SDoH and health equity changes between the 2026 proposed and final rules
August 28, 2025 | Michelle Badore and Tiffany Harman
In our previous blog, we explored the IPPS proposed rule for fiscal year (FY) 2026. The Centers for Medicare & Medicaid Services (CMS) sought to remove indicators related to health equity and social determinants of health (SDoH) from quality reporting and payment models. There is now a notable shift between the proposed and final rules, with many equity-centered proposals not finalized. This development may indicate a change in policy direction from previously proposed rules.
Health equity analyses
The proposed rule included annual health equity analyses of utilization management policies and procedures. However, the final rule did not finalize these proposals. CMS explicitly deferred the requirement for plans to perform detailed health equity analyses.
SDoH and reporting in inpatient and post-acute settings
In the proposed FY 2026 rule, CMS sought to remove SDoH and health equity measures from key inpatient and post-acute quality programs. Measures such as “Screening for Social Drivers of Health,” “Screen Positive Rate” and “Facility Commitment to Health Equity” were proposed for removal from the Hospital Inpatient Quality Reporting (IQR) and Prospective Payment System Exempt Cancer Hospitals Quality Reporting (PCHQR) programs. For long-term care and inpatient rehabilitation facilities, CMS proposed removing several individual SDoH data elements like living situation, food and utilities, and rescinding health equity adjustments in value-based purchasing. These proposed removals represent a rollback in the emphasis on capturing and reporting SDoH from previous years.
Expansion of SDoH screening in outpatient settings
Separately, CMS is expanding SDoH efforts in outpatient programs, which are independent of the Medicare Advantage/Part D final rule. Starting this year, SDoH screening in outpatient settings will be voluntary and will become mandatory in 2026. This applies to programs like Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR). The screenings will cover domains such as food insecurity, housing instability, transportation, utilities and personal safety.
A summary table of changes between the proposed and final rules is below:
| Focus area | Proposed rule for 2026 | Final rule outcome |
|---|---|---|
| Annual health equity analysis | Required for utilization management | Not finalized |
| SDoH measures in inpatient settings | Removed in proposed inpatient/post-acute reporting programs | Suggesting removal, not part of final rule |
| SDoH screening in outpatient settings | Expanded (voluntary → mandatory) | Proceeding separately—not within Medicare Advantage/Part D rule |
FY2026 updates to Z59 and Z63
New Z59.86 codes have been introduced to address financial insecurity, expanding to Z59.861 Financial insecurity, difficulty paying for utilities, Z59.868 Other specified financial insecurity challenges, and Z59.869 Financial insecurity, unspecified.
The increased detail under Z63 reflects a broader effort by CMS to improve the specificity of SDoH coding. This allows healthcare providers to more accurately document a patient's circumstances and demonstrate the impact of social factors on their care.
While specific new codes were not available in the search results, the broader updates highlight new documentation areas, which include:
- Caregiver burnout: Allows for specific coding to identify problems stemming from the patient's primary caregiver
- Financial stress: Better documentation of financial circumstances affecting a patient's health and treatment
- Unstable housing: Adds granularity for housing-related issues
These codes under Z63 provide a more comprehensive picture of a patient's social support, which is often a critical element of their overall well-being.
The bottom line
SDoH reporting requirements are expanding under separate regulatory channels in outpatient settings, though that is not part of the Medicare Advantage/Part D final rule. CMS moved forward with fewer health equity and SDoH-related mandates in the final Medicare Advantage/Part D rule for calendar year 2026, stepping back from proposals to require equity analyses and remove burdensome SDoH items, and did not finalize major equity-related measures in this rulemaking. However, while the decrease in SDoH reporting may lessen administrative work, social determinants of health remain relevant to readmissions, adherence to care plans, and overall patient outcomes. Instead of SDoH metrics, CMS has released a Request for Information for well-being and nutrition, though it is not yet clear how this will account for broader social risk factors previously measured by hospitals.
FY 2026 IPPS Proposed Rule Home Page
FY 2026 IPPS Final Rule Home Page
Michelle Badore is an international content development manager at Solventum.
Tiffany Harman, RN, MSN, is the global coding and clinical content manager at Solventum.
