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Proposed Rule2026-06674

Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program for Federal Fiscal Year 2027

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Published

April 7, 2026

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This rule proposes changes and updates to the policies and payment rates used under the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for fiscal year 2027. This proposed rule also updates the requirements for the SNF Quality Reporting Program and the SNF Value-Based Purchasing Program.

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[Federal Register Volume 91, Number 66 (Tuesday, April 7, 2026)]
[Proposed Rules]
[Pages 17678-17717]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06674]

[[Page 17677]]

Vol. 91

Tuesday,

No. 66

April 7, 2026

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 413

Medicare Program; Prospective Payment System and Consolidated Billing
for Skilled Nursing Facilities; Updates to the Quality Reporting
Program for Federal Fiscal Year 2027; Proposed Rule

Federal Register / Vol. 91 , No. 66 / Tuesday, April 7, 2026 /
Proposed Rules

[[Page 17678]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 413

[CMS-1843-P]
RIN 0938-AV75

Medicare Program; Prospective Payment System and Consolidated
Billing for Skilled Nursing Facilities; Updates to the Quality
Reporting Program for Federal Fiscal Year 2027

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This rule proposes changes and updates to the policies and
payment rates used under the Skilled Nursing Facility (SNF) Prospective
Payment System (PPS) for fiscal year 2027. This proposed rule also
updates the requirements for the SNF Quality Reporting Program and the
SNF Value-Based Purchasing Program.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by June 1, 2026.

ADDRESSES: In commenting, please refer to file code CMS-1843-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1843-P, P.O. Box 8016, Baltimore, MD
21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1843-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
<a href="/cdn-cgi/l/email-protection#cd9d899d808daea0bee3a5a5bee3aaa2bb">[email&#160;protected]</a> 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.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="http://www.regulations.gov/">http://www.regulations.gov/</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.

Availability of Certain Tables Exclusively Through the Internet on the
CMS Website

As discussed in the FY 2014 SNF PPS final rule (78 FR 47936),
tables setting forth the Wage Index for Urban Areas Based on Core Based
Statistical Area (CBSA) Labor Market Areas and the Wage Index Based on
CBSA Labor Market Areas for Rural Areas are no longer published in the
Federal Register. Instead, these tables are available exclusively
through the internet on the CMS website. The wage index tables for this
proposed rule can be accessed on the SNF PPS Wage Index home page, at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>.
Readers who experience any problems accessing any of these online
SNF PPS wage index tables should contact Patricia Taft at (410) 786-
4561.

I. Executive Summary

A. Purpose

This proposed rule would update the skilled nursing facility (SNF)
prospective payment rates for fiscal year (FY) 2027, as required under
section 1888(e)(4)(E) of the Social Security Act (the Act). It would
also implement 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 proposed rule) in the Federal
Register before the August 1 that precedes the start of each fiscal
year. We are also proposing to continue to use the concurrent pre-
floor, pre-reclassified Inpatient Prospective Payment System (IPPS)
hospital wage index as the basis for the SNF wage index. In this
proposed rule, we are not proposing any substantive changes to the
Patient Driven Payment Model (PDPM) ICD-10 code mappings. This proposed
rule proposes updates to the SNF Quality Reporting Program (QRP)
including removing two measures from the program, specifically the
COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) Measure
and the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to
Date Measure. We are also proposing the revision of the SNF QRP data
submission deadlines. In addition, we are proposing to require the
submission of MDS data on each resident receiving covered skilled care
in a SNF, regardless of payer. Finally, we are requesting comment on
future measure concepts for the SNF QRP. We are also proposing updates
to the Skilled Nursing Facility Value-Based Purchasing (SNF VBP)
Program, including estimating performance standards and updating the
review and correction policy for measures calculated with MDS
assessment data. This proposed rule also includes a Request for
Information (RFI) on the methodology for quantifying and addressing
case-mix creep under PDPM.

