CMS corrects FY 2027 hospital, rehab, psych, SNF and hospice rates as FY 2027 begins, after one hospital was wrongly left out

One hospital in Mississippi, identified in federal records only as CMS Certification Number 250078, was counted as a rural emergency hospital when it was not one [1]. Because Medicare’s fiscal-year rate setting excludes those facilities, its claims and wage data were left out of the FY 2027 calculations, and CMS spent the last three days of September publishing five correction notices to put them back [1, 2, 3, 4, 5].

What changed

All five corrections take effect October 1, 2026, the first day of fiscal year 2027 [1, 2, 3, 4, 5]. CMS published the hospital inpatient (IPPS) and long-term care hospital correction on September 29, the skilled nursing facility (SNF) and hospice corrections on September 30, and the inpatient rehabilitation facility (IRF) and inpatient psychiatric facility (IPF) corrections on October 1 [1, 2, 3, 4, 5].

The rural emergency hospital category, created by Congress in December 2020, is open to critical access hospitals and to rural hospitals with no more than 50 beds that give up acute inpatient care [11]. CMS’s FY 2027 inpatient rule excludes such hospitals, including those that converted after the data period, from the MS-DRG relative weights, the standardized amount and the wage index [1]. Hospital 250078 had not converted [1].

Restoring it moved the numbers by small amounts. The count of Medicare discharges used to set FY 2027 relative weights rose from 6,961,093 to 6,967,557 [1, 6]. The unadjusted national average hourly wage fell from $58.89 to $58.88 [1]. CMS also fixed a second error, an Ohio hospital (CCN 360068) wrongly treated as rural after it had canceled its rural reclassification [1].

The corrected inpatient figures, by payment system:

• IPPS: the outlier fixed-loss threshold is $49,331, not $49,346, and the capital federal rate is $539.95, not $540.03 [1]. Restored data also make hospital 250078 eligible for disproportionate share and uncompensated care payments, which required recalculating Factor 3 for every DSH hospital [1].
• LTCH: the standard federal payment rate is $52,126.94, down from $52,132.76 [1].
• IPF: the per diem base rate is $912.13, down from $912.40; the electroconvulsive therapy (ECT) payment per treatment is $688.38, down from $688.59 [4].
• IRF: the standard payment conversion factor is $19,866, down from $19,868, and the outlier threshold is $8,856 [3].

Who it affects

Facilities, first. The SNF, IRF, IPF and hospice systems all build their wage indexes from the IPPS pre-floor, pre-reclassified wage data, so the one omission carried into each of them [2, 3, 4, 5]. For hospices, CMS recalculated wage index values for every core-based statistical area and rural area, plus national rates for each level of care [5].

SNFs see the smallest effect. CMS moved the SNF wage index budget neutrality factor from 0.9989 to 0.9988 and reissued its rate tables, but said the impact estimates “are not affected at the displayed level” [2]. The July rule projected an increase of about $882.74 million, or 2.4%, in SNF Part A payments for FY 2027 [8].

One psychiatric provider in the Hattiesburg, Mississippi, wage area gets a corrected wage index, because the restored hospital’s data feed that labor market [4]. CMS also restated the largest estimated IPF decrease as 1.3% for facilities in the East South Central region, where it had listed 1.1% for those with 25 to 49 beds [4, 9]. The July rule projected a 2.3% net increase in IPF payments overall [9].

Hospital coders face a separate set of fixes. The FY 2027 inpatient rule listed 101 new ICD-10-PCS procedure codes; CMS’s errata adds two more, XW0U3CC and XW0U4CC, for percutaneous and percutaneous endoscopic introduction of recombinant human bone morphogenetic protein-2 with collagen scaffold into joints [1, 10]. That brings the FY 2027 procedure code set to 79,258 [10].

What ICD-10 codes change on October 1, 2026?

On the diagnosis side, the inpatient final rule counts 74,879 ICD-10-CM codes for FY 2027, up from 74,719, with 30 codes becoming invalid on October 1 [6]. The procedure side shows 103 new codes, 3 revised titles and 38 deleted codes [10].

The September 29 correction also fixes a typo that matters to anyone coding rheumatology: the code for adult-onset Still’s disease is M06.1, not M06.10 as the rule’s tables had shown [1]. The IPF correction separately raises, from 10 to 20, the number of ICD-10-CM diagnosis codes added to the IPF poisoning comorbidity list [4].

For new technology add-on payments, the Infuse bone graft now qualifies through any of the three XW0U codes for its open, percutaneous and percutaneous endoscopic approaches, in combination with the procedure codes listed in the rule [1]. CMS says the two added codes are non-operating-room procedures that do not change MS-DRG assignment [10].

What it means for your practice

If you bill only under the physician fee schedule, these notices do not change your rates. That schedule runs on a calendar year, and this site covered the proposed 2027 fee schedule in July. What reaches your practice is the code set and, if you work in rehab or psychiatric units, the facility rules your documentation supports.

The IRF rule tightens therapy timing from today. The FY 2027 IRF rule, effective October 1, requires that all therapy treatments or therapy evaluations, not only one discipline, begin no later than 36 hours from midnight on the day of admission [7]. CMS’s example: a patient admitted at 2 p.m. Tuesday must have every ordered therapy started by 12 p.m. Thursday [7]. Therapies a rehabilitation physician orders after that window are outside the requirement [7]. The rule also requires the initial interdisciplinary team meeting within 4 days of admission, matching the plan-of-care deadline [7]. This site’s September 21 report showed how rehab admission documentation fares in an audit; CMS says it determines 36-hour compliance by auditing IRF medical record documentation [7].

Psychiatric units get slightly lower base figures. The ECT per-treatment amount and the day-one emergency department adjustment are paid to the facility under the IPF system; CMS also corrected the adjustment factor for IPFs without a qualifying emergency department from 1.27 to 1.28 [4, 9].

Surgeons using the Infuse product should know the facility’s coders now have three qualifying codes, not one [1, 10].

What to do now

1. Update code files. Load the FY 2027 ICD-10-CM and ICD-10-PCS sets with the errata codes for services on or after October 1 [6, 10].
2. Fix the Still’s disease mapping in templates and problem lists to M06.1 [1].
3. Rebuild IRF admission workflows around the 36-hour clock and the 4-day team meeting, and make sure the preadmission screening reflects every therapy you expect to order at admission [7].
4. Recheck rate models. Any contract model or budget built on the July or August IPF, IRF, LTCH or IPPS figures should use the corrected numbers [1, 3, 4].

The policy fight

The corrections themselves drew no dispute in the public record; CMS issued all five without notice and comment. It argued in each that the notices fix technical errors rather than make rules, and that delay would be contrary to the public interest because providers should “receive appropriate payments in as timely a manner as possible” [1, 4].

The IRF therapy rule was contested in comments. Commenters asked how “midnight on the day of admission” is defined and whether an evaluation started but not finished in 36 hours would count [7]. Some urged CMS to let physician assistants perform rehabilitation physician duties, saying the requirement adds to physicians’ burden, and another asked that recreational therapy count [7]. Several sought flexibility for smaller IRFs and those short on staff [7].

CMS declined each request. It said it “did not propose to allow for flexibilities and are not finalizing any such flexibilities,” and that IRF claims for patients who cannot tolerate an intensive program “may be denied” [7]. On PAs and recreational therapy, CMS said it will keep monitoring both [7]. It left one door open: CMS “will continue to consider other exceptions to the 36-hour requirement and may propose them in future rulemaking” [7].