CMS Proposes FY 2027 Skilled Nursing Facility Payment and Quality Updates
The Centers for Medicare & Medicaid Services (CMS) has issued its proposed rule for the Fiscal Year (FY) 2027 Skilled Nursing Facility Prospective Payment System (SNF PPS), outlining updates to payment rates, quality reporting requirements, and value-based purchasing policies.
While the rule represents a routine annual update required under federal law, it introduces several operational and reporting changes that may have downstream implications for payers, managed care organizations, and post-acute care stakeholders.
What the Proposed Rule Does
The proposed rule (CMS-1843-P) updates Medicare payment policies for skilled nursing facilities and includes changes across 3 primary areas: reimbursement, quality reporting, and performance-based incentives.
Payment Update: Modest Increase
CMS proposes a 2.4% net increase in SNF PPS rates for FY 2027, reflecting the following:
- A 3.2% market basket update
- A 0.8% productivity adjustment
The agency estimates this will result in an overall increase in Medicare payments to skilled nursing facilities, though the impact does not account for adjustments tied to value-based purchasing penalties or incentives.
Key Policy Changes
1. Quality Reporting Program (QRP) Updates
CMS proposes several modifications to the SNF Quality Reporting Program:
- Removal of 2 COVID-19-related measures beginning in FY 2028
- Shortened data submission timelines, shifting from 4.5 months after each quarter to a deadline earlier in the reporting cycle
- Expansion of reporting requirements to include Minimum Data Set (MDS) data for all residents receiving skilled care, regardless of payer (future implementation)
Facilities that fail to meet reporting requirements would continue to face a 2-percentage point reduction in their annual payment update.
2. Value-Based Purchasing (VBP) Program Adjustments
The rule maintains the structure of the SNF Value-Based Purchasing Program in the following ways:
- It withholds 2% of Medicare fee-for-service payments to fund incentive payments
- It redistributes a portion of those funds based on performance
CMS also proposes the following:
- Updated performance standards for future program years
- Technical adjustments to measurement timelines to align with reporting changes
3. Continued Use of Existing Payment Framework
The proposal does not include major structural changes to the Patient-Driven Payment Model (PDPM), signaling stability in the underlying payment methodology for FY 2027.
However, CMS is seeking stakeholder input on how to measure and address case-mix changes under PDPM, indicating potential future policy development in this area.
Timeline and Next Steps
- Public comment period closes: June 1, 2026
- Final rule expected: Summer 2026
- Effective date: October 1, 2026 (start of FY 2027)
Implications for Payers and Managed Care
Although the proposed rule primarily governs Medicare fee-for-service reimbursement, it may carry broader implications across the post-acute care landscape:
- Rate updates may influence contract negotiations between Medicare Advantage plans and SNFs
- Expanded data reporting requirements could improve visibility into patient populations across payer types
- Alignment of quality and performance measures may affect network design and preferred provider strategies
The proposed all-payer data reporting requirement, in particular, signals a continued shift toward more standardized and comprehensive data collection across care settings.
The Bottom Line
CMS’s FY 2027 SNF PPS proposed rule reflects an incremental approach: modest payment increases combined with targeted updates to quality reporting and performance programs.
For managed care stakeholders, the rule underscores ongoing federal efforts to refine data collection, align incentives with quality outcomes, and maintain stability in post-acute payment systems—while laying the groundwork for potential future policy changes.
References
- Centers for Medicare & Medicaid Services. Fiscal Year (FY) 2027 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS-1843-P). CMS.gov. Published April 2026. Accessed April 10, 2026. https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2027-skilled-nursing-facility-prospective-payment-system-proposed-rule-cms-1843-p
- medicare program; prospective payment system and consolidated billing for skilled nursing facilities; updates to the quality reporting program and value-based purchasing program for federal fiscal year 2027. Federal Register. Published April 7, 2026. Accessed April 10, 2026. https://www.federalregister.gov/documents/2026/04/07/2026-06674/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities
- CMS proposes 2.4% Medicare rate hike for nursing homes in 2027 and operators are already doing the math. Skilled Care Journal. Published 2026. Accessed April 10, 2026. https://skilledcarejournal.com/cms-proposes-2-4-medicare-rate-hike-for-nursing-homes-in-2027-and-operators-are-already-doing-the-math/
