting Period in CY 2026 and Subsequent Years a. Definition of the EHR Reporting Period Under the definition of ‘‘E e public comment on those proposals through the CY 2026 PFS proposed rule. 2. EHR Reporting Period in CY 2026 and Subsequent Years a. Definition of the EHR Reporting Period Under the definition of ‘‘EHR reporting period for a payment adjustment year’’ at 42 CFR 495.4, for eligible hospitals and CAHs in the Medicare Promoting Interoperability Program, the EHR reporting period in CY 2025 is a minimum of any continuous 180-day period within CY 2025 as finalized in the FY 2024 IPPS/ LTCH PPS final rule (88 FR 59259 through 59260). This applies to eligible hospitals and CAHs that are both new and returning participants in the Medicare Promoting Interoperability Program. We had previously maintained the EHR reporting period for a payment adjustment year as a minimum of any continuous 90-day period from CY 2015 through CY 2023 for eligible hospitals and CAHs for the Medicare Promoting Interoperability Program before increasing the length of the EHR reporting period to any continuous 180- days beginning with CY 2024. In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18355 to 18356), we proposed to maintain the EHR reporting period for CY 2026 and subsequent years as a minimum of any contin beginning with CY 2024. In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18355 to 18356), we proposed to maintain the EHR reporting period for CY 2026 and subsequent years as a minimum of any continuous 180-days. 180-days would be the minimum length, and eligible hospitals and CAHs are encouraged to use longer periods, up to and including the full calendar year. This provides consistency with the EHR reporting period established for CY 2025 and would afford eligible hospitals and CAHs the flexibility they may need to work with their chosen EHR vendors on continuing to develop, update, implement, and test their EHR systems to maintain effective use of CEHRT. We proposed corresponding revisions to the definition of ‘‘EHR reporting period for a payment adjustment year’’ at 42 CFR 495.4. In collaboration with the Assistant Secretary for Technology Policy and Office of the National Coordinator for Health Information Technology (ONC) (collectively referred to as ASTP/ ONC),378 we stated we will continue to monitor CEHRT utilization by eligible hospitals and CAHs to determine if a longer EHR reporting period may be appropriate in the future. We invited public comment on the proposal to will continue to monitor CEHRT utilization by eligible hospitals and CAHs to determine if a longer EHR reporting period may be appropriate in the future. We invited public comment on the proposal to define the ‘‘EHR reporting period for a payment adjustment year’’ in CY 2026 and subsequent years as a minimum of any continuous 180-day period within that calendar year for eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program and to make corresponding revisions at 42 CFR 495.4. Comment: Many commenters supported our proposal to maintain a 180-day EHR reporting period in CY 2026 for eligible hospitals and CAHs. Several commenters emphasized the importance of flexibility for eligible hospitals and CAHs to manage system upgrades, address technical issues, coordinate with vendors, and implement changes effectively. Several commenters appreciated the stability provided by the 180-day reporting period, citing benefits such as reduced resource strain, effective system implementation, and consistency in reporting timelines. A few commenters supported the 180-day EHR reporting period as a manageable timeframe that allows eligible hospitals and CAHs to fo ctive system implementation, and consistency in reporting timelines. A few commenters supported the 180-day EHR reporting period as a manageable timeframe that allows eligible hospitals and CAHs to focus on improving EHR use without risking penalties due to shorter reporting windows. A commenter stated that the proposal enables better planning and execution for eligible hospitals, CAHs, and organizations. Response: We thank commenters for their support. We agree that maintaining the 180-day EHR reporting period provides consistency with the prior years’ EHR reporting periods and provides eligible hospitals and CAHs the flexibility and stability they may need to develop and update their system, and coordinate with their EHR vendors as necessary. Furthermore, we note that many commenters agreed that the 180-day reporting period is a manageable timeframe to plan, execute, and improve their certified EHR use. Comment: A few commenters urged CMS to maintain the 180-day EHR reporting period beyond CY 2026, emphasizing the need for sufficient time to safely deploy and test EHR upgrades before the EHR reporting period begins. A commenter recommended that CMS 378 On July 29, 2024, notice wa beyond CY 2026, emphasizing the need for sufficient time to safely deploy and test EHR upgrades before the EHR reporting period begins. A commenter recommended that CMS 378 On July 29, 2024, notice was posted in the Federal Register that ONC would be dually titled to the Assistant Secretary for Technology Policy and Office of the National Coordinator for Health Information Technology (ASTP) (89 FR 60903). provide an additional year for implementation if the EHR reporting period is further expanded, citing insufficient time to adapt to such changes. Response: We thank commenters for their comments. We note we proposed to use a 180-day EHR reporting period in CY 2026 and subsequent years, which would continue to be our policy unless we propose a change through future rulemaking. Continuing to improve the interoperability of health information exchange by enabling patients and providers to have more comprehensive and reliable data are key goals of the Medicare Promoting Interoperability Program. We will continue to monitor technological advancements and strive to maintain the consistency, flexibility, and stability of our policies for the EHR reporting period, providing sufficient tim rogram. We will continue to monitor technological advancements and strive to maintain the consistency, flexibility, and stability of our policies for the EHR reporting period, providing sufficient time for eligible hospitals and CAHs to safely deploy and test EHR upgrades before the EHR reporting period begins. Additionally, we appreciate the recommendations regarding future EHR reporting periods and may consider this for future rulemaking. Comment: A commenter did not support the proposal stating that a 180- day EHR reporting period may hinder their ability to leverage timely data and optimize certified EHR use. This commenter instead recommended that CMS revert to the 90-day EHR reporting period in CY 2026 because it would preserve flexibility, support data driven decision making, and better align with the Medicare Promoting Interoperability Program’s goal to demonstrate meaningful use of CEHRT. Response: After finalizing the 180-day EHR reporting period for CY 2024 in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45460 through 45462), and for CY 2025 in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59259 and 59260), eligible hospitals and CAHs have had more than 3 years of advance p PS/LTCH PPS final rule (86 FR 45460 through 45462), and for CY 2025 in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59259 and 59260), eligible hospitals and CAHs have had more than 3 years of advance planning with their vendors to build upon and utilize investments already made within their infrastructure to meet site-specific needs for implementation. We also note that the EHR reporting period remained at 90-days from adoption for the EHR reporting period in CY 2011 through the EHR reporting period in CY 2023. When we adopted the 90-day EHR reporting period, we indicated that we did not believe a 90-day period would be appropriate in future years because potential delays in implementing CEHRT were limited to the initial implementation of CEHRT (75 FR 44320). Maintaining an EHR reporting period of 180-days for CY 2026 and subsequent years would not impact eligible hospitals’ and CAHs’ efforts to VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00510 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 37045 update, implement, an M\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 37045 update, implement, and test EHR systems. Reporting data from a longer period provides eligible hospitals and CAHs the opportunity to continuously monitor their performance and identify areas that may require investigation and corrective action. Maintaining the 180- day EHR reporting period in CY 2026 and subsequent years supports the continued improvement of interoperability and health information exchange by producing more comprehensive and reliable data for patients and providers. After consideration of the public comments we received, we are finalizing our proposal to define the ‘‘EHR reporting period for a payment adjustment year’’ in CY 2026 and subsequent years as a minimum of any continuous 180-day period within that calendar year for eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program, and we are finalizing these proposed changes at 42 CFR 495.4. 3. Modifications to the Security Risk Analysis Measure a. Background on the Security Risk Analysis Measure The HI nteroperability Program, and we are finalizing these proposed changes at 42 CFR 495.4. 3. Modifications to the Security Risk Analysis Measure a. Background on the Security Risk Analysis Measure The HIPAA Security Rule 379 (45 CFR part 160 and subparts A and C of part 164) contains administrative safeguards that covered entities and business associates (45 CFR 160.103) must implement, such as the standard and implementation specifications for security management processes. Among those safeguards are implementation specifications that require covered entities and business associates to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information (ePHI) held by the covered entity or business associate (45 CFR 164.308(a)(1)(ii)(A)), and to implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with the general requirements of the HIPAA Security Rule at 45 CFR 164.306(a). For eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program, ensuring the privacy and security eneral requirements of the HIPAA Security Rule at 45 CFR 164.306(a). For eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program, ensuring the privacy and security of ePHI is essential for demonstrating meaningful use of CEHRT. In both the Medicare and Medicaid Programs; Electronic Health Record Incentive Program-Stage 2 final 379 Under the Biden administration, the Department proposed to modify the HIPAA Security Rule to strengthen the cybersecurity of ePHI(90 FR 898). This proposed rule has not been finalized as of publication of this final rule. rule (Stage 2 final rule) (77 FR 54002 through 54003) and the Medicare and Medicaid Programs; Electronic Health Record Incentive Program-Stage 3 and Modifications to Meaningful Use in 2015 through 2017 final rule (Stage 3 final rule) (80 FR 62793 through 62794), we discussed the benefits of safeguarding electronic health information and our determination that protecting electronic health information is essential to all aspects of meaningful use. We also noted that impermissible disclosures of protected health information, whether unintended, unlawful, or both, could diminish individuals’ confidence in sential to all aspects of meaningful use. We also noted that impermissible disclosures of protected health information, whether unintended, unlawful, or both, could diminish individuals’ confidence in EHRs and electronic health information exchange and that ensuring that health information is adequately protected and secured would assist in addressing the unique risks and challenges that may be presented. We previously adopted the Security Risk Analysis measure based on the HIPAA Security Rule risk analysis requirement in 45 CFR 164.308(a)(1). Information on the adoption of this measure can be found in several rules that established Medicare and Medicaid EHR Incentive Programs requirements, including the Medicare and Medicaid Programs; Electronic Health Record Incentive Program final rule (Stage 1 final rule) (75 FR 44369), Stage 2 final rule (77 FR 54002 and 54003), Stage 3 final rule (80 FR 62793 through 62794), and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41644). In the Stage 3 final rule (80 FR 62793 through 62795 and 62829 through 62832), we adopted the Protect Patient Health Information objective and included the Security Risk Analysis measure. Prior to the FY 2026 IPPS/LT inal rule (80 FR 62793 through 62795 and 62829 through 62832), we adopted the Protect Patient Health Information objective and included the Security Risk Analysis measure. Prior to the FY 2026 IPPS/LTCH PPS final rule, the Security Risk Analysis measure required eligible hospitals and CAHs to attest ‘‘yes’’ or ‘‘no’’ as to whether they had conducted or reviewed a security risk analysis, as required by the HIPAA Security Rule at 45 CFR 164.308(a)(1)(ii)(A). Eligible hospitals and CAHs were required to attest ‘‘yes’’ to the measure to be considered a meaningful EHR user and avoid a downward payment adjustment. The measure was not scored and did not contribute any points to the total score for the Protect Patient Health Information objective. An attestation of ‘‘no’’ resulted in the eligible hospital or CAH not meeting the requirements of the measure and not satisfying the definition of a meaningful EHR user under 42 CFR 495.4, subjecting the eligible hospital or CAH to a downward payment adjustment. b. Modification of the Security Risk Analysis Measure Beginning With the EHR Reporting Period in CY 2026 As of the EHR reporting period in CY 2025, the Security Risk Analysis measure does adjustment. b. Modification of the Security Risk Analysis Measure Beginning With the EHR Reporting Period in CY 2026 As of the EHR reporting period in CY 2025, the Security Risk Analysis measure does not require eligible hospitals and CAHs to manage their security risk conduct or to attest to having implemented security measures to manage their security risk. Codified at 45 CFR 164.308(a)(1)(ii)(B), the HIPAA Security Rule implementation specification for risk management requires the implementation of security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 CFR 164.306(a). We note the HIPAA Security Rule does not prescribe a specific methodology for conducting and documenting a risk analysis or managing risk (45 CFR 164.308(a)(1)(ii) and 164.316(b)(1)). We refer readers to educational resources and information on conducting a HIPAA Security Rule risk analysis available in the U.S. Department of Health and Human Services (HHS) Office for Civil Rights’ (OCR) cybersecurity newsletters,380 OCR’s website381, and YouTube channel,382 the National Institute of Standard and Technology (NIST) special publication, Implementing t HHS) Office for Civil Rights’ (OCR) cybersecurity newsletters,380 OCR’s website381, and YouTube channel,382 the National Institute of Standard and Technology (NIST) special publication, Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule: A Cybersecurity Resource Guide,383 and the HHS Administration for Strategic Preparedness and Response 405(d) Program and Task Group website.384 In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18357 to 18359), we proposed to modify the Security Risk Analysis measure to require eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted security risk management as required by the HIPAA Security Rule implementation specification for risk management. This proposed modification would be in addition to the current requirement under the measure for eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted or reviewed a security risk analysis. Under the proposed modified measure, eligible hospitals and CAHs would be required to attest that they have implemented policies and procedures to support analyzing and 380 See generally https://www.hhs.gov/hipaa/for- professionals/security/guidance/index.html. Hs would be required to attest that they have implemented policies and procedures to support analyzing and 380 See generally https://www.hhs.gov/hipaa/for- professionals/security/guidance/index.html. 381 Guidance on Risk Analysis available at https:// www.hhs.gov/hipaa/for-professionals/security/ guidance/guidance-risk-analysis/index.html. 382 See https://www.youtube.com/user/ USGovHHSOCR. 383 See NIST SP 800–66, rev. 2. https:// csrc.nist.gov/pubs/sp/800/66/r2/final. 384 See generally https://405d.hhs.gov/resources. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00511 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 37046 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations managing security risks to ePHI associated with the implementation and use of EHRs in accordance with the HIPAA Security Rule implementation specifications for risk analysis and risk management as described in 45 CFR 164.308(a)(1)(ii)(A) and (B). The modifications we proposed to the Security Risk Analysis measure would increase accountability among eligible hospitals and CAHs that have not taken steps t in 45 CFR 164.308(a)(1)(ii)(A) and (B). The modifications we proposed to the Security Risk Analysis measure would increase accountability among eligible hospitals and CAHs that have not taken steps to reduce risks and vulnerabilities to ePHI as required by the HIPAA Security Rule and would provide transparency regarding the efforts of eligible hospitals and CAHs that are already taking steps to manage this risk. We proposed the following text for the modified measure, with proposed revised text (as compared to the prior measure text) in italics: Conduct or review a security risk analysis and conduct security risk management activities, in accordance with the requirements under 45 CFR 164.308(a)(1)(ii)(A) and (B), including addressing the security of data created or maintained by CEHRT (to include encryption), in accordance with 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the eligible hospital’s or CAH’s risk management process. Actions included in the security risk analysis measure may occur any time during the calendar year in which the EHR reporting period occurs. To meet the e hospital’s or CAH’s risk management process. Actions included in the security risk analysis measure may occur any time during the calendar year in which the EHR reporting period occurs. To meet the requirements of the modified measure, we proposed that eligible hospitals and CAHs would need to separately attest ‘‘yes’’ to both components of the measure. An eligible hospital or CAH would be required to both attest ‘‘yes’’ that they have met the existing security risk analysis requirement component, and attest ‘‘yes’’ that they have met the security risk management component of the modified Security Risk Analysis measure to be considered a meaningful EHR user beginning with the EHR reporting period in CY 2026. This proposed modification would not impact the provision that actions included in the Security Risk Analysis measure may occur any time during the calendar year in which the EHR reporting period occurs and that an eligible hospital or CAH must use the capabilities and standards as defined for CEHRT at 42 CFR 495.4. The proposal to modify the Security Risk Analysis measure would not change the current scoring approach and would not contribute any points towards the eligible h as defined for CEHRT at 42 CFR 495.4. The proposal to modify the Security Risk Analysis measure would not change the current scoring approach and would not contribute any points towards the eligible hospital or CAH’s total score for the objective. An eligible hospital or CAH that attests ‘‘no’’ to either the risk analysis component or the risk management component, or to both components, would not meet measure requirements and would not satisfy the definition of a meaningful EHR user under 42 CFR 495.4, subjecting the eligible hospital or CAH to a downward payment adjustment. We invited public comment on the proposal to modify the Security Risk Analysis measure to require eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted security risk management in addition to the current requirement for eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted or reviewed a security risk analysis as required by the HIPAA Security Rule. We also invited public comment regarding compliance with security risk management requirements and the potential impact the proposed modification to the Security Risk Analysis measure would have on risk management compliance and any potential ompliance with security risk management requirements and the potential impact the proposed modification to the Security Risk Analysis measure would have on risk management compliance and any potential burden from this proposal. Comment: Many commenters supported our proposal. Several of these commenters emphasized that requiring eligible hospitals and CAHs to attest to having conducted security risk management activities in addition to security risk analysis aligns with the HIPAA Security Rule and strengthens cybersecurity preparedness. A commenter supported CMS’ continued alignment of the Medicare Promoting Interoperability Program’s interoperability objectives with national frameworks that advance trust, data integrity, and security. A few commenters agreed that requiring attestation to security risk management activities increases accountability for reducing risks and vulnerabilities to ePHI. They noted that many eligible hospitals and CAHs have already taken steps to prepare for and manage these risks with policies and procedures in place to address cybersecurity risks. They anticipate the additional requirement would help ensure ePHI is adequately protected in organizations th d manage these risks with policies and procedures in place to address cybersecurity risks. They anticipate the additional requirement would help ensure ePHI is adequately protected in organizations that have not adopted such risk management practices. A few commenters noted that the proposal strikes an appropriate balance between safeguarding patient data and minimizing mandatory reporting requirements. Response: We thank the commenters for their support. We agree that adding the security risk management attestation requirement to the Security Risk Analysis measure aligns with the HIPAA Security Rule and would assist eligible hospitals and CAHs to strengthen their cybersecurity preparedness. We also agree that the change to the Security Risk Analysis measure will increase accountability for reducing risks and vulnerabilities to ePHI while balancing the need to safeguard patient data with minimal reporting requirements. Eligible hospitals and CAHs are required to conduct security risk management activities by implementing security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with § 164.306(a), as covered entities and busines anagement activities by implementing security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with § 164.306(a), as covered entities and business associates under the HIPAA Security Rule. We refer readers to the educational resources that the Department has published on performing security risk analyses and other activities for managing security risks, such as OCR’s cybersecurity newsletters,385 OCR’s website,386 and YouTube videos 387 and other resources published by the HHS Administration for Strategic Preparedness and Response through the 405(d) Program and Task Group.388 Comment: Several commenters that supported the proposal offered recommendations for consideration. A commenter recommended a phased-in approach to implementation, that we offer technical assistance, and that we provide toolkits to support CAHs and rural hospitals. A few commenters recommended HHS issue guidance on performing security risk management activities. Another commenter recommended providing a voluntary reporting year to allow eligible hospitals and CAHs to integrate the new requirements into existing workflows. Response: We thank the commenters f . Another commenter recommended providing a voluntary reporting year to allow eligible hospitals and CAHs to integrate the new requirements into existing workflows. Response: We thank the commenters for their support and feedback. We recognize that eligible hospitals and CAHs may sometimes need additional flexibility to work with external vendors to implement measure changes or to adjust their workload accordingly, however, we note that the HIPAA Security Rule required covered entities to assess and manage risks to ePHI beginning in CY 2003 (68 FR 8346 to 8348). When we adopted the Security Risk Analysis measure in the Stage 1 final rule (75 FR 44369), the HIPAA Security Rule already required risk management administrative safeguards under 45 CFR 164.308(a)(1) and had 385 See https://www.hhs.gov/hipaa/for- professionals/security/guidance/cybersecurity/ index.html. 386 Guidance on Risk Analysis,’’ available at https://www.hhs.gov/hipaa/for-professionals/ security/guidance/guidance-risk-analysis/ index.html. 387 See https://www.youtube.com/user/ USGovHHSOCR. 