What the FY2027 Medicare rates do to your inpatient revenue
We take the Medicare cases your hospital actually treated in 2024 and price them twice: once at FY2026 rates, once at FY2027 rates. Same cases both years, so every dollar of change is CMS policy, not your volume.
FY2027 is priced from the final rule, CMS-1849-F, published August 4, 2026. CMS has not released the FY2027 pricer yet, so these rates come from our own engine and will be reconciled against the pricer when it lands. Two inputs do not exist yet for anyone: CMS announces the calendar 2027 Part A deductible in November 2026, and posts final readmission factors in the autumn. Both are carried as estimates and both are yours to override in Scenarios.
This is the modeled number. The real one lives in your cost report.
The bridge from FY2026 to FY2027
Payment components
The MS-DRGs that move your number
Biggest gains
Biggest losses
By service line
The same dollars, grouped into the Major Diagnostic Categories CMS pays by. A code list tells you what moved. This tells you who owns it.
What actually reaches the bank
Every MS-DRG, line by line
Exactly what CMS published for this hospital, unscaled. CMS withholds any MS-DRG with fewer than 11 discharges, so at most hospitals this is not the whole book and these rows will not add up to the headline. Coverage above gives both figures.
Click any column heading to sort by it. The CSV carries whichever rows are on screen, on the payment layer selected at the top of the page.
Every number on this page, and the arithmetic behind it
No figure here is a black box. Each one below says what it is, how it is calculated, and what it is good for. Where a number is an estimate, it says so.
The three payment layers
Operating base DRG
What it is. The core MS-DRG payment on its own. No disproportionate share, no teaching add-on, no capital, no charity care, no quality adjustment, no hospital-specific rate.
How it is built. The federal standardized amount, split into its labor and non-labor shares, with the labor share multiplied by your wage index and the non-labor share by your cost-of-living adjustment, all multiplied by the DRG's relative weight.
Use it for the cleanest read on what CMS did to rates and weights, with every hospital-specific adjustment stripped out. One warning: at a Sole Community or Medicare-Dependent hospital this layer hides the hospital-specific rate, so it can look healthy while the payment that actually arrives falls.
Add DSH, teaching, capital and quality
What it is. The operating base plus every hospital-specific adjustment except charity care. This is your DRG business as CMS actually prices it for you.
How it is built. Operating base, plus disproportionate share and the indirect medical education add-on (both proportional to the operating base), plus capital (the federal capital rate times weight, geographically adjusted), plus your quality adjustment, plus the hospital-specific rate where it pays more than the standard calculation.
Use it for a read on the DRG business without charity care distorting it. At a safety-net hospital the charity care payment can swamp every other signal on the page.
All-in payment
What it is. Everything this model prices for a discharge, including the uncompensated care payment.
How it is built. The layer above plus charity care. Charity care is a flat dollar amount per discharge, identical on every MS-DRG at one hospital, set by CMS from your reported uncompensated care rather than by what you treat.
Not included anywhere on this page: outlier payments, transfer-policy adjustments, new-technology add-ons and pass-through payments. Those are claim-level and cannot be modeled from a public annual file.
The headline tiles
FY2027 revenue
What it is. What your 2024 caseload would be paid at the new year's rates.
How it is built. For every MS-DRG, your 2024 discharge count times the modeled payment for one discharge of that DRG at your hospital, added up, then scaled to CMS's own total discharge count.
Why it is scaled. CMS withholds any MS-DRG with fewer than 11 discharges at a hospital, so the published rows are only part of your book. The DRG-side payment moves with relative weight, so it is scaled up on a case-mix-weighted basis. Charity care is not scaled, because CMS publishes it as an annual amount and that figure is carried as published. When the tile is labelled EST, the percentage shown is how much of your weighted volume CMS published.
Change vs FY2026
What it is. The same caseload priced at the new rates minus the same caseload priced at the old ones.
How it is built. New-year revenue minus prior-year revenue. The discharge counts are identical on both sides, so volume cancels out completely and what is left is rate, weight and policy. This is the whole point of the tool: it is not a forecast, it is a repricing.
Payment per discharge
What it is. The average payment for one case.
How it is built. Total revenue divided by CMS's own discharge count, not by the published subset. It moves when your case mix moves as well as when rates move, so read it next to case mix drift rather than on its own.
Case mix drift
What it is. How much CMS reweighting alone changed the average complexity of work you already do.
How it is built. Case mix index is discharges times each DRG's relative weight, divided by discharges. It is calculated twice on the identical 2024 caseload, once with each year's weights, and the percent change is the drift. The patients are the same patients. Any movement is CMS changing the weights, not your hospital changing what it treats.
Rank in your market, and national rank
What it is. Where your percent change falls against other hospitals, first by CBSA wage-index market and then against every hospital in the file.
How it is built. Sort by percent change, largest gain first, and take the position. Read the market rank with care: it is unweighted, so a 60-case specialty hospital counts the same as a 6,000-case academic centre. The market table below the rank shows volume alongside every peer for exactly that reason.
Modeled vs actually paid
What it is. A sanity check on the engine, not a finding about your hospital.
