Not long ago, I couldn’t wait to get my hands on the annual SNF “payment rule.” Now, I simply wonder how much friction it will introduce and how frustrated I’ll be at what’s missing.

To CMS’s credit, things are moving in a better direction in several areas. The problem is that the data infrastructure behind current policy has been distorted for decades, and there is no clean way to reset it. In a growing number of markets, there simply is not enough Medicare left to meaningfully influence performance, so it’s not primarily about the money anymore. Whatever comes out of the 2027 rule, it is more likely to signal direction than deliver correction.

Where this rule will matter is in tone. CMS now has enough experience under PDPM to see what has developed across the system. There are clear differences in coding, utilization, and outcomes across providers and markets. The incremental programs layered over the past decade are starting to converge, and this feels like the point where CMS begins to pull them together. Not abruptly, but deliberately. The direction is toward alignment, recapture, and more control over how the system behaves.

CMS Not There Yet on AI

At the same time, there is a growing issue CMS is not ready to resolve, which is the role of artificial intelligence (AI) in SNF operations. There is an obvious tension between regulatory expectations around clinical judgment and the increasing use of software to guide decisions. That tension already affects coding, care planning, and audit exposure. CMS will likely acknowledge pieces of this - documentation standards, data integrity - but not the broader implication. By the time it does, the problem will be more intricate.

Complicating this further is the quiet reality that the data CMS depends on is increasingly mediated and influenced before it reaches broader use. As access, integration, and interoperability become commercial considerations rather than neutral utilities, the line between “reported data” and “usable data” is no longer clean. CMS is moving toward more standardized and comparable data, but it is doing so at the same time that control over that data is becoming more concentrated. Those two trajectories are not aligned, and the tension is building.

3 Percent Likely

On rates, the outcome will look familiar. Something in the range of 3 percent, with the usual variation driven by wage index. The larger issue is that the inputs used to get there no longer reflect operating reality. Cost reports are inconsistent, the Market Basket has drifted away from actual expense pressure, and updates to the CMS-2540-10 will be discussed as progress even though they are long overdue. We are still calibrating payment with tools that do not measure what they are supposed to measure.

Budget neutrality will not be highlighted, but it remains the constraint behind everything. Whether it shows up in federal adjustments or state Medicaid “reform,” it is the same exercise: reallocating a fixed pool of funds. The harder question - whether the pool is adequate - remains largely untouched. We’ll see if Medicaid constraints are even mentioned.

Quality programs are shifting as well. At the state level, they often continue to redistribute funds in ways that are difficult to justify – they’re proving to be regressive and rewarding providers that least need the support. At the federal level, they are becoming more directly tied to enforcement. That shift makes sense, but it also raises a basic issue. If the measures primarily reflect compliance thresholds rather than meaningful differences in care, the financial consequences will continue to fall unevenly.

MA Hovers

Medicare Advantage is causing the most angst – CMS knows it, even if it is not addressed directly. CMS does not regulate MA within this rule, but it will indirectly address it. Reminding readers of the skilled care requirements is the best they can do here. FFS becomes the reference point, and the pressure works its way into contracting, admissions, and length-of-stay decisions – in theory. In practice, the industry has momentum, but the plans have the leverage.

The expansion of data requirements continues along the same path. It is easy to dismiss as more reporting, but it is more than that. It is the infrastructure needed to compare providers across settings and, eventually, to move toward more unified payment logic.

All of this points to a broader shift. The SNF PPS is no longer functioning purely as a payment system. It is becoming a way to measure and influence behavior. Rate updates matter less than how those dollars are redistributed based on coding, quality scores, and utilization patterns.

No Drama

The 2027 rule will not be dramatic. Rates will move slightly. PDPM will be adjusted at the margins. Quality programs will tighten. But underneath that, the system will continue to change in how it allocates revenue across providers.

The issues that matter most are still sitting in plain view: the gap between reported and actual costs, the credibility of the Market Basket, wage index distortion, the structural impact of Medicare Advantage, the growing role of AI, and the control of data itself. None of these are peripheral. They define the system.

CMS spent the last five years building PDPM. Now it is trying to manage what that system produced, without fully addressing what was already broken.

Marc Zimmet is the CEO of Zimmet Healthcare Services Group.