Article | What providers need to know
Navigating changes to Medicare skilled nursing facility reimbursement rates
CMS finalizes FY 2026 SNF payment rule
Sept. 15, 2025 · Authored by Edward A. Klik, Kristopher Pattison
Update: CMS final rule issued for FY 2026
On July 31, 2025, CMS issued the final rule for the FY 2026 Skilled Nursing Facility Prospective Payment System (CMS-1827-F). The only notable change from the proposed rule is an increased net payment update of 3.2%, up from 2.8% originally proposed. All other provisions, such as PDPM ICD-10 code mappings, SNF VBP updates and QRP changes, were finalized as proposed.
The article below originally published June 2025 with the proposed ruling has been updated in September 2025 to reflect the final rule, with proposed vs final references where applicable.
On April 30, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Fiscal Year (FY) 2026 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Proposed Rule (CMS-1827-P). This annual update to Medicare skilled nursing facility reimbursement rates and quality program expectations outlines several operational changes that SNF operators must prepare for before the October 1 implementation. While most provisions were finalized as proposed, CMS increased the net payment update from 2.8% to 3.2% in the final rule. This rule also confirms updates to the Patient-Driven Payment Model (PDPM) primary diagnosis mappings, Value-Based Purchasing (VBP) incentives and Quality Reporting Program (QRP) requirements that will impact provider strategy.
Payment rate adjustment: A modest increase amid cost pressures
CMS proposed a 2.8% net increase in Medicare Part A SNF PPS payment rates for FY 2026. The final rule increased this to 3.2%, composed of a 3.3% market basket increase, a 0.6% forecast error adjustment and a -0.7% productivity adjustment. CMS projects this increase will result in an additional $1.16 billion in Medicare payments to SNFs in FY 2026. Compared to recent fiscal years, which saw 4.0% (FY 2024) and 4.2% (FY 2025) rate increases, this update may feel underwhelming to operators still grappling with inflationary cost pressures and wage growth. However, this increase aligns with historical norms and reflects a return to a more stable reimbursement environment.
