Washington, D.C. — The federal agency that oversees Medicare just put long-term care hospitals on notice: a modest pay bump is coming, but so are tougher rules governing who gets to train the next generation of nurses.
The Centers for Medicare & Medicaid Services released its proposed rule for fiscal year 2027 on April 10, updating payment rates and policies for both inpatient hospitals and long-term care hospitals (LTCHs) — the specialized facilities that serve patients too sick for a standard acute care stay but not quite ready for a skilled nursing facility.
What the Numbers Say
For LTCHs, CMS is proposing a 2.4% increase to the standard federal payment rate, pushing it to $52,177.04 per discharge. Total LTCH payments would rise by roughly $55 million, or about 2.3%. That sounds like a win — and for operators who consistently submit quality data, it is. But facilities that fail to meet quality reporting requirements would receive just a 0.4% update. That’s a gap of two full percentage points, and it’s intentional.
On the inpatient hospital side, CMS proposes a 2.4% increase as well, reflecting a 3.2% market basket update minus a 0.8% productivity adjustment. All told, the agency expects total IPPS payments to rise by roughly $1.9 billion.
Comments on the proposed rule are due June 9, 2026.
The DEI Ban Nursing Homes Should Know About
Buried in the rule is a proposal that has nothing to do with rates — but could reshape who fills nursing home jobs for years to come.
CMS is proposing to prohibit residency and nursing education programs that receive Medicare reimbursement from discriminating or promoting discrimination on the basis of race, color, national origin, sex, age, disability, or religion. The agency is explicit that this means programs can’t use DEI criteria in selecting residents, allocating resources, or granting opportunities.
The rule would take effect October 1, 2026, if finalized.
It’s consistent with an executive order signed in April 2025 directing federal agencies to scrutinize diversity programs in graduate medical and nursing education. For long-term care facilities that partner with training programs or help fund nursing pipelines, this is worth watching closely. The nursing workforce is already stretched thin — industry reports show the country could be short nearly 250,000 licensed practical nurses by 2038, a shortage that will hit nursing homes hardest.
LTCHs Are Already Under Pressure
This proposed rule lands at a difficult moment for the long-term care hospital sector. More than a quarter of the nation’s long-term care hospitals have closed in recent years, and industry groups have been pressing Congress for relief — arguing that payment structures haven’t kept pace with the cost of caring for the most medically complex patients.
A 2.4% bump is something. It’s not everything. The comment window is open through June 9, which gives operators, advocacy groups, and nursing education programs six weeks to weigh in before the rule moves toward finalization.
