Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program for Federal Fiscal Year 2026

<RULE> DEPARTMENT OF HEALTH AND HUMAN SERVICES <SUBAGY>Centers for Medicare & Medicaid Services</SUBAGY> <CFR>42 CFR Part 413</CFR> <DEPDOC>[CMS-1827-F]</DEPDOC> <RIN>RIN 0938-AV47</RIN> <SUBJECT>Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program for Federal Fiscal Year 2026</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule finalizes changes and updates to the policies and payment rates used under the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for fiscal year 2026. This final rule also updates the requirements for the SNF Quality Reporting Program and the SNF Value-Based Purchasing Program. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> These regulations are effective on October 1, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> <E T="03">PDPM@cms.hhs.gov</E> for issues related to the SNF PPS. Heidi Magladry, (410) 786-6034, for information related to the skilled nursing facility quality reporting program. Christopher Palmer, (410) 786-8025, for information related to the skilled nursing facility value-based purchasing program. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Availability of Certain Tables Exclusively Through the Internet on the CMS Website</HD> As discussed in the FY 2014 SNF PPS final rule (78 FR 47936), tables setting forth the Wage Index for Urban Areas Based on CBSA Labor Market Areas and the Wage Index Based on CBSA Labor Market Areas for Rural Areas are no longer published in the <E T="04">Federal Register</E> . Instead, these tables are available exclusively through the internet on the CMS website. The wage index tables for this final rule can be accessed on the SNF PPS Wage Index home page, at <E T="03">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html.</E> Readers who experience any problems accessing any of these online SNF PPS wage index tables should contact Patricia Taft at (410) 786-4561. <HD SOURCE="HD1">I. Executive Summary</HD> <HD SOURCE="HD2">A. Purpose</HD> This final rule will update the Skilled Nursing Facility (SNF) prospective payment rates for fiscal year (FY) 2026, as required under section 1888(e)(4)(E) of the Social Security Act (the Act). It also implements section 1888(e)(4)(H) of the Act, which requires the Secretary to publish specified information relating to the payment update (see section II.C. of this final rule) in the <E T="04">Federal Register</E> before the August 1 that precedes the start of each FY. In this final rule, we finalize several technical revisions to the code mappings used to classify patients under the Patient Driven Payment Model (PDPM) to improve payment and coding accuracy. This final rule updates requirements for the SNF Quality Reporting Program (QRP) including the removal of four standardized patient assessment data elements under the Social Determinants of Health (SDOH) category. We also amend and codify our reconsideration policy and process related to non-compliance determinations that a SNF has not met QRP reporting requirements. In addition, we provide a summary of the comments received on three Requests for Information (RFIs) for the SNF QRP, specifically on future measure concepts for the SNF QRP, potential revisions to the data submission deadlines for assessment data collected for the SNF QRP, and advancing digital quality measurement in SNFs. Finally, this final rule updates the Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program, including providing final performance standards, removing the Health Equity Adjustment from the Program's scoring methodology, applying the Program's scoring methodology to the Skilled Nursing Facility Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, adopting a new reconsideration process that will allow SNFs to appeal the Centers for Medicare & Medicaid Services (CMS) decisions on review and correction requests, and finalizing technical updates to the SNF VBP Program's regulations text. Also, for the SNF VBP Program, we are finalizing our proposal to remove the Health Equity Adjustment in the Program's scoring methodology. <HD SOURCE="HD2">B. Summary of Major Provisions</HD> In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the Act, this final rule updates the annual rates that we published in the SNF PPS final rule for FY 2025 (89 FR 64048). In addition, this final rule includes a forecast error adjustment for FY 2026. We are also finalizing several technical revisions to the code mappings used to classify patients under the PDPM to improve payment and coding accuracy. For the SNF QRP, we are finalizing our proposal to remove four standardized patient assessment data elements under the SDOH category beginning with residents admitted on October 1, 2025, for the