CMS Finalizes FY 2026 Skilled Nursing Facility Payment Rule: Key Updates Announced
The Centers for Medicare & Medicaid Services (CMS) has published its final rule for the Fiscal Year 2026 Skilled Nursing Facility Prospective Payment System (PPS), which contains modifications in the Medicare payment policies and quality programs covering skilled nursing facilities in the country. The last regulation that was issued in the Federal Register [CMS-1827-F] has considerable payment rates, value-based purchasing, and reporting changes on quality.
SNF PPS ( Payment Update )
CMS has completed a 3.2 percent adjustment in SNF PPS payment rates that would increase Medicare payments to SNFs by an estimated 1.16 billion, compared to FY 2025. This growth is based on a 3.3 percent market basket adjustment, 0.6 percent forecast error, and 0.7 percent productivity adjustment. Such numbers do not include the potential decreases in some facilities based on the SNF Value-Based Purchasing (VBP) Program that will amount to 208.36 million dollars.
ICD-10 Code mapping PDPM Revisions
In accordance with the Patient-Driven Payment Model, which was announced in FY 2020, CMS completed 34 ICD-10-CM code mapping updates. The changes are intended to improve primary diagnoses of skilled care to be more accurate and clinically appropriate, and consistent with the most recent ICD-10-CM coding recommendations.
SNF Value-Based Purchasing (VBP) Program
CMS will still retain 2% of what is paid out by SNFs on their part A Medicare dollar to finance the SNF VBP Program, and then redistribution performance will be based on 50-70 percent of what is withheld. Some of the updates are as follows:
- Elimination of the Health Equity Adjustment as a part of the scoring methodology.
- A new reconsideration process is to be adopted in which SNFs can appeal the decision made by Review and Correction.
- The dates of implementing the FY 2028 and FY 2029 program year performance standards.
- The existing scoring methodology of the SNF Within-Stay Potentially Preventable Readmission (WS PPR) measure is one phase of the program that will continue to be applied in FY 2028 and beyond.
SNF QRP (Quality Reporting Program) Changes
The SNFs that do not report under the QRP are liable to a 2 percent reduction in their Annual Payment Update. These four SDOH data elements will be deleted by CMS as part of the Minimum Data Set (MDS), beginning effective October 1, 2025, including two data elements related to food and one each related to living situation and utilities.
CMS also completed the process of revising its reconsideration policy to enable SNFs to apply extensions to reconsideration requests and expand the reasons to request reconsideration. The agency also provided an overview of the stakeholder responses to RFIs covering future quality indicators, digital reporting innovations, and interoperability enhancement.
Seek Public Input
CMS is seeking ongoing stakeholder feedback on regulatory simplification and reduction of administrative burden with a standalone Request for Information (RFI), available at CMS Regulatory Relief RFI. The comments should be submitted by September 15, 2025.
More Information
This last regulation is seen to be an onward step of CMS to increase the accuracy of payment as well as quality improvement, and a decrease of regulatory burden within the SNF industry. The updates will come into force as of October 1, 2025.
