How 57 Hospitals Get the Full Market Basket

CMS issued a change request on Thursday that revises no manual section, carries no attachments, and lists its provider education as "None."

It contains two numbers.

$310,707 and $304,492.86, the second being the first with the 2 percent Medicare sequester taken off. Transmittal 14017 tells the shared systems to put the smaller figure on every rural emergency hospital's remit, on the last day of every month, starting January 1.

That is the whole of CY2027 payment policy for a Medicare provider type. No rule proposed it, no comment period preceded it, and the only people who had to do anything about it work on the Fiscal Intermediary Shared System.

The One Line That Moves

Run the four editions of this change request side by side and the business requirement is word-for-word identical every year. Only the calendar year and the dollar figure change.

• CY2024: Transmittal 12373, issued November 22, 2023, $281,871 before sequestration.
• CY2025: Transmittal 12964, issued November 15, 2024, $291,455.
• CY2026: Transmittal 13536, issued December 22, 2025, $301,073.
• CY2027: Transmittal 14017, issued October 22, 2026, $310,707.

All four say "PROVIDER EDUCATION: None." All four say "CHANGES IN MANUAL INSTRUCTIONS: N/A."

The one thing that did move this year is the clock.

Last year's number landed 10 days before it took effect, which is no use to anyone building a budget. This year's landed 71 days out.

So if you run an REH and your CY2027 model still carries the CY2026 facility payment, the gap is $9,441.32 a month after sequestration, $113,295.84 for the year. The full-year figure to book is $3,653,914.32.

Where the 3.2 Percent Comes From

The update rule sits at 42 CFR 419.92(b)(2), and it is one sentence: each year's annual facility payment is the prior year's amount "increased by the hospital market basket percentage increase as described under section 1886(b)(3)(B)(iii) of the Act."

The arithmetic checks to the dollar. 272,866 times 1.033 is 281,871. Times 1.034 is 291,455. Times 1.033 is 301,073. Times 1.032 is 310,707.

Those four factors are the FY2024 through FY2027 hospital market baskets, raw. 3.3, 3.4, 3.3, 3.2.

Now compare what an actual inpatient hospital got in the same four years. FY2027's IPPS impact appendix puts it plainly: "the 2.3 percent applicable percentage increase to the standardized amount (reflecting the 3.2 percent market basket rate-of-increase reduced by the 0.9 percentage point productivity adjustment)."

Here's the catch. Section 1886(b)(3)(B)(iii) is only the index.

The productivity cut lives in a different clause, 1886(b)(3)(B)(xi)(II), and it applies wherever a statute reaches over and bolts it on. The REH clause never reaches.

"How much is a cross-reference that stops one subparagraph early actually worth?"

Watch the OPPS side do it the other way. The CY2027 proposed rule defines the OPD fee schedule increase factor as "equal to the market basket percentage increase applicable under section 1886(b)(3)(B)(iii) of the Act," the exact same pointer, and the very next regulatory sentence says it "is reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act." CMS proposed 2.4 percent for CY2027 on that basis.

Same index, same subparagraph, two answers (chart below).

And the two answers are drifting apart, because the productivity adjustment itself keeps growing: 0.2 points in FY2024, then 0.5, then 0.7, then 0.9.