The inclusion of Medicare Advantage data in hospital quality reporting, mandatory participation in a bundled payment model and, of course, annual pay increases were common refrains among hospital groups’ submitted feedback on the administration’s proposed Inpatient Prospective Payment Systems (IPPS) rule for fiscal year 2026.

Public comments on the Centers for Medicare & Medicaid Services (CMS) proposed rule were due Tuesday.

Its top-line item: a 2.4% pay raise for inpatient hospitals in the coming fiscal year, which is comprised of a 3.2% projected hospital market basket update that’s reduced by a 0.8 percentage point productivity adjustment. The CMS said in April when proposing the rule that hospitals’ total payments would rise by $4 billion, inclusive of a $1.5 billion projected increase in Medicare uncompensated care payments to disproportionate share hospitals.

The American Hospital Association (AHA), in its submitted comments, described the pay bump as “simply inadequate given the unrelenting financial headwinds faced by hospitals and health systems” and added that it was “particularly concerned with the inappropriately large productivity cut.”

The group pointed to a report it published in April that found a 5.1% increase in hospital expenses during 2024, which it attributed to persistent labor pressures, a jump in drug prices and rising administrative costs stemming from prior authorization. As for the productivity cut, the AHA said it’s inappropriate to use a metric that captures technology-driven productivity gains across the entire private non-farm economy and asked the CMS to use its “special exceptions and adjustments” authority to eliminate the statutory productivity cut for this year.

Similar payment concerns came from the Federation of American Hospitals (FAH), which pointed out “that CMS itself acknowledges that the total factor productivity adjustment applied to the update is more than hospitals can realize.” Also taking into account a market basket forecast that “significantly understated the actual increase in hospital costs” during the past few years, the FAH called for the agency to apply a positive adjustment “in recognition of this unique and extraordinary situation.”

America’s Essential Hospitals (AEH), hospital group-purchasing and analytics vendor Premier and provider-serving performance improvement company Vizient were among those echoing the calls for more inpatient pay.

The CMS has historically increased its proposed pay raise in the wake of this recurring feedback—in fiscal year 2025’s IPPS, for instance, the pay raise rose from a proposed 2.6% to a finalized 2.9% after industry pushback.

DSH payments also grabbed the groups’ attention. The FAH, for instance, applauded the CMS’ push to increase DSH payments, but, along with the AMA, Vizient and the AEH noted that proposed regulatory and legislative changes that came to light in recent months may boost uninsured rates beyond the proposed rule’s in-use projections. Multiple groups also called for more transparency on how the CMS calculates some portion of the DSH payments.

Quality measurement program changes were a key focus for the CMS in the proposed rule and garnered their fair share of attention from the commenting organizations. A proposal to integrate Medicare Advantage beneficiary data into certain measures, including several within the Hospital Readmission Reduction Program, earned strong pushback from the groups with recommendations that the data be analyzed to ensure accuracy and appropriateness for comparison against fee-for-service encounter data.

And, reiterating months of concerns and immediate reactions following the proposed rule’s release, the hospital and provider-serving groups voiced their “numerous concerns” with the Transforming Episode Accountability Model (TEAM)—a payment model that beginning Jan. 1 will require certain acute care hospitals to participate in episode-based payments for five common surgical procedures.

The organizations have railed against the CMS’ decision to make participation in TEAM mandatory, arguing such requirements “are disruptive to healthcare providers as alternative payment models generally require significant planning for success and these steps may not be feasible for all types of providers,” as Vizient said in its most recent comments.

The AHA made its opposition explicit, choosing to submit its criticisms of TEAM in a 20-page letter separate from its other IPPS comments. While the decision to make TEAM mandatory remains the group’s “primary” issue, it outlined other modification recommendations including a low-volume threshold exempting participation within individual episode categories, removing primary care referral requirements, adding more variables to the model’s risk adjustment methodology such as illness severity and prompting data provision for participants ahead of the performance period.

“AHA and its members support innovative payment models that improve quality and lower costs,” the group wrote. “However, we continue to be concerned that TEAM does not meet these desired goals and may, in fact, hamper access to care by overburdening providers who do not have the infrastructure or population to be successful in this model, the way it is currently designed.”

The CMS typically releases the IPPS final rule around early August.