388 See https://405d.hhs.gov/resources. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00512 Fmt 4701 Sfmt 4700 E: analysis/ index.html. 387 See https://www.youtube.com/user/ USGovHHSOCR. 388 See https://405d.hhs.gov/resources. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00512 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 37047 done so for years. Therefore, we do not believe a phased-in approach, or a voluntary year of reporting are warranted for eligible hospitals and CAHs to attest to having conducted risk management activities that have been required activities since adoption of the HIPAA Security Rule. Regarding the request for technical assistance, toolkits, and other guidance to support CAHs and rural hospitals, we refer readers to OCR’s resources on performing security risk analyses and other related security risk management activities.389 The guidance materials OCR makes available would best inform all eligible hospitals and CAHs on how to meet the requirements of the measure, since we intend the modified measure to be aligned with the HIPAA Security Rule requirements. Comment: A commenter recommended specific refinement CAHs on how to meet the requirements of the measure, since we intend the modified measure to be aligned with the HIPAA Security Rule requirements. Comment: A commenter recommended specific refinements to the measure language to reduce ambiguity and enhance the focus on cybersecurity without unnecessarily increasing administrative burden. Another commenter recommended CMS provide guidance modeled after OCR’s documentation expectations for demonstrating implementation of recognized security practice (RSP), to support consistent implementation. Response: With respect to the recommendation to modify the measure language to reduce ambiguity, we appreciate the commenter’s recommendations. To minimize any potential for confusion or ambiguity in the measure’s requirements, we are providing technical and clarifying revisions to simplify the language of the proposed measure text as follows: First, conduct or review a security risk analysis and second, conduct security risk management activities, in accordance with the requirements under 45 CFR 164.308(a)(1)(ii)(A) and (B). Security risk analysis and management activities include addressing the security of data created or maintained by CEHRT , in accordance with the requirements under 45 CFR 164.308(a)(1)(ii)(A) and (B). Security risk analysis and management activities include addressing the security of data created or maintained by CEHRT (to include encryption), in accordance with 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3). The encryption implementation specified at 45 CFR 164.312(a)(2)(iv) must be implemented if it is reasonable and appropriate; if encryption is not reasonable and appropriate, then the eligible hospital or CAH would adopt an equivalent alternative measure if it is reasonable and appropriate to do so. Actions included in the security risk analysis measure may occur any time during the 389 https://www.hhs.gov/hipaa/for-professionals/ security/guidance/cybersecurity/index.html. calendar year in which the EHR reporting period occurs. We note that the HIPAA Security Rule does not currently prescribe a specific methodology for conducting and documenting a risk analysis or managing risk, and we reiterate our proposal was not intended to exceed or extend beyond what is required under the HIPAA Security Rule. We have modified the measure text accordingly. In addition, with respect to risk management do our proposal was not intended to exceed or extend beyond what is required under the HIPAA Security Rule. We have modified the measure text accordingly. In addition, with respect to risk management documentation, we appreciate the recommendation to provide guidance modeled after OCR’s documentation requirements for demonstrating implementation of RSPs; however, we note that the HIPAA Security Rule does not prescribe a specific methodology for conducting and documenting a risk analysis or managing risk (45 CFR 164.308(a)(1)(ii) and 164.316(b)(1)). Comment: Many commenters did not support the security risk analysis measure modification for various reasons. Several commenters stated the proposed modification is duplicative because eligible hospitals and CAHs are already required by the HIPAA Security Rule to conduct regular security risk analyses and address identified vulnerabilities. A few commenters urged CMS to reconsider inclusion of the Security Risk Analysis measure altogether because they stated it is duplicative of the HIPAA Security Rule requirements and, therefore, believe removing the measure would reduce burden. A commenter stated the proposed modification would undermine use they stated it is duplicative of the HIPAA Security Rule requirements and, therefore, believe removing the measure would reduce burden. A commenter stated the proposed modification would undermine established enforcement practices and place eligible hospitals and CAHs at an increased financial risk. Another commenter stated the Paperwork Reduction Act (PRA) prohibits duplicative federal information collections unless justified by clear, demonstrable benefit, and that requiring eligible hospitals and CAHs to re-attest to security risk management under the Medicare Promoting Interoperability Program may contradict the PRA’s purpose. A few commenters did not support the measure change and stated it creates an administrative burden without clear evidence of improved security outcomes. A few commenters expressed concern that the proposed modification to the Security Risk Analysis measure runs counter to the Administration’s policy objective to reduce regulatory burden. A few commenters did not support the proposal and stated it would create an additional compliance step for eligible hospitals and CAHs, raising concerns that compliance may be difficult to measure, and that implementi did not support the proposal and stated it would create an additional compliance step for eligible hospitals and CAHs, raising concerns that compliance may be difficult to measure, and that implementing cybersecurity requirements can be financially challenging for some. A commenter recommended that CMS work with OCR to implement consistent requirements and provide funding, resources, guidance, and education for entities, particularly small, rural, and otherwise under-resourced eligible hospitals and CAHs. Response: With respect to the relationship between the HIPAA Security Rule and the security risk analysis required by the Security Risk Analysis measure, we previously explained in the Stage 3 final rule (80 FR 62794), and discussed in greater detail in the Stage 3 proposed rule (80 FR 16746 to 16747), that our measure is narrower than what is required to satisfy the security risk analysis requirement under the HIPAA Security Rule at 45 CFR 164.308(a)(1). The security risk analysis required by the measure is limited to annually conducting or reviewing a security risk analysis to assess whether the technical, administrative, and physical safeguards and risk management strategies ar quired by the measure is limited to annually conducting or reviewing a security risk analysis to assess whether the technical, administrative, and physical safeguards and risk management strategies are sufficient to reduce the potential risks and vulnerabilities to the confidentiality, availability, and integrity of ePHI created by or maintained in CEHRT and to implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 CFR 164.306(a). In contrast, the security risk analysis and risk management requirements under 45 CFR 164.308(a)(1) require covered entities and business associates to assess the potential risks and vulnerabilities to the confidentiality, availability, and integrity of all ePHI that an organization creates, receives, maintains, or transmits, including ePHI in all forms of electronic media, and to implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 CFR 164.306(a) for all ePHI held by the covered entity or business associate. As covered entities and business associates, eligible hospitals and CAHs are required to conduct e level to comply with 45 CFR 164.306(a) for all ePHI held by the covered entity or business associate. As covered entities and business associates, eligible hospitals and CAHs are required to conduct security risk management activities under the HIPAA Security Rule. Therefore, we do not agree that the requirement to attest ‘‘yes’’ to having conducted risk management activities creates an additional administrative or regulatory burden, introduces an additional compliance step other than attesting ‘‘yes’’ or ‘‘no’’ once a year to CMS, adds significant technical complexity, places eligible hospitals and CAHs at financial risk, or contradicts the PRA’s purpose. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00513 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 37048 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations The proposed security risk management attestation reflects an eligible hospital’s or CAH’s acknowledgment of having performed activities that also meet the requirements of the HIPAA Security Rule implementation specification for risk management at 45 CFR 164.308 eligible hospital’s or CAH’s acknowledgment of having performed activities that also meet the requirements of the HIPAA Security Rule implementation specification for risk management at 45 CFR 164.308(a)(1)(ii)(B). Furthermore, non- compliance with the HIPAA Security Rule’s requirements for security risk analysis and risk management could expose eligible hospitals and CAHs to greater financial and other risks in the event of a data breach. We note that our intention with this attestation measure, including the new modification to require an affirmative attestation to having conducted security risk management as required under the HIPAA Security Rule implementation specification for risk management, is not to measure the level of HIPAA Security Rule compliance. Rather, we intend to augment our past efforts to incorporate security, including security risk analysis and risk management, as a fundamental structural component for the meaningful use of EHRs. Instead of being duplicative, we consider the modified Security Risk Analysis measure to be complementary to the HIPAA Security Rule. As we explained previously in the Stage 2 final rule (77 FR 54002 and 54003), we emphasize again tha onsider the modified Security Risk Analysis measure to be complementary to the HIPAA Security Rule. As we explained previously in the Stage 2 final rule (77 FR 54002 and 54003), we emphasize again that our discussion of the HIPAA Security Rule implementation specification for security risk analysis and 45 CFR 164.308(a)(1) is only relevant for purposes of the meaningful use requirements and is not intended to supersede what is separately required by the HIPAA Security Rule or other applicable laws. We also explained in the Stage 3 final rule that OCR administers and enforces the HIPAA Rules, including the HIPAA Security Rule, to ensure the privacy and security of protected health information (PHI); however, we continue to believe it is important and necessary for eligible hospitals and CAHs to attest to certain actions required to protect ePHI created or maintained by CEHRT in order to meet the Medicare Promoting Interoperability Program requirements (80 FR 62830). The modification to the Security Risk Analysis measure demonstrates our continued commitment to ensuring that electronic health information created or maintained by CEHRT is protected and secured by eligible hospitals an the Security Risk Analysis measure demonstrates our continued commitment to ensuring that electronic health information created or maintained by CEHRT is protected and secured by eligible hospitals and CAHs given the unique risks and challenges that may be presented by EHRs, particularly at a time when cybersecurity threats are increasingly common and sophisticated.390 Comment: A commenter was concerned that imposing parallel but independently administered requirements increases the likelihood of conflicting interpretations and audit standards across Federal agencies that would introduce significant technical complexity and risk. Response: We explained previously in the Stage 2 final rule (77 FR 54002 and 54003) that the Security Risk Analysis measure is only relevant for purposes of the meaningful use requirements and is not intended to supersede the HIPAA Security Rule or other applicable laws that address cybersecurity, nor is it intended to introduce additional technical requirements other than what is already required under HIPAA. As we explained in the Stage 3 final rule (80 FR 62794), and described in greater detail in the Stage 3 proposed rule (80 FR 16746 to 16747), the Se ts other than what is already required under HIPAA. As we explained in the Stage 3 final rule (80 FR 62794), and described in greater detail in the Stage 3 proposed rule (80 FR 16746 to 16747), the Security Risk Analysis measure is narrower than what is required by the HIPAA Security Rule at 45 CFR 164.308(a)(1) because it only applies to ePHI created or maintained by CEHRT and excludes other forms of electronic media, such as hard drives. These statements continue to apply after the modification we proposed to the Security Risk Analysis measure. Comment: A commenter expressed concern that the proposed modification to the measure is procedurally flawed because the commenter stated that it relies on the HIPAA Security Rule to Strengthen the Cybersecurity of Electronic Protected Health Information proposed rule (90 FR 898) that has not been finalized. Response: We disagree that the proposal to add a security risk management attestation requirement relies on OCR’s HIPAA Security Rule to Strengthen the Cybersecurity of Electronic Protected Health Information proposed rule. The proposed Security Risk Analysis measure modification refers to current requirements of the HIPAA Security Rule trengthen the Cybersecurity of Electronic Protected Health Information proposed rule. The proposed Security Risk Analysis measure modification refers to current requirements of the HIPAA Security Rule that are codified at 45 CFR 164.308(a)(1)(ii)(A) and (B), 164.312(a)(2)(iv), and 164.306(d)(3). The cross-references we proposed do not rely on any other proposed policies or proposed modifications to these provisions. We acknowledge that if the HIPAA Security Rule to Strengthen the Cybersecurity of Electronic Protected Health Information proposed rule (90 390 Healthcare and Public Health Sector Coordinating Council, Centers for Medicare and Medicaid Services, and U.S. Department of Health and Human Services. Hospital Cyber Resiliency Initiative Landscape Analysis. Washington, DC: April 17, 2023 at https://405d.hhs.gov/Documents/ 405d-hospital-resiliency-analysis.pdf. FR 898) is finalized, we will consider whether we need to modify the Security Risk Analysis measure accordingly in future rulemaking. Comment: A few commenters stated that the proposed measure modification would not prevent cyberattacks. A commenter recommended reevaluating existing metrics for the effects of the industr rulemaking. Comment: A few commenters stated that the proposed measure modification would not prevent cyberattacks. A commenter recommended reevaluating existing metrics for the effects of the industry’s move towards interoperability. A commenter recommended keeping the measure as- is and exploring other avenues to encourage risk mitigation. A few commenters expressed reservations around requiring ‘‘yes’’ attestations to receive full scoring credit. Response: While we agree with commenters that an attestation by itself will not prevent cyberattacks, at this time it is important and necessary to use available levers to protect patients’ health information, including the attestation of actions required to protect ePHI created or maintained by CEHRT to meet the Medicare Promoting Interoperability Program requirements. We note that we may consider re- evaluating existing metrics and other avenues to encourage risk mitigation in future rulemaking. After consideration of the public comments we received, we are finalizing our proposal to modify the Security Risk Analysis measure, with modification, to require eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted security risk we received, we are finalizing our proposal to modify the Security Risk Analysis measure, with modification, to require eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted security risk management in addition to the current requirement under the measure for eligible hospitals and CAHs to attest ‘‘yes’’ to having conducted or reviewed a security risk analysis as required by the HIPAA Security Rule, with clarification of the specified measure language as discussed previously so that the finalized measure reads as follows: First, conduct or review a security risk analysis and second, conduct security risk management activities, in accordance with the requirements under 45 CFR 164.308(a)(1)(ii)(A) and (B). Security risk analysis and management activities include addressing the security of data created or maintained by CEHRT (to include encryption), in accordance with 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3). The encryption implementation specified at 45 CFR 164.312(a)(2)(iv) must be implemented if it is reasonable and appropriate; if encryption is not reasonable and appropriate, then the eligible hospital or CAH would adopt an equivalent alternative measure if it )(2)(iv) must be implemented if it is reasonable and appropriate; if encryption is not reasonable and appropriate, then the eligible hospital or CAH would adopt an equivalent alternative measure if it is reasonable and appropriate to do so. Actions included in the security risk analysis measure may occur any time during the calendar year in which the EHR reporting period occurs. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00514 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 37049 4. Modifications to the Safety Assurance Factors for EHR Resilience (SAFER) Guides Measure a. Background on the SAFER Guides Measure The SAFER Guides are an evidence- based set of recommendations in the form of nine stand-alone, subject- oriented chapters that present the health IT community, including eligible hospitals and CAHs that use health IT, with best practice recommendations to improve the safety and safe use of EHRs.391 The SAFER Guides were first released in 2014 and updated in 2016. In the FY 2022 IPPS/LTCH PPS final rule (86 FR IT, with best practice recommendations to improve the safety and safe use of EHRs.391 The SAFER Guides were first released in 2014 and updated in 2016. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45479 through 45481), we adopted the SAFER Guides measure under the Protect Patient Health Information objective beginning with the EHR reporting period in CY 2022. In the FY 2024 IPPS/LTCH PPS final rule, we modified the requirements for the SAFER Guides measure beginning with the EHR reporting period in CY 2024 to require eligible hospitals and CAHs to attest ‘‘yes’’ to conducting an annual self-assessment using all nine of the 2016 SAFER Guides to be considered a meaningful EHR user (88 FR 59262 through 59266). b. Modification of the SAFER Guides Measure Beginning With the EHR Reporting Period in CY 2026 In January 2025, ASTP/ONC published an updated set of SAFER Guides (hereafter referred to as the 2025 SAFER Guides, located at https:// www.healthit.gov/topic/safety/safer- guides). The 2025 SAFER Guides consist of eight guides organized into three broad groups of Foundational Guides, Infrastructure Guides, and Clinical Process Guides.392 All guides have been edited and contain new 2025 SAFER Guides consist of eight guides organized into three broad groups of Foundational Guides, Infrastructure Guides, and Clinical Process Guides.392 All guides have been edited and contain new recommendations as well as the comprehensive consolidation of recommendations that were similar and overlap in function or intent with the 2016 SAFER Guides. For example, the ‘‘System Configuration’’ and ‘‘System Interfaces’’ chapters have been consolidated into a single chapter titled, ‘‘System Management.’’ The entirety of the content recommendations, bibliography, and implementation guidance have been organized into a comprehensive table, which promotes the adoption of best safety practices for health IT. This update represents the most comprehensive revision of the SAFER Guides since they were first released. Table X.F.–01 provides titles of the guides, and chapters within the guides, that collectively comprise the 2016 SAFER Guides and the 2025 SAFER Guides, respectively. In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18358 to 18359), we proposed to modify the SAFER Guides measure by requiring eligible hospitals and CAHs to attest ‘‘yes’’ to completing an annual self-assessment 26 IPPS/LTCH PPS proposed rule (90 FR 18358 to 18359), we proposed to modify the SAFER Guides measure by requiring eligible hospitals and CAHs to attest ‘‘yes’’ to completing an annual self-assessment using all eight 2025 SAFER Guides to be considered a meaningful EHR user, beginning with the EHR reporting period in CY 2026. Some commenters who submitted comments on the FY 2024 IPPS/LTCH PPS proposed rule believed the 2016 SAFER Guides were outdated and recommended that ONC review and update them. Some commenters questioned the relevancy of the 2016 SAFER Guides to patient safety in hospitals due to the rapid advancement of health IT (88 FR 59264 through 59265). Our proposal to update the SAFER Guides measure addresses these concerns and suggestions, because the 2025 SAFER guides have been updated and streamlined to focus on the highest risk, most commonly occurring issues that can be addressed through technology or practice changes to build system resilience and have been condensed into eight SAFER Guides rather than nine. We proposed the following text for the measure: Conduct an annual self-assessment using all eight of the 2025 SAFER Guides at any point during the calendar year to eight SAFER Guides rather than nine. We proposed the following text for the measure: Conduct an annual self-assessment using all eight of the 2025 SAFER Guides at any point during the calendar year in which the EHR reporting period occurs, beginning with the EHR reporting period in CY 2026 and subsequent years. We noted that our proposed modification of the measure to reference the 2025 SAFER Guides would only be effective beginning with EHR reporting periods in CY 2026. We further noted that during EHR reporting period in CY 2025, eligible hospitals and CAHs should continue to use the 2016 SAFER Guides to complete their self- assessment. Both the 2016 and the 2025 SAFER Guides are available on the ASTP website: https:// www.healthit.gov/topic/safety/safer- guides. We encourage eligible hospitals and CAHs to begin to familiarize themselves with the 2025 SAFER Guides during CY 2025. We invited public comment on this proposal for eligible hospitals and CAHs to conduct an annual self-assessment using all eight of the 2025 SAFER Guides at any point during the calendar year in which the EHR reporting period occurs, beginning with the EHR reporting period in CY 2026 and subsequent yea ssessment using all eight of the 2025 SAFER Guides at any point during the calendar year in which the EHR reporting period occurs, beginning with the EHR reporting period in CY 2026 and subsequent years. Comment: Many commenters expressed support for the proposal to 391 ASTP SAFER Guides—https:// 392 ASTP SAFER Guides—https:// www.healthit.gov/topic/safety/safer-guides. www.healthit.gov/topic/safety/safer-guides VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00515 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 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00516 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 37051 SAFER Guides and suggested allowing eligible hospitals and CAHs to earn bonus points for early adoption of the updated guides. A few commenters emphasized the need to balance safeguarding patient data with minimizing administrative burden, particularly for rural and resource-constrained hospitals. Response: We appreciate the feedback mmenters emphasized the need to balance safeguarding patient data with minimizing administrative burden, particularly for rural and resource-constrained hospitals. Response: We appreciate the feedback and recommendations provided by commenters regarding the SAFER Guides measure. Based on our general understanding of recognized EHR safety programs and certifications, we believe the suggested approach to allow hospitals to submit evidence of participation in these programs as an alternative to attestation would not be as comprehensive as the topics covered in the SAFER Guides, nor would it be less burdensome to report the information to CMS. We recognize the importance of ensuring the SAFER Guides measure is both effective in promoting EHR safety and that it is feasible for eligible hospitals and CAHs across varying resource levels to meet measure requirements. We reiterate that during the EHR reporting period in CY 2025, eligible hospitals and CAHs should continue to use the 2016 SAFER Guides for their self-assessment. Both the 2016 and the 2025 SAFER Guides are available on the ASTP website at: https:// www.healthit.gov/topic/safety/safer- guides. We encourage eligible hospitals an Guides for their self-assessment. Both the 2016 and the 2025 SAFER Guides are available on the ASTP website at: https:// www.healthit.gov/topic/safety/safer- guides. We encourage eligible hospitals and CAHs to begin to familiarize themselves with the 2025 SAFER Guides during CY 2025. We appreciate commenters’ eagerness to begin using the 2025 SAFER Guides earlier than the EHR reporting period in CY 2026, however, allowing one full year for the industry to review the updated guides will allow for uniform adoption beginning with the EHR reporting period in CY 2026 and subsequent years. We acknowledge the importance of targeted education, streamlined tools, and technical assistance to help eligible hospitals and CAHs complete assessments effectively, as highlighted by several commenters. In response to prior feedback from the public, the 2025 version of the SAFER Guides has been updated and streamlined compared to the 2016 version. First, there was a reduction from nine guides to eight guides, with each guide organized into one of three broad categories focused on foundational best practices, infrastructure best practices, and clinical process best practices. Each of the eight individ ides, with each guide organized into one of three broad categories focused on foundational best practices, infrastructure best practices, and clinical process best practices. Each of the eight individual guides includes an extensive set of references offering additional detailed information and evidence. There are also public resources available to eligible hospitals and CAHs that are completing the self- assessments.394 We appreciate the emphasis placed by commenters on balancing the need to safeguard patient data with minimizing administrative burden, particularly for rural and resource-constrained hospitals. We remain committed to engaging with stakeholders and consider the feasibility of implementation strategies that address the concerns raised. We appreciate the continued collaboration and input from stakeholders. After consideration of the public comments we received, we are finalizing our proposal to modify the SAFER Guides measure to require eligible hospitals and CAHs to conduct an annual self-assessment using all eight of the 2025 SAFER Guides at any point during the calendar year in which the EHR reporting period occurs, beginning with the EHR reporting period in CY 202 uct an annual self-assessment using all eight of the 2025 SAFER Guides at any point during the calendar year in which the EHR reporting period occurs, beginning with the EHR reporting period in CY 2026 and in subsequent years. 5. Modification to the Public Health and Clinical Data Exchange Objective: Adoption of an Optional Bonus Measure for Public Health Reporting Using the Trusted Exchange Framework and Common AgreementTM (TEFCA) a. Background on the Public Health and Clinical Data Exchange Objective The Medicare Promoting Interoperability Program for eligible hospitals and CAHs encourages health information exchange for public health purposes through the Public Health and Clinical Data Exchange objective. Effective and efficient responses to public health events require rapid, accurate exchange of electronic health information between health care providers, including eligible hospitals and CAHs, and Federal, State, Tribal, local, and territorial public health agencies (PHAs). Health care providers, including eligible hospitals and CAHs, collect this electronic health information for patient care, and PHAs use the information for public health purposes such as tracking a disease, care providers, including eligible hospitals and CAHs, collect this electronic health information for patient care, and PHAs use the information for public health purposes such as tracking a disease, initiating contact tracing, or pinpointing the source of a disease or outbreak of foodborne illness. There are currently eight measures under the Public Health and Clinical Data Exchange objective: Immunization Registry Reporting, Syndromic 394 One such source of information about the 2025 SAFER Guides is an academic paper titled, ‘‘Guidelines for US Hospitals and Clinicians on Assessment of Electronic Health Record Safety Using SAFER Guides,’’ written by the authors of the SAFER Guides. This paper is available to download or use at https://jamanetwork.com/journals/jama/ article-abstract/2788984. Surveillance Reporting, Electronic Case Reporting, Electronic Laboratory Reporting, Antimicrobial Use Surveillance, Antimicrobial Resistance Surveillance, Public Health Registry Reporting, and Clinical Data Registry Reporting. Six of these measures are required under the objective, while two, the Public Health Registry Reporting and Clinical Data Registry Reporting, are optional bonus measure inical Data Registry Reporting. Six of these measures are required under the objective, while two, the Public Health Registry Reporting and Clinical Data Registry Reporting, are optional bonus measures. Eligible hospitals and CAHs may receive a total of 5 bonus points for reporting on one or both optional bonus measures. Measures under the Public Health and Clinical Data Exchange objective promote the exchange of health information for specific public health use cases with PHAs and other entities using CEHRT. However, one difficulty with the electronic exchange of health information for many different public health purposes is that exchanging data between PHAs and eligible hospitals and CAHs requires different processes. For instance, health information exchange for Electronic Case Reporting may be based on several point-to-point connections among eligible hospitals, CAHs, intermediaries, and PHAs, but these connections and agreements are different for other use cases such as Electronic Laboratory Reporting or Syndromic Surveillance. We anticipate that participation in TEFCA could help reduce the difficulty of public health information exchange over time by creating a common govern c Laboratory Reporting or Syndromic Surveillance. We anticipate that participation in TEFCA could help reduce the difficulty of public health information exchange over time by creating a common governance and technical framework for health information exchange. Facilitating health information exchange with PHAs through the TEFCA framework has the potential to increase standardization of connections to PHAs and reduce reporting burden for eligible hospitals, CAHs, and PHAs. b. Background on TEFCA Section 4003(b) of the 21st Century Cures Act, enacted in 2016, amended section 3001(c) of the Public Health Service Act and required HHS to take steps to ensure full network-to-network exchange of health information. Specifically, in section 3001(c)(9)(A) of the Public Health Service Act, Congress directed the National Coordinator, in collaboration with NIST and other agencies within HHS, to ‘‘develop or support a trusted exchange framework, including a common agreement among health information networks nationally.’’ Since the enactment of the 21st Century Cures Act, HHS has pursued development of the TEFCA framework. By standardizing health information exchange across many different netwo n networks nationally.’’ Since the enactment of the 21st Century Cures Act, HHS has pursued development of the TEFCA framework. By standardizing health information exchange across many different networks, TEFCA helps to ensure VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00517 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 37052 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations nationwide network-to-network exchange of health information. Standardization across networks simplifies health information exchange by reducing the number of connections that health care providers, including eligible hospitals and CAHs, PHAs, and other interested parties need to make to send and receive health information. TEFCA supports this standardization by creating baseline governance, legal, and technical requirements that enable secure health information exchange across different networks nationwide, including: a common method for authenticating trusted network participants, a common set of rules for trusted exchange, organizational and operational policies to enable the exchange of he nationwide, including: a common method for authenticating trusted network participants, a common set of rules for trusted exchange, organizational and operational policies to enable the exchange of health information among networks, and a process for filing and adjudicating noncompliance with the terms of the Common Agreement.395 We anticipate that TEFCA can help expand the nationwide availability of secure health information exchange capabilities in public health reporting. CMS, the Centers for Disease Control and Prevention (CDC), and ASTP/ONC have been working closely with PHAs and other interested parties to expand the use of TEFCA for sharing health information for public health purposes. TEFCA is an important part of a shared vision for building a modernized public health infrastructure that connects previously siloed public health and health care systems. Early efforts to enable public health reporting through TEFCA exchange have focused on electronic case reporting, which is likely to be the primary mechanism of public health information exchange supported by entities that are part of TEFCA during CY 2026. c. Adding an Optional Bonus Measure Under the Public Health and Clin kely to be the primary mechanism of public health information exchange supported by entities that are part of TEFCA during CY 2026. c. Adding an Optional Bonus Measure Under the Public Health and Clinical Data Exchange Objective Beginning with the EHR Reporting Period in CY 2026 In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18359 through 18361), we proposed to add a third optional bonus measure under the Public Health and Clinical Data Exchange objective for health information exchange with a PHA that occurs using TEFCA. Specifically, beginning with the EHR reporting period in CY 2026, we proposed the following optional bonus measure: Public Health Reporting Using TEFCA. The eligible hospital or CAH: (1) participates as a signatory to a 395 Additional information on TEFCA can be found on the ASTP website, available at: https:// www.healthit.gov/topic/interoperability/policy/ trusted-exchange-framework-and-common- agreement-tefca. Framework Agreement (as that term is defined by the Common Agreement for Nationwide Health Information Interoperability as published in the Federal Register and on ASTP/ONC’s website) 396; (2) is not suspended; (3) submits health information using TEFC Common Agreement for Nationwide Health Information Interoperability as published in the Federal Register and on ASTP/ONC’s website) 396; (2) is not suspended; (3) submits health information using TEFCA to a PHA consistent with one or more of the measures under the Public Health and Clinical Data Exchange objective; (4) is in active engagement Option 2 (validated data production) with a PHA to transfer health information for one or more of the measures under the Public Health and Clinical Data Exchange objective; and (5) uses the functions of CEHRT to exchange data with the PHA. As previously finalized in the FY 2023 IPPS/LTCH final rule (87 FR 49339), for the measures in the Public Health and Clinical Data Exchange objective, eligible hospitals and CAHs are required to report their level of active engagement as either Option 1 (pre-production and validation) or Option 2 (validated data production) and may only spend one EHR reporting period at the pre-production and validation level of active engagement (Option 1) before advancing to Option 2 (validated data production) to fulfill measure requirements. Under our proposal, the bonus measure would only be available when the eligible active engagement (Option 1) before advancing to Option 2 (validated data production) to fulfill measure requirements. Under our proposal, the bonus measure would only be available when the eligible hospital or CAH is in active engagement Option 2 (validated data production) with a PHA to transfer health information for one or more of the measures under the Public Health and Clinical Data Exchange objective. Under our proposal, to attest ‘‘yes’’ for the Public Health Reporting Using TEFCA optional bonus measure, an eligible hospital or CAH must be a signatory to a TEFCA Framework Agreement,397 meaning either the Common Agreement or an agreement that includes the Participant/Sub- participant Terms of Participation,398 and is not suspended under the respective agreement. To attest ‘‘yes’’ for this bonus measure, an eligible hospital 396 See Common Agreement for Nationwide Health Information Interoperability Version 2.1 November 2024 at: https://www.healthit.gov/sites/ default/files/2024-11/Common_Agreement_2.1.pdf. 397 The Common Agreement defines ‘‘Framework Agreement(s)’’ as: ‘‘any one or combination of the Common Agreement, a Participant-QHIN Agreement, a Participant-Subparticipa -11/Common_Agreement_2.1.pdf. 397 The Common Agreement defines ‘‘Framework Agreement(s)’’ as: ‘‘any one or combination of the Common Agreement, a Participant-QHIN Agreement, a Participant-Subparticipant Agreement, or a Downstream Subparticipant Agreement, as applicable.’’ See Common Agreement for Nationwide Health Information Interoperability Version 2.1 (Nov 2024) https://www.healthit.gov/sites/default/files/2024– 11/Common_Agreement_2.1.pdf. 398 Participant/Subparticipant Terms of Participation (Apr. 2024), https:// rce.sequoiaproject.org/wp-content/uploads/2024/ 05/Common-Agreement-v2.0-Exhibit-1_508.pdf. or CAH must transmit electronic health information for at least one measure under the Public Health and Clinic Data Exchange objective using TEFCA. Finally, the eligible hospital or CAH must use the functions of CEHRT to engage in a data exchange with a PHA. We believe there are numerous certified health IT capabilities that can support exchange with a PHA under a TEFCA Framework Agreement. For instance, eligible hospitals or CAHs may exchange information under TEFCA by using technology certified to the health IT certification criteria, ‘‘Transmission to public health agencies— greement. For instance, eligible hospitals or CAHs may exchange information under TEFCA by using technology certified to the health IT certification criteria, ‘‘Transmission to public health agencies—reportable laboratory tests and value/results’’ at 45 CFR 170.315(f)(3) and ‘‘Transmission to public health agencies—electronic case reporting’’ at 45 CFR 170.315(f)(5). Both criteria are associated with the exchange use cases currently identified under the TEFCA Public Health Exchange Purpose Implementation SOP. We further recognize that eligible hospitals and CAHs may connect to entities that connect directly or indirectly to a Qualified Health Information NetworkTM 399 (QHIN) using certified health IT in a variety of ways. This includes the other ONC health IT certification criteria at 45 CFR 170.315(f) associated with the Public Health and Clinical Data Exchange objective measures, and we believe that we should allow for substantial flexibility in how eligible hospitals and CAHs use certified health IT to exchange health information under a TEFCA Framework Agreement. For more information about exchange of public health data using TEFCA, we refer readers to the TEFCA Public Health E rtified health IT to exchange health information under a TEFCA Framework Agreement. For more information about exchange of public health data using TEFCA, we refer readers to the TEFCA Public Health Exchange Purpose Implementation Standard Operating Procedure (SOP).400 The Public Health Exchange Purpose Implementation SOP currently identifies electronic case reporting and electronic laboratory reporting as exchange use cases, but the SOP can also be used for any allowable public health purpose. CDC, ASTP/ ONC, and others are focused on establishing a foundation for health care providers, including eligible hospitals and CAHs, to use TEFCA to meet their public health reporting needs for the benefit of both public health and clinical care. 399 A Qualified Health Information Network is a health information network that facilitates TEFCA exchange by undergoing technology and security testing, onboarding, and designation. For more information, see: https://www.healthit.gov/topic/ interoperability/policy/trusted-exchange- framework-and-common-agreement-tefca. 400 For more information, see https://rce.sequoia project.org/wp-content/uploads/2024/08/XP- Implementation-SOP-Public-Health-PH.p bility/policy/trusted-exchange- framework-and-common-agreement-tefca. 400 For more information, see https://rce.sequoia project.org/wp-content/uploads/2024/08/XP- Implementation-SOP-Public-Health-PH.pdf. