Medicare Program; CY 2026 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts

<NOTICE> DEPARTMENT OF HEALTH AND HUMAN SERVICES <SUBAGY>Centers for Medicare & Medicaid Services</SUBAGY> <DEPDOC>[CMS-8089-N]</DEPDOC> <RIN>RIN 0938-AV54</RIN> <SUBJECT>Medicare Program; CY 2026 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Centers for Medicare & Medicaid Services (CMS), HHS. <HD SOURCE="HED">ACTION:</HD> Notice. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year (CY) 2026 under Medicare's Hospital Insurance Program (Medicare Part A). The Medicare statute specifies the formulae used to determine these amounts. For CY 2026, the inpatient hospital deductible will be $1,736. The daily coinsurance amounts for CY 2026 will be as follows: $434 for the 61st through 90th day of hospitalization in a benefit period; $868 for lifetime reserve days; and $217 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> The deductible and coinsurance amounts announced in this notice are effective on January 1, 2026. </DATES> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Suzanne Codespote, (410) 786-7737 or Yaminee Thaker (410) 786-7921. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> Section 1813 of the Social Security Act (the Act) provides for an inpatient hospital deductible to be subtracted from the amount payable by Medicare for inpatient hospital services furnished to a beneficiary. It also provides for certain coinsurance amounts to be subtracted from the amounts payable by Medicare for inpatient hospital and extended care services. Section 1813(b)(2) of the Act requires the Secretary of the Department of Health and Human Services (the Secretary) to determine and publish each year the amount of the inpatient hospital deductible and the hospital and extended care services coinsurance amounts applicable for services furnished in the following calendar year (CY). <HD SOURCE="HD1">II. Computing the Inpatient Hospital Deductible for CY 2026</HD> Section 1813(b) of the Act prescribes the method for computing the amount of the inpatient hospital deductible. The inpatient hospital deductible is an amount equal to the inpatient hospital deductible for the preceding CY, adjusted by the Secretary's best estimate of the payment-weighted average of the applicable percentage increases (as defined in section 1886(b)(3)(B) of the Act) used for updating the payment rates to hospitals for discharges in the fiscal year (FY) that begins on October 1 of the same preceding CY, and adjusted to reflect changes in real casemix. The adjustment to reflect real casemix is determined on the basis of the most recent case-mix data available. The amount determined under this formula is rounded to the nearest multiple of $4 (or, if midway between two multiples of $4, to the next higher multiple of $4). Under section 1886(b)(3)(B)(i)(XX) of the Act, the percentage increase used to update the payment rates for FY 2026 for hospitals paid under the inpatient prospective payment system (IPPS) is the IPPS operating market basket percentage increase, otherwise known as the IPPS market basket update, reduced by an adjustment based on changes in the economy-wide productivity (productivity adjustment) (see section 1886(b)(3)(B)(xi)(II) of the Act). Under section 1886(b)(3)(B)(viii) of the Act, for FY 2026, the applicable percentage increase for hospitals that do not submit quality data as specified by the Secretary is reduced by one quarter of the market basket update. We are estimating that after accounting for those hospitals receiving the lower market basket update in the payment-weighted average update, the calculated deductible will not be affected, since the majority of hospitals submit quality data and receive the full market basket update. Section 1886(b)(3)(B)(ix) of the Act requires that any hospital that is not a meaningful electronic health record (EHR) user (as defined in section 1886(n)(3) of the Act) will have three-quarters of the market basket update reduced by 100 percent for FY 2017 and each subsequent FY. We are estimating that after accounting for these hospitals receiving the lower market basket update, the calculated deductible will not be affected, since the majority of hospitals are meaningful EHR users and are expected to receive the full market basket update. Under section 1886 of the Act, the percentage increase used to update the payment rates (or target amounts, as applicable) for FY 2026 for hospitals excluded from the inpatient prospective payment system is as follows: • The percentage increase for long term care hospitals (LTCH) is the LTCH market basket percentage increase reduced by the productivity adjustment (see section 1886(m)(3)(A) of