Medicare Will Pay Nursing Homes 2.4 Percent More Starting This October

The Centers for Medicare and Medicaid Services issued the fiscal year 2027 skilled nursing facility prospective payment system final rule on July 29, setting the rates Medicare pays for covered short-term stays in nursing facilities.

CMS finalized a 2.4 percent increase in SNF payment rates for FY 2027, which begins October 1, 2026. The update reflects a 3.3 percent market basket increase minus a 0.9 percentage point productivity adjustment. Aggregate SNF payments are projected to rise by approximately 882 million dollars compared to fiscal year 2026.

To receive full payment rates, facilities must meet the quality reporting requirements of the SNF Quality Reporting Program. CMS is removing two COVID-related measures from that program beginning with FY 2028, saying they no longer reflect current public health priorities.

Separately, CMS published a request for information asking stakeholders to propose updates to the Patient Driven Payment Model, the case-mix classification system used to calculate SNF care payments since 2019. CMS said the request is aimed at keeping payment policy current as the SNF patient population and care practices evolve.

Medicare covers skilled nursing facility care for beneficiaries who qualify after a hospital stay of at least three days. The rate update affects facility revenue, not the daily coinsurance amounts that Medicare beneficiaries pay for covered stays.