AHA Statement on FY 2027 Proposed IPPS & LTCH Payment Rule

Ashley Thompson
Senior Vice President, Public Policy Analysis and Development
American Hospital Association

April 10, 2026

Hospitals and health systems are eager to advance value-based payment arrangements that improve quality, enhance patient outcomes, and make health care more affordable. The AHA and its members support continued innovation in Medicare payment models that align incentives, promote coordinated care, and reward prevention and wellness.

While we appreciate CMS's efforts to expand the reach of value-based models, we believe that mandatory participation presents significant challenges, particularly for hospitals that lack the scale or financial capacity to make the necessary investments in care redesign. A phased or voluntary approach would better support success, allowing organizations to build the infrastructure and partnerships needed to achieve shared savings and improved outcomes.

At the same time, hospitals face mounting financial pressures. Despite this, CMS has proposed another inadequate update to inpatient payment rates, another extremely high productivity cut, and reductions to disproportionate share payments - in the face of rising need for care and higher uninsured rates. Policymakers must balance these realities to preserve access to comprehensive care while driving sustainable transformation.

Finally, the AHA remains concerned about ongoing shortfalls in reimbursement for Long-term Care Hospitals (LTCHs). Under the current payment system, LTCHs have been unable to maintain the same volume of care, and many LTCHs have been forced to close. We appreciate that CMS did not increase the outlier threshold this year. However, additional reforms are needed to stabilize the LTCH field and ensure critically ill patients continue to have the ability to receive care at LTCHs. We will work with the Administration and Congress to pursue the AHA's LTCH reform principles to protect access to LTCHs.

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