B. Summary of Major Provisions

In accordance with sections 1888(e)(4)(E)(ii)(IV) and (e)(5) of the
Act, this proposed rule would update the annual rates that we published
in the SNF PPS final rule for FY 2026 (90 FR 37310).
For the SNF QRP we are proposing to remove two measures beginning
with the FY 2028 SNF QRP: the COVID-19 Vaccination Coverage Among
Healthcare Personnel Measure and the COVID-19 Vaccine: Percent of
Patients/Residents Who are Up to Date Measure. Additionally, we are
proposing revisions to the data submission deadlines for data collected
for the SNF QRP from 4.5 months after the end of each quarter to the
15th day of the second month after the end of the

[[Page 17679]]

quarter beginning with the FY 2029 SNF QRP. We are also proposing to
require the submission of MDS data on all SNF residents admitted for
covered skilled care regardless of payer beginning with the FY 2031 SNF
QRP. Finally, we are requesting comment on future measure concepts for
the SNF QRP.
For the SNF VBP Program, we are providing estimated performance
standards for the FY 2029 and FY 2030 program years to comply with the
Program's statutory notice deadline. We are also proposing to update
the ``snapshot date'' codified at 42 CFR 413.338(f)(1)(v) for two
measures that are calculated using MDS assessment data to maintain
alignment with proposed SNF QRP submission deadlines for MDS assessment
data, beginning with FY 2027 data.

C. Summary of Cost and Benefits

Table 1--Estimated Cost and Benefits
------------------------------------------------------------------------
Updates Estimated total transfers/costs
------------------------------------------------------------------------
FY 2027 SNF PPS payment rate The overall economic impact of this
update. proposed rule is an estimated increase
of $888 million in aggregate payments to
SNFs during FY 2027.
FY 2028 SNF QRP changes due The overall economic impact of this
to the removal of two proposed rule to SNFs is an estimated
measures. decrease of $8.3 million annually to
SNFs beginning with the FY 2028 SNF QRP.
FY 2031 SNF QRP changes due The overall economic impact of this
to the requirement to submit proposed rule to those SNFs is an
MDS data on each resident estimated increase of $88 million
receiving skilled care annually to SNFs beginning with the FY
regardless of payer. 2031 SNF QRP.
FY 2027 SNF VBP changes...... The overall economic impact of the SNF
VBP Program is an estimated reduction of
$203.41 million in aggregate payments to
SNFs during FY 2027.
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II. Background on SNF PPS

A. Statutory Basis and Scope

As amended by section 4432 of the Balanced Budget Act of 1997 (BBA
1997) (Pub. L. 10533, 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 <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf</a>.
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.

B. Initial Transition for the SNF PPS

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, up to and including the one that began
in FY 2001. Thus, the SNF PPS is no longer operating under the
transition, as all facilities have been paid at the full Federal rate
effective with cost reporting periods beginning in FY 2002. As we now
base payments for SNFs entirely on the adjusted Federal per diem rates,
we no longer include adjustment factors under the transition related to
facility-specific rates for the upcoming FY.

C. Required Annual Rate Updates

Section 1888(e)(4)(E) of the Act requires the SNF PPS payment rates
to be updated annually. The most recent annual update occurred in a
final rule that set forth updates to the SNF PPS payment rates for FY
2026 (90 FR 37310).
Section 1888(e)(4)(H) of the Act specifies that we provide for
publication annually in the Federal Register the following:
<bullet> The unadjusted Federal per diem rates to be applied to
days of covered SNF services furnished during the upcoming FY.
<bullet> The case-mix classification system to be applied for these
services during the upcoming FY.
<bullet> The factors to be applied in making the area wage
adjustment for these services.
Along with other revisions discussed in this preamble, this
proposed rule will set out the required annual updates to the per diem
payment rates for SNFs for FY 2027.

