Committee insight: Key takeaways for CDI professionals from the 2027 IPPS proposed rule

The fiscal year (FY) 2027 Hospital Inpatient Prospective Payment System (IPPS) proposed rule was published on April 14, 2026. Since then, the ACDIS Regulatory Committee has reviewed and compiled key takeaways for CDI, coding, and quality professionals. To reference the proposed changes summarized below, the full proposed rule and tables can be accessed here.

1. Hospital Inpatient Quality Reporting (IQR) Program (p. 270–279)

IPPS payment rates are expected to increase by 2.4%. CMS predicts this increase will result in an additional 1.4 billion dollars to hospitals. Add-on payments for several new technologies will add an additional 464 million dollars. However, hospitals participating in IPPS payments must be successful in the hospital IQR program as well as be participating in meaningful use of electronic health records (EHR) to get the full rate update.

If hospitals do not meet the IQR program requirements or offer quality data, IPPS payments to those facilities will be reduced by one fourth. Targeted diseases/procedures include acute myocardial infarction (AMI), pneumonia, heart failure, chronic obstructive pulmonary disease (COPD), and coronary artery bypass graft (CABG) surgery.             

These diseases/procedures would include a hospital 30 day, all-cause, risk-standardized mortality measure set to begin FY 2028. (The CABG measure is for acute ischemic stroke post-CABG). Medicare Advantage patients will be included in the measures along with Medicare beneficiaries, and there will be a shortening of the performance period.

Also starting in FY 2028, modifications to three initiatives would include excess days in acute care after hospitalization for AMI, heart failure, and pneumonia, and the performance period would be shortened from three to two years. Medicare Advantage patients would be included in the initiatives, expanding the population affected by documentation quality. For CDI professionals, these changes showcase that accurate capture of chronic conditions, comorbidities, and severity of illness remains critical for mortality risk adjustment.

CMS also proposes to adopt three new Electronic Clinical Quality Measures (eCQM):

• Excess Days in Acute Care after Diabetes Hospitalization eCQM: Tracks acute care use (readmissions/ED visits) within 30 days post-discharge and aims to improve discharge planning and care transitions
• Advance Care Planning (ACP) eCQM: Measures whether hospitalized adults have documented advance care planning discussions or directives in the EHR
• Hospital Harm—Postoperative Venous Thromboembolism (VTE) eCQM: Captures post-operative VTE events within 30 days to shift focus from prevention processes to actual harm outcomes

CMS proposes to remove three measures starting in FY 2030 in order to shift from process measures to outcome-based measures:

• VTE–1 (Venous Thromboembolism Prophylaxis) eCQM
• VTE–2 (ICU VTE Prophylaxis) eCQM
• STK–02 (Discharged on Antithrombotic Therapy) eCQM 

For CDI professionals, eCQMs represent a critical intersection between clinical documentation and quality reporting. Accurate data capture, especially in areas like problem lists, medication reconciliation, and clinical assessments, affect eCQM metrics, which track an organization’s regulatory compliance and alignment with best clinical practices. For more information on why eCQMs matter to CDI, read this overview published by the ACDIS Regulatory Committee.

1. Hospital Readmissions Reduction Program (HRRP)

CMS proposes for sepsis to become an HRRP readmission measure beginning in FY 2029, with FY 2028 early-look reports.

“Sepsis readmissions are often preventable, highlighting the need for targeted interventions to reduce sepsis related mortality and improve post discharge outcomes including readmissions,” the proposal stated. “Readmission following a sepsis hospitalization may be a result of inadequate treatment of the initial infection, complications of hospital care, or secondary to the many challenges in implementation of care transitions and immediate post discharge care among a complex patient population.”

CMS acknowledges stakeholder concerns regarding sepsis definitions, claims-based measurement, documentation variability, and denials and coding practices. Because the measure is entirely claims-based and identifies patients through a principal diagnosis of sepsis, CDI would play a critical role in:

• Accurate sepsis identification and principal diagnosis assignment
• Complete capture of severity (severe sepsis, septic shock, organ dysfunction)
• Accurate present on admission reporting
• Comprehensive documentation of comorbidities and frailty factors used in risk adjustment

This proposal significantly increases the financial and quality-reporting importance of sepsis documentation.

