FY 2027 SNF Proposed Payment Rule: What SNFs Need to Know

FY 2027 SNF Proposed Payment Rule: What SNFs Need to Know

On April 2, 2026, 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 (SNF) Prospective Payment System (PPS) for fiscal year (FY) 2027.   Let’s review the key take aways of the proposed rule and potential impact to SNFs.

 

Payment Update Overview

• • +2.4% Medicare Part A rate increase effective October 1, 2026
  • Equals approximately $888 million in additional SNF payments
  • Based on:
    • 2% market basket increase
    • –0.8% productivity adjustment

Impact:
Positive, but modest relative to rising labor, supply, and operational costs.

 

SNF Quality Reporting Program (QRP)

Proposed Changes:

• • Removal of two COVID-related measures (effective FY 2028):
    • Healthcare Personnel COVID-19 Vaccination
    • Resident COVID-19 Vaccination (Up-to-Date status)
  • New submission deadline (effective FY 2029):
    → Data due by the 15th day of the second month after quarter end
  • Request for Information (RFI):
    • Future measure under consideration: Advanced Care Planning

Operational Focus:

• • Tighter timelines
  • Continued shift toward meaningful, outcome-based measures

 

SNF Value-Based Purchasing (VBP)

• • CMS released estimated performance standards for FY 2029–2030
  • Proposed updates to snapshot dates for:
    • Discharge Function
    • Long-Stay Falls with Major Injury

Impact:
Greater alignment with QRP → accuracy and timeliness of MDS data is critical

 

PDPM: Key Strategic Watch Area

CMS is not proposing changes for FY 2027, but is requesting input on:

• • Case-mix “creep” under PDPM
  • Whether reimbursement reflects:
    • True resident complexity
    • coding-driven increases

Potential Future Impact (not finalized):

• • ~4.3% case-mix adjustment
  • ~3.6% total payment impact

Keep in mind, this is a Request for Information—not an implemented cut, but signals future reimbursement risk. In addition, CMS has expressed an interest in increased data collection including the following:

 

Collection of Data on All Residents Regardless of Payer

CMS is signaling a significant shift toward standardizing data collection across all residents, not just those covered under Medicare Part A. The proposal to expand data collection reflects a broader goal of improving transparency, comparability, and quality measurement across the entire nursing home population.

 

By collecting data on all residents—Medicare, Medicaid, Managed Care, and private pay—CMS can create a more comprehensive picture of facility performance. This allows for more accurate Quality Measures, better benchmarking, and stronger oversight of care delivery across payer types. It also reduces the variability that currently exists when only a subset of residents is included in federal reporting programs.

 

For facilities, this means a shift from payer-specific processes to a more unified clinical and documentation approach. Teams will need to ensure that assessments, documentation, and interdisciplinary coordination are consistent across all residents—not just those tied to Medicare reimbursement.

 

Required MDS Submission for All Residents by 2031

Looking ahead, CMS is proposing a phased move toward requiring MDS submissions for all nursing home residents regardless of payer by 2031. This represents a major operational and regulatory transformation for the industry.  Currently, MDS submission requirements are largely tied to Medicare and certain Medicaid/state-specific processes. Expanding this requirement to all residents will significantly increase the volume, frequency, and complexity of assessment activity within facilities.

This change is expected to:

• • Substantially increase the assessment workload and data reporting burden
  • Require enhanced staffing models or workflow redesign within MDS departments
  • Drive greater emphasis on real-time documentation and interdisciplinary participation
  • Improve CMS’s ability to analyze outcomes, identify trends, and enforce accountability across the full resident population

 

From a strategic perspective, this move aligns with CMS’s ongoing focus on value-based care, health equity, and data-driven oversight. It also reinforces the importance of treating the MDS not just as a reimbursement tool—but as a central clinical, regulatory, and quality reporting instrument.

 

Operational Insight for Leadership

Forward-thinking organizations should begin preparing now by:

• • Standardizing MDS and documentation practices across all payer types
  • Evaluating MDS staffing ratios and workflow efficiency
  • Strengthening IDT engagement beyond Medicare residents
  • Investing in training around accuracy, timeliness, and defensibility of coding
  • Facilities that proactively adapt will be in a much stronger position as CMS continues to move toward full-population data reporting and oversight.

 

What This Means for Your Facility

Success under current and future models depends on:

• • MDS Accuracy
    • Section GG (usual function)
    • Skilled services and PDPM drivers
    • Diagnosis capture and validation
  • Clinical Documentation
    • Must fully support coded acuity
    • Defensible for audit and reimbursement
  • IDT Collaboration
    • Strong admission processes (first 72 hours critical)
    • Ongoing interdisciplinary alignment
  • Data & Audit Processes
    • Routine PDPM and CMI audits
    • QAPI integration with reimbursement strategy

 

Bottom Line

• • The 2.4% increase provides short-term support
  • The real story is future PDPM scrutiny and data accuracy expectations

Facilities that prioritize accuracy, documentation, and interdisciplinary processes will be best positioned for long-term success.

 

 

Next Steps:

Establish a partnership with Proactive to drive data accuracy, support quality efforts and ensure reliable MDS completion and MDS completion compliance during periods of staffing gaps or caseload surge

 

 

CMS Resources

• SNF PPS Proposed Rule Fact Sheet https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2027-skilled-nursing-facility-prospective-payment-system-proposed-rule-cms-1843-p
• Full Proposed Rule (CMS-1843-P) https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/list-federal-regulations/cms-1843-p
• SNF QRP https://www.cms.gov/medicare/quality/snf-quality-reporting-program
• SNF VBP https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing

 

 

 

Written By:

 

 

Sarah Becker, RN, RAC-CT, DNS-CT, QCP

Director of Clinical Reimbursement

Proactive LTC Consulting