Author: Ronald Hirsch, MD, FACP, ACPA-C, CHCQM, CHRI | October 7, 2026
Well, we are officially in fiscal year (FY) 2027, and the start of all the provisions of the 2027 Inpatient Prospective Payment System (IPPS) Final Rule. And that means all the hard work you did to reduce length of stay and increase your hospital’s case mix index (CMI) over the last year is out the window. Why is that?
Because Oct. 1 is when the Centers for Medicare & Medicaid Services (CMS) resets all the Diagnosis-Related Group (DRG) weights and the geometric mean length of stay (GMLOS). And because everyone is always trying to shorten length of stay and reduce costs, the data that CMS uses to reset the values each year suggests that patients are discharged sooner and cost less. Sometimes you just can’t win.
We are also approaching open enrollment season, when beneficiaries can switch their Medicare plans. They can go from traditional Medicare to Medicare Advantage (MA), switch to a different MA plan, or give up their MA plan and go back to traditional Medicare. But note that if they switch back to Medicare, they may not be able to obtain a supplement.
Because it is complex, many Medicare beneficiaries use insurance brokers to help pick a plan. And the Center for Medicare Advocacy issued a warning a couple of weeks ago that there are increasing reports of these brokers aggressively cross-selling other insurance products. The Center advises beneficiaries to ask questions, and urges them not to fall for high-pressure sales tactics. Help your family and friends who face these decisions understand their options.
The Center also issued a report on increasing number of cases of Medicare beneficiaries with a MA plan who reside in nursing facilities that disenroll them from the MA plan without their knowledge or consent. CMS first put out a notice about this in 2015, so it is not new, but it sure is unethical.
While there is no clear explanation given, one has to think that the facilities want to get patients back on Medicare Parts A and B so they can provide covered care like therapy services without having to go through the pain of getting authorization from the MA plan and having to submit notes every few days to get the authorization extended.
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Next, I have talked about site neutrality before. Payers want it so they don’t have to pay a hospital more for a surgery that could have been done at a lower cost to them at a surgery center or physician office. So far there is only talk in Washington. But one payer, Elevance Health, has figured out a workaround to reduce their expenditures.
They are going to start requiring that claims for services at hospital-owned facilities include the address where the service was actually provided, rather than just billing with the hospital’s information. That will allow them to adjust payment for services that were performed off-campus to the same rate they would pay an independent facility not affiliated with a hospital or health system. Just as Aetna did with their severity index plan, the payers are figuring every way they can to reduce their costs and increase their profits.
Finally, Oct. 1 marked the loss of Medicaid coverage for hundreds of thousands of immigrants who are lawfully present in the country, but do not have permanent resident status. This adds to the estimated 760,000 people who were disenrolled from their Marketplace plan by CMS a couple of weeks ago. Many of these people will end up in our hospitals needing medical care, and once again it will fall upon many of you to develop a safe and effective plan for them.
There is a bit of irony about this in that Oct. 1 also marks the start of Case Management Month, when we honor the vital contributions of case and care managers across the healthcare continuum. And I thank all of you for everything you do every day for our patients.
This article was originally published on RACmonitor.