How it is built. Prior-year modeled revenue divided by what Medicare reported actually paying you in 2024, using only the MS-DRGs CMS published so both sides are like for like. It runs above 1.00 by design, because the reported figure is net of the Part A deductible and the sequestration withhold and the modeled figure is gross. The tile also shows the net comparison with both taken off, which is the number to judge the fit by. The year-over-year change is unaffected either way, because the same offset sits in both years.
Volume to hold FY2026
What it is. How much more volume it would take to finish the new year with the same revenue as the old one.
How it is built. Prior-year revenue divided by new-year revenue, minus one. It assumes the extra cases arrive in your existing mix. It is a revenue break-even, not a margin break-even. It knows nothing about what those extra cases cost to treat.
The bridge
DRG weight recalibration
What it is. The share of the change caused by CMS moving the relative weights on the DRGs you bill.
How it is built. For each DRG, discharges times the change in relative weight, priced at the prior year's rate per unit of weight. Holding the rate at last year isolates the weight move on its own. Note that CMS applies a budget-neutrality factor to keep total spending flat and that factor lives inside the standardized amount, so it lands in the rate line below rather than here.
Rate, wage index and policy
What it is. Everything else. The standardized amount update, your wage index move, policy changes, and the interaction between rate and weight.
How it is built. For each DRG, discharges times the new year's weight times the change in payment per unit of weight. When this line is large, look at your wage index before looking anywhere else. It is the single most volatile input on the page and it is set by where you are, not by what you do.
Charity care, hospital-specific rate, quality adjustments
What they are. Three pieces shown separately because none of them scales with DRG weight, so folding them into the rate line would misattribute the cause.
How they are built. Charity care is the change in the published annual amount. The hospital-specific rate is the Sole Community and Medicare-Dependent payment, which only appears where it pays more than the standard calculation. Quality is your combined value-based purchasing and readmissions factor applied to the operating base.
Interaction and residual
What it is. The arithmetic remainder, shown rather than hidden.
How it is built. Total change minus the named pieces above. A bridge that decomposes a product into additive parts always leaves a cross-term. Publishing it is the honest option; a bridge that ties exactly to the penny has usually had the remainder quietly folded into the largest bar.
Service lines, scenarios and coverage
Service line (Major Diagnostic Category)
What it is. CMS assigns every MS-DRG to a Major Diagnostic Category, broadly a body system. Grouping the per-DRG change this way is the same money as Winners and losers, sorted the way a hospital is actually run.
How it is built. The published per-DRG rows summed by MDC, sorted by absolute dollars so a service line quietly shedding money ranks alongside one that is gaining. The percentage beside each line is that line's own year-over-year change. These are published rows only and unscaled, so they sum to the Winners and losers total rather than to the headline. Two categories are not body systems: the pre-MDC group that CMS assigns before body system (transplants, ECMO, tracheostomy), and the unrelated-O.R.-procedure group that has no MDC by construction.
Net receipts, the deductible and sequestration
What it is. The priced amount turned into money that reaches the bank.
How it is built. Gross revenue, minus one Part A deductible for every discharge in CMS's count, then 2% off the remainder for sequestration. The new-year deductible is an estimate, because CMS does not announce the calendar figure until November. Both boxes are yours to override.
Coverage, and why the tables do not add up to the headline
What it is. The gap between what CMS published for you and what you actually treated.
How it is built. CMS withholds any MS-DRG with fewer than 11 discharges at a hospital, to protect patient privacy. At a small hospital that can be most of the book. The per-DRG tables on this page show exactly what CMS published and nothing more, while the headline is scaled to CMS's own discharge count. That is the difference, and Coverage gives both figures for your hospital.
Retired MS-DRGs and the crosswalk
What it is. Codes CMS retired for the new year, which therefore have no new-year weight to price against.
How it is built. Most tools drop these cases silently. This one maps each retired code to its replacements and reprices it, and every figure that depends on the mapping is labelled an estimate wherever it appears. Coverage lists which of your codes are affected and what the estimate is worth.
Two inputs on this page do not exist yet for anyone. CMS announces the calendar 2027 Part A deductible in November 2026 and posts final readmission adjustment factors in the autumn. Both are carried forward as stated estimates and both are yours to override in Scenarios.
The numbers are free. The plan is the work.
A3HCS helps hospitals turn rate shifts into service-line strategy, payer positioning and margin protection. Get the board-ready brief for your hospital, or talk to us.
Talk to A3HCSYour board-ready brief
One printable page: your FY2027 number, what is driving it, and the board notes. Tell us where to reach you and it opens immediately.
Caseload: CMS Medicare Inpatient Hospitals by Provider and Service, 2024. Rates: FY2026 (CMS-1833-F) and FY2027 (CMS-1849-F) IPPS final rule standardized amounts, Table 5 relative weights, and per-provider factors from the CMS impact files (wage index, teaching, DSH, capital, uncompensated care, hospital-specific rates, quality adjustments). Payments are modeled gross amounts and exclude outlier, transfer and short-stay payments, the low-volume adjustment, new-technology add-ons and pass-through amounts. Traditional Medicare fee-for-service only. The FY2027 Part A deductible and readmission factors are estimates until CMS publishes them. Estimates, not advice; verify against primary sources. Independent analysis by A3HCS. Not affiliated with CMS. Read the full methodology, validation and terms →