The Centers for Medicare & Medicaid Services (CMS) has published its annual update to Part A reimbursement of skilled nursing facilities in traditional Medicare. 91 Fed. Reg. 17678 (Apr. 7, 2026). CMS reports that the highest case-mix adjusted federal rates for urban and rural SNFs are more than $1000 per day (p. 17683, Table A, urban, Table B5, rural). CMS estimates that, taken together, SNFs will receive an increase of $888 million during Fiscal Year 2027. CMS, “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program for Federal Fiscal Year 2027,” 91 Fed. Reg. 17678 (Apr. 7. 2026). Comments are due June 1, 2026. File code is CMS-1843-P.
CMS includes in the proposed rule a “Request for Information: Methodology for Quantifying and Addressing Case-Mix Creep Under the Patient Drive Payment Model [PDPM].” 91 Fed. Reg., 17689-17692. Although CMS intended for the PDPM system to be budget-neutral when PDPM replaced the prior reimbursement system (called Resource Utilization Groups) on October 1, 2019, CMS found that “actual payments under PDPM exceeded expected levels, leading CMS to implement a 4.6 percent parity adjustment recalibration phased in over two years.” 91 Fed. Reg., 17690.
CMS continued to monitor resident coding and is working on “developing a regression framework to quantify the extent to which recent case-mix trends may reflect nominal coding changes, commonly referred to as ‘case-mix creep,’” id.
Discussing Observed Case-Mix Trends, CMS writes, “These data suggest significant increases in certain case-mix indexes (CMIs) that are unlikely to reflect underlying health status trends in the patient population.,” id., and provides examples.
| Resident assessment issue | Rate before PDPM | Rate in FY 2024 |
| Malnutrition | 5% | 47% |
| Swallowing disorder | 4% | 21% |
| Depression | 4% | 19% |
Id. CMS also reports that case-mix indices (CMIs) “have increased at a rate that exceeds what would be expected based solely on changes in patient health status, while median per-diem costs, which reflect patient resource utilization, have declined,” id.
Therapy payments declined significantly following implementation of PDPM.
| Therapy | Before PDPM | After PDPM |
| Physical therapy costs | $67 | $51 |
| Occupational therapy costs | $58 | $45 |
| Speech language pathology costs | $43 | $39 |
Id. CMS finds that the “divergence suggests a potential disconnect between reported acuity and observed resource utilization” and that “these patterns underscore the need for a systematic approach to evaluating how much observed case-mix growth reflects real changes versus changes in coding or documentation,” id.
CMS describes in detail the methodology it is considering using to address case-mix creep, id. 17690-17691. CMS requests information from the public about its methodology, data sources, alternative approaches to addressing case-mix creep, and other related considerations, id. 17691.
CMS also proposes several changes in the Skilled Nursing Facility Quality Reporting Program (SNF QRP): removing two vaccination measures beginning with FY 2028 and adding a quality measure related to advanced care planning, id. 17694-17695.
CMS is also considering “expanding MDS Data Submission on All SNF Residents Regardless of Payer,” id. 17697. 17697-17700. CMS is concerned that the SNF QRP requires data submission only for Medicare beneficiaries in traditional Medicare (which CMS calls fee-for-service). It cites the Congressional Budget Office’s estimate that 54% of Medicare beneficiaries are currently enrolled in Medicare Advantage and that by 2034, 64% of Medicare beneficiaries will be in Medicare Advantage, id. 17697. CMs writes, “Therefore, submitting MDS data on all SNF residents, regardless of payer, would provide the most robust and accurate representation of SNF quality,” id. 17697-17698.
CMS also suggests that requiring submission of MDS data on all residents “could promote higher quality more efficient healthcare for all residents through standardization of data submission and support for the exchange of longitudinal information between SNFs and other providers,” “could support SNFs in their quality improvement activities,” and “could contribute to better healthcare outcomes for our beneficiaries, enabling them to make more informed decisions about where to receive SNF care,” id. 17698.
May 7, 2026 – T. Edelman