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00518 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 37053 In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18359 through 18361), we proposed that an eligible hospital or CAH may earn a total of 5 bonus points if it attests ‘‘yes’’ for one of the following optional bonus measures: the Public Health Reporting Using TEFCA measure, the Public Health Registry Reporting measure, or the Clinical Data Registry Reporting measure. Eligible hospitals and CAHs may attest ‘‘yes’’ to more than one but can only earn a total of 5 bonus points even if the eligible hospital or CAH attests ‘‘yes’’ to multiple bonus measures. Because the Public Health Reporting Using TEFCA measure would be an optional bonus measure, we did not propose any exclusions. We also proposed that if an eligible hosp s’’ to multiple bonus measures. Because the Public Health Reporting Using TEFCA measure would be an optional bonus measure, we did not propose any exclusions. We also proposed that if an eligible hospital or CAH uses TEFCA to fulfill any of the required Public Health and Clinical Data Exchange objective measures, such as Electronic Case Reporting or Electronic Laboratory Reporting, that eligible hospital or CAH would be able to claim the 5 bonus points if it attests ‘‘yes’’ to the Public Health Reporting Using TEFCA bonus measure in addition to earning points for fulfilling the requirements of the required measure(s). We invited public comment on our proposal to adopt an optional bonus measure under the Public Health and Clinical Data Exchange Objective to permit an eligible hospital or CAH to earn a total of 5 bonus points if it is participating as a signatory to a TEFCA Framework Agreement, is not suspended, and submits health information using TEFCA to a PHA consistent with one or more of the measures under the Public Health and Clinical Data Exchange objective, is in active engagement Option 2 (validated data production) with a PHA to transfer health information for one or more ore of the measures under the Public Health and Clinical Data Exchange objective, is in active engagement Option 2 (validated data production) with a PHA to transfer health information for one or more of the measures under the Public Health and Clinical Data Exchange objective, and uses the functions of CEHRT to exchange with the PHA. Comment: Many commenters supported our proposal to create an optional bonus measure for public health reporting using TEFCA. Many commenters supported the proposal because they stated it provides an appropriate incentive to encourage health information exchange between PHAs and health care systems, continues to invest in technical modernization, and improves the capacity for public health surveillance and interventions. Response: We thank commenters for their responses. We agree that the goal of this bonus measure is to encourage public health information exchange, technical modernization, and improved public health capacity. Comment: Several commenters supported the proposal and stated it would lead to benefits such as reduced workforce requirements, improved use of data exchange standards, reduced burden during public health crises, faster onboardin upported the proposal and stated it would lead to benefits such as reduced workforce requirements, improved use of data exchange standards, reduced burden during public health crises, faster onboarding, improved data quality, and streamlined public health reporting workflows that would improve PHAs’ ability to act upon timely and reliable data. Another commenter stated it would lead to less administrative burden from state agency specification changes and EHR vendor updates. Response: We thank commenters for their responses. We anticipate that continued improvements in public health information exchange, such as methods relying upon TEFCA, will be beneficial for those eligible hospitals and CAHs that use them. Comment: A few commenters supported the proposal and stated that the optional rather than required status of the measure would allow participants time and flexibility to engage in public health reporting using TEFCA as well as provide information as to its use for real world reporting. They stated that with the measure being optional, this will appropriately encourage adoption and crediting early adopters. Response: We agree that an optional rather than required measure will rting. They stated that with the measure being optional, this will appropriately encourage adoption and crediting early adopters. Response: We agree that an optional rather than required measure will allow eligible hospitals and CAHs more time and flexibility to adopt the measure and evaluate the utility of TEFCA for public health reporting purposes. While we do not require the measure currently, we encourage eligible hospitals and CAHs to consider the use of advanced protocols for public health data exchange. Comment: A few commenters supported the proposal and recommended that CMS assess hospital and health system experiences with adopting the measure for future policymaking. A commenter recommended CMS treat the measure as informational or developmental in early years and ensure rural and community- based hospitals have clear, low-cost pathways to participate. Response: We thank commenters for their responses and note we do consider the experiences of eligible hospitals and CAHs when considering all potential measures for the Medicare Promoting Interoperability Program. We are open to modifying or adjusting program measures if experiences of eligible hospitals and CAHs show this n considering all potential measures for the Medicare Promoting Interoperability Program. We are open to modifying or adjusting program measures if experiences of eligible hospitals and CAHs show this to be necessary. We will continue to work with the CDC and ASTP/ONC to find opportunities to lower barriers to participation among rural and community-based hospitals. Comment: A few commenters supported the proposal but were concerned about the disproportionate burden the optional measure requirements may impose on small, rural, or under-resourced hospitals. These commenters were also concerned that smaller, under-resourced hospitals might not benefit from the optional measure due to the technical capabilities needed to support data exchange. Response: One reason we proposed the Public Health Reporting Using TEFCA measure as an optional measure rather than a required one is because requiring the measure may have otherwise caused undue hardship for small, rural, or under-resourced eligible hospitals and CAHs. One goal of the optional bonus measure is to encourage the use of networks participating in nationwide exchange under TEFCA without unfairly penalizing eligible hospitals or CAHs e hospitals and CAHs. One goal of the optional bonus measure is to encourage the use of networks participating in nationwide exchange under TEFCA without unfairly penalizing eligible hospitals or CAHs that are not yet ready to participate in such networks and may need additional time and flexibility. Eligible hospitals and CAHs that are not ready to participate in exchange under TEFCA can still receive the 5 bonus points by reporting on either the Public Health Registry Reporting measure, the Clinical Data Registry Reporting measure, or both. Comment: A commenter supported the proposal and recommended maintaining the existing options for exchange with PHAs. Response: We thank the commenter for the support and recommendation to maintain existing options for exchange to PHAs. Our proposal to add an optional bonus measure for public health reporting using TEFCA is intended to complement, not replace, current exchange methods under the Public Health and Clinical Data Exchange objective. Eligible hospitals and CAHs will continue to have flexibility to use existing standards- based infrastructure and intermediaries to meet reporting requirements regardless of their direct or indirect par igible hospitals and CAHs will continue to have flexibility to use existing standards- based infrastructure and intermediaries to meet reporting requirements regardless of their direct or indirect participation in TEFCA. By establishing this optional measure, we aim to incentivize early adopters while ensuring that hospitals and CAHs can continue using their current arrangements for information exchange and reporting without disruption. Comment: A commenter supported the proposal but recommended that the measure definition be refined to only count Level 2 exchange use cases within the TEFCA Public Health Exchange Purpose Implementation Standard VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00519 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 37054 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations Operating Procedure because those have better defined standards. Response: In the TEFCA Exchange Purpose Implementation Standard Operating Procedure, Level 2 use cases refer to more specific data exchange contexts with accompanying exchange standards.401 Although we recognize n the TEFCA Exchange Purpose Implementation Standard Operating Procedure, Level 2 use cases refer to more specific data exchange contexts with accompanying exchange standards.401 Although we recognize the value of focusing on more mature and standardized use cases, such as the Level 2 exchange use cases, our proposal aims to provide flexibility for eligible hospitals and CAHs to engage in public health reporting using TEFCA across a variety of use cases. Limiting the measure to Level 2 use cases at this time could restrict participation and hinder measure adoption. However, we will monitor rates of adoption and consider proposing refinements to the measure in the future based on stakeholder feedback and real-world experience with TEFCA-supported exchanges. Comment: A commenter supported the proposal and encouraged CMS to continue allowing flexibility in determining which certified health IT capabilities can be used to meet the specifications of this optional measure. Response: We thank the commenter for their support. We agree that flexibility is necessary to accommodate the diverse technical environments and resources of eligible hospitals and CAHs. Our proposal is designed to all the commenter for their support. We agree that flexibility is necessary to accommodate the diverse technical environments and resources of eligible hospitals and CAHs. Our proposal is designed to allow eligible hospitals and CAHs to leverage various certified health IT capabilities to exchange data using TEFCA, ensuring they can choose the solutions that best fit their operational needs. We remain committed to supporting adaptable approaches that promote participation while minimizing burden, and we will continue to evaluate opportunities to enhance flexibility as TEFCA evolves. Comment: Several commenters did not support the proposal to create an optional bonus measure for public health reporting using TEFCA. A few commenters did not support the proposal because they wanted CMS to allow a variety of options rather than one option using TEFCA. They recommended that including a variety of options would allow entities that are capable of public health reporting via TEFCA to pursue that path, while also allowing entities that have other standards-based and governance- supported infrastructures to continue to use what they have without re- architecting their infrastructure. Response: path, while also allowing entities that have other standards-based and governance- supported infrastructures to continue to use what they have without re- architecting their infrastructure. Response: We acknowledge commenters’ concerns about ensuring flexibility in public health reporting options. Our proposal to create an optional bonus measure for public health reporting using TEFCA is intended to complement, not replace, existing pathways for meeting the Public Health and Clinical Data Exchange objective. Eligible hospitals and CAHs can continue using their current standards-based and governance-supported infrastructure to fulfill required measures, regardless of whether the intermediaries or other entities supporting current arrangements participate directly or indirectly in TEFCA. We recognize that many HIEs and other intermediaries across the country not yet participating in TEFCA continue to provide significant value to users reporting data to public health agencies. We remain committed to supporting diverse approaches to public health reporting that accommodate the varied capabilities and resources of stakeholders. Comment: A few commenters did not support the proposal beca ommitted to supporting diverse approaches to public health reporting that accommodate the varied capabilities and resources of stakeholders. Comment: A few commenters did not support the proposal because they were concerned about a lack of clarity with respect to HIPAA protections and the use of the TEFCA. These commenters specifically raised concerns with respect to queries and exchanges without explicit patient permission, recent HIPAA protections of reproductive health, and the use of record locator services in TEFCA. The commenters were concerned that use of TEFCA may breach HIPAA protections by revealing through a record locator service without a patient’s consent that they had sought certain medical services such as at a substance use clinic. Response: TEFCA is designed to operate within the framework of existing privacy and security laws, including HIPAA, and does not override these protections.402 Any exchange of health information using TEFCA must comply with applicable federal and state privacy laws, including those governing sensitive health information. The HIPAA Privacy Rule permits covered entities to use or disclose protected health information for treatment, payment l and state privacy laws, including those governing sensitive health information. The HIPAA Privacy Rule permits covered entities to use or disclose protected health information for treatment, payment, or health care operations without first obtaining an individual’s authorization for such use or disclosure. We will continue to work closely with stakeholders to ensure that measures that reference TEFCA- 401 For more information about Level 2 use cases, see the Exchange Purpose Implementation Standard Operating Procedure at: https:// rce.sequoiaproject.org/wp-content/uploads/2024/ 08/XP-Implementation-SOP-Public-Health-PH.pdf. 402 For details regarding compliance with the HIPAA Privacy Rule among signatories to the Common Agreement, see the Common Agreement at: https://rce.sequoiaproject.org/wp-content/ uploads/2024/11/Common-Agreement-2.1_ASTP– 508.pdf. supported exchange uphold high standards of privacy and security while enabling effective public health reporting. Additionally, we welcome ongoing feedback to address specific concerns and improve clarity around measures that reference the use of TEFCA. Comment: A few commenters did not support the proposal because they believe the lcome ongoing feedback to address specific concerns and improve clarity around measures that reference the use of TEFCA. Comment: A few commenters did not support the proposal because they believe there are flaws in TEFCA as a method of data exchange. Commenters stated that they believe TEFCA limits the digital enablement needed for the health care sector, that it is cumbersome and at odds with the technical underpinnings needed for digital applications, and that it is exclusionary because smaller hospitals and CAHs do not connect to QHINs for lack of financial and human resources. Response: TEFCA is designed to create a standardized framework for secure, nationwide health information exchange, and we recognize that its expansion may require adjustments to address barriers for under-resourced entities. By making the Public Health Reporting Using TEFCA measure optional, we aim to encourage adoption of the measure without imposing undue burden on smaller hospitals and CAHs that may face financial or technical challenges. We remain committed to working with stakeholders to refine program measures to improve accessibility and ensure that they meet the needs of smaller and rural eligibl financial or technical challenges. We remain committed to working with stakeholders to refine program measures to improve accessibility and ensure that they meet the needs of smaller and rural eligible hospitals and CAHs. Comment: A commenter did not support the proposal and believes that all public health reporting should be done through Health Information Exchanges (HIEs) in states that have them. The commenter believes that CMS should provide strong incentives to form HIEs in states that lack them. Response: We recognize the important role that HIEs play in facilitating public health reporting at the state level. Our proposal to introduce an optional bonus measure for public health reporting using TEFCA is intended to complement existing infrastructure, including HIEs, rather than replace or compete with them. TEFCA provides a standardized, nationwide framework that supports broader data exchange capabilities that can enhance interoperability across networks, including HIEs. We also note that we support the use of HIEs through the HIE Bi-Directional Exchange measure under the Health Information Exchange objective. Comment: A commenter did not support the proposal, stating that H note that we support the use of HIEs through the HIE Bi-Directional Exchange measure under the Health Information Exchange objective. Comment: A commenter did not support the proposal, stating that HIEs are already connected to QHINs and already transmit public health data to VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00520 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 37055 PHAs through TEFCA. The commenter recommended that CMS simplify the scored and bonus categories rather than adding a TEFCA-specific bonus measure. Response: We acknowledge the commenter’s perspective regarding potential redundancy with the proposed TEFCA-specific optional bonus measure. While some HIEs may already connect to QHINs and transmit public health data, some do not, and some may not effectively transfer public health information between networks. The optional bonus measure is intended to incentivize broader interoperability and electronic exchange of health information. We appreciate the recommendation to simplify scored and bonus ca networks. The optional bonus measure is intended to incentivize broader interoperability and electronic exchange of health information. We appreciate the recommendation to simplify scored and bonus categories and will continue to evaluate opportunities to streamline program measures in future rulemaking. Comment: A commenter did not support the proposal because of a concern that TEFCA is not yet a viable national reporting mechanism. The commenter stated that readiness across hospitals, PHAs, and QHINs remains uneven. Response: We acknowledge the concerns regarding the current readiness of hospitals, public health agencies, and QHINs to fully implement TEFCA as a national reporting mechanism. The Public Health Reporting Using TEFCA measure is intentionally designed as an optional bonus measure to encourage early adoption of this measure in order to foster the electronic exchange of health information and provide flexibility for eligible hospitals and CAHs while TEFCA continues to mature. This approach would allow stakeholders to explore the benefits of TEFCA without imposing requirements that could create challenges for entities not yet prepared to participate. Comment: Several com e. This approach would allow stakeholders to explore the benefits of TEFCA without imposing requirements that could create challenges for entities not yet prepared to participate. Comment: Several commenters recommended that CMS work with other HHS agencies to continue investing in public health reporting. The comments included recommendations that CMS continue to invest in TEFCA and in public health data systems’ capabilities and that CMS explore mechanisms to encourage state and local PHAs to expand their engagement with TEFCA. Commenters also recommended that CMS work with CDC and ASTP/ONC to build upon and improve TEFCA. Another commenter added that TEFCA should continue to evolve over time to reflect advances in data exchange so that burden and cost are both reduced. Response: We thank commenters for their recommendations and agree on the importance of continued collaboration with other HHS agencies to invest in public health reporting infrastructure. CMS is committed to working closely with the CDC, ASTP/ONC, and other stakeholders to enhance TEFCA and support the modernization of public health data systems. We also recognize the need to encourage state and local public healt losely with the CDC, ASTP/ONC, and other stakeholders to enhance TEFCA and support the modernization of public health data systems. We also recognize the need to encourage state and local public health agencies to expand their engagement with TEFCA and to ensure its evolution reflects advances in data exchange, reducing both burden and cost for participants. We will continue to prioritize partnerships that strengthen public health reporting capabilities and improve interoperability across the health care and public health sectors. Comment: A few commenters requested clarification on the proposal. A commenter requested clarification whether an eligible hospital or CAH that used TEFCA for electronic case reporting would attest ‘‘yes’’ to both the proposed optional bonus measure and the Electronic Case Reporting required measure. Another commenter asked for clarification on whether eligible hospitals and CAHs can attest to both the Enabling Exchange under TEFCA measure under the Health Information Exchange objective and the optional bonus measure or if they can only attest to one TEFCA measure. Response: We thank commenters for their questions and appreciate the opportunity to provide formation Exchange objective and the optional bonus measure or if they can only attest to one TEFCA measure. Response: We thank commenters for their questions and appreciate the opportunity to provide clarification. An eligible hospital or CAH that uses TEFCA for electronic case reporting should attest ‘‘yes’’ to both the proposed Public Health Reporting Using TEFCA optional bonus measure and the required measure under the Public Health and Clinical Data Exchange objective if it used TEFCA to fulfill the measure’s requirements, assuming it meets all of the measures’ specifications. Additionally, eligible hospitals and CAHs may attest to both the Enabling Exchange under TEFCA measure under the Health Information Exchange objective and the Public Health Reporting Using TEFCA optional bonus measure, as these measures address use of TEFCA to meet different elements of the Medicare Promoting Interoperability Program. However, eligible hospitals and CAHs can only earn five bonus points, even if they report on multiple bonus measures. Comment: A few commenters encouraged CMS to provide technical assistance resources and grant opportunities to help resource-limited institutions participate if they report on