What You Need to Know: CMS’s Proposed SNF Payment Updates for FY 2026

HUNT VALLEY, MD – April 15, 2025 - On Friday, April 11, 2025, The Centers for Medicare & Medicaid Services (CMS) issued its proposed rule updating Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System for fiscal year 2026. Following are highlights

Key Payment Updates:

  • SNFs are set to receive a 2.8% increase in Medicare payment rates.

    This is based on:

    • A 3.0% general market rate increase

    • A small bump (0.6%) for past forecast errors

    • A cut (-0.8%) for productivity adjustments

  • In 2025, SNFs already got a 4.1% increase in Medicare Part A payments.

  • Some SNFs could lose funding due to Value-Based Purchasing (VBP) penalties, which CMS estimates will total about $196.5 million across facilities.

Diagnosis Code Updates (PDPM & ICD-10):

  • CMS wants to reassign 34 diagnosis codes to more appropriate categories to help facilities better document the medical needs of residents.

Quality Reporting Program (QRP):

  • CMS plans to remove 4 social-related questions (about housing, food, and utilities) from the data SNFs need to report starting in 2027 to ease paperwork burden.

  • They're updating how SNFs can ask CMS to reconsider decisions about quality reporting penalties.

  • They're gathering feedback on future reporting ideas like:

    • Interoperability (how well systems share data)

    • Resident nutrition, well-being, and delirium

    • Shortening the deadline for SNFs to submit data from 4.5 months to 45 days

    • Moving toward digital quality measures

  • No major changes are being proposed yet on how and when SNFs have to report data publicly.

Value-Based Purchasing Program (VBP):

  • CMS wants to remove the “Health Equity Adjustment” from its scoring system starting in FY 2024.

  • They're looking to use an existing scoring method for hospital readmissions beginning in FY 2028.

  • A new appeal process is being proposed:

    • SNFs could ask for additional reconsideration only after going through the current review process.

    • SNFs would have 15 days to file once CMS sends a decision.

CMS has included a Request for Information in this proposed rule seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program. The RFI is available at https://www.cms.gov/medicare-regulatory-relief-rfi, and the public should submit all comments in response to this RFI through the provided weblink.