III. Proposed SNF PPS Ratesetting Methodology and FY 2027 Payment
Update

A. Federal Base Rates

Under section 1888(e)(4) of the Act, the SNF PPS uses per diem
Federal payment rates based on mean SNF costs in a base year (FY 1995)
updated for inflation to the first effective period of the PPS. We
developed the Federal payment rates using allowable costs from
hospital-based and freestanding SNF cost reports for reporting periods

[[Page 17680]]

beginning in FY 1995. The data used in developing the Federal rates
also incorporated a Medicare Part B add-on, which is an estimate of the
amounts that, prior to the SNF PPS, would be payable under Medicare
Part B for covered SNF services furnished to individuals during a
covered Medicare Part A stay in a SNF.
In developing the rates for the initial period, we updated costs to
the first effective year of the PPS (the 15-month period beginning July
1, 1998) using the SNF market basket and then standardized for
geographic variations in wages and for the costs of facility
differences in case mix. In compiling the database used to compute the
Federal payment rates, we excluded those providers that received new
provider exemptions from the routine cost limits, as well as costs
related to payments for exceptions to the routine cost limits. Using
the formula that the BBA 1997 prescribed, we set the Federal rates at a
level equal to the weighted mean of freestanding costs plus 50 percent
of the difference between the freestanding mean and weighted mean of
all SNF costs (hospital-based and freestanding) combined. We computed
and applied separately the payment rates for facilities located in
urban and rural areas and adjusted the portion of the Federal rate
attributable to wage related costs by a wage index to reflect
geographic variations in wages.

B. SNF Market Basket Update

1. SNF Market Basket
Section 1888(e)(5)(A) of the Act requires us to establish a SNF
market basket that reflects changes over time in the prices of an
appropriate mix of goods and services included in covered SNF services.
Accordingly, we have developed a SNF market basket that encompasses the
most commonly used cost categories for SNF routine services, ancillary
services, and capital-related expenses. In the SNF PPS final rule for
FY 2025 (89 FR 64065 through 64082), we rebased and revised the SNF
market basket, which included updating the base year from 2018 to 2022.
The SNF market basket is used to compute the market basket
percentage increase that is used to update the SNF Federal rates on an
annual basis, as required by section 1888(e)(4)(E)(ii)(IV) of the Act.
This market basket percentage increase is adjusted by a forecast error
adjustment, if applicable, and then further adjusted by the application
of a productivity adjustment as required by section 1888(e)(5)(B)(ii)
of the Act and described in section III.B.4. of this proposed rule.
As outlined in this proposed rule, we are proposing a FY 2027 SNF
market basket percentage increase of 3.2 percent based on IHS Global
Inc.'s (IGI's) fourth-quarter 2025 forecast of the 2022-based SNF
market basket (before application of the forecast error adjustment and
productivity adjustment). We are also proposing that if more recent
data subsequently become available (for example, a more recent estimate
of the market basket, the productivity adjustment, or the forecast
error adjustment), we would use such data, if appropriate, to determine
the FY 2027 SNF market basket percentage increase, labor-related share
relative importance, forecast error adjustment, or productivity
adjustment in the SNF PPS final rule.
2. Market Basket Update Factor for FY 2027
Section 1888(e)(5)(B) of the Act defines the SNF market basket
percentage increase as the percentage change in the SNF market basket
from the midpoint of the previous FY to the midpoint of the current FY.
For the Federal rates outlined in this proposed rule, we use the
percentage change in the SNF market basket to compute the update factor
for FY 2027. This factor is based on the FY 2027 percentage increase in
the 2022-based SNF market basket reflecting routine, ancillary, and
capital -related expenses. Sections 1888(e)(4)(E)(ii)(IV) and
(e)(5)(B)(i) of the Act require that the update factor used to
establish the FY 2027 unadjusted Federal rates be at a level equal to
the SNF market basket percentage increase. Accordingly, we determined
the total growth from the average market basket level for the period of
October 1, 2025, through September 30, 2026, to the average market
basket level for the period of October 1, 2026, through September 30,
2027. This process yields a percentage increase in the 2022-based SNF
market basket of 3.2 percent for FY 2027.
As further explained in section IV.B.3. of this proposed rule, as
applicable, we propose to adjust the percentage increase by the
forecast error adjustment from the most recently available FY for which
there is final data and apply this adjustment whenever the difference
between the forecasted and actual percentage increase in the market
basket exceeds a 0.5 percentage point threshold in absolute terms.
Additionally, section 1888(e)(5)(B)(ii) of the Act requires us to
reduce the market basket percentage increase by the productivity
adjustment (the 10 year moving average of changes in annual economy-
wide private nonfarm business total multifactor productivity for the
period ending September 30, 2027), which is estimated to be 0.8
percentage point, as described in section IV.B.4. of this proposed
rule.
We also note that section 1888(e)(6)(A)(i) of the Act provides
that, beginning with FY 2018, SNFs that fail to submit data, as
applicable, in accordance with sections 1888(e)(6)(B)(i)(II) and (III)
of the Act for a FY will receive a 2.0 percentage point reduction to
their market basket update for the FY involved, after application of
section 1888(e)(5)(B)(ii) of the Act (the productivity adjustment) and
section 1888(e)(5)(B)(iii) of the Act (the market basket increase). In
addition, section 1888(e)(6)(A)(ii) of the Act states that application
of the 2.0 percentage point reduction (after application of section
1888(e)(5)(B)(ii) and (iii) of the Act) may result in the market basket
percentage change being less than zero for a FY and may result in
payment rates for a FY being less than such payment rates for the
preceding FY. Section 1888(e)(6)(A)(iii) of the Act further specifies
that the 2.0 percentage point reduction is applied in a noncumulative
manner, so that any reduction made under section 1888(e)(6)(A)(i) of
the Act applies only to the FY involved, and that the reduction cannot
be taken into account in computing the payment amount for a subsequent
FY.
3. Forecast Error Adjustment
As discussed in the June 10, 2003, supplemental proposed rule (68
FR 34768) and finalized in the August 4, 2003, final rule (68 FR 46057
through 46059), Sec. 413.337(d)(2) provides for an adjustment to
account for SNF market basket forecast error. The initial adjustment
for SNF market basket forecast error applied to the update of the FY
2003 rate for FY 2004 and considered the cumulative forecast error for
the period from FY 2000 through FY 2002, resulting in an increase of
3.26 percent to the FY 2004 update. Subsequent adjustments in
succeeding FYs take into account the forecast error from the most
recently available FY for which there is final data and apply the
difference between the forecasted and actual change in the market
basket when the difference exceeds a specified threshold. We originally
used a 0.25 percentage point threshold for this purpose; however, for
the reasons specified in the FY 2008 SNF PPS final rule (72 FR 43425),
we adopted a 0.5 percentage point threshold effective for FY 2008 and
subsequent FYs. As we stated in the final rule for FY 2004 that first
issued the market basket forecast error adjustment (68 FR 46058), the