multiple bonus measures. Comment: A few commenters encouraged CMS to provide technical assistance resources and grant opportunities to help resource-limited institutions participate in TEFCA. Among these, a commenter recommended that CMS publish a TEFCA readiness framework that would include benchmarks for PHA onboarding, QHIN participation, and EHR vendor integration. Response: We recognize the challenges faced by smaller and under- resourced eligible hospitals and CAHs and are committed to exploring ways to reduce barriers to participation. We appreciate the suggestion to publish a TEFCA readiness framework with benchmarks for public health agency onboarding, QHIN participation, and EHR vendor integration. We will continue to collaborate with other HHS agencies and stakeholders to identify opportunities for technical support and funding mechanisms that promote access to TEFCA and strengthen public health reporting capabilities. Comment: A few commenters recommended that CMS collect and publish data on TEFCA enrollment and participation. A commenter requested data disaggregated by hospital size, location, and ownership type. Another commenter recommended the col that CMS collect and publish data on TEFCA enrollment and participation. A commenter requested data disaggregated by hospital size, location, and ownership type. Another commenter recommended the collection of patient-level data sources that they believe would improve the comprehensiveness of surveillance initiatives. Response: We agree that transparency and data collection are useful for evaluating the adoption and impact of TEFCA and could provide valuable insights into participation trends. We will explore opportunities to collaborate with stakeholders and other HHS agencies to gather and share meaningful data that supports the advancement of TEFCA and public health reporting efforts. While patient-level data sources may enhance the comprehensiveness of surveillance initiatives, we remain committed to ensuring that any data collection aligns with privacy and security standards. Comment: A commenter recommended including Option 1 of Active Engagement as fulfilling the measure because the commenter believes that TEFCA is still in early stages of adoption and implementation and limiting the measure to Option 2 will limit its applicability. Response: While we recognize that TEFCA i e the commenter believes that TEFCA is still in early stages of adoption and implementation and limiting the measure to Option 2 will limit its applicability. Response: While we recognize that TEFCA is still in its early stages, the intent of the measure is to incentivize the electronic exchange of health information, which we believe is best reflected by validated data production under Option 2, in which eligible hospitals and CAHs are actively exchanging production-level data with public health agencies. This approach aligns with the goal of promoting meaningful and actionable public health reporting. However, we understand the importance of supporting entities in earlier stages of engagement and will continue to monitor TEFCA’s implementation to assess whether adjustments to the measure criteria are VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00521 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 37056 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations warranted in the future to enhance its applicability and encourage broader participation. Comment: A commenter reco Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations warranted in the future to enhance its applicability and encourage broader participation. Comment: A commenter recommended that measures related to TEFCA participation remain optional. Response: We agree that flexibility is important, particularly as TEFCA is still in its early stages of adoption and implementation. By proposing the Public Health Reporting Using TEFCA measure as an optional bonus measure, we aim to avoid imposing undue burden on eligible hospitals and CAHs that may not yet have the resources or infrastructure to participate. Comment: A commenter recommended making public health reporting with TEFCA mandatory but cautions that hospitals and PHAs would require sufficient time for adoption. Response: We thank the commenter for the recommendation. We believe establishing the Public Health Reporting Using TEFCA measure as an optional bonus measure is the most appropriate approach at this time because it provides flexibility for eligible hospitals and CAHs while TEFCA continues to mature and expand its adoption. This optional status allows eligible hospitals and CAHs to explore TEFCA’s b me because it provides flexibility for eligible hospitals and CAHs while TEFCA continues to mature and expand its adoption. This optional status allows eligible hospitals and CAHs to explore TEFCA’s benefits without imposing immediate requirements that could create challenges for entities still developing the necessary infrastructure. Comment: A commenter was concerned that the 5 bonus points could dilute the incentive to report on multiple bonus measures. They recommended that CMS consider allowing eligible hospitals and CAHs to earn 5 points for each bonus measure they meet and report on. Response: We designed the scoring structure to balance the opportunity for eligible hospitals and CAHs to earn bonus points while maintaining fairness and simplicity within the program. Allowing 5 points for each bonus measure could disproportionately shift the focus away from required measures and complicate the scoring methodology. The current approach encourages participation in bonus measures while ensuring the overall emphasis remains on fulfilling required objectives. However, we will continue to evaluate the effectiveness of the scoring methodology and may consider adjustments in future r ile ensuring the overall emphasis remains on fulfilling required objectives. However, we will continue to evaluate the effectiveness of the scoring methodology and may consider adjustments in future rulemaking based on stakeholder feedback and program outcomes. for additional discussion regarding this issue. Comment: A commenter was concerned about reporting the level of Active Engagement for measures in the Public Health and Clinical Data Exchange objective, including the proposed optional bonus measure. The commenter believed that eligible hospitals and CAHs are penalized if state agencies are not ready to promote hospitals to validated data production (Option 2). The commenter recommended that CMS add an exclusion to the effect that if the state or public health agency is unready or unable to move a hospital from pre- production to production reporting, the eligible hospital or CAH may be exempt from the measure. Response: We recognize that some eligible hospitals and CAHs may face barriers to advancing from pre- production (Option 1) to validated data production (Option 2) if their state or PHA is not prepared to support production-level reporting. While the proposed Public Hea barriers to advancing from pre- production (Option 1) to validated data production (Option 2) if their state or PHA is not prepared to support production-level reporting. While the proposed Public Health Reporting Using TEFCA measure is an optional bonus measure and does not negatively impact scoring for eligible hospital and CAHs that do not participate, we understand the importance of ensuring fairness in reporting requirements. For required measures, we remind eligible hospitals and CAHs that they may be able to claim an exclusion under the measure and therefore receive full credit. Specifically, any eligible hospital or CAH may be excluded from reporting on a Public Health and Clinical Data Exchange measure, such as Electronic Laboratory Reporting or Electronic Case Reporting if it operates in a jurisdiction for which no PHA is capable of receiving data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period. For those measures with a relevant exclusion in the Public Health and Clinical Data Exchange objective, CMS interprets ‘‘capable of receiving data in the specific standards required’’ in this exclusion to mean that the PHA i a relevant exclusion in the Public Health and Clinical Data Exchange objective, CMS interprets ‘‘capable of receiving data in the specific standards required’’ in this exclusion to mean that the PHA in the eligible hospital’s or CAH’s jurisdiction has the ability to advance, and has advanced, an eligible hospital or CAH registered with the PHA to Active Engagement Option 2: Validated Data Production. Please also see section X.F.1. of the preamble of this final rule After consideration of the public comments we received, we are finalizing our proposal to add an optional bonus measure for Public Health Reporting Using TEFCA under the Public Health and Clinical Data Exchange objective, beginning with the EHR reporting period in CY 2026. Eligible hospitals and CAHs may earn a maximum of 5 bonus points under the Public Health and Clinical Data Exchange objective for reporting on any or all of the optional bonus measures. 6. Overview of Scoring Methodology for the EHR Reporting Period in CY 2026 In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41636 through 41641), we adopted a performance-based scoring methodology for eligible hospitals and CAHs reporting to the Medicare Promoting Interop 2026 In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41636 through 41641), we adopted a performance-based scoring methodology for eligible hospitals and CAHs reporting to the Medicare Promoting Interoperability Program beginning with the EHR reporting period in CY 2019. This methodology included a minimum scoring threshold that eligible hospitals and CAHs were required to meet, in addition to the requirement to report on the objectives and measures of meaningful use, both under 42 CFR 495.24(e)(1), to be considered a meaningful EHR user under 42 CFR 495.4. In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69616 through 69618), we finalized a proposal to increase the performance-based scoring threshold to at least 70 points for the EHR reporting period in CY 2025 and to at least 80 points beginning with the EHR reporting period in CY 2026 and subsequent years. As shown in Table X.F.–02., the points associated with the required measures sum to 100 points, and reporting on one or more of the optional bonus measures offers an additional 5 total bonus points. The scores for each of the required measures and bonus measures are added together to calculate a total score of up to 105 possible p optional bonus measures offers an additional 5 total bonus points. The scores for each of the required measures and bonus measures are added together to calculate a total score of up to 105 possible points for each eligible hospital or CAH. We refer readers to Table X.F.–02. in this final rule, which reflects the objectives, measures, maximum points available, and whether a measure is required or optional for the EHR reporting period in CY 2026 and subsequent years based on our previously adopted policies and newly finalized policies included in this final rule. BILLING CODE 4120–01–P VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00522 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 37057 BILLING CODE 4120–01–C The maximum number of points available by measure in this final rule does not include the points that would be redistributed in the event an exclusion is claimed for a given measure. We did not propose any changes to our policy for point redistribution in the event an exclusion is claimed. We refer readers to Tab istributed in the event an exclusion is claimed for a given measure. We did not propose any changes to our policy for point redistribution in the event an exclusion is claimed. We refer readers to Table X.F.–03. in the preamble of this final rule, which shows point redistribution among the objectives and measures for the EHR reporting period in CY 2026 and subsequent years, in the event an eligible hospital or CAH claims an exclusion. 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 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00523 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00524 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00525 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00526 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00527 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00528 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 20 00 Frm 00527 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00528 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00529 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00530 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00531 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00532 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00533 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00534 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00535 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00536 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00537 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265 36 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00537 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00538 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00539 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 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00540 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 37075 participants’ actual Medicare FFS spending during a performance year to their reconciliation target price as well as by assessing performance on selected quality measures. TEAM participants may earn a payment from CMS, subject to a quality performance adjustment, if their spending is below the reconciliation target price. TEAM participants may owe CMS a repayment amount, subject to a quality performance adjustment, if their spending was above the reconciliation target price. 2. T below the reconciliation target price. TEAM participants may owe CMS a repayment amount, subject to a quality performance adjustment, if their spending was above the reconciliation target price. 2. TEAM Provisions of This Final Rule a. Participation (1) Background In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69642) we indicated that testing TEAM will help us understand the impact of a mandatory episode- based payment model in selected geographic areas for acute care hospitals that initiate the episode categories included in the model. We stated that implementing TEAM among acute care hospitals in select geographic areas will allow CMS and TEAM participants to gain experience testing and evaluating an episode-based payment approach for certain episodes furnished by hospitals with a variety of historic utilization patterns; roles within their local markets, including with regard to accountable care organization participation or affiliation; volume of services provided; access to financial, community, or other resources; and population and health care provider density. Further, Medicare beneficiaries and providers in certain areas, such as rural areas, can be underrepresented in vo cial, community, or other resources; and population and health care provider density. Further, Medicare beneficiaries and providers in certain areas, such as rural areas, can be underrepresented in voluntary models, whereas under a mandatory model we have the ability to include these entities, with safeguards as appropriate, for participation so that all beneficiaries have access to care redesign approaches intended to improve the quality care, and such providers gain experience in value- based care. Lastly, we noted that participation of hospitals in selected geographic areas will allow CMS to test episode-based payments without introducing participant attrition or selection bias such as the selection bias inherent in the BPCI Advanced model due to self-selected participation in the model and self-selection of episode categories. (2) Mandatory Participation In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69642), we defined two ways that an acute care hospital could be designated as a TEAM participant. First, a hospital is a TEAM participant if it initiates episodes and is paid under the IPPS with a CMS Certification Number (CCN) primary address located in one of the mandatory CBSAs EAM participant. First, a hospital is a TEAM participant if it initiates episodes and is paid under the IPPS with a CMS Certification Number (CCN) primary address located in one of the mandatory CBSAs selected for participation in TEAM. Second, a hospital that participates in either the Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model or the Comprehensive Care for Joint Replacement (CJR) Model until the last day of the last performance period (or last performance year) of the respective model may voluntarily opt into TEAM participation. As stated in the proposed rule, these criteria for TEAM participants did not include any temporal restrictions, leading to potential uncertainty regarding the TEAM participant status of hospitals that open before or during the model performance period, which is defined at § 512.505 as the 60-month period from January 1, 2026, to December 31, 2030, during which TEAM is being tested and the TEAM participant is held accountable for spending and quality. Additionally, there was also uncertainty regarding TEAM participant status in circumstances where a hospital that previously did not satisfy the definition of TEAM participant later ding and quality. Additionally, there was also uncertainty regarding TEAM participant status in circumstances where a hospital that previously did not satisfy the definition of TEAM participant later meets the definition criteria in the months before or during the model performance period. For example, this scenario would apply to a hospital that was previously not paid under the IPPS but then underwent a status change such that the hospital is no longer classified as a critical access hospital (CAH), as defined in section 1861(mm)(1) of the Act, or a hospital that terminated their participation in the Rural Community Health Demonstration (RCHD).404 Further, we recognize that there may be instances where a hospital no longer satisfies the definition of TEAM participant during the model performance period, such as a hospital joining the RCHD or a hospital converting to a CAH. We also noted in the proposed rule that our existing policy at § 512.550(b)(2) provides for separate TEAM reconciliation calculations for TEAM participants that experience a reorganization event, as defined at § 512.505, including any new TEAM participant that results from a reorganization event. However, this iliation calculations for TEAM participants that experience a reorganization event, as defined at § 512.505, including any new TEAM participant that results from a reorganization event. However, this policy does not address new hospitals that open in TEAM mandatory CBSAs independently of a reorganization event. We recognized that new hospitals that open shortly before or during the model performance period, as well as hospitals 404 https://www.cms.gov/priorities/innovation/ innovation-models/rural-community-hospital. that begin to satisfy the definition of TEAM participant shortly before or during the model performance period, and that would otherwise be required to participate in TEAM based on their receipt of payment under IPPS and their geographic location, may experience multiple disadvantages relative to other TEAM participants. First, because the list of mandatory CBSAs was published as part of the FY 2025 IPPS/LTCH PPS final rule on August 1, 2024 (89 FR 69706), and a preliminary TEAM participant list was published to the TEAM public web page on September 5, 2024, the TEAM participants in existence at that time have been afforded an opportunity to prepare for TEAM prior to t y TEAM participant list was published to the TEAM public web page on September 5, 2024, the TEAM participants in existence at that time have been afforded an opportunity to prepare for TEAM prior to the beginning of the model performance period on January 1, 2026. Based on previous and current episode-based payment models like BPCI Advanced and CJR models, we recognized that hospitals may engage in a number of care redesign activities and processes in order to achieve successful model outcomes, and that new hospitals that open shortly before or during the model performance period, as well as hospitals that begin to satisfy the definition of a TEAM participant shortly before or during the model performance period, may be at a relative disadvantage by not having comparable advance notice to engage in preparatory care redesign activities or otherwise prepare for the model. Second, to accommodate the varying levels of readiness among TEAM participants at the beginning of the model performance period, we have provided participation track options which allow TEAM participants to phase in financial risk based on performance year (PY). Eligibility for Track 1, which has no downside risk, i nce period, we have provided participation track options which allow TEAM participants to phase in financial risk based on performance year (PY). Eligibility for Track 1, which has no downside risk, is available to all TEAM participants in PY 1 and to safety net hospitals in PYs 1 through 3. As a result, if new hospitals were to become TEAM participants during or after PY 1, they would not be afforded the same opportunity to participate in a track with no downside risk for at least 1 year prior to assuming greater levels of financial risk. In the proposed rule, we proposed to establish a cutoff date after which new hospitals and hospitals that begin to meet the definition of a TEAM participant and that are located in a mandatory CBSAs, excepting any new hospitals resulting from a reorganization event, would not be required to participate immediately in the model and would have a limited deferment period before beginning their participation in TEAM. Therefore, we proposed that any new hospital, as identified by Medicare ID (CMS VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00541 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 ospital, as identified by Medicare ID (CMS VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00541 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 37076 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations Certification Number—CCN) with an initial effective date after December 31, 2024, within the Medicare Provider Enrollment, Chain, and Ownership System (PECOS), excepting any new hospital that is created as part of a