Skilled nursing facilities get 3.2% boost in final rule

Skilled nursing facilities will get a 3.2% bump per the final rule issued by the Centers for Medicare and Medicaid Services on Thursday.

For fiscal year 2026, CMS is making the update to the Skilled Nursing Facility Prospective Payment System (PPS) based on the final SNF market basket of 3.3%, plus a 0.6% market basket forecast error adjustment and a negative 0.7% productivity adjustment.

That translates to an increase in SNF PPS payments of $1.16 billion compared to this year.

WHAT’S THE IMPACT

As part of the rule, CMS is also making changes to the Patient-Driven Payment Model (PDPM), which the agency implemented in 2020 with the intent of improving payment accuracy and appropriateness by focusing on patient need rather than volume of services.

The PDPM uses the International Classification of Diseases, 10th Revision, Clinical Modification (ICD‑10-CM) codes in several ways, including using the person’s primary diagnosis to assign patients to clinical categories. CMS is finalizing several changes to the PDPM ICD-10-CM code mappings, which it said would allow providers to give more accurate and consistent diagnoses that meet the criteria for skilled intervention during a Part A SNF stay.

CMS is also finalizing a series of operational and administrative proposals for the SNF Value-Based Purchasing (VBP) Program. As required by statute, CMS withholds 2% of SNF’s Medicare fee-for-service (FFS) Part A payments to fund the pay-for-performance program, which is referred to as the “withhold.” CMS is then required to redistribute between 50% and 70% of this withhold to SNFs as incentive payments depending on their performance in the program. 

Operational changes include finalizing statutorily required performance standards for program measures and the removal of the program’s Health Equity Adjustment from the scoring methodology. Final administrative updates include the adoption of a new reconsideration process and technical updates to the program’s regulation text. 

There are also updates to the SNF Quality Reporting Program. CMS will remove four standardized patient assessment data elements under the Social Determinant of Health (SDOH) category from the MDS beginning with residents admitted on Oct. 1. 

CMS is also finalizing its proposal to amend the reconsideration policy and process, whereby the agency will allow SNFs to request an extension to file a request for reconsideration, and is updating the bases on which CMS can grant a reconsideration request.

THE LARGER TREND

CMS said it’s also seeking public input on streamlining regulations and reducing burdens on those participating in the Medicare program. The public is invited to comment on the RFI until Sept. 15.