[[Page 17681]]

adjustment will reflect both upward and downward adjustments, as
appropriate.
For FY 2025 (the most recently available FY for which there is
final data), the forecasted or estimated increase in the SNF market
basket was 3.0 percent, and the actual increase for FY 2025 was 2.8
percent, resulting in the actual increase being 0.2 percentage point
lower than the estimated increase. Accordingly, as the difference
between the estimated and actual percentage increase in the market
basket does not exceed the 0.5 percentage point threshold, under the
policy previously described (comparing the forecasted and actual market
basket percentage increase), the FY 2027 market basket percentage
increase of 3.2 percent would not be adjusted to account for the
forecast error correction.
Table 2 shows the forecasted and actual market basket percentage
increases for FY 2025.

Table 2--Difference Between the Actual and Forecasted SNF Market Basket Percentage Increases for FY 2025
----------------------------------------------------------------------------------------------------------------
Forecasted FY Actual FY 2025
Index 2025 percentage percentage FY 2025
increase * increase ** difference
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SNF.......................................................... 3.0 2.8 -0.2
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* Published in Federal Register; based on second quarter 2024 IHS Global Inc. forecast (2022-based SNF market
basket).
** Based on the fourth quarter 2025 IHS Global Inc. forecast (2022-based SNF market basket), with historical
data through third quarter 2025.

