CMS Proposes 2.8 Percent Increase to Nursing Home Medicare Rates
(April 15, 2025) The Centers for Medicare and Medicaid Services (CMS) has released the Federal Fiscal Year (FFY) 2026 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) proposed rule that sets SNF Medicare Part A rates and makes other payment and reporting policy updates. The proposal would increase Medicare Part A rates by 2.8 percent for the FFY that starts Oct. 1, 2025 and would make minor updates to policies governing the SNF Value-Based Purchasing (VBP) Program and Quality Reporting Program (QRP). A high-level summary of the proposed rule is provided below. The CMS fact sheet is available here, and the public inspection draft of the rule is here. It is scheduled to be published in the April 30th Federal Register.
Payment Update
The proposed rule includes a 2.8 percent increase in SNF Medicare Part A rates which is comprised of a 3.0 percent market basket (i.e., inflation) adjustment, a 0.6 percent forecast error adjustment due to the underestimate of inflation from two years prior, and a negative 0.8 percent productivity adjustment. CMS estimates that this would result in a nationwide reimbursement increase of $997 million. The rule would make several changes to the International Classification of Diseases (ICD)-10 mapping used to determine a resident’s Patient-Driven Payment Model (PDPM) category.
Besides the increase to base rates, the regional wage index is an integral part of the rate calculation and can have a significant impact on reimbursement. Please note that last year’s wage index impacts were notably negative for a number of regions. The proposed rule would adjust 71.9 percent of the rate by the facility’s regional wage index. Proposed regional wage index values suggest a decrease of 1.3 percent for NYC relative to the current wage index, a 2.9 percent decrease for Long Island, and a 4 percent decrease for Dutchess and Orange counties. If enacted as proposed, the wage index decreases in these regions would offset some or all of the market basket increase.
Most upstate regions would see increases to the wage index, and therefore an overall greater increase in Part A rates than the 2.8 percent base increase, if the rule were to be adopted as proposed. The wage index in the Buffalo area would increase by 0.5 percent, Rochester and Binghamton by 3.8 percent, Central NY by 1.2 percent, Utica by 3.2 percent, Capital District by 4.8 percent, and Washington and Warren counties by 10 percent. Counties deemed non-urban would see a wage index increase of 2.9 percent.
VBP
SNF Medicare Part A rates are adjusted by a VBP multiplier that can increase or decrease reimbursement by approximately 2 percent based on the facility’s performance on the VBP measure(s). The program was expanded from one to eight measures in the past three years, with some of the measures yet to be implemented. This year’s proposal would remove the not-yet-implemented Health Equity Adjustment (HEA) that, beginning with the FFY 2027 program year, would have rewarded homes that serve higher proportions of residents dually eligible for Medicaid and Medicare. CMS indicates that the reason for removing the HEA is their belief that it will simplify the SNF VBP Program’s scoring methodology and provide clearer incentives for providers. If the adjustment were implemented as part of the VBP Program, it would authorize CMS to return to providers slightly more than the 60 percent of the VBP withhold that currently gets returned through VBP Program payments.
QRP
Provider rates are not impacted by the publicly reported QRP measures. However, failure to report sufficient data to meet the set threshold requirements does result in a 2 percent reduction of Part A reimbursement. CMS is proposing to update the QRP by removing four standardized patient assessment data elements related to social determinants of health that were adopted last year and would have been collected starting in October 2025. These include one item for Living Situation (R0310), two items for Food (R0320A and R0320B), and one item for Utilities (R0330). The rule would also provide greater flexibility for providers to submit QRP reconsideration requests. In addition, the rule includes a Request for Information (RFI) seeking input on four concepts for potential future QRP measures: data exchange interoperability, healthy eating, delirium, and well-being (defined as a "comprehensive approach to disease prevention and health promotion, as it integrates mental and physical health while emphasizing preventative care to proactively address potential health issues").
As part of the rule, CMS included an RFI seeking public input on approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries, and other stakeholders participating in the Medicare program. CMS has made the RFI available here, asking that comments in response to the RFI be made through the provided weblink.
CMS will accept other comments on the proposed rule overall until June 11th. It is expected to be finalized in mid-summer. We invite members to review the rule and to share reactions and comments with us as well as with CMS.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841