reorganization event as defined at § 512.505, would not be required to participate in TEAM immediately and would have at least one full performance year of participation deferment before being required to participate in the model. We also proposed that any hospital that begins to satisfy the definition of TEAM participant after December 31, 2024, would not be required to participate in TEAM immediately and would have at least one full performance year of participation deferment before being required to participate in the model. Specifically, we proposed that any new hospital located in a mandatory CBSA, and any hospital located in a mandatory CBSA that begins to on deferment before being required to participate in the model. Specifically, we proposed that any new hospital located in a mandatory CBSA, and any hospital located in a mandatory CBSA that begins to meet the definition of TEAM participant after December 31, 2024, would not be required to participate in TEAM in the performance year when their Medicare ID initially became effective or when they began to meet the definition of TEAM participant, or the performance year thereafter. Rather, these hospitals would be required to participate in TEAM starting on January 1st of the subsequent performance year. For example, if a hospital opened in a mandatory CBSA with a Medicare ID initial effective date on June 1, 2026, then that hospital would not be required to begin participation in TEAM until January 1, 2028 (PY 3). Likewise, if a hospital located in a mandatory CBSA terminated their participation in the RCHD effective on August 1, 2027, then they would not be required to begin participation in TEAM until January 1, 2029 (PY 4). As noted in the proposed rule, we believed this proposed policy would allow new hospitals and hospitals that begin to meet the definition of TEAM participant s on in TEAM until January 1, 2029 (PY 4). As noted in the proposed rule, we believed this proposed policy would allow new hospitals and hospitals that begin to meet the definition of TEAM participant sufficient time to focus on establishing their care processes and ensuring their ability to comply with TEAM policies and requirements before being required to participate in TEAM. Specifically, the proposed cutoff date of December 31, 2024, would provide all new or newly qualifying hospitals with at least 1 year and not more than 2 years to prepare for the model, thereby establishing a level playing field with hospitals that have had the opportunity to prepare for model implementation since the publication of the preliminary TEAM participant list on the TEAM public web page on September 5, 2024. As noted in the proposed rule, this proposal would not affect the existing policy at § 512.550(b)(2) to conduct separate reconciliations for each hospital entity that results from a reorganization event as defined at § 512.505. We also proposed that a hospital that no longer satisfies the definition of TEAM participant would end TEAM participation effective the date they no longer satisfy the d event as defined at § 512.505. We also proposed that a hospital that no longer satisfies the definition of TEAM participant would end TEAM participation effective the date they no longer satisfy the definition. As noted in the proposed rule, we believed it was important to only allow hospitals that satisfy the definition of TEAM participant to participate in TEAM, otherwise it may introduce issues with pricing fairness and episode attribution. For example, since Medicare payments to CAHs and to hospitals participating in the RCHD are based on reasonable costs rather than traditional FFS, TEAM’s pricing methodology may not afford these hospitals the same opportunity for savings compared to hospitals paid under FFS. Additionally, since TEAM’s sampling and pricing methodologies were devised based on acute care hospitals paid under the IPPS, allowing additional hospitals that do not meet these criteria to participate in TEAM could result in changes to the TEAM sample in terms of geographic location and expected episode volume. We also proposed that CMS would notify the hospital that no longer met the definition of TEAM participant within 30 days of the hospital no longer meeting the TE location and expected episode volume. We also proposed that CMS would notify the hospital that no longer met the definition of TEAM participant within 30 days of the hospital no longer meeting the TEAM participant definition or as soon as is reasonably practicable. For example, if a TEAM participant was classified as a CAH on April 1, 2026, then their last day participating in TEAM would be March 31, 2026, and CMS would notify the hospital that they are no longer a TEAM participant by April 30, 2026, or as soon as is reasonably practicable. We recognized in the proposed rule that this proposed policy may present an opportunity for hospitals to avoid mandatory participation in TEAM. However, we indicated in the proposed rule that we did not believe this policy would affect many hospitals given the stringent requirements to convert to a non-IPPS hospital type, such as a CAH, or to participate in the RCHD. Irrespective of the potentially small impact, we would monitor for concerns of participation gaming. In the proposed rule, we considered proposing that new hospitals, as identified by a Medicare ID initial effective date after December 31, 2024, within the Medicare PECOS, excepting ticipation gaming. In the proposed rule, we considered proposing that new hospitals, as identified by a Medicare ID initial effective date after December 31, 2024, within the Medicare PECOS, excepting any new hospital that is created as part of a reorganization event as defined at § 512.505, and hospitals that begin to satisfy the definition of TEAM participant after December 31, 2024, would not be required to participate in TEAM. However, we believed it would be important that new hospitals are exposed to value-based care early on to promote adoption of standard care practices and efficient processes. We also considered in the proposed rule proposing that new hospitals, as identified by a Medicare ID initial effective date after December 31, 2024, within the Medicare PECOS, excepting any new hospital that is created as part of a reorganization event as defined at § 512.505, and hospitals that begin to satisfy the definition of TEAM participant after December 31, 2024, would be required to participate in the first full performance year following their Medicare ID initial effective date or the date when they began to satisfy the TEAM participant definition. We considered allowing th d to participate in the first full performance year following their Medicare ID initial effective date or the date when they began to satisfy the TEAM participant definition. We considered allowing those hospitals to participate with no downside risk for that first performance year and then requiring them to participate in the subsequent performance year in one of the participation tracks, as applicable depending on their eligibility under the participation track requirements. However, as noted in the proposed rule, we believed requiring the hospitals to participate in the first full performance year, even with no downside financial risk, would not provide sufficient opportunity for them to prepare for the participation requirements. That is because, while the hospitals would not have downside financial risk during the first year, they would still need to comply with other model requirements which could be challenging to meet in addition to all the Medicare conditions of participation. We recognized in the proposed rule that a deferred participation policy or a policy that excludes new hospitals within mandatory CBSAs could provide an opportunity for patient shifting. For example, We recognized in the proposed rule that a deferred participation policy or a policy that excludes new hospitals within mandatory CBSAs could provide an opportunity for patient shifting. For example, a TEAM participant or affiliated provider could refer patients who are anticipated to need costly treatments or require extensive and potentially expensive follow-up care to a non-participating hospital. We believed that such patient shifting would run counter to the goals of the model as discussed at 89 FR 69631. We anticipated this practice would be unlikely to occur given our belief that TEAM participants would make medically appropriate decisions for beneficiaries and that the frequency of new hospitals opening during the performance period would be low. However, we recognized in the proposed rule that the introduction of deferred participation for new hospitals VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00542 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 37077 in TEAM mandatory CBSAs could present an opportunity f 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 37077 in TEAM mandatory CBSAs could present an opportunity for such patient shifting. As a result, we proposed to monitor specifically for the potential shifting of patients with high anticipated episode spending from TEAM participants to non-participant hospitals. We also noted in the proposed rule that, based on experience with prior models, we anticipated the opening of new hospitals within selected mandatory CBSAs during the TEAM performance period to be a relatively rare occurrence. As a result, we anticipated that the proposed policy would not affect a large number of hospitals. We considered, but did not propose, including as TEAM participants and requiring immediate participation from any new hospitals in TEAM mandatory CBSAs, as identified by a Medicare ID (CMS Certification Number) with an initial effective date after December 31, 2024, within PECOS and hospitals that begin to satisfy the definition of TEAM participant after December 31, 2024. As discussed previously in the proposed rule, we believed that such hospitals would be place ithin PECOS and hospitals that begin to satisfy the definition of TEAM participant after December 31, 2024. As discussed previously in the proposed rule, we believed that such hospitals would be placed at a disadvantage in terms of their performance in TEAM if they were not afforded the same opportunities to prepare for the model and phase in financial risk. We also considered, but did not propose, alternative cutoff dates for the inclusion of hospitals as TEAM participants without a deferment period, including June 30, 2025, December 31, 2025, and December 31, 2026. While a cutoff date of June 30, 2025, would provide new or newly qualifying hospitals with at least 6 months to prepare for model implementation in 2025, including receipt and analysis of baseline claims and preliminary target price data from CMS, we recognized in the proposed rule that these hospitals, especially those that open shortly before the cutoff date, could be disadvantaged relative to hospitals that have had at least 1 year to prepare for model implementation. We also recognized that a cutoff date at the end of 2025 could result in the same disadvantage from a lack of preparation time, and that a cutoff date least 1 year to prepare for model implementation. We also recognized that a cutoff date at the end of 2025 could result in the same disadvantage from a lack of preparation time, and that a cutoff date at the end of 2026 could result in this same disadvantage, as well as the disadvantage of missing the opportunity to participate without downside risk in PY 1. Lastly, we considered but did not propose requiring new hospitals in mandatory CBSAs, as identified by Medicare ID (CMS Certification Number) with an initial effective date after December 31, 2024, within PECOS and hospitals that begin to satisfy the definition of TEAM participant after December 31, 2024, to participate in TEAM either 1 year or 2 years after their Medicare ID initial effective date or from the date they begin to satisfy the definition of TEAM participant. However, TEAM’s performance years run on a calendar year basis, and a new hospital Medicare ID effective date or the date when a hospital begins to satisfy the definition of TEAM participant would not generally fall on January 1st of a calendar year, which could have made including them as a TEAM participant after the performance year has started challenging. finition of TEAM participant would not generally fall on January 1st of a calendar year, which could have made including them as a TEAM participant after the performance year has started challenging. Many model requirements, like participation track decisions and submission of certain deliverables, occur prior to the beginning of each performance year and apply to the entire performance year, which may have disadvantaged hospitals if they started after the performance year begins. We sought comment on our proposal at § 512.508 to require new hospitals that open in a mandatory CBSA as indicated by a Medicare ID initial effective date after December 31, 2024, and hospitals located in a mandatory CBSA that begin to satisfy the definition of TEAM participant after December 31, 2024, to participate in TEAM after one full performance year has passed from their Medicare ID initial effective date or the date when they begin to satisfy the definition of TEAM participant, respectively. We also sought comment on our proposal to monitor specifically for the potential shifting of patients with high anticipated episode spending from TEAM participants to non-participant hospitals. We also sought ought comment on our proposal to monitor specifically for the potential shifting of patients with high anticipated episode spending from TEAM participants to non-participant hospitals. We also sought comment on whether or how this policy could affect the business decision of opening a new hospital even when there is patient need in the service area where the new hospital would be opened. Finally, we sought comment on our proposal that a hospital that no longer satisfies the definition of TEAM participant would end TEAM participation effective the date they no longer satisfy the definition. The following is a summary of the public comments received on the proposed policy for a limited deferment period for hospitals that open in a mandatory CBSA or for hospitals located in a mandatory CBSA that begin to satisfy the definition of TEAM participant after December 31, 2024, and our responses to these comments: Comment: Many commenters expressed support for the proposed limited deferment period for hospitals that open in a mandatory CBSA or for hospitals located in a mandatory CBSA that begin to satisfy the definition of a TEAM participant after December 31, 2024, indicating that the defe od for hospitals that open in a mandatory CBSA or for hospitals located in a mandatory CBSA that begin to satisfy the definition of a TEAM participant after December 31, 2024, indicating that the deferment period would allow new hospitals to prepare for the model. A few commenters stated that the deferment period would help hospitals maintain patient safety and access to care. A couple commenters noted that the deferment period would help to minimize financial risk for new hospitals under the model. Response: We thank the commenters for their support. We agree that this limited deferment period will benefit hospitals by allowing time to prepare for model participation and permit a smooth transition of care redesign to support and improve patient care. Comment: A couple commenters stated that the proposed limited deferment period is inadequate and recommended that hospitals that open or that begin to satisfy the definition of TEAM participant after December 31, 2024, be excluded from the model. These commenters indicated that new hospitals already face substantial challenges in recruiting staff, establishing workflows, and developing systems, along with inconsistent patient volume a e model. These commenters indicated that new hospitals already face substantial challenges in recruiting staff, establishing workflows, and developing systems, along with inconsistent patient volume and revenue. The commenters stated that the financial risks to these hospitals would outweigh the benefits of participating for only part of the model’s duration and could disincentivize the opening of new hospitals in areas that need them. A commenter stated that the proposed limited deferment period is inadequate and suggested that CMS extend the deferment period from 1 full performance year to 2 full performance years. Response: We thank the commenters for their suggestions and recognize the challenges involved in establishing a new hospital. However, we disagree that the proposed limited deferment period of at least 1 full performance year is inadequate. We believe that new hospitals will be able to integrate TEAM preparation into their general preparatory activities and could benefit from establishing care processes with TEAM’s focus on care coordination and efficiency in mind. We also note that many integral TEAM processes, including quality reporting, deliverables, and reconcilia rom establishing care processes with TEAM’s focus on care coordination and efficiency in mind. We also note that many integral TEAM processes, including quality reporting, deliverables, and reconciliation, are designed to be simpler for participants compared to the requirements of voluntary models like BPCI Advanced. We recognize commenters’ concerns that requiring new hospitals to participate in TEAM could disincentivize the opening of new hospitals in areas of need. However, we also note that the potential for financial gains, the receipt of claims data from CMS, and the incentive and support to VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00543 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 37078 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations develop efficient care delivery processes under the model are potential benefits of TEAM participation for new hospitals. Therefore, we believe that it is unlikely that requiring new hospitals in TEAM mandatory CBSAs to participate in TEAM will have a strong and systematically negative effect on the opening of new hospital erefore, we believe that it is unlikely that requiring new hospitals in TEAM mandatory CBSAs to participate in TEAM will have a strong and systematically negative effect on the opening of new hospitals. However, we emphasize the importance of beneficiary quality and access to care in TEAM, and we may monitor for anomalies in the rates of new hospital openings in TEAM mandatory CBSAs as well as any reports that TEAM is affecting the decision to open a particular hospital. Comment: Some commenters recommended that newly established hospitals be allowed to participate in TEAM with no downside financial risk in their first performance year, which would mirror the Track 1 eligibility granted to all TEAM participants in PY1. These commenters stated that allowing new participants to participate with no downside financial risk in their first performance year would allow them to learn, adjust to the model, and optimize care without risking financial losses. The commenters also indicated that allowing new hospitals to participate with no downside financial risk in their first performance year would reduce the impact of the model on decisions of whether and when to open new hospitals. Respons lowing new hospitals to participate with no downside financial risk in their first performance year would reduce the impact of the model on decisions of whether and when to open new hospitals. Response: We thank the commenters for their recommendations and acknowledge that new hospitals and hospitals that newly satisfy the definition of TEAM participant after December 31, 2024, would not have the opportunity to participate in TEAM with no downside financial risk in their first performance year. However, we disagree that it is necessary to provide new hospitals and hospitals that newly satisfy the definition of TEAM participant after December 31, 2024, with the option to participate with no downside financial risk in their first performance year. As stated in the proposed rule and in comments summarized previously, the proposed limited deferment period provides an opportunity for new hospitals to prepare for the model and thus minimize financial risk. Additionally, hospitals that open or that begin to satisfy the definition of TEAM participant after December 31, 2024, will have a larger set of CMS-created model resources at their disposal compared to those available to participants r that begin to satisfy the definition of TEAM participant after December 31, 2024, will have a larger set of CMS-created model resources at their disposal compared to those available to participants at the time of publication of the initial TEAM participant list on September 5, 2024. We also note that hospitals newly joining the model in PY 2 or later would experience the financial incentives of the model for a shorter duration than hospitals that begin participation in PY 1. As a result, we believe that further limiting these participants’ financial incentives by allowing them to participate without downside risk in their first performance year could dilute the intended impact of the model. However, we note that these new TEAM participants are not precluded from participating in Track 2, the participation track with lower financial risk and reward, if they meet the Track 2 eligibility parameters, as outlined in § 512. 