1. Transforming Episode Accountability Model (TEAM) (pp. 345–354)

CMS’s Transforming Episode Accountability Model (TEAM), a mandatory five-year alternative payment model running from January 1, 2026, through December 31, 2030, is designed to reduce Medicare spending while maintaining or improving care quality for five surgical episode categories:

• Coronary artery bypass graft
• Lower extremity joint replacement
• Major bowel procedure
• Surgical hip/femur fracture treatment
• Spinal fusion

This year, CMS proposed adding three new MS-DRGs (523, 524, 525) to the spinal fusion category starting October 1, 2026, as well as episode attribution changes. CMS also proposed specific measurement periods for several TEAM quality measures and pricing methodology updates to make TEAM target prices more reflective of actual performance-year payment rules and coding changes.

1. Medicare Severity Diagnosis-Related Group (MS-DRG) classifications and relative weights (Table 5)

As part of the proposed rule, FY 2027 Table 5 includes multiple new DRGs, deletions, and code reassignments intended to better align payment with current clinical practice and resource use.

Classification edits of note:

• Cardiac pacemaker/device work: Reassigns an endocardiac pacing electrode code, delete MS-DRGs 258–262, and create new MS-DRGs 210 and 211 for cardiac pacemaker revision/device replacement
• Complex spinal fusion: Moves extensive spinal fusion-related codes into new MS-DRGs 523–525
• Knee infection cases: Deletes MS-DRGs 485–487 and create new MS-DRG 400
• Hip/knee revision and infection-related cases: Deletes MS-DRGs 466–468 and create new MS-DRG 449, plus create new MS-DRGs 403–404 for periprosthetic joint infection.
• Female reproductive malignancy surgery: Deletes MS-DRGs 736–741 and create new MS-DRGs 731–733
• Circulatory OR procedures: Deletes MS-DRG 264 and create new MS-DRGs 361–362.
• Code reassignments:
  
  • Moves an ICD‑10‑PCS code for insertion of an endocardiac pacing electrode and a key CAR‑T–related code into cardiac MS‑DRGs that have higher expected resource use
  • Deletes and recreates some MS‑DRGs (such as pacemaker and knee procedure groups) to restore clinical coherence and align severity levels with current practice patterns and costs

Overall, CMS proposes to create 14 new MS-DRGs and delete 18 MS-DRGs. Compared with FY 2026, the FY 2027 proposal shows notable weight increases in some high-cost procedure groups, especially certain wound/burn, abortion, knee, and hepatobiliary/pancreas categories.

1. Proposed additions to the MCC List/CC list (Tables 6A–6J.2)

As part of the proposed rule, FY 2027 Table 6A–6J.2 has deleted CCs, edited broad categories for more specificity, and proposed new CCs and MCCs.

Deleted CCs include housing instability/homelessness codes, and broad codes listed below that CMS added more specific codes for:

• Malignant neoplasm of endocrine gland
• Dilated and “other” cardiomyopathy
• Osteomyelitis
• <19.9 BMI

CC additions include:

• Post bariatric and other postprocedural hypoglycemia
• Other diseases of the pelvis NES
• Specified ectopic pregnancy codes
• Loeys-Dietz syndrome

MCC additions include:

• Pulmonary mycetoma
• Prevesical abscess
• Other pelvic abscess

The comment period for this proposed rule closed on June 9, 2026, and the final rule is expected in early August.

As CDI, coding, and quality departments work together to capture quality data with accuracy, keeping up with CMS regulatory requirements will inform best practices for each organization’s quality management initiatives. Each year, the ACDIS Regulatory Committee updates a quality map created to provide CDI specialists with tips, techniques, and up-to-date resources to augment their quality programs. To access the 2025 quality map, click here.

Editor’s note: This article was written by members of the ACDIS Regulatory Committee. For questions about the committee, please contact ACDIS Editor Jess Fluegel at jess.fluegel@hcpro.com.