CMS Issues FY 2026 SNF Final Rule for SNF PPS

August 5, 2025-- On July 31, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the final rule (CMS-1827-F) for the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for fiscal year (FY) 2026. Effective October 1, 2025, the rule updates payment rates and policies and finalizes changes to the SNF Quality Reporting Program (QRP), the SNF Value-Based Purchasing (VBP) Program, and the Patient-Driven Payment Model (PDPM) ICD-10 code mappings. It also includes a summary of comments on requests for information, including questions about the use of information technology in nursing facilities. The FY 2026 SNF PPS Final Rule will be published in the Federal Register on August 4, 2025. Read CMS’ Fact Sheet here.

Economic Impact

The final rule is projected to have the following overall economic impacts:

• An estimated increase of $1.16 billion in aggregate payments to SNFs during FY 2026.
• An estimated reduction of $208.36 million in aggregate payments to SNFs in FY 2026 due to the SNF VBP Program.
• An estimated annual decrease of $2.2 million in costs for SNFs beginning with the FY 2027 SNF QRP, related to the removal of certain data elements.

Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Rate Setting

CMS will update the SNF PPS payment rates for FY 2026. The key components of this update are:

• Market Basket Update: The SNF market basket increase is finalized at 3.3 percent, based on the 2022-based SNF market basket.
• Unadjusted Federal Per Diem Rates for FY 2026:
  
  • Urban: PT: $75.73, OT: $70.49, SLP: $28.28, Nursing: $132.00, NTA: $99.59, Non-Case-Mix: $118.21
  • Rural: PT: $86.33, OT: $79.29, SLP: $35.63, Nursing: $126.12, NTA: $95.15, Non-Case-Mix: $120.40

Patient Driven Payment Model (PDPM)

The final rule includes technical revisions to 34 ICD-10 clinical coding categories used under the PDPM to improve payment and coding accuracy. Thirty-three of these codes will be changed from “Medical Management” to "Return to Provider" (includes Type 1 Diabetes Mellitus, Hypoglycemia, and Obesity), and one code will be moved from the "Acute Neurologic" category to "Medical Management".

Skilled Nursing Facility Quality Reporting Program (SNF QRP)

Several updates have been finalized for the SNF QRP:

• Removal of Data Elements: Four standardized patient assessment data elements under the Social Determinants of Health (SDOH) category will be removed beginning with residents admitted on October 1, 2025. The removed items pertain to Living Situation, Food, and Utilities. This change is intended to reduce the administrative burden on SNFs
• Reconsideration Policy: The rule amends and codifies the reconsideration request policy and process for non-compliance determinations. SNFs will be allowed to request an extension to file a reconsideration request if affected by an extraordinary circumstance. The request for an extension must be submitted no later than 30 calendar days from the date of the written notification of noncompliance 

Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program

The final rule includes several updates to the SNF VBP Program:

• The final rule removes the Health Equity Adjustment (HEA) beginning in the FY 2027.
• The finalized scoring methodology will be applied to the Skilled Nursing Facility Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure starting in FY 2028
• Beginning with the FY 2027 program year, SNFs will have a new process to appeal CMS decisions on performance score reviews and corrections.

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