Initial reaction to the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for fiscal year (FY) 2027 is favorable to the SNF section, according to industry analysts, with one calling it a “clean” rule with no adjustments to the PDPM model. The nursing home trade association said it is a “practical” proposal that providers can move forward with.

Late Thursday, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule for updates to Medicare payment policies and rates for SNFs under the with the bottom-line number calling for a 2.4 percent SNF payment rate increase, which amounts to $888 million, beginning Oct. 1, 2026.

For FY 2027, CMS proposes updating SNF PPS rates by 2.4 percent based on the proposed SNF market basket of 3.2 percent, and a negative 0.8 percent productivity adjustment.

Of note, for FY 2024: the productivity adjustment was a 0.2 percentage point reduction, for FY 2025: a 0.5 percentage point reduction, and for FY 2026: a 0.7 percentage point reduction.

“Note that these impact figures do not incorporate the SNF VBP [Value-Based Purchasing] reductions for certain SNFs subject to the net reduction in payments under the SNF VBP. The SNF VBP adjustments are estimated to total $208.4 million in FY 2026,” CMS said.

CMS also said it is seeking feedback on two Requests for Information (RFI).

Not a Lot of Waves in Draft

Martin Allen, former senior vice president of reimbursement policy for the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), said “this looks like a nice clean rule, which the industry likes. There were no adjustments to the PDPM model, only an RFI for comments on areas that should be considered for adjustment in future years. That will give AHCA, Leading Age, and other provider groups the opportunity to advocate to talk for what they think is important to change or not change in the payment system.”

In terms of the Market Basket Index adjustment, this appears to be the first in five years where there is no forecast error adjustment, he said.

“What that means is that the inflation factor before the productivity adjustment used in FY 2026, which was 3.3 percent, did not require adjustment up or down in the current year, and that CMS expects the FY 2027 inflation factor to be 3.2 percent [before the productivity adjustment which brings it down to 2.4 percent.],” Allen said.

So. while he said this appears to be a clean rule with no structural adjustments, and only minor mention of QRP and VBP, “I think providers will be disappointed in how small the inflation adjustment is compared to their change in costs year over year. The only consolation is we are still receiving a small bump and none of the MEDPAC recommendations for cuts to provider payment are included.”

AHCA/NCAL Reacts

A statement by Clif Porter, the president and CEO of the AHCA/NCAL, said: “We appreciate CMS for proposing another practical Medicare increase for skilled nursing facilities in FY 2027.”

“Medicare reimbursement policy that recognizes the increasing demand for care, patient complexity, and health care costs is essential to help post-acute care providers deliver for their patients. Providers are committed to continuous investments in quality care, their workforce, and modernization efforts, and this is only possible with a stable, sustainable reimbursement system.”

FY 2027 Proposed Updates to the SNF QRP

CMS is proposing to remove two measures from the SNF QRP, beginning with the FY 2028 SNF QRP. They are:

• The COVID-19 Vaccination Coverage among Healthcare Personnel measure, and

• The COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure.

CMS is also proposing to revise the time frame for data submission from 4.5 months to no later than the 15th day of the second month after the end of the calendar quarter beginning with the FY 2029 SNF QRP. This shortened data submission time frame would reduce the lag in public reporting by up to three months resulting in more timely public reporting of data for consumers and their families.

In addition, CMS is proposing to require the submission of MDS data on all SNF residents receiving covered skilled care in a SNF, regardless of payer. This would align the SNF QRP with other post-acute care settings and CMS programs that already collect data on all patients regardless of payer.

FY 2027 SNF VBP

For the SNF VBP Program, CMS is providing estimated performance standards for the FY 2029 and FY 2030 program years to comply with the program’s statutory notice deadline. CMS is also proposing to update the “snapshot date” codified at 42 CFR § 413.338(f)(1)(v) for two measures that are calculated using MDS assessment data to maintain alignment with the newly proposed SNF QRP submission deadlines for MDS assessment data, beginning with FY 2027 data.

FY 2027 SNF QRP RFI

CMS is seeking feedback on one potential measure topic that CMS is considering adopting in future years for the SNF QRP: Advanced care planning (ACP). ACP is a continuous process of conversation and documentation to align a patient’s care and interventions with their beliefs, values, and preferences, in the event they become unable to make those decisions, CMS said.

Patient Driven Payment Model (PDPM) Payment System

CMS has added a second RFI to address case mix upcoding. “This RFI focuses on potential updates to the PDPM payment system as part of a broader effort to ensure that payment policy reflects current care practices and changes in the SNF resident population. The RFI also focuses on how CMS could address observed Case Mix Upcoding,” the agency said.

The SNF Final Payment Rule can be viewed on the Federal Register at: https://www.federalregister.gov/d/2026-06674.

Information on the SNF VBP is available at: https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing.

Information on the SNF QRP is available at: https://www.cms.gov/medicare/quality/snf-quality-reporting-program.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.