In the March 12, 2026, MLN Connects newsletter, the Centers for Medicare & Medicaid Services (CMS) announced updates to its Medicare Payment Systems educational tool for 2026. The resource explains how Medicare pays for services across several care settings, including inpatient hospitals, hospice, hospital outpatient departments, inpatient rehabilitation facilities, long-term care hospitals, ambulatory surgical centers, home health agencies, durable medical equipment suppliers, and skilled nursing facilities (SNFs).
Many providers are paid under a Prospective Payment System (PPS). Under PPS, Medicare payments are based on predetermined formulas rather than the actual intensity of services provided. Payment amounts are determined using classification systems specific to each type of service.
For skilled nursing facilities, Medicare pays under the Skilled Nursing Facility Prospective Payment System (SNF PPS). SNFs receive a per diem payment for Medicare Part A residents that covers routine services, ancillary services, and capital-related costs. Certain services are excluded, such as approved educational activities and other items that fall outside SNF consolidated billing.
CMS updated the market basket adjustment used for SNF PPS beginning in Fiscal Year (FY) 2026. The original 3.3 percent market basket increase was adjusted upward by 0.6 percent for forecast error, resulting in a 3.9 percent increase. After applying a 0.7 percentage-point productivity adjustment, the final FY 2026 SNF market basket update is 3.2 percent.
CMS also updated the Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program. For the FY 2026 program year, incentive payments will be based on performance on four quality measures:
- SNF 30-Day All-Cause Readmission Measure (SNFRM), which evaluates unplanned hospital readmissions
- Skilled Nursing Facility Healthcare-Associated Infections Requiring Hospitalization (SNF HAI)
- Total Nursing Staff Turnover
- Total Nursing Hours per Resident Day
Performance during the FY 2024 period (October 1, 2023, through September 30, 2024) will be compared to the FY 2022 baseline period (October 1, 2021, through September 30, 2022).
Beginning in the FY 2027 program year, the SNF VBP Program will expand to eight quality measures. New measures will include discharge to community, falls with major injury among long-stay residents, discharge function scores, and hospitalizations per 1,000 long-stay resident days.
The SNF 30-Day All-Cause Readmission Measure will remain in the program through FY 2027. Beginning in FY 2028, CMS will replace it with the Skilled Nursing Facility Within-Stay Potentially Preventable Readmission measure.
Additional information about the Medicare Payment Systems is available here. You can access the Quality Measures for FY 2026 here.
Compliance Perspective
Issue
CMS continues to update Medicare payment policies and quality measurement programs that affect SNFs and other post-acute care providers. Recent updates to the Medicare Payment Systems educational tool include revised information related to the SNF PPS and changes to the SNF VBP Program, including expanded quality measures in upcoming program years. As CMS continues to refine payment methodologies and quality performance expectations, facilities should ensure internal processes remain aligned with current guidance. This includes maintaining clear policies, ensuring staff understand applicable requirements, and monitoring performance data tied to reimbursement and quality outcomes.
Discussion Points
- Review and update policies and procedures related to Medicare payment systems, documentation practices, and quality performance monitoring to ensure alignment with current CMS guidance. Policies should address responsibilities for tracking regulatory updates, monitoring performance under value-based purchasing programs, and responding to changes that may affect reimbursement or quality reporting. Facilities may also consider collaborating with a consultant to review existing policies, identify potential compliance gaps, and ensure internal processes support ongoing regulatory readiness.
- Provide targeted education for billing, clinical, and administrative staff to reinforce accurate Medicare claims submission and compliance practices. Med-Net Academy offers the course Understanding and Using the Medicare Triple Check Process, which reviews how to ensure billing accuracy for skilled services, prevent submission of false claims, reduce the number of adjusted or denied claims, confirm residents receive entitled benefits, and ensure clinical documentation aligns with financial data.
- Conduct periodic audits or internal reviews to evaluate documentation practices, quality measure performance, and overall compliance with CMS payment and reporting expectations. Facilities may also find value in engaging an external reviewer or consultant to perform focused reviews or mock surveys, providing an objective assessment and recommendations to strengthen compliance and operational readiness.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*