Company: THC
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0000070318-25-000046
Chunk: 83

Company: TENET HEALTHCARE CORP
Filing Date: 2025-10-28
Form: 10-Q
Item: Part I, Item 1
Chunk 83
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4.

Because we cannot predict what actions the federal government or the states may take under existing or future legislation and/or regulatory changes to address budget gaps, deficits, Medicaid expansion, Medicaid eligibility redeterminations, provider fee programs, state‑directed payment programs or Medicaid Section 1115 waivers, we are unable to assess the effect that any such legislation or regulatory action might have on our business; however, the impact on our future financial position, results of operations or cash flows may be material.

Regulatory and Legislative Updates

Material updates to the information set forth in our Annual Report about the Medicare and Medicaid payment systems, as well as other government programs impacting our business, are provided below.

Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems—Section 1886(d) of the Social Security Act requires CMS to update Medicare inpatient FFS payment rates for hospitals reimbursed under the inpatient prospective payment systems (“IPPS”) annually. The updates generally become effective October 1, the beginning of the FFY. In August 2025, CMS issued final changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2026 Rates (“Final IPPS Rule”). According to CMS, the combined impact of the proposed payment and policy changes in the Final IPPS Rule for operating costs will yield an average 4.4% increase in Medicare operating payments for proprietary hospitals in FFY 2026. The Final IPPS Rule includes the following payment and policy changes, among others:

•A market basket increase of 3.3% for Medicare severity‑adjusted diagnosis‑related groups (“MS‑DRG”) operating payments for hospitals reporting specified quality measure data and that are meaningful users of electronic health record technology; CMS also finalized a 0.7% multifactor productivity reduction required by the Affordable Care Act that results in a net operating payment update of 2.6% before budget neutrality adjustments; 

•A decrease in the cost outlier threshold from $46,217 to $40,397; 

•A 2.35% net increase in the capital federal MS‑DRG rate; 

•Updates to the three factors used to determine the amount and distribution of Medicare uncompensated care disproportionate share hospital payments; and

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•Updates to the implementation of the Transforming Episode Accountability Model (“TEAM”), which will begin January 1, 2026 and end December 31, 2030 for certain episodic categories. TEAM will be mandatory, with limited exceptions, for all hospitals