FFY 2026 IPPS Proposed Rule: Outlier Reconciliation Changes

I. FY26 IPPS Proposed Rule Summary

II. ”Unleashing Prosperity through Deregulation of the Medicare Program”

III. National Medicare IPPS Estimates

IV. Provider Rates

V. Uncompensated Care DSH

VI. Wage Index

VII. Graduate Medical Education

VIII. Reminder: Outlier Reconciliation Changes

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Change Request 13566 finalized additional criteria for triggering Medicare outlier payment reconciliations. Effective for FFY25 cost reports (starting on/after 10/1/24) providers will be subject to outlier reconciliation when the cost to charge ratio is +/- 20 percent or more from the CCR used to make outlier payments¹². Previously, CMS required a CCR change of 10 percentage points. Please see table 6 below for an example of the change using an increase to a CCR of 30%.

Table 6 - Example of Outlier Change

Toyon’s Take

Toyon recommends providers review current CCRs calculated from FFY25 cost reports and estimate the change to FY25 CCRs for chargemaster increases and expense changes. If there is a projected change of +/- 20%, Toyon recommends reserving the potential impact of an outlier reconciliation.  Also, providers can request their MAC update their CCR anytime, regardless of the degree of increase or decease to the CCR.  For instance, if a provider has an increase to the CCR, the provider can request the MAC beginning using the new CCR before the issuance of a new Medicare rate letter.

¹²Sum of operating and capital outlier payments in the cost reporting period must also exceed $500,000.

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