Ahead of the new year, providers working in skilled nursing facilities (SNFs) are paying attention to how changes made by the Centers for Medicare and Medicaid Services (CMS) to practice expense methodologies (PE) will affect their bottom line. The changes to PE are in the Calendar Year 2026 Medicare Physician Fee Schedule Final Rule released in the fall.

This new PE methodology will see medical providers rounding on SNF residents receive a lower PE-adjusted reimbursement by recognizing greater indirect costs for practitioners in office-based settings compared to facility settings, like SNFs.

What it boils down to is that doctors who take care of long-term care patients received an increase for 2026 but nurse practitioners and other clinicians who take care of short-stay patients actually saw a reduction compared to compensation from last year. 

CMS said it did this “to better reflect current clinical practice. . .The original allocation methodologies assumed physicians maintained separate practice locations even if they furnished some care in hospitals.”

The agency noted that “since the methodologies were established decades ago, there has been a steady decline in the number of physicians working in private practice, with a corresponding rise in physician employment by hospitals and health systems. Therefore, we believe that the allocation of indirect costs for PE RVUs [relative value units] in the facility setting at the same rate as the non-facility setting may no longer reflect contemporary clinical practice.”

Provider Weighs In

How this rule change will work in the real world is what concerns Comprehensive Rehab Consultants (CRC), a provider of physiatry and psychiatry services to long-term care facilities (SNFs). Physiatry is a branch of medicine that aims to enhance and restore functional ability and quality of life to those with physical impairments and disabilities.

For SNFs, a physiatry clinician works in collaboration with the facility’s team to address barriers to therapy and ensure progress toward functional goals. Physiatry clinicians are experts in neuromusculoskeletal and disabling conditions including pain management.

Justin Molignoni, NP, is the clinical lead for CRC, and he says there has been plenty of push back from the post-acute care community around the new way CMS is thinking on PE methodology.

“CMS this time around is thinking that many providers have gone to work for larger groups rather than outside the practice setting. This may be true for hospitals but not for long-term care or skilled nursing,” he said.

Team Care Is ‘Knocked Out’

For reimbursement for groups like his, the change builds up over time and ends up costing real money. “When you look at a medical practice, you see 20 to 30 people a day, so even a 2 percent reduction in reimbursement over the course of 12 months per provider is a large deal,” Molignoni said.

For CRC and other providers working in LT/PAC buildings, the move by CMS is counter-intuitive to the agency’s TEAM initiative, which is designed to form a collaborative effort to keep residents from being readmitted to hospitals.

“If they are not well enough to go home, they need a team of doctors, like in nursing homes they will see experts in cardiology or nephrology, in an effort to keep them out of hospitals. This change impacts that by giving no incentive to bring in outside providers. They knocked the stool right out of that thought process,” he said.

In the Transforming Episode Accountability Model (TEAM), selected acute care hospitals coordinate care from surgery through 30 days post-hospitalization for people with original Medicare undergoing one of five surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.

TEAM is a mandatory model and will run for five performance years from Jan. 1, 2026, to Dec. 31, 2030, in selected areas nationwide.

Providers Move Forward

Molignoni notes that CRC will continue to perform well in its business plan, with its balance of services and sites of care despite the CMS reimbursement change. In looking at SNFs, he does think the PE methodology change will be a challenge for others.

“When an individual with complex medical needs such as dialysis, it may be difficult. Doing the dialysis onsite at SNFs has gained so much traction and really improved outcomes and management; however. you’re now disincentivizing providers to round at the building and incentivizing them to have the patient care outside of the building,” he said.

Getting a resident transported to care then will be the problem of course since transportation is not covered by CMS. “It is really an incredibly compounding issue and will cost CMS more in the long- and medium- term than the savings they see from any other changes,” Molignoni said.

Questions or comments? Contact Patrick Connole at pconnole@parkplacelive.com.