On July 30, 2026, the Centers for Medicare & Medicaid Services (“CMS”) issued its final rule updating Medicare payment policies and rates for skilled nursing facilities (“SNFs”) under the Skilled Nursing Facility Prospective Payment System (“SNF PPS”) for federal fiscal year (“FY”) 2027. The final rule also includes significant revisions to the Skilled Nursing Facility Quality Reporting Program (“SNF QRP”) and the Skilled Nursing Facility Value-Based Purchasing (“SNF VBP”) Program. The rule becomes effective October 1, 2026.
While the FY 2027 rule provides a modest payment increase, it also finalizes several significant quality reporting and operational changes that will have lasting implications for SNFs, including an eventual requirement to submit Minimum Data Set (“MDS”) assessments for all covered skilled residents regardless of payer source. This article summarizes the major provisions of the final rule.
Medicare Payment Update for FY 2027
CMS finalized a 2.4% update to SNF Medicare payment rates for FY 2027. The update reflects:
- A 3.3% SNF market basket increase;
- No forecast error adjustment because the statutory 0.5 percentage-point threshold was not met; and
- A 0.9 percentage-point productivity adjustment required by statute.
The payment update will not affect all providers equally. CMS estimates:
- Hospital-based SNFs will experience an average payment increase of approximately 2.9%;
- Rural SNFs will receive approximately 2.7%; and
- Freestanding urban SNFs will receive approximately 2.3%.
Patient Driven Payment Model (PDPM)
CMS used the proposed rule to solicit stakeholder feedback through a Request for Information (“RFI”) regarding possible methodologies for measuring and addressing case-mix growth. CMS summarized stakeholder comments and stated that it would consider those comments in future rulemaking.
Skilled Nursing Facility Quality Reporting Program
- CMS Removes Two COVID-19 Vaccination Measures
CMS finalized the removal of two quality measures beginning with the FY 2028 SNF QRP:
-
- COVID-19 Vaccination Coverage Among Healthcare Personnel; and
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date.
CMS concluded these measures are no longer necessary given the current stage of the COVID-19 public health environment and ongoing reporting priorities. CMS estimates removing the measures will reduce reporting burden for providers by approximately $8.3 million annually.
- Accelerated Data Submission Deadlines
CMS also finalized a significant change to SNF QRP reporting timelines.
Beginning with the FY 2029 SNF QRP, SNFs must submit required data no later than the fifteenth day of the second month following the end of each calendar quarter, replacing the current 4.5-month submission period. CMS believes the accelerated timeline will reduce the delay between provider submission and public reporting by approximately three months while providing more timely quality information to beneficiaries and consumers.
Although the revised reporting schedule does not apply until the FY 2029 SNF QRP, providers may need to begin evaluating workflow changes well before implementation.
- Expanded MDS Reporting to All Covered Skilled Residents
The most significant operational change in the final rule is CMS’s decision to require SNFs to submit MDS assessments for every resident admitted or readmitted for covered skilled nursing services, regardless of payer source.
This requirement becomes effective beginning with the FY 2031 SNF QRP and applies to residents admitted or readmitted on or after October 1, 2029. CMS explained that this policy aligns the SNF QRP with other post-acute care quality reporting programs that already collect standardized assessment data across all payers. CMS also believes broader data collection will improve quality measurement and permit more complete comparisons among providers.
Skilled Nursing Facility Value-Based Purchasing Program
CMS finalized several updates to the SNF VBP Program.
- Performance Standards Established
To satisfy statutory notice requirements, CMS finalized performance standards for the FY 2029 and FY 2030 SNF VBP program years.
- Updated Snapshot Dates
CMS also revised the regulatory “snapshot date” used for two measures calculated from MDS assessment data. The revisions are intended to maintain consistency with the newly accelerated SNF QRP submission deadlines.
- Incentive Payment Methodology Remains Unchanged
CMS declined commenters’ requests to increase the percentage of withheld funds redistributed through the incentive payment pool.
Under current law:
-
- CMS will continue withholding 2% of Medicare Part A fee-for-service payments;
- Sixty percent of the withhold will continue to be redistributed through incentive payments; and
As in prior years, the impact will vary by facility depending on its VBP performance. Some SNFs will recover more than others through incentive payments, while lower-performing facilities will experience a net payment reduction.
Requests for Information
CMS also summarized comments received on several RFIs but did not adopt any related policy changes. These included:
- Potential methodologies to address PDPM case-mix growth;
- A possible Advance Care Planning quality measure for the SNF QRP; and
- Alternatives to the current hospital-based wage index methodology used under the SNF PPS.
These issues remain under consideration and could resurface in future rulemaking.
Practical Takeaways
- CMS’s continued effort to expand standardized quality reporting and assessment requirements across post-acute care settings. SNFs to evaluate staffing, training, documentation workflows and software capabilities before the October 1, 2029 implementation date.
- Accelerated QRP submission deadlines will require providers to shorten internal reporting timelines
- CMS continues to evaluate the PDPM payment model and may consider future modifications.
If you have questions or would like additional information about this topic, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
