07/30/2026

CMS Finalizes 2.4% SNF Payment Update for Fiscal 2027

The Centers for Medicare & Medicaid Services issued its fiscal year 2027 Skilled Nursing Facility Prospective Payment System final rule on July 29. The rule finalizes Medicare payment updates and changes to the Skilled Nursing Facility Quality Reporting Program and Value-Based Purchasing Program.

The rule is scheduled for Federal Register publication July 31. The payment update and other fiscal year 2027 provisions take effect Oct. 1, while several quality reporting changes will begin in later program years.

What You Need To Know

• Medicare payment rates will increase by 2.4%. The update reflects a 3.3% market basket increase, reduced by a 0.9 percentage-point productivity adjustment. CMS estimates aggregate payments to skilled nursing facilities will increase by approximately $882.74 million in fiscal year 2027.
• Two COVID-19 vaccination measures will be removed. Beginning with the fiscal year 2028 Skilled Nursing Facility Quality Reporting Program, CMS will remove vaccination coverage measures for health care personnel and residents.
• The quality reporting submission window will be shortened. Beginning with the fiscal year 2029 program, the current 4.5-month submission period will be reduced to approximately 45 days. CMS expects the change to reduce the delay between data submission and public reporting by up to three months.
• Minimum Data Set reporting will expand. Skilled nursing facilities will be required to submit Minimum Data Set information for all residents receiving covered skilled care, regardless of payer.
• Value-Based Purchasing adjustments remain separate from the payment increase. CMS estimates fiscal year 2027 Skilled Nursing Facility Value-Based Purchasing adjustments will result in a net payment reduction of approximately $203.60 million for affected facilities.
• CMS did not finalize Patient Driven Payment Model changes. The agency requested feedback on possible payment model updates addressing case-mix coding and will consider the comments in future rulemaking.

What Happens Next

• The fiscal year 2027 payment update takes effect Oct. 1. CMS has posted the final rule and supporting payment files, including the wage index, Patient Driven Payment Model case-mix rates and ICD-10 mapping files.
• The quality reporting changes will be phased in. The vaccination measures will be removed beginning with the fiscal year 2028 program. The shorter submission timeframe will begin with the fiscal year 2029 program.
• CMS will align Value-Based Purchasing snapshot dates with the new reporting deadlines. The change will apply to two measures calculated with Minimum Data Set assessment information, beginning with fiscal year 2027 data.
• Additional changes could follow through future rulemaking. CMS will consider comments related to advance care planning measures and possible Patient Driven Payment Model revisions addressing case-mix coding. No new requirements were finalized for either issue in this rule.

What to Do

• Model the facility-level financial impact. Apply the 2.4% national update alongside the organization’s wage index, resident case mix and expected Value-Based Purchasing adjustment. Use the fiscal year 2027 payment and classification files when preparing budget projections.
• Review quality reporting workflows now. Identify how clinical, reimbursement, health information and quality teams will meet the future 45-day submission window. CMS maintains current dates and reporting instructions on its Skilled Nursing Facility Quality Reporting Program submission deadlines page.
• Prepare for expanded Minimum Data Set reporting. Review current assessment processes, payer classifications and software capabilities to determine what changes will be needed. CMS posts current coding instructions and updates in the Minimum Data Set 3.0 Resident Assessment Instrument Manual.
• Confirm access to reporting systems and reports. Ensure appropriate team members can use the Internet Quality Improvement and Evaluation System to submit assessments and review facility reports.
• Review Value-Based Purchasing performance. Compare current results with the eight measures used for the fiscal year 2027 program and review quarterly confidential feedback reports through iQIES. CMS provides measure, payment and program information on its Skilled Nursing Facility Value-Based Purchasing Program page.
• Check Patient Driven Payment Model coding and documentation. Review interdisciplinary documentation and classification practices for consistency with CMS guidance. The agency’s Patient Driven Payment Model resources include training materials, fact sheets and technical information.

LeadingAge will be releasing an analysis soon. Read the full CMS announcement, LeadingAge’s press statement, and the Federal Register final rule.