CMS Releases Final Rule for Hospitals That Reflects Continued Transition to Value-Based Care

August 14, 2026

CMS' Fiscal Year 2027 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH PPS) final rule introduces two major bundled care models that hospitals must adopt under certain conditions: the Comprehensive Care for Joint Replacement Expansion (CJR-X) and the Transforming Episode Accountability Model (TEAM).

Unlike existing prospective payment systems, which generally establish payment for a particular hospital stay or service, these models hold participating hospitals accountable for the cost and quality of care across a broader episode that extends beyond the hospital stay. Providers continue to bill Medicare under existing payment systems, but hospitals may receive additional payments or owe repayments based on spending and outcomes across the episode.

Although these models may not directly affect audiologists and speech-language pathologists (SLPs) now, they reflect Medicare's growing emphasis on accountability for costs and outcomes across the continuum of care, a shift clinicians should understand and prepare for.

As hospitals become increasingly accountable for the cost and quality of care beyond the initial hospital stay, audiologists and SLPs may play a greater role in helping hospitals achieve better outcomes and preventing costly complications. Services that support effective communication, safe transitions of care, rehabilitation, and successful recovery can contribute to the goals of these value-based payment models.

CJR-X

CJR-X marks the first nationwide test of a mandatory episode-based payment model. This model applies to Medicare patients undergoing hip, knee, and ankle replacements performed in inpatient and outpatient hospital settings. Acute care hospitals nationwide must adopt CJR-X starting January 1, 2028.

With few exceptions, the episode will include all related items and services paid under Medicare Part A and Part B for eligible CJR-X patients-such as the cost of the procedure, hospital stay, post-discharge physical therapy, and follow-up visits.

Although CJR-X primarily affects services such as physical therapy, ASHA commented on this model [PDF] because it could serve as a framework for future episode-based payment models that encompass a broader range of conditions and services. ASHA recommended that CMS consider prehabilitation and recovery data beyond the 90-day episode to better capture the full course of recovery, but CMS did not finalize those recommendations.

TEAM

TEAM is an episode-based alternative payment model that began on January 1, 2026, in which selected acute care hospitals in certain geographic areas are required to coordinate care for people with traditional Medicare undergoing lower extremity joint replacements, surgical hip femur fracture treatments, spinal fusions, coronary artery bypass grafts, or major bowel procedures. The acute care hospital assumes responsibility for the total cost and quality of care from surgery through the first 30 days after hospital discharge.
Because TEAM holds hospitals accountable for care after discharge, the model also increases the importance of coordination with clinicians in post-acute and outpatient settings, including audiologists and SLPs, when appropriate.

TEAM participants continue to bill Medicare FFS as usual but receive target prices for included episodes prior to each performance year. Target prices are based on all Medicare Parts A & B items and services included in an episode and are risk-adjusted based on beneficiary-level and hospital-level factors. January 1, 2027, marks the start date for both online quality reporting and financial penalties for excess spending.

ASHA submitted comments to CMS [PDF] explaining that audiologists and SLPs can serve as valuable members of such teams. As communication sciences experts, audiologists and SLPs play a critical role in ensuring communication challenges do not get in the way of improving the quality and outcomes of care regardless of the patient's diagnosis.

Health care professionals outside of audiology and speech-language pathology-who likely receive little training in the area of communication-may not recognize or be familiar with hearing loss, mild cognitive impairment, aphasia from a past stroke, residual effects of cardiac events, use of augmentative and alternative communication (AAC), stuttering, articulation disorders, or other communication difficulties.

Payment Update

CMS finalized a 2.3% increase in base inpatient hospital payments for FY 2027, reflecting updated inflation data.

Quality Reporting Changes

CMS again showed interest in value-based care through more digitally extractable measures and more focus on meaningful patient outcomes.

CMS updated the Hospital Readmissions Reduction Program (HRRP) and Hospital Value-Based Purchasing (HVBP) Program to remove COVID-19 exclusions and include Medicare Advantage data. CMS did not propose or finalize any new measures for these programs.

CMS updated the Hospital Inpatient Quality Reporting (IQR) Program by:

• lowering data completeness thresholds for the core clinical data elements submission from 90% and 95% of discharges to 70% or more of discharges; and
• including Medicare Advantage patients in certain measures.

CMS also added an advance care planning measure while making minor modifications to the following measures:

• Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA);
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Ischemic Stroke Hospitalization with Claims-Based Risk Adjustment for Stroke Severity;
• Hybrid Hospital-Wide Readmission (HWR); and
• Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (HWM).

CMS permanently removed several measures, including:

• the Hospital Commitment to Health Equity measure beginning with the CY 2024 reporting period/FY 2026 payment determination;
• the COVID-19 Vaccination Coverage among HCP measure beginning with the CY 2024 reporting period/FY 2026 payment determination;
• the Screening for Social Drivers of Health measure beginning with the CY 2024 reporting period/FY 2026 payment determination; and
• the Screen Positive Rate for Social Drivers of Health measure beginning with the CY 2024 reporting period/FY 2026 payment determination.

CMS finalized new measures, measure modifications, and measure removals for the IQR Program.

In its comments on the proposed rule, ASHA highlighted that including audiologists and SLPs in all applicable episodes would ensure communication access, thus improving all measures' accuracy in capturing comprehensive health care quality-particularly when patients must understand complex health information, participate in care planning, or communicate their preferences.

Promoting Interoperability

Safety Assurance Factors for EHR Resilience (SAFER) Guides are a set of self-assessment tools developed by the Office of the National Coordinator to help health care organizations evaluate and improve the safety and safe use of certified electronic health record (EHR) systems.

CMS finalized modifications to the Medicare Promoting Interoperability Program, including a minimum 180-day EHR reporting period, updated Security Risk Analysis requirements, and mandatory attestation to the SAFER Guides for EHR resilience. These changes aim to enhance cybersecurity and operational flexibility without increasing economic burden.

Questions?

Contact ASHA's health care and education policy team at [email protected].