On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for the Fiscal Year (FY) 2026 Skilled Nursing Facility Prospective Payment System (SNF PPS). As part of its annual regulatory update, CMS proposes a 2.8 percent increase in payment rates for SNFs, which reflects a 3.0 percent market basket increase, a 0.6 percent forecast error adjustment, and a negative 0.8 percent productivity adjustment.
In addition to the payment rate adjustment, the proposed rule includes updates to the SNF Value-Based Purchasing (VBP) Program. CMS estimates that VBP payment reductions will total $196.5 million in FY 2025, with similar impacts expected in FY 2026. The proposal also removes the Health Equity Adjustment from the program and introduces a reconsideration process that would allow facilities to appeal CMS’s determinations during the Review and Correction period.
CMS is also proposing several updates to the Patient-Driven Payment Model (PDPM) ICD-10 code mappings. These changes are aimed at improving consistency and accuracy in diagnosis coding, which plays a key role in how SNFs are reimbursed under Medicare Part A. The updated mappings are intended to align with the most recent ICD-10 coding guidance and reflect changes in clinical practice and classification standards.
Changes to the SNF Quality Reporting Program (QRP) are also included in the proposed rule. CMS proposes to remove four standardized patient assessment data elements related to Social Determinants of Health (SDOH) — one item related to living situation, two related to food, and one related to utilities — beginning October 1, 2025.
The proposed rule also includes a Request for Information (RFI) seeking feedback on ways to streamline QRP reporting and improve regulatory efficiency.
Access the CMS fact sheet here.
Compliance Perspective
Issue
The FY 2026 SNF PPS proposed rule outlines several changes that will impact SNF operations, staffing, and compliance activities in the coming year. These include a proposed 2.8 percent payment increase, updates to the SNF VBP Program, revisions to the SNF QRP, and the removal of specific SDOH data elements from quality reporting. Additionally, CMS proposes updates to the PDPM ICD-10 code mappings, which may affect payment accuracy and skilled intervention eligibility. Facilities should review these proposed changes to ensure their internal coding, assessment processes, and quality reporting practices are aligned with CMS’s updated criteria and adjust their operations as needed. Facilities should also monitor any additional regulatory changes that may result from CMS’s RFI on streamlining regulations and reducing administrative burdens.
Discussion Points
- Review and update your policies and procedures to reflect the proposed payment updates and quality reporting changes. Also review documentation practices for the ICD-10 code mapping under PDPM and prepare to adjust quality reporting workflows based on the proposed removal of certain SDOH data elements beginning October 1, 2025.
- Educate staff, particularly those in billing, MDS coordination, and clinical documentation, on the proposed changes to ICD-10 code mapping, quality reporting metrics, and VBP scoring updates. Provide training on documentation changes related to the removed SDOH items and ensure staff understand the impact of those removals on assessment and care planning processes.
- Audit to assess whether coding and assessment practices are aligned with CMS’s updated criteria. Periodically audit data submissions and payment accuracy to ensure compliance with CMS regulations and to avoid financial or reporting penalties.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*