About Medicare
The federal Medicare program is an essential pillar of the state’s health care system, supporting more than 6 million Californians over the age of 65 and younger Californians with disabilities. One in five hospitals is at risk of closing, in part because Medicare reimbursement rates are far lower than the cost of providing care. It’s essential that future federal Medicare policy protects patient care.
CMS Proposes Inadequate IPPS Update for FFY 2026
What’s happening: On April 11, the Centers for Medicare & Medicaid Services (CMS) released the federal fiscal year (FFY) 2026 inpatient prospective payment system (IPPS) proposed rule — which falls short of what hospitals need to keep up with rising costs and health care needs.
What else to know: As a result of all proposed changes, CMS estimates that hospital inpatient payments will increase by $4 billion in FFY 2026. Comments on the proposed rule are due June 10.
CMS Issues Post-Acute Care Payment Proposed Rules
What’s happening: On April 11, the Centers for Medicare & Medicaid Services (CMS) issued its proposed payment policies for inpatient rehabilitation facilities (IRFs), skilled-nursing facilities (SNFs), and long-term care hospitals (LTCHs) for federal fiscal year (FFY) 2026.
What else to know: Comments on the proposed rules are due to CMS by June 10.
CMS Finalizes Medicare Advantage, Part D Rule for 2026
What’s happening: In its finalized changes to the Medicare Advantage (MA) and Part D prescription drug programs for contract year 2026, the Centers for Medicare & Medicaid Services (CMS) struck most of the Biden-era proposals and declined to finalize additional insurer accountability provisions.
What else to know: The rule, which did not address several other proposals (detailed below), is effective Jan. 1, 2026.
MedPAC Issues Report to Congress with Payment Recommendations
What’s happening: On March 13, the Medicare Payment Advisory Commission (MedPAC) released its report to Congress that includes fiscal year 2026 payment recommendations for hospitals and other Medicare fee-for-service payment systems.
What else to know: In the report, MedPAC urges Congress to update the base payment rate for hospitals by current law plus 1%.
CMS Publishes Progress Report on Review Choice Demonstration for Inpatient Rehabilitation Services, Shares ‘Helpful Hints’
What’s happening: The Centers for Medicare & Medicaid Services (CMS) has posted to its website a report on the ongoing Review Choice Demonstration for Inpatient Rehabilitation Services (IRF RCD) — a program currently in Alabama and Pennsylvania that will expand to California in the future, though a specific time frame has not yet been established.
What else to know: Based on IRF RCD results to date, CMS has released a Helpful Hints document that could assist California providers, as it includes reasons a claim might not be affirmed, as well as best practices that may help avoid non-affirmations.
Medicare Patient Reclassification Notices Now in Effect
What’s happening: Effective Feb. 14, providers are required to issue a Medicare Change of Status Notice (MCSN) to eligible patients who were admitted as hospital inpatients, but the hospital subsequently reclassified them as outpatients who are receiving observation services.
What else to know: This requirement only applies to patients with traditional Medicare as the primary payer. The form and its instructions are available to download.
As Congress Prepares to Focus on Area Wage Index, CHA Issues Informational Document for Hospitals
CMS Announces Quality Reporting Exceptions for Hospitals Impacted by Los Angeles Fires
What’s happening: The Centers for Medicare & Medicaid Services (CMS) is granting exceptions for certain measures in Medicare quality reporting and value-based programs to hospitals, psychiatric hospitals, and post-acute providers in designated areas affected by the California Wildfires and Straight-line Winds public health emergency in Los Angeles.
What else to know: If providers voluntarily report data where exceptions are allowed, CMS notes that the data will be used for public reporting and applying scoring methodologies under value-based programs.
CHA Comments on Medicare Advantage Proposals for 2026
What’s happening: CHA submitted comments in response to the Centers for Medicare & Medicaid Services’ (CMS) proposed policy and technical changes to Medicare Advantage (MA) and Part D programs for contract year 2026.
What else to know: Finalization of the proposed rule is expected in April — in time for MA plans to bid to CMS and offer MA products for plan year 2026. The rule, once finalized, will take effect Jan. 1, 2026.
CMS Provides Additional Guidance on Beneficiary Observation Status Appeals
What’s happening: The Centers for Medicare & Medicaid Services (CMS) has issued additional information, including billing instructions, for the Medicare Change of Status Notifications (MCSN).
What else to know: Beginning Feb. 14, CMS will require giving MCSNs to patients who are reclassified from inpatient to observation (outpatient) status.