4. Productivity Adjustment
Section 1888(e)(5)(B)(ii) of the Act, as added by section 3401(b)
of the Patient Protection and Affordable Care Act (Affordable Care Act)
(Pub. L. 111-148, enacted March 23, 2010), requires that, in FY 2012
and in subsequent FYs, the market basket percentage under the SNF
payment system (as described in section 1888(e)(5)(B)(i) of the Act) is
to be reduced annually by the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II)
of the Act, in turn, defines the productivity adjustment to be equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business multifactor productivity (as projected by the
Secretary of the Department of Health and Human Services (Secretary)
for the 10-year period ending with the applicable FY, year, cost
reporting period, or other annual period) (the ``productivity
adjustment'').
The United States Department of Labor's Bureau of Labor Statistics
(BLS) publishes the official measure of productivity for the United
States. The productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act is published by BLS as private nonfarm
business total factor productivity ((TFP) previously referred to as
multifactor productivity).\1\ We refer readers to the BLS website at
<a href="http://www.bls.gov/productivity">www.bls.gov/productivity</a> for the BLS historical published TFP data. A
complete description of IGI's TFP projection methodology is available
on CMS's website at <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch">https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch</a>.
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\1\ <a href="https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm">https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm</a>.
---------------------------------------------------------------------------

Section 1888(e)(5)(B)(ii) of the Act further states that the
reduction of the market basket percentage by the productivity
adjustment may result in the market basket percentage being less than
zero for a FY and may result in payment rates under section 1888(e) of
the Act being less than such payment rates for the preceding FY. Thus,
if the application of the productivity adjustment to the market basket
percentage calculated under section 1888(e)(5)(B)(i) of the Act results
in a productivity adjusted market basket percentage that is less than
zero, then the annual update to the unadjusted Federal per diem rates
under section 1888(e)(4)(E)(ii) of the Act would be negative, and such
rates would decrease relative to the prior FY.
Based on the data available for the FY 2027 SNF PPS proposed rule,
the proposed productivity adjustment (the 10-year moving average of
changes in annual economy-wide private nonfarm business TFP for the
period ending September 30, 2027) is projected to be 0.8 percentage
point.
Consistent with section 1888(e)(5)(B)(i) of the Act and Sec.
413.337(d)(2), and as outlined previously in section III.B.1. of this
proposed rule, the market basket percentage increase for FY 2027 for
the SNF PPS, based on IHS Global Inc.'s fourth quarter 2025 forecast of
the SNF market basket percentage increase, is estimated to be 3.2
percent. As outlined earlier in this section, we are applying a
proposed 0.8 percentage point productivity adjustment to the FY 2027
SNF market basket percentage increase. Therefore, the resulting
proposed FY 2027 SNF market basket update is equal to 2.4 percent.
5. Unadjusted Federal per Diem Rates for FY 2027
As stated in the FY 2019 SNF PPS final rule (83 FR 39162), in FY
2020 we implemented a new case-mix classification system to classify
SNF patients under the SNF PPS, the PDPM. As stated in section V.B.1.
of that final rule (83 FR 39189), under PDPM, the unadjusted Federal
per diem rates are divided into six components, five of which are case-
mix adjusted components (physical therapy (PT), occupational therapy
(OT), speech-language pathology (SLP), nursing, and non-therapy
ancillaries (NTA)), and one of which is a non-case-mix component, as
existed under the previous Resource Utilization Groups, Version IV
(RUG-IV) model. We propose to use the SNF market basket update,
adjusted as outlined previously in sections III.B.1. through III.B.4.
of this proposed rule, to adjust each per diem component of the Federal
rates forward to reflect the change in the average prices for FY 2027
from the average prices for FY 2026. We also propose further adjusting
the rates by a wage index budget neutrality factor outlined in section
III.D. of this proposed rule.
Further, in the past, we used the revised Office of Management and
Budget (OMB) delineations adopted in the FY 2015 SNF PPS final rule (79
FR 45632, 45634), with updates as reflected in OMB Bulletins Nos. 15-01
and 17-01 to identify a facility's urban or rural status for the
purpose of determining which set of rate tables apply to the facility.
As discussed in the FY 2021 SNF PPS proposed and final rules, we
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) to

