On July 16th, 2025, the Centers for Medicare & Medicaid Services (CMS) released the CY 2026 Outpatient Prospective Payment System (OPPS) Proposed Rule, which includes a significant update to the methodology used to calculate the Overall Hospital Quality Star Rating. These changes are designed to address long-standing concerns about hospitals receiving high overall ratings despite underperformance in patient safety measures.
What's Changing?
CMS is proposing a two-stage update to the Star Rating methodology, with both stages focused on elevating the importance of the Safety of Care measure group:
Stage 1
- Applies to 2026 CMS Star Scores
- Hospitals that fall into the lowest quartile for the Safety of Care measure group will be capped at a maximum of four stars—even if their overall performance would otherwise qualify them for five stars.
Stage 2
- Applies to 2027 CMS Star Scores and all future years
- Hospitals that fall into the lowest quartile for Safety of Care will receive an automatic one-star reduction in their overall rating, with a minimum possible rating of one star.
- This methodology will fully replace the Stage 1 methodology
These changes are meant to reflect CMS’s commitment to ensuring that patient safety is not overshadowed by strong performance in other domains. The agency aims to prevent scenarios where hospitals with poor safety records still achieve top-tier ratings.
Why These Changes Matter to You
1. Your Hospital Could Drop a Full Star Level in 2026 or 2027
- The proposed methodology changes could have a substantial impact on hospitals’ public reputations and reimbursement strategies. For organizations that have historically performed well overall but struggled in safety metrics (hospital acquired infections [HAIs], PSI-90, or Hip and Knee surgical complications), these changes could result in a visible drop in star ratings
- Hospitals currently have access to all publicly available national and hospital-specific data needed to determine if the proposed rule will negatively impact their future star scores
2. Hospital Acquired Infection Scores May Undergo Another Big Change This Year
- The CDC’s National Healthcare Safety Network (NHSN) is currently implementing a comprehensive rebaseline of HAI metrics using 2022 data, representing the first major update since the 2015 baseline. According to the CDC’s progress tracker, as of May 2025, only 7% of the 2022 rebaseline models are available in NHSN, with the majority of HAI reports still under development.¹ This rebaseline project involves:
- Updating risk adjustment models for all major HAIs
- Incorporating seven years of healthcare evolution since the 2015 baseline
- Reflecting changes in surveillance definitions, diagnostic testing, and prevention practices
- Accounting for the impact of COVID-19 on healthcare operations and infection patterns²
- Hospital Acquired Infection (HAI) measures account for 75% of the Safety of Care measure in CMS Stars, which comprises 22% of the Overall Hospital Quality Star Rating.³ The rebaseline activities will fundamentally alter how these infections are measured and compared, potentially creating substantial shifts in hospital performance rankings independent of actual quality improvements or declines
What You Can Do to Prepare
Hospitals should begin evaluating their current Safety of Care performance now to understand potential risks. Early mitigation strategies, such as targeted quality improvement initiatives and data-driven performance reviews, will be essential to avoid penalties under the new methodology.
The proposed rule is currently open for public comment through September 15th, 2025, with a final rule expected in early November 2025. CMS encourages hospitals to provide feedback during this period.
CMS FY2026 Final Rule Summary
The CMS FY2026 Final Rule expands Medicare Advantage inclusion, adopts ICD-10–based risk adjustment, and transitions to two-year performance periods. These updates mark a significant shift in how performance is measured and incentivized, requiring hospitals to adapt strategies for compliance, quality improvement, and long-term success.
Impact Advisors Can Help
At Impact Advisors, we are already working with clients to assess the potential impact of these changes and develop proactive strategies. If your organization would benefit from a safety domain performance review or support in preparing a public comment, we’re here to help. Contact our experts today.
References:
- CDC National Healthcare Safety Network. 2022 NHSN HAI Rebaseline Progress Tracker. Available at: https://www.cdc.gov/nhsn/2022rebaseline/progress-tracker.html. Last updated May 29, 2025.
- CDC National Healthcare Safety Network. Frequently Asked Questions Regarding the 2022 HAI Rebaseline Project. NHSN Patient Safety Component. 2024.
- Centers for Medicare & Medicaid Services. CY 2026 Hospital Outpatient Prospective Payment System Proposed Rule. 90 FR [page numbers]. July 2025.
