HHS's Increasing Focus on Sepsis: Agency Action to Monitor in 2026

On April 10, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2027 Inpatient Prospective Payment System (IPPS) proposed rule, setting out the agency's intent to expand the Hospital Readmission Reduction Program to include sepsis. If the proposal is adopted, CMS will track the rate at which Medicare Fee-for-Service or Medicare Advantage beneficiaries aged 65 years and older who were discharged with a principal diagnosis of sepsis are readmitted to an acute care hospital for any cause within 30 days. Hospitals with excessive readmission rates would see payment reductions effective FY 2029. Notably, CMS would rely on Sepsis-2 criteria if the proposal is adopted.

Additional agency input regarding sepsis is expected this year from the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). CMS has continued to apply Sepsis-2 criteria for Medicare claims, despite many payors' adoption of the more restrictive Sepsis-3 criteria. HHS-OIG is slated to publish a study this year analyzing inpatient billing patterns and the costs to Medicare associated with providers using the Sepsis-2 criteria for Medicare beneficiaries.

Sepsis remains a leading cause of mortality, hospitalization, and readmission in the United States. HHS's 2026 actions signal an increased focus on sepsis that will have both immediate and long-term impacts on providers, including for Medicare Fee-for-Service, Medicare Advantage, and Commercial claims. DWT's managed care team will be monitoring these developments, including their implication for payor-provider relationships.

+++

Mark Anishchenko is an associate and Leslie Murphy is a partner in the healthcare group in the San Francisco office of DWT. For questions or more insights, please reach out to the authors or another member of our healthcare team and sign up for our alerts.