[[Page 17682]]

identify a facility's urban or rural status effective beginning with FY
2021. As discussed in the FY 2025 SNF PPS proposed and final rules, we
adopted the revised OMB delineations identified in OMB Bulletin No. 23-
01 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf</a>) to identify a facility's urban or rural status
effective beginning with FY 2025.
Tables 3 and 4 reflect the unadjusted Federal rates for FY 2027,
prior to adjustment for case-mix.

Table 3--FY 2027 Unadjusted Federal Rate per Diem--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate Component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $77.45 $72.09 $28.92 $134.99 $101.85 $120.89
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 4--FY 2027 Unadjusted Federal Rate per Diem--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rate component PT OT SLP Nursing NTA Non-case-mix
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Diem Amount................................... $88.29 $81.09 $36.44 $128.98 $97.31 $123.13
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Case-Mix Adjustment

Under section 1888(e)(4)(G)(i) of the Act, the Federal rate also
incorporates an adjustment to account for facility case-mix, using a
classification system that accounts for the relative resource
utilization of different patient types. The statute specifies that the
adjustment is to reflect both a resident classification system that the
Secretary establishes to account for the relative resource use of
different patient types, as well as resident assessment data and other
data that the Secretary considers appropriate. The previous RUG-IV
model classified most patients into a therapy payment group and
primarily used the volume of therapy services provided to the patient
as the basis for payment classification, thus creating an incentive for
SNFs to furnish therapy regardless of the individual patient's unique
characteristics, goals, or needs. PDPM eliminates this incentive and
improves the overall accuracy and appropriateness of SNF payments by
classifying patients into payment groups based on specific, data-driven
patient characteristics, while simultaneously reducing the
administrative burden on SNFs.
The PDPM uses clinical data from the minimum data set (MDS), a core
set of screening, clinical, and functional status data elements,
including common definitions and coding categories, which form the
foundation of a comprehensive assessment for all residents of nursing
homes certified to participate in Medicare or Medicaid, consistent with
the provisions of section 1888(e)(4)(G)(i) of the Act. As outlined in
section IV.A. of this proposed rule, the clinical orientation of the
case-mix classification system supports the SNF PPS's use of an
administrative presumption that considers a beneficiary's initial case-
mix classification to assist in making certain SNF level of care
determinations. Further, because the MDS is used as a basis for
payment, as well as a clinical assessment, we have provided extensive
training on proper coding and the timeframes for MDS completion in our
Resident Assessment Instrument (RAI) Manual. As previously stated, for
an MDS to be considered valid for use in determining payment, the MDS
assessment must be completed in compliance with the instructions in the
RAI Manual in effect at the time the assessment is completed. For
payment and quality monitoring purposes, the RAI Manual consists of
both the Manual instructions and the interpretive guidance and policy
clarifications posted on the appropriate MDS website at <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/MDS30RAIManual.html</a>.
Under section 1888(e)(4)(H) of the Act, each update of the payment
rates must include the case-mix classification methodology applicable
for the upcoming FY. The FY 2027 payment rates set forth in this
proposed rule reflect the use of the PDPM case-mix classification
system from October 1, 2026, through September 30, 2027. The case-mix
adjusted PDPM payment rates for FY 2027 are listed separately for urban
and rural SNFs, in Tables 5 and 6 with corresponding case-mix values.
Given the differences between the previous RUG-IV model and PDPM in
terms of patient classification and billing, it was important that the
format of Tables 5 and 6 reflect these differences. More specifically,
under both RUG-IV and PDPM, providers use a Health Insurance
Prospective Payment System (HIPPS) code on a claim to bill for covered
SNF services. Under RUG-IV, the HIPPS code included the three-character
RUG-IV group into which the patient classified, as well as a two-
character assessment indicator code that represented the assessment
used to generate this code. Under PDPM, while