CMS Finalizes 2.4% Medicare Payment Increase for Skilled Nursing Facilities

Skilled nursing facilities will receive an estimated $882.7 million increase in Medicare payments under the fiscal year 2027 payment rule finalized by the Centers for Medicare and Medicaid Services.

CMS approved a 2.4% increase in Skilled Nursing Facility Prospective Payment System rates, reflecting a 3.3% increase in the cost of delivering care, reduced by a 0.9-percentage-point productivity adjustment.

The American Hospital Association maintains that the increase is insufficient to keep pace with higher labor, drug and supply costs. AHA also criticized the productivity adjustment, arguing that labor-intensive healthcare providers cannot achieve the same efficiency gains as other private industries.

The final rule removes two COVID-19 vaccination measures from the Skilled Nursing Facility Quality Reporting Program beginning in fiscal year 2028, a change supported by AHA. CMS also shortened the quality-data submission period from approximately 4.5 months to 45 days beginning with the fiscal year 2029 reporting program. Facilities will eventually be required to submit Minimum Data Set information for all residents receiving covered skilled care, regardless of payer.

Separately, value-based purchasing adjustments are expected to reduce payments to affected facilities by approximately $203.6 million in fiscal year 2027.

CMS is also examining whether increases in documented patient severity under the Patient Driven Payment Model reflect actual clinical complexity or changes in coding practices, but it finalized no related payment adjustment. Read more about the SNF final payment rule from CMS.