On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for updates to Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year (FY) 2026. Here are the major provisions of the proposed rule.

Request for Information on Streamlining Regulations and Reducing Administrative Burdens in Medicare

On January 31, 2025, President Trump issued Executive Order (EO) 14192 “Unleashing Prosperity Through Deregulation,” which states the Administration’s policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America’s economic prosperity and national security and the highest possible quality of life for each citizen. To comply with the Executive Order, CMS, is including in the proposed rule a Request for Information 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.

SNF PPS Proposed Rule for Fiscal Year 2026

For FY 2026, CMS proposes updating SNF PPS rates by 2.8% based on the proposed SNF market basket of 3.0%, plus a 0.6% market basket forecast error adjustment, and a negative 0.8% productivity adjustment. Note that these impact figures do not incorporate the SNF Value-Based Purchasing (VBP) reductions for certain SNFs subject to the net reduction in payments under the SNF VBP. Those adjustments are estimated to total $196.5 million in FY 2025.

Proposed Changes in Patient-Driven Payment Model (PDPM) ICD-10 Code Mappings 

In FY 2020, CMS implemented the Patient-Driven Payment Model (PDPM) to improve payment accuracy and appropriateness by focusing on the needs of the whole patient, rather than focusing on the volume of services provided.  In this proposed rule, CMS proposes several changes to the PDPM ICD-10 code mappings to maintain consistency with the latest ICD-10 coding guidance.

SNF Value-Based Purchasing (VBP) Program

For the SNF VBP Program, CMS is proposing a series of operational and administrative proposals as part of this year’s rule. The SNF VBP Program is a pay-for-performance program. As required by statute, CMS withholds 2% of SNFs’ Medicare fee-for-service (FFS) Part A payments to fund the SNF VBP Program. This 2% 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. CMS applies incentive payments prospectively to all Medicare fee-for-service (FFS) Part A claims paid under the SNF PPS for the applicable program year (beginning October 1).

Proposed Updates to the SNF VBP 

• CMS is proposing to apply the previously finalized scoring methodology of the program to the SNF Within-Stay Potentially Preventive Readmission (SNF WS PPR) measure beginning with the FY 2028 program year.
• Secondly, CMS is providing estimated performance standards for the FY 2028 and FY 2029 program years to comply with the program’s statutory notice deadline.
• CMS is proposing to adopt a reconsideration process that will allow SNFs to appeal CMS’ initial decisions for Review and Correction (R&C) requests prior to any affected data being publicly available.
• Finally, CMS is proposing to remove the SNF VBP Program’s Health Equity Adjustment to simplify the methodology and provide clearer incentives for SNFs as they seek to improve their quality of care for all residents.

SNF Quality Reporting Program (QRP)

For the SNF QRP, CMS is proposing to remove four standardized patient assessment data elements beginning October 1, 2025, including one item for “living situation,” two items for “food,” and one item for “utilities;” amend the reconsideration request policy and process; and seek feedback on three Requests for Information (RFIs)

Proposed Updates to the SNF QRP

• CMS is proposing to remove four standardized patient assessment data elements under the Social Determinant of Health (SDOH) category including one item for “living situation,” two items for “food,” and one item for “utilities.”
• CMS is proposing to amend the reconsideration policy and process. Specifically, CMS is proposing to allow SNFs to request an extension to file a request for reconsideration and to update the bases on which CMS can grant a reconsideration request.
• CMS also seeks input on several RFIs, specifically: 1) future measure concepts on the topics of delirium, interoperability, nutrition, and well-being; 2) revisions to the current data submission deadlines for assessment data, which would allow CMS to provide SNFs with more timely quality data; and 3) advancing digital quality measurement and the use of Fast Healthcare Interoperability Resources® in the SNF QRP.

The Skilled Nursing Facility Proposed Payment Rule can be viewed at the Federal Register at: https://www.federalregister.gov/public-inspection/current.

Information derived from: CMS Fact Sheet: Fiscal Year 2026 Skilled Nursing Facility Prospective Payment System Proposed Rule CMS 1827-P

Contact the Blue & Co. Post-Acute Care Team

Blue & Co. offers a team of highly knowledgeable consultants dedicated to supporting your Post-Acute Care needs. Whether you require assistance with Therapy Operations, Clinical Reviews, Payroll-Based Journal (PBJ) reporting, 5-Star ratings, regulatory surveys, Value-Based Purchasing (VBP), or MDS support, our experts are here to help. Please contact a member of our Post-Acute Care team below or reach out to your local Blue & Co. advisor for personalized guidance.

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