Jessie McGill, RN, BSN, RAC-MT, RAC-MT, is a regular contributor to Park Place, and is the curriculum development specialist for the American Association of Post-Acute Care Nursing.

The Fiscal Year (FY) 2027 Skilled Nursing Facility Prospective Payment System (SNF PPS) proposed rule describes several significant changes that could directly affect reimbursement, Quality Reporting Program (QRP) operations, and long-term care (LTC) facility workflows. In response, the American Association of Post-Acute Care Nursing (AAPACN) submitted comments urging the Centers for Medicare and Medicaid Services (CMS) to reconsider proposals that could increase burden on staff and reduce reimbursement without fully accounting for current operational realities.

For facility leadership, the message is clear. These proposals could have financial, operational, and compliance implications well beyond the department that oversees the Minimum Data Set (MDS).

Payment Update Concerns

CMS proposed a 2.4 percent payment update for FY 2027. However, AAPACN emphasized that many facilities may see little practical financial relief after sequestration and the 2 percent Skilled Nursing Facility Value-Based Purchasing (SNF VBP) withhold are applied.

AAPACN again highlighted concerns with the current SNF VBP methodology, noting that CMS withholds 2 percent from providers but redistributes only 60 percent of those funds back to facilities. The organization recommended increasing the percentage returned to providers to better support facilities caring for increasingly complex residents amid ongoing workforce shortages and rising operational expenses. Leadership should recognize that this continued imbalance affects already strained operating margins, especially as facilities manage both rising labor costs and resident populations with more challenging needs.

PDPM ‘Case-Mix Creep’

One of the most concerning areas for leadership involves CMS’s request for information regarding potential Patient-Driven Payment Model (PDPM) “case-mix creep” adjustments. CMS believes changes in provider coding and documentation patterns may have increased Medicare reimbursement beyond original projections.

AAPACN raised significant concerns with the CMS methodology, noting that the analysis fails to fully account for these factors:

• Increased resident acuity following the COVID-19 public health emergency

• Changes in nursing home populations and referral patterns

• Expanded use of home health services

• CMS-driven education efforts that improved coding accuracy

• Significant revisions to MDS coding guidance over time

AAPACN also expressed concern that CMS included years already evaluated during the FY 2023 PDPM parity adjustment analysis. Leadership should pay close attention to this issue because broad PDPM reductions could affect both Medicare reimbursement and some state Medicaid case-mix systems.

CMS was also urged to avoid sweeping payment reductions and instead address any concerns through targeted coding or policy refinements.

All-Payer SNF QRP Expansion

AAPACN also highlighted concerns regarding the CMS proposal to expand the SNF QRP to all payer types. QRP requirements currently focus solely on Medicare Part A residents during a skilled stay. The proposed changes would expand QRP reporting to all admissions and readmissions, regardless of payer, who require a skilled level of care.

Expanding QRP requirements across all payer sources could create a substantial operational burden because SNFs serve both short-stay skilled residents and long-stay custodial residents. Unlike other post-acute care settings, payer status and skilled coverage can fluctuate frequently in the SNF environment.

AAPACN highlighted these operational risks:

• Daily determination of skilled status across payer types

• Medicare Advantage (MA) denials and appeals

• Benefit exhaust situations

• Additional other Medicare-required assessments

• Increased interdisciplinary documentation demands

Concerns were also identified related to CMS’s projected implementation costs and burden estimates, particularly during ongoing workforce shortages. To reduce disruption, AAPACN recommended a phased implementation approach beginning with Medicare Part A and MA populations before expanding to all payers.

Conclusion

AAPACN’s response to the FY 2027 SNF PPS proposed rule reflects growing concern that regulatory complexity and reimbursement pressures continue to outpace operational realities in SNFs. Although CMS has not finalized these proposals, leadership teams should begin evaluating how potential payment adjustments, expanded QRP requirements, and increased scrutiny of coding practices could affect facility operations. Preparing now by establishing stronger documentation systems, more fruitful interdisciplinary collaboration, and proactive financial planning will position facilities to respond more effectively as final rule changes emerge.

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