How to Achieve Reimbursement Wins Under the Fiscal Year 2026 IPPS Final Rule

With the July issue of the Fiscal Year 2026 Hospital Inpatient Prospective Payment System (IPPS) Final Rule, CMS included a 2.6% increase in Medicare IPPS rates. The rule also includes a $2 billion increase in disproportionate share hospital payments and a $192 million increase in new medical technology payments. Overall, the rule is projected to increase hospital payments by $5 billion in FY 2026 compared to FY 2025. Here’s a summary of the major topics, what they mean, and the impact the IPPS Final Rule is expected to have: 

TEAM 2026 Updates

The TEAM (Transforming Episode Accountability Model) is a new mandatory bundled payment model finalized in the FY 2026 IPPS Final Rule. It reflects the ongoing push by CMS toward value-based care, especially after the phase-out of older models like BPCI-Advanced. Here’s a breakdown of TEAM’s core mechanics: 

Model Structure 

• Mandatory participation for selected hospitals in specific geographic areas. 
• Covers inpatient episodes of care for certain high-volume, high-cost conditions (exact list finalized by CMS; includes common surgical and medical DRGs). 
• Episodes begin with an anchor hospitalization and continue for 90 days post-discharge. 

Payment & Reconciliation

• Hospitals continue to receive FFS payments during the episode, but: 
  • At year-end, CMS reconciles actual spending against a pre-set target price. 
  • Hospitals may receive a payment (if below target + quality threshold) or owe a repayment to CMS (if above). 

Target Price Methodology 

• Prices are based on:
  • Historical Medicare FFS spending
  • Regional and national benchmarks
  • Case-mix adjustment
  • Risk adjustment (including patient clinical characteristics and social risk factors) 

• Updates in the final rule:
  • More refined risk adjustment to prevent penalizing hospitals treating complex or high-risk populations.
  • Increased weight on hospital-specific performance to incentivize improvement over time.  

What To Do Next  

1) Support Clinical Informaticists to champion regulatory compliance and reimbursement initiatives.  

With new reimbursement requirements, the workload for clinical informaticists has increased in both volume and frequency. The FY 2026 IPPS Final Rule may leave hospital leaders and informaticists stretched thin as they work to align data and workflows with evolving standards, which is critical for maximum reimbursement.  

Empowering your organization is essential for navigating these new quality measures and reporting requirements. By investing in the resources to support your informaticists, you can meet these demands effectively, ultimately improving patient outcomes and securing financial incentives. 

2) Assess your EHR for workflow and data automation opportunities.  

A common challenge for many hospitals begins with the clinical documentation entries and the resulting charge capture and reporting that results from these processes. An EHR assessment with automated testing almost always reveals quick wins that result in more complete charge capture and clinical documentation. For example: this hospital improved compliance and captured an estimated $2.1M in high value charges with just one of their findings.

Bottom line: hospitals must ensure that every claimable charge is captured and documented appropriately. That requires an investment in the EHR and ensuring that users are prepared to demonstrate best practices in system documentation. An EHR assessment is a low-cost and high return on investment opportunity that every hospital has available to them.  

3) Reduce challenges and costs of reporting by leveraging core EHR components.  

Clients we have worked with find that the most cost-effective approach to maximizing reimbursement is leveraging core EHR components, solid workflows and data review, and platforms such as SQL and PowerBI that are often already part of the hospital’s technology stack. This reduces common challenges with data coordination with other vendors and platforms, as well as reduces costs.  

CereCore’s comprehensive program includes turnkey implementation, monitoring, validation, alerting/auditing, and trend analysis on all CMS and CDC major regulatory programs, as well as a 100% success rate for on-time complete regulatory submissions. This service is both cost-effective compared with other market offerings and offloads the burden on informaticists with experts in data flow, extraction, and report formatting.  

Bottom line: It isn’t typically necessary to purchase additional platforms and toolsets for regulatory compliance. Investing in the EHR itself and expertise to extract the data, leverage reporting platforms you already own, and support your regulatory efforts with insights has a much better return on investment.  

Learn more about CereCore’s Regulatory Submissions Program on CereCore.net.

4) Ensure data integrity between now and year end.

Our recap of regulatory reporting changes is intended to help prepare hospitals for what's ahead and offer alternatives for filling gaps in resources, but it is impossible to include complete guidance in a blog post.

We strongly recommend, as with previous years, that time is utilized as a premium for Regulatory program adherence. The remainder of the year should be utilized to ensure data completeness, timely attestation, and audit documentation for the remaining 2025 Regulatory Programs (Hybrid Measures, Promoting Interoperability, MIPS, etc.). MEDITECH sites need to be focused on implementing their HTI-1/USCDIv3 top-off prior to 1/1/26. As with previous regulatory requirements, technology systems and production functionality must be in place prior to the start of any associated reporting period.

Other Industry Sources

Editor’s note: Refer to official documentation from CMS including 2025 IPPS final rule, the final rule fact sheet, the TEAM fact sheet, and the Calendar Year (CY) 2025 Medicare Physician Fee Schedule Final Rule) as well as these related resources: 

• IPPS Operating Payment Rate: (American Hospital Association)
• Labor Related Share: (Holland & Knight)
• DSH Payments: (America's Essential Hospitals) 

For More Information from CereCore 

• MEDITECH Assessment
• CereCore Regulatory Submissions Program Video 
• Regulatory Reporting Services at CereCore