the Act). In addition, these hospitals may also be impacted by the quality reporting adjustments and the site-neutral payment rates (see section 1886(m)(5) and (6) of the Act). • The percentage increase for inpatient rehabilitation facilities (IRF) is the IRF market basket percentage increase reduced by the productivity adjustment in accordance with section 1886(j)(3)(C)(ii)(I) of the Act. In addition, these hospitals may also be impacted by the quality reporting adjustments (see section 1886(j)(7) of the Act). • The percentage increase used to update the payment rate for inpatient psychiatric facilities (IPF) is the IPF market basket percentage increase reduced by the productivity adjustment (see section 1886(s)(2)(A)(i) of the Act). In addition, these hospitals may also be impacted by the quality reporting adjustments (see section 1886(s)(4) of the Act). • The percentage increase used to update the target amounts for other types of hospitals that are excluded from the inpatient prospective payment system and that are paid on a reasonable cost basis, subject to a rate-of-increase ceiling, is the IPPS operating market basket percentage increase, which is described at section 1886(b)(3)(B)(ii)(VIII) of the Act and 42 CFR 413.40(c)(3). These other types of hospitals include cancer hospitals, children's hospitals, extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico. The IPPS operating market basket percentage increase for FY 2026 is 3.3 percent and the productivity adjustment is 0.7 percentage point, as announced in the final rule that appeared in the <E T="04">Federal Register</E> on August 04, 2025 entitled, “Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year (FY) 2026 Rates; Changes to the FY 2025 IPPS Rates Due to Court Decision; Requirements for Quality Programs; and Other Policy Changes; Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit and Electronic Prior Authorization” (90 FR 36536). Therefore, the percentage increase for hospitals paid under the inpatient prospective payment system that submit quality data and are meaningful EHR users is 2.6 percent (that is, the FY 2026 IPPS operating market basket update of 3.3 percent less the productivity adjustment of 0.7 percentage point). The average payment percentage increase for hospitals excluded from the inpatient prospective payment system is 2.7 percent. This average includes long term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities and other hospitals excluded from the inpatient prospective payment system. Weighting these percentages in accordance with payment volume, our best estimate of the payment-weighted average of the increases in the payment rates for FY 2026 is 2.62 percent. To develop the adjustment to reflect changes in real casemix, we first calculated an average casemix for each hospital that reflects the relative costliness of that hospital's mix of cases compared to those of other hospitals. We then computed the change in average casemix for hospitals paid under the Medicare inpatient prospective payment system in FY 2025 compared to FY 2024. (We excluded from this calculation hospitals whose payments are not based on the inpatient prospective payment system because their payments are based on alternate prospective payment systems or reasonable costs.) We used Medicare bills from prospective payment hospitals that we received as of July 2025. These bills represent a total of about 5.4 million Medicare discharges for FY 2025 and provide the most recent case-mix- data available at this time. Based on these bills, the change in average casemix in FY 2025 -is 0.9 percent. Based on these bills and past experience, we expect the overall FY 2025 casemix change to be 0.9 percent as the year progresses and more FY 2025 data become available. Section 1813(b) of the Act requires that the inpatient hospital deductible be adjusted only by that portion of the case mix change that is determined to be real. Real casemix is that portion of casemix that is due to changes in the mix of cases and not due to coding optimization. We are assuming that this increase in casemix is real and not a result of coding optimization. Thus, the estimate of the payment-weighted average of the applicable percentage increases used for updating the payment rates is 2.62 percent, and the real case-mix adjustment factor for the deductible is 0.9 percent. Therefore, using the statutory formula as stated in section 1813(b) of the Act, we calculate the inpatient hospital deductible for services furnished in CY 2025 to be $1,736. This deductible amount is determined by multiplyi ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 25k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━