08/07/2025

SNF Prospective Payment Final Rule Includes 3.2% Increase for FY2026

On July 31, the Centers for Medicare & Medicaid Services (CMS) issued a final rule updating Medicare payment policies and rates for skilled nursing facilities (SNFs) under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for fiscal year 2026, which begins October 1.

CMS is updating SNF PPS rates by 3.2% (compared to the 2.8% increase CMS had proposed in April). The update is 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.

The SNF Value Based Purchasing program will see changes under the final rule, including a new policy that will allow a SNF to appeal a decision made on a review-and-correct reconsideration request prior to any data being made publicly available.

CMS has also finalized changes to the SNF Quality Reporting Program (QRP) that LeadingAge supported in our comments on the proposed rule, including the removal of four standardized patient assessment data elements relating to social determinants of health (living situation, food, and utilities). LeadingAge supported the removal because these look-back items are neither reflective of, nor impacted by, the SNF stay. The final rule also includes changes to the CMS reconsideration policy and process related to noncompliance determinations that a SNF has not met the Quality Reporting Program reporting requirements.

In an August 1 statement, LeadingAge President and CEO Katie Smith Sloan said that the finalized 3.2% update “reflects modest recognition of the need for support in the form of fair payment for the care providers’ deliver, but still falls short of what is needed to meet the growing financial and workforce pressures facing providers,” and that CMS must also acknowledge that the financial realities of the current market “are placing immediate and significant strain on nursing home operations.”

We will provide additional analysis in the coming days. See the text of the final rule and a CMS Fact Sheet.