FY 2027 SNF QRP. Additionally, we are finalizing our proposals to amend and codify our reconsideration request policy and process. Finally, we are summarizing comments received in response to three Requests for Information (RFIs) for the SNF QRP on future measure concepts for the SNF QRP, potential revisions to the data submission deadlines for assessment data collected for the SNF QRP from 4.5 months after the end of each quarter to 45 days after the end of each quarter, and advancing digital quality measurement in SNFs. For the SNF VBP Program, we are finalizing several updates. First, we are providing final performance standards for the FY 2028 and FY 2029 program years to comply with the Program's statutory notice deadline. Second, we are applying the previously finalized scoring methodology codified at 42 CFR 413.338(e)(1) and 413.338(e)(3) of our regulations to the SNF WS PPR measure beginning with the FY 2028 program year, which is the first year that measure will be used in the SNF VBP Program's measure set (88 FR 53280). Third, we are finalizing our proposal to remove the Health Equity Adjustment to simplify the scoring methodology and provide clearer incentives for SNFs as they seek to improve their quality of care for all residents. Fourth, we are finalizing our proposal to adopt a reconsideration process that will allow SNFs to seek reconsideration of a review and correction request if they are not satisfied with CMS's decision on that request, beginning with the FY 2027 program year. Lastly, we are finalizing our proposal to adopt several updates to the SNF VBP Program's regulations text to align with finalized policies. <HD SOURCE="HD2">C. Summary of Cost and Benefits</HD> <GPH SPAN="3" DEEP="238"> <GID>ER04AU25.006</GID> </GPH> <HD SOURCE="HD1">II. Background on SNF PPS</HD> <HD SOURCE="HD2">A. Statutory Basis and Scope</HD> As amended by section 4432 of the Balanced Budget Act of 1997 (BBA 1997) (Pub. L. 105-33, enacted August 5, 1997), section 1888(e) of the Act provides for the implementation of a PPS for SNFs. This methodology uses prospective, case-mix adjusted per diem payment rates applicable to all covered SNF services defined in section 1888(e)(2)(A) of the Act. The SNF PPS is effective for cost reporting periods beginning on or after July 1, 1998, and covers virtually all costs of furnishing covered SNF services (routine, ancillary, and capital-related costs) other than costs associated with approved educational activities and bad debts. Under section 1888(e)(2)(A)(i) of the Act, covered SNF services include post-hospital extended care services for which benefits are provided under Medicare Part A, as well as those items and services (other than a small number of excluded services, such as physicians' services) for which payment may otherwise be made under Medicare Part B and which are furnished to Medicare beneficiaries who are residents in a SNF during a covered Medicare Part A stay. A comprehensive discussion of these provisions appears in the May 12, 1998, interim final rule (63 FR 26252). In addition, a detailed discussion of the legislative history of the SNF PPS is available online at <E T="03"> https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf.</E> Section 215(a) of the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93, enacted April 1, 2014) added new section 1888(g) to the Act, requiring the Secretary to specify an all cause all condition hospital readmission measure and an all-condition risk adjusted potentially preventable hospital readmission measure for the SNF setting. Additionally, section 215(b) of PAMA added section 1888(h) to the Act requiring the Secretary to implement a VBP program for SNFs. In 2014, section 2(c)(4) of the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 (Pub. L. 113-185, enacted October 6, 2014) amended section 1888(e)(6) of the Act, which requires the Secretary to implement a QRP for SNFs under which SNFs report data on measures and resident assessment data. Finally, section 111 of the Consolidated Appropriations Act, 2021 (CAA, 2021) (Pub. L. 116-260, enacted December 27, 2020) amended section 1888(h)(2)(A) of the Act, authorizing the Secretary to apply up to ten measures to the VBP program for SNFs. <HD SOURCE="HD2">B. Initial Transition for the SNF PPS</HD> Under sections 1888(e)(1)(A) and (e)(11) of the Act, the SNF PPS included an initial, three phase transition that blended a facility-specific rate (reflecting the individual facility's historical cost experience) with the Federal case mix adjusted rate. The transition extended through the facility's first 3 cost reporting periods under the prospective payment system (PPS), up to and ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 306k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━