CMS proposes 2.8% SNF rate hike, ICD-10 updates & SDOH changes for FY 2026.
Fiscal Year 2026 SNF PPS Proposed Rule
On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update Medicare payment policies and rates for skilled nursing facilities (SNFs) under the Skilled Nursing Facility Prospective Payment System (SNF PPS) for Fiscal Year (FY) 2026. This annual update fulfills CMS’s legal obligation to revise SNF payment policies. Below are the key provisions:
- Payment Rate Update: CMS proposes a 2.8% increase in SNF PPS rates for FY 2026, reflecting a 3.0% market basket update, a 0.6% forecast error adjustment, and a negative 0.8% productivity adjustment, resulting in an estimated $997 million increase in payments.
- PDPM ICD-10 Code Mappings: Proposed changes to 34 new ICD-10 codes effective October 1, 2024, aim to enhance payment accuracy by aligning mappings with a holistic view of patient needs under the Patient-Driven Payment Model (PDPM).
- SNF Value-Based Purchasing (VBP) Program: Updates include revised scoring policies, removal of the Health Equity Adjustment beginning FY 2027, and a new reconsideration process to ensure accurate performance scores.
- SNF Quality Reporting Program (QRP): Proposals include removing four Social Determinants of Health (SDOH) standardized patient assessment data elements (living situation, two food items, utilities) starting FY 2027 and amending the reconsideration request process.
Request For Information
CMS seeks public input on streamlining regulations to reduce administrative burdens, aligning with Executive Order 14192, “Unleashing Prosperity Through Deregulation” (January 31, 2025). Stakeholders can review the proposed rule and submit comments by June 10, 2025, via the Federal Register.
October 2025 MDS 1.20.1 Draft Item Sets: Focus on Social Determinants of Health
On October 1, 2024, CMS released the draft MDS 1.20.1 item sets, set for implementation on October 1, 2025. The most significant change is the introduction of Section R (Health-Related Social Needs), which emphasizes Social Determinants of Health (SDOH) to enhance care planning and equity.
Key Changes in MDS 1.20.1
- Section R (Health-Related Social Needs):
- Introduces SDOH items addressing living situation, food security, utilities, and transportation access.
- Aims to reduce healthcare disparities and improve discharge planning by identifying social barriers to care.
- Other Revisions:
- Updates to Sections A (Identification Information), B (Hearing, Speech, Vision), I (Active Diagnoses), and O (Special Treatments, Procedures, and Programs).
- Removal of item O0400 (Therapies) and replacement with O0390 (Therapy Services) to streamline documentation.
- Impact: These changes require Nurse Assessment Coordinators (NACs) and Interdisciplinary Teams (IDTs) to prioritize resident interviews and accurate SDOH documentation.
Implementation Steps for SNFs
- Educate the Team: Train NACs and IDTs on Section R’s importance and its role in addressing SDOH to improve resident outcomes.
- Conduct Timely Interviews: Complete SDOH interviews within the assessment reference period, relying primarily on resident responses rather than secondary sources.
- Enhance Documentation: Avoid excessive use of dashes in SDOH coding to meet SNF QRP data submission thresholds and prevent penalties under Medicare Part A.
- Collaborate with Leadership: Work with the Director of Nursing Services (DNS) to address assessment challenges and refine processes.
Preparing for SDOH Compliance
- Current SDOH Practices: Ensure accurate and timely interviews for existing SDOH items to maintain compliance and avoid payment penalties.
- Staff Training: Foster collaboration between NACs and IDTs to standardize SDOH assessment protocols.
- Data Submission: Monitor SDOH data entry to minimize errors and ensure adherence to SNF QRP requirements.
How Polaris Group Can Help
Navigating the FY 2026 SNF PPS proposed rule and MDS 1.20.1 changes requires proactive preparation. Polaris Group offers expert consulting services, including staff training, compliance audits, and process optimization, to ensure your facility meets CMS requirements, maximizes reimbursements, and aligns with 2025 State Survey guidance. Contact us to learn more about how we can support your team.