520. Further, the model includes policies that help to protect TEAM participants from significant financial risk, including a high-cost outlier cap that limits high episode spending, as described in § 512.540(b)(4), in addition to a stop-loss policy that prevents ex M participants from significant financial risk, including a high-cost outlier cap that limits high episode spending, as described in § 512.540(b)(4), in addition to a stop-loss policy that prevents extreme loss from a repayment amount, as described in § 512.550(e)(1). As stated previously, we recognize commenters’ concerns that requiring new hospitals to participate in TEAM could disincentivize the opening of new hospitals. However, we also note that the potential for financial gains, the receipt of claims data from CMS, and the incentive and support to develop efficient care delivery processes under the model are potential benefits of TEAM participation for new hospitals. Therefore, we believe that it is unlikely that requiring new hospitals in TEAM mandatory CBSAs to participate in TEAM will have a strong and systematically negative effect on the opening of new hospitals. However, we emphasize the importance of beneficiary quality and access to care in TEAM, and we may monitor for anomalies in the rates of new hospital openings in TEAM mandatory CBSAs as well as any reports that TEAM is affecting the decision to open a particular hospital. Comment: Some commenters suggested that omalies in the rates of new hospital openings in TEAM mandatory CBSAs as well as any reports that TEAM is affecting the decision to open a particular hospital. Comment: Some commenters suggested that all TEAM participants be eligible for Track 1 throughout the model, indicating that hospitals would undergo learning and improvement activities throughout the duration of the model, not just in their first year. A commenter requested that all TEAM participants be eligible for Track 1 for 2 years in order to provide adequate time for hospitals to undergo practice transformation, assess risk management strategies, understand performance, and ensure all providers can participate in the model. Response: We thank the commenters for their suggestions. However, we believe that extending Track 1 eligibility beyond PY 1 would not be sustainable for the model. The introduction of required downside financial risk in PY2 for hospitals that do not meet the definition of a safety net hospital is a critical incentive for efficiency in care delivery under the model and is necessary for the model to achieve its projected savings to Medicare, as indicated in section I.G.12. of the Appendix A of this fin cal incentive for efficiency in care delivery under the model and is necessary for the model to achieve its projected savings to Medicare, as indicated in section I.G.12. of the Appendix A of this final rule. We agree with commenters that learning, practice transformation, and care improvement activities are intended to be continuous under the model. However, we disagree that this necessitates an extension of the period without downside financial risk for TEAM participants, new or otherwise. The presence of financial risk provides an incentive for participants to engage in care transformation and performance improvement activities, while existing provisions—including lower-risk options for safety net and other special hospital types, stop-loss limits, and quality adjustments—help to protect against large financial losses. Comment: A commenter requested that, in combination with the limited deferment period, CMS implement additional beneficiary protections to prevent inappropriate diversion from medically necessary SNF care. The commenter noted that current Medicare policy requires a beneficiary to be admitted to a SNF and receive care within 30 days of a qualifying hospital stay to sion from medically necessary SNF care. The commenter noted that current Medicare policy requires a beneficiary to be admitted to a SNF and receive care within 30 days of a qualifying hospital stay to retain eligibility for the SNF benefit, unless a ‘‘Medical Appropriateness Exception’’ applies. The commenter stated that the length of TEAM episodes, which extend for 30 days following discharge, could incentivize participants to delay or divert necessary SNF care to reduce episode spending. The commenter recommended that CMS expand the Medical Appropriateness Exception to include cases where TEAM hospitals delay or divert SNF placement, and in cases where diversion has occurred, reset the 30-day SNF eligibility clock to begin after the TEAM participant’s accountability period ends. The commenter also suggested that CMS monitor for SNF-level diversion patterns, similar to the planned monitoring for shifting of high-cost patients to non-participant hospitals. Response: We recognize that the financial incentives of the model could provide motivation for participants to delay necessary care until after the episode or shift care to a less appropriate setting to reduce costs. We agree tha he financial incentives of the model could provide motivation for participants to delay necessary care until after the episode or shift care to a less appropriate setting to reduce costs. We agree that this possibility necessitates policy and monitoring protections to ensure that delays to and diversions from medically necessary care do not occur. We believe that the beneficiary protections and monitoring provisions in place will prevent delays to and diversions from medically necessary VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00544 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 37079 care for TEAM beneficiaries. As established at § 512.582, beneficiary protections prohibit TEAM participants from restricting beneficiary choice or access to medically necessary covered services, require TEAM participants to notify beneficiaries of potential financial liability during discharge planning, and prohibit TEAM participants and their downstream participants from selecting for or against treating certain beneficiaries based iciaries of potential financial liability during discharge planning, and prohibit TEAM participants and their downstream participants from selecting for or against treating certain beneficiaries based on factors that would render the beneficiary an ‘‘at-risk beneficiary’’ as defined at § 425.20. We believe specifically that prohibiting TEAM participants from restricting beneficiary access to medically necessary covered services—which, in the case of SNF services, are expanded in TEAM by the 3-day SNF rule waiver—will protect beneficiary access to SNF care when their provider determines that SNF care is medically necessary. We believe that providers, in consultation with their patients, are in the best position to determine appropriate care destinations. Further, we expect that the financial incentive to avoid complications and readmissions will disincentivize participants from delaying or diverting medically necessary SNF care. As described in § 512.590, CMS may conduct monitoring activities to ensure compliance by the TEAM participant and each of its downstream participants with the terms of TEAM. CMS reserves the right to monitor data from the TEAM participant and its downstream vities to ensure compliance by the TEAM participant and each of its downstream participants with the terms of TEAM. CMS reserves the right to monitor data from the TEAM participant and its downstream participants, including claims data, medical records, beneficiary interviews, and quality outcomes. We plan to monitor for abnormal patterns in post- acute care destinations and utilization and may take remedial action in the event of noncompliance, pursuant to § 512.592. We believe that these combined elements of the model will provide comprehensive protection for beneficiaries, and we trust TEAM participants to appropriately pursue efficiencies in care delivery while maintaining care access and quality. We also plan to review monitoring findings across the model and may propose additional beneficiary protections in future notice-and-comment rulemaking if further provisions appear necessary. Comment: A couple commenters requested that CMS provide hospitals in the proposed participation deferment period with monthly claims data to help them prepare for the model. Response: We thank the commenters for their suggestion and recognize the value of claims data for participants in preparing ferment period with monthly claims data to help them prepare for the model. Response: We thank the commenters for their suggestion and recognize the value of claims data for participants in preparing for and managing episodes. As described in § 512.562, CMS will make beneficiary-identifiable claims data available to TEAM participants annually, at least 1 month prior to the performance year, for baseline period data. This provision will apply regardless of when a participant joins TEAM. Additionally, as we have done and continue to do in the year prior to PY 1, we will consider additional ways to provide data and support to late- joining TEAM participants prior to their participation. Comment: A commenter expressed support for the proposal to discontinue a hospital’s TEAM participation the day that the hospital no longer meets the definition of TEAM participant. Response: We thank the commenter for their support. After consideration of the public comments, we are finalizing without modification the proposal at § 512.508 for a limited deferment period for hospitals that open in a mandatory CBSA or for hospitals located in a mandatory CBSA that begin to satisfy the definition of TEAM fication the proposal at § 512.508 for a limited deferment period for hospitals that open in a mandatory CBSA or for hospitals located in a mandatory CBSA that begin to satisfy the definition of TEAM participant after December 31, 2024. We are also finalizing without modification the proposal at § 512.508(d) to monitor specifically for the potential shifting of patients with high anticipated episode spending from TEAM participants to non-participant hospitals. Additionally, we are finalizing without modification the proposal at § 512.508(c)(2) to discontinue a hospital’s TEAM participation the day that the hospital no longer meets the definition of TEAM participant. (3) Medicare Dependent Hospital Status In the FY 2025 IPPS/LTCH PPS final rule (89 FR 68986), we designated hospital types that are eligible for participation in Track 2, which offers lower levels of upside and downside financial risk relative to Track 3, for PYs 2 through 5. As stated at 89 FR 69657, we believed that certain TEAM participants may benefit from a participation option that has limited two-sided financial risk so that their beneficiaries may receive high quality, coordinated care without imposing significa in TEAM participants may benefit from a participation option that has limited two-sided financial risk so that their beneficiaries may receive high quality, coordinated care without imposing significant financial pressure. The hospital types designated for Track 2 eligibility are safety net hospitals, rural hospitals, Medicare dependent hospitals (MDHs), sole community hospitals (SCHs), and essential access community hospitals. We noted in the proposed rule that section 1886(d)(5)(G)(iv) of the Act defines a MDH as a hospital that is located in a rural area (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in 2 of its 3 most recently settled Medicare cost reporting years). For additional information on the MDH program and associated policies in this rulemaking, we refer readers to section VI.E. of the preamble of this final rule. We also noted in the proposed rule, The Consolidated Appropr mation on the MDH program and associated policies in this rulemaking, we refer readers to section VI.E. of the preamble of this final rule. We also noted in the proposed rule, The Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118–42), enacted on March 9, 2024, extended the MDH program. Specifically, section 307 of the CAA, 2024, extended the MDH program under section 1886(d)(5)(G) of the Act through December 31, 2024. Subsequently, section 3202 of the American Relief Act, 2025 (ARA, 2025) (Pub. L. 118–158), enacted on December 21, 2024, extended the MDH program for FY 2025 discharges occurring before April 1, 2025. We further noted in the proposed rule that most recently, section 2202 of the Full-Year Continuing Appropriations and Extensions Act, 2025 (Pub. L. 119–4), enacted on March 15, 2025, extended the MDH program, amongst other changes, for FY 2025 discharges occurring before October 1, 2025. Because the MDH program is not authorized by statute beyond September 30, 2025, we stated that beginning October 1, 2025, all hospitals that previously qualified for MDH status under section 1886(d)(5)(G) of the Act will no longer have MDH status and will be paid based on th 025, we stated that beginning October 1, 2025, all hospitals that previously qualified for MDH status under section 1886(d)(5)(G) of the Act will no longer have MDH status and will be paid based on the IPPS Federal rate or other designation, such as SCH or RRC. In the proposed rule we recognized the end of the MDH program on September 30, 2025, affects Track 2 participation eligibility. However, we also acknowledged that, historically, Congress has extended the MDH program, and in some instances retroactively reinstated the program. Therefore, we proposed that TEAM participants who are classified as MDHs would still be eligible for Track 2 participation as long as the MDH program is active at the time that participation track selections are due to CMS. As described in § 512.520(b)(2), TEAM participants must notify CMS of its Track 2 selection prior to the performance year in a form and manner and by a date specified by CMS. For example, if CMS requests participation track selections by November 15, 2026, for PY 2 and the MDH program was set to expire on December 31, 2026, then TEAM participants with a MDH classification that submit their Track 2 VerDate Sep 2014 00:36 Aug 02, 2025 November 15, 2026, for PY 2 and the MDH program was set to expire on December 31, 2026, then TEAM participants with a MDH classification that submit their Track 2 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00545 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 37080 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations no longer maintained in Medicare more broadly. We also noted in the proposed rule that § 412.108(b)(1) states that the Medicare Administrative Contractor (MAC) determines whether a hospital meets the criteria for MDH designation as specified in § 412.108(a), and that § 412.108(b) establishes classification procedures for MDH status (55 FR 15175). As a result, we did not believe that it would be appropriate for CMS to circumvent these established procedures for the purposes of TEAM. We also considered and are sought comment on, but did not propose, the potential for the CMS Innovation Center to provide support to TEAM participants that were designated as MDHs until the termination of the MDH designation, with such support including providing technical assi al for the CMS Innovation Center to provide support to TEAM participants that were designated as MDHs until the termination of the MDH designation, with such support including providing technical assistance in helping them determine their eligibility for other Track 2-eligible hospital designations, including rural and SCH. We stated in the proposed rule that such support may be necessary as the TEAM participant may not be aware of other hospital designations they may be eligible for given their potential long-standing participation in the MDH program. Table XI.A.–01 identifies the potential impact on TEAM participants if the MDH program were to expire. While we recognized in the proposed rule that hospitals with MDH designation may qualify for other hospital designations that are eligible to participate in Track 2 for PY 2 through 5 of TEAM, we also noted that provision of such assistance to TEAM participants could unfairly disadvantage non- participant hospitals that do not receive the same support from CMS. selection by November 15, 2026, would be eligible for Track 2 for PY 2, regardless of whether the MDH program was active in PY 2. In contrast, using the previous scenario exc he same support from CMS. selection by November 15, 2026, would be eligible for Track 2 for PY 2, regardless of whether the MDH program was active in PY 2. In contrast, using the previous scenario except that the MDH program expired on June 30, 2026, no TEAM participant could use their previous MDH classification for eligibility to participate in Track 2 for PY 2 because the MDH program was not active as of the deadline by which CMS requested participation track selections. We noted this proposal would not affect Track 2 eligibility for TEAM participants that meet the definition of safety net hospitals, rural hospitals, SCHs, or essential access community hospitals, as defined in § 512.505. In the proposed rule we believed that tying the eligibility for Track 2 participation for TEAM participants that have a MDH classification to the expiration of the MDH program allows TEAM participants to still take advantage of Track 2 participation while acknowledging that the MDH program is not indefinite. We anticipated that if the MDH program is not extended, then there would be minimal impact on Track 2 eligibility for this lower-risk participation track due to the overlap between the MDH c definite. We anticipated that if the MDH program is not extended, then there would be minimal impact on Track 2 eligibility for this lower-risk participation track due to the overlap between the MDH classification as defined at § 412.108 and TEAM’s rural hospital definition, as defined at § 512.505. Per § 412.108, a necessary criterion for MDH classification is location in a rural area, which means any area outside an urban area as defined at § 412.64, or, for hospitals located in a State with no rural area, satisfaction of any of the criteria for reclassification as rural as described in § 412.103(a)(1) through (3) (65 FR 47048). For the purposes of TEAM, a rural hospital is defined as an IPPS hospital that meets one of the following criteria: • Is located in a rural area as defined under § 412.64. • Is located in a rural census tract defined under § 412.103(a)(1). We noted in the proposed rule that qualification as rural under § 412.64 encompasses all hospitals not located in an urban area, meaning a Metropolitan Statistical Area or a Metropolitan Division (in the case where a Metropolitan Statistical Area is divided into Metropolitan Divisions), as defined by the Office of Manag n area, meaning a Metropolitan Statistical Area or a Metropolitan Division (in the case where a Metropolitan Statistical Area is divided into Metropolitan Divisions), as defined by the Office of Management and Budget (69 FR 49242). Qualification as rural under § 412.103(a)(1) encompasses all hospitals located in a rural census tract of a Metropolitan Statistical Area as determined under the most recent version of the Goldsmith Modification,405 using the Rural-Urban Commuting Area codes and additional criteria, as determined by the Federal Office of Rural Health Policy (FORHP) of the Health Resources and Services Administration (HRSA), which is available at the web link provided in the most recent Federal Register notice issued by HRSA defining rural areas (65 FR 47048). For the purposes of TEAM, we stated in the proposed rule that a hospital’s qualification as rural on the basis of location in a rural census tract as defined under § 412.103(a)(1) is determined by location of the hospital’s primary CCN within a rural census tract as defined under § 412.103(a)(1), regardless of whether the hospital has applied for and received rural reclassification from CMS under § 412.103. We indic al’s primary CCN within a rural census tract as defined under § 412.103(a)(1), regardless of whether the hospital has applied for and received rural reclassification from CMS under § 412.103. We indicated in the proposed rule that since these two pathways to rural hospital designation cover both hospitals located outside of an urban area and hospitals located in a rural census tract within an urban area, we anticipated that a large proportion of hospitals that would have been designated as MDHs, and thus would have been eligible for participation in Track 2 during the TEAM performance period will continue to be eligible for participation in Track 2 due to rural hospital status. We considered, but did not propose, continuing to classify hospitals in TEAM based on the existing MDH criteria beyond the expiration of the MDH program. While this option would maintain the list of Track 2-eligible hospitals as originally finalized in the FY 2025 IPPS/LTCH PPS final rule at § 512.520(b)(4), we did not believe that it would be appropriate for TEAM to maintain hospital designations that are 405 The Goldsmith Modification was originally developed and used to identify rural Census tracts in lar did not believe that it would be appropriate for TEAM to maintain hospital designations that are 405 The Goldsmith Modification was originally developed and used to identify rural Census tracts in large metropolitan counties. For additional information regarding the Goldsmith Modification, we direct readers to: https://www.ruralhealth info.org/pdf/improving-the-operational-definition- of-rural-areas.pdf. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00546 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 37081 We sought comment on our proposal to determine MDHs’ eligibility for Track 2 participation in TEAM based on the hospitals’ status in the MDH program on the date CMS requires the TEAM participants to submit their track selections for the upcoming PY. We also sought comment on the potential for us to provide support to TEAM participants whose MDH designation ended as a result of the expiration of the MDH program in determining their eligibility for other hospital designations, such as rural and SCH, that are eligible AM participants whose MDH designation ended as a result of the expiration of the MDH program in determining their eligibility for other hospital designations, such as rural and SCH, that are eligible for participation in Track 2 in PY 2 through 5 of TEAM. The following is a summary of the public comments received on the proposed policy to determine MDHs’ eligibility for Track 2 participation in TEAM, and our responses to these comments: Comment: Some commenters expressed support for the proposal to determine MDHs’ eligibility for Track 2 based on the hospitals’ status in the MDH program on the date CMS requires the TEAM participants to submit their track selections for the upcoming PY. Response: We thank the commenters for their support. Comment: A few commenters recommended that CMS treat a hospital’s MDH designation preceding PY 1 as qualification for Track 2 participation in all PYs of TEAM. A couple commenters indicated that the financial constraints and community needs faced by these hospitals would still be present even if the MDH designation were to be removed. A commenter stated that the additional certainty afforded to a hospital by locking in its Track 2 eligibility for t ese hospitals would still be present even if the MDH designation were to be removed. A commenter stated that the additional certainty afforded to a hospital by locking in its Track 2 eligibility for the duration of the model based on its MDH status prior to PY 1 would allow the hospital to make additional investments in the model. A couple commenters recommended that CMS treat a hospital as an MDH for a given performance year if it held such designation in the previous performance year. Response: We thank the commenters for their suggestions and recognize the financial challenges and community needs faced by MDHs and other rural hospitals. However, we believe that conferring Track 2 eligibility to a hospital for the full duration of the model based on its MDH status in 2025, or conferring Track 2 eligibility to a hospital for a given performance year based on its MDH status at the beginning of the prior performance year, would not be appropriate. As stated in the proposed rule, § 412.108(b)(1) establishes that the Medicare Administrative Contractor (MAC) determines whether a hospital meets the criteria for MDH designation. We believe that it would not be appropriate for CMS to circ 08(b)(1) establishes that the Medicare Administrative Contractor (MAC) determines whether a hospital meets the criteria for MDH designation. We believe that it would not be appropriate for CMS to circumvent this procedure for the purposes of TEAM, nor for CMS to maintain hospital designations in TEAM that are not maintained within Medicare more broadly in the event that the MDH program is terminated. Additionally, we note that maintaining a hospital’s eligibility for Track 2 in a given performance year based on its MDH status at a time other than the time of track selection for that performance year would unfairly disadvantage hospitals whose Track 2 eligibility determinations are made on the grounds of rural, SCH, or EACH status at the time of track selection. Finally, we remind commenters that rural hospital status in TEAM is determined by location in a rural area as defined under § 412.64 or location in a rural census tract defined under § 412.103(a)(1), regardless of whether the hospital has applied for and received rural reclassification from CMS under § 412.103. Therefore, we anticipate that, if the MDH program is terminated, a large majority of hospitals that would have been spital has applied for and received rural reclassification from CMS under § 412.103. Therefore, we anticipate that, if the MDH program is terminated, a large majority of hospitals that would have been eligible for Track 2 based on their MDH status will continue to be eligible for Track 2 by meeting the definition of a rural hospital in TEAM without requiring additional effort from the hospital to achieve this classification. Comment: A few commenters requested that CMS provide technical assistance to hospitals that may lose MDH status. Response: We thank the commenters for their suggestions. While we project that the majority of TEAM participants currently designated as MDHs would already qualify for Track 2 by being a safety net hospital, rural hospital, SCH, or EACH, we are actively exploring forms of support we could provide to MDHs if the MDH program is discontinued. Potential forms of support under consideration include, but are not limited to the following: • Targeted outreach to notify hospitals of changes in their MDH status. • Determination and notification of rural hospital status as defined in TEAM, regardless of existing rural reclassification from CMS. • Distribution o notify hospitals of changes in their MDH status. • Determination and notification of rural hospital status as defined in TEAM, regardless of existing rural reclassification from CMS. • Distribution of resources and interpretation of regulations related to qualification as a SCH or EACH. We also welcome suggestions from TEAM participants on how we may best support them through potential changes in hospital classification and track eligibility. After consideration of the public comments, we are finalizing without modification the proposal at § 512.520(b)(4)(i) to determine MDHs’ eligibility for Track 2 based on the hospitals’ status in the MDH program on the date CMS requires the TEAM participants to submit their track selections for the upcoming PY. (4) Indian Health Services/Tribal Hospitals As indicated earlier in section XI.A.2.a.(1). of the preamble of this final rule, and defined at § 512.505, for a hospital to be a TEAM participant they must either—(1) initiate episodes and be paid under the IPPS with a CMS Certification Number (CCN) primary address located in one of the mandatory CBSAs selected for participation in TEAM; or (2) be a hospital that participates in either the B id under the IPPS with a CMS Certification Number (CCN) primary address located in one of the mandatory CBSAs selected for participation in TEAM; or (2) be a hospital that participates in either the BPCI Advanced Model or the CJR Model until the last day of the last performance period or last performance year of the respective model that voluntarily opts into TEAM and CMS approves their opt VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00547 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 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00548 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 37083 methodology and predict their episode spending. Lastly, we also considered, but did not propose, including IHS/Tribal hospitals as a hospital type eligible for Track 2 participation. However, we stated in the proposed rule that we also believed many IHS/Tribal hospitals may already satisfy eligibility requirements for Track 2 due to being a safety net hos or Track 2 participation. However, we stated in the proposed rule that we also believed many IHS/Tribal hospitals may already satisfy eligibility requirements for Track 2 due to being a safety net hospital or a rural hospital. We sought comment on the alternatives we considered for IHS/ Tribal hospitals. We also sought comment on alternatives that we may not have considered. The following is a summary of the public comments received on the considerations for IHS/Tribal hospitals, and our responses to these comments: Comment: Some commenters suggested the IHS/Tribal hospitals should be exempt from TEAM. A few commenters indicated that, because IHS/Tribal hospitals are not paid OPPS, it would not be possible to construct accurate target prices for them and fairly assess their performance for LEJR and spinal fusion episodes. A few of these commenters indicated that limiting IHS/ Tribal hospitals in the LEJR and spinal fusion episode categories to inpatient- only episodes would result in adverse selection between inpatient and outpatient episodes and recommended that, were CMS to not fully exempt IHS/ Tribal hospitals from TEAM, they should, at minimum, exclude all LEJR and spinal fusi dverse selection between inpatient and outpatient episodes and recommended that, were CMS to not fully exempt IHS/ Tribal hospitals from TEAM, they should, at minimum, exclude all LEJR and spinal fusion episodes at IHS hospitals. These commenters also expressed concern that simply limiting the IHS/Tribal hospitals participation in team to inpatient episodes would significantly reduce episode volume for LEJR and spinal fusion—because these procedures are increasingly provided in outpatient settings—resulting in low episode volume for these episode categories that may prevent accurate assessment of a hospital’s performance. In response to our alternative considerations, a commenter suggested that participation in Track 2 would not provide sufficient protection for IHS/ Tribal hospitals and that they should be provided the same protections as Track 1 hospitals. The same commenter suggested that a robust low-volume policy was also necessary to protect rural hospitals, sole community hospitals, and IHS/Tribal hospitals. Another commenter suggested that finalizing any alternative approach to calculating target prices and reconciliation payments for IHS/Tribal hospitals would not give the als, and IHS/Tribal hospitals. Another commenter suggested that finalizing any alternative approach to calculating target prices and reconciliation payments for IHS/Tribal hospitals would not give these hospitals adequate time to plan for TEAM. Response: We agree with commenters that inclusion of inpatient episodes but not outpatient episodes for LEJR and spinal fusion presents an opportunity for adverse selection and patient shifting between care settings which may not be clinically appropriate, as we previously stated in the proposed rule. We also agree with commenters that omitting outpatient episodes, while continuing to include inpatient episodes in TEAM, may make it difficult to establish fair and accurate target prices for IHS/Tribal hospitals and that lower episode volume due to exclusion only of outpatient episodes for LEJR and spinal fusion would result in an incomplete picture of a participant’s performance for these episode categories. We further agree that proposing and finalizing any new, alternative approach to calculating target prices for IHS/Tribal in this final rule would not give these hospitals adequate time to plan for TEAM. Therefore, we are finalizing a poli nalizing any new, alternative approach to calculating target prices for IHS/Tribal in this final rule would not give these hospitals adequate time to plan for TEAM. Therefore, we are finalizing a policy to exclude IHS/Tribal hospitals from the model by updating the TEAM participant definition to state that a TEAM participant must be paid under IPPS and OPPS. Specifically, we are finalizing a modification to the TEAM participant definition at § 512.505 to define a TEAM participant as an acute care hospital that (1) initiates episodes and is paid under the IPPS and OPPS with a CMS Certification Number (CCN) primary address located in one of the mandatory CBSAs selected for participation in TEAM in accordance with § 512.515; or (2) Makes a voluntary opt-in participation election to participate in TEAM in accordance with § 512.510 and is accepted to participate in TEAM by CMS. We recognize that excluding IHS/Tribal hospitals from TEAM will reduce episode volume, thereby limiting the reach of the model. However, an internal analysis demonstrated that when using the first half of 2024 as a performance year, it was estimated that IHS/Tribal hospitals initiated only 158 (0.03%) episodes. G of the model. However, an internal analysis demonstrated that when using the first half of 2024 as a performance year, it was estimated that IHS/Tribal hospitals initiated only 158 (0.03%) episodes. Given the small episode footprint of IHS/Tribal hospitals, we believe excluding IHS/Tribal hospitals from TEAM will not have a significant impact on TEAM in terms of episode volume and beneficiary access to the model. Further, IHS/Tribal hospitals’ exclusion from TEAM does not exclude them or their clinicians from other value-based care initiatives, such as the Quality Payment Program. Therefore, clinicians may still gain value-based care experience, and beneficiaries still have access to clinicians focused on value and quality of care. After consideration of the public comments, we are finalizing the exclusion of IHS/Tribal hospitals from TEAM by making a modification to the TEAM participant definition at § 512.505 to state that a TEAM participant must be paid under the IPPS and OPPS. Lastly, we note that this policy applies to all IHS/Tribal hospitals without regard to episode volume. While we agree with commenters about the importance of a low-volume policy, which we are addressing i ly, we note that this policy applies to all IHS/Tribal hospitals without regard to episode volume. While we agree with commenters about the importance of a low-volume policy, which we are addressing in section XI.A.2.c.(8). of the preamble of this final rule, this low volume policy would not affect IHS/ Tribal hospitals given their exclusion from TEAM. b. Quality Measures (1) Background As discussed in the FY 2025 IPPS/ LTCH PPS final rule (89 FR 68986), Medicare payment policy has moved away from FFS payments that are not linked to quality of care. As noted in the proposed rule, through the Medicare Modernization Act and the Affordable Care Act, we have implemented specific IPPS programs like the Hospital Inpatient Quality Reporting (IQR) Program (section 1886(b)(3)(B)(viii) of the Act), the Hospital Value-Based Purchasing (VBP) Program (subsection (o) of section 1886), the Hospital- Acquired Condition (HAC) Reduction Program (subsection (q) of section 1886), and the Hospital Readmissions Reduction Program (subsection (p) of section 1886), where payment reflects the quality of care delivered to Medicare beneficiaries. TEAM’s quality measures focus on care coordination, patient saf ions Reduction Program (subsection (p) of section 1886), where payment reflects the quality of care delivered to Medicare beneficiaries. TEAM’s quality measures focus on care coordination, patient safety, and patient reported outcomes (PROs) which we believe represent areas of quality that are particularly important to patients undergoing acute procedures. We indicated in the proposed rule that wherever possible, we align TEAM quality measures with those used in ongoing models and programs to minimize participant burden, recognizing that introducing new reporting functions and requirements in a mandatory model would create additional burden. Hospitals are not required to report quality data separately to CMS for TEAM. CMS will use data already reported through existing CMS quality reporting programs, thereby avoiding duplicative reporting requirements. We also stated in the proposed rule that we aim to use quality measures in which all hospitals would have access and experience. We finalized in the FY 2025 IPPS/ LTCH PPS final rule a set of quality measures tied to payment, with these measures scored to calculate the Composite Quality Score (CQS). The CQS would be combined with the alized in the FY 2025 IPPS/ LTCH PPS final rule a set of quality measures tied to payment, with these measures scored to calculate the Composite Quality Score (CQS). The CQS would be combined with the VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00549 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 37084 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations TEAM participants’ reconciliation amount during the reconciliation process to tie quality performance to payment. The finalized set of TEAM quality measures from the FY 2025 IPPS/LTCH PPS final rule have been summarized in Table XI.A.–02. For performance year 1, we proposed and finalized three quality measures (noted later in this section) due to their: (1) alignment with the goals of TEAM; (2) hospitals’ familiarity with the measures due to their use in other CMS hospital quality programs, including the Hospital IQR and HAC Reduction Programs; and (3) alignment to CMS priorities, including the CMS National Quality Strategy, which has goals that support safety, outcomes, and engagement. We stated in the proposed rule t AC Reduction Programs; and (3) alignment to CMS priorities, including the CMS National Quality Strategy, which has goals that support safety, outcomes, and engagement. We stated in the proposed rule that we believe these three TEAM PY1 quality measures that link to payment reflect these goals and accurately measure hospitals’ level of achievement on such goals. These PY1 measures are— • For all TEAM episodes: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356); • For all TEAM episodes: CMS Patient Safety and Adverse Events Composite (CMS PSI 90) (CMIT ID #135); and • For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient- Reported Outcome-Based Performance Measure (PRO–PM) (CMIT ID #1618). Additionally, we proposed and finalized in the FY 2025 IPPS/LTCH PPS final rule the inclusion of three measures that were included in the Measures Under Consideration List (known as the MUC List) that were subsequently finalized (89 FR 69540 and 89 FR 69552), starting in PY 2 (2027), and will replace the PSI 90 measure. These three measures are as follows: • For all TEAM episodes: Hospital Harm—Falls re subsequently finalized (89 FR 69540 and 89 FR 69552), starting in PY 2 (2027), and will replace the PSI 90 measure. These three measures are as follows: • For all TEAM episodes: Hospital Harm—Falls with Injury (CMIT ID #1518) (starting in PY 2). • For all TEAM episodes: Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) (starting in PY 2). • For all TEAM episodes: Thirty-day Risk—Standardized Death Rate among Surgical Inpatients with Complications (Inpatient Surgical Compilations Mortality Rate) (CMIT ID #134) (starting in PY 2). We stated in the proposed rule that the Inpatient Surgical Complications Mortality Rate measure began mandatory reporting with the July 1, 2023–June 30, 2025, reporting period, while the other two (Hospital Harm— Falls with Injury and Hospital Harm— Postoperative Respiratory Failure) are available on the list of eCQMs from which hospitals must select to report three beginning with the CY2026 reporting period. This timeline will allow TEAM participants to have 1 year to gain experience reporting all three of these measures in the Hospital IQR program before their performance is tied to payment beginning in TEAM’s second performance year (202 cipants to have 1 year to gain experience reporting all three of these measures in the Hospital IQR program before their performance is tied to payment beginning in TEAM’s second performance year (2027). While we believe the TEAM quality measure set would provide CMS with sufficient measures to monitor quality and to calculate scoring on quality performance, we stated in the proposed rule that we may adjust the measure set in future performance years, via rulemaking, by adding new measures or removing measures if we determine those adjustments to be appropriate at the time. In this final rule, we will finalize several changes to and clarifications around the TEAM quality measure set finalized in the FY 2025 IPPS/LTCH PPS final rule. (2) Alignment of Hybrid Hospital-Wide Readmission Measure to Hospital IQR Program As stated previously, TEAM aims to, whenever possible, align measures with existing reporting requirements so as not to introduce additional burden to participants. This includes aligning the TEAM Hybrid Hospital-Wide Readmission (HWR) Measure reporting requirements with what is required under the Hospital Inpatient Quality Reporting (IQR) Program. The Hybrid HWR measure c des aligning the TEAM Hybrid Hospital-Wide Readmission (HWR) Measure reporting requirements with what is required under the Hospital Inpatient Quality Reporting (IQR) Program. The Hybrid HWR measure combines claims data with electronic health record (EHR) data to risk-adjust hospital readmission rates, accounting for patient severity and illness at admission. We noted in the proposed rule that the Hospital IQR Program initially planned that the Hybrid HWR measure would be mandatory, beginning with the July 1, 2023–June 30, 2024, reporting period. However, after public feedback on reporting difficulties, the Hospital IQR Program finalized in the CY 2025 Hospital OPPS Final Rule (89 FR 93912) the continuation of voluntary reporting of the clinical data elements for the Hybrid HWR for the July 1, 2023, through June 30, 2024, reporting period and the July 1, 2024, through June 30, 2025, reporting period. Mandatory reporting will begin the following reporting period (July 1, 2025, through June 30, 2026), impacting TEAM’s PY 1. Additionally, we stated in the proposed rule that CMS has recognized public input regarding the difficulties in reporting the clinical data elements and is finali une 30, 2026), impacting TEAM’s PY 1. Additionally, we stated in the proposed rule that CMS has recognized public input regarding the difficulties in reporting the clinical data elements and is finalizing proposals in section X.C. of the preamble of this final rule the following allowances: up to two missing laboratory results; up to two missing vital signs; the reduction of the CCDE (core clinical data elements) submission requirement to 70 percent or more of discharges, and; the reduction of the submission requirement of linking variables to 70 percent or more of discharges. We noted in the proposed rule that we recognize that this change means that VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00550 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 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00551 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 37086 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations Response: We thank the commenter for their concerns regarding the appropriateness of includ o d n o m m a h k 37086 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations Response: We thank the commenter for their concerns regarding the appropriateness of including the Hybrid HWR measure in TEAM. While we understand the commenter’s concern, we disagree that the measure is duplicative given the incentive structure and quality calculations in TEAM differs from other CMS quality reporting programs. Further, we believe this measure aims to drive positive change, not just for TEAM beneficiaries, but encourages hospitals to improve care delivery and reduce re-admissions for all inpatient beneficiaries. Therefore, using the same measure as other CMS quality reporting programs has the benefit of capitalizing on a measure that the hospital is already reporting, while also encouraging hospitals to implement protocols that reduce re-admissions for all inpatient beneficiaries, not just for those who have initiated a TEAM episode. Comment: Commenters made various recommendations including delaying implementation by at least 1 year, using only claims-based elements initially during PY1 to reduce reporting burden, removing the measure entirely from the comp ious recommendations including delaying implementation by at least 1 year, using only claims-based elements initially during PY1 to reduce reporting burden, removing the measure entirely from the composite quality score (CQS), using the first mandatory reporting year as baseline rather than performance period, or implementing the legacy Hospital-Wide Readmission measure until the hybrid version is operational. A commenter raised equity concerns about safety net providers facing structural challenges in data collection due to patient demographics, health literacy, and language barriers, which, they stated, could result in unfair penalties based on patient population characteristics rather than care quality. Response: We thank and recognize commenters vast recommendations that reflect genuine concerns around hospitals’ readiness and capacity to implement the Hybrid HWR measure effectively. We acknowledge the thoughtful feedback regarding implementation timelines, data collection challenges, and the need for operational flexibility as hospitals navigate the transition to hybrid reporting methodologies. We are attentive to the concerns raised about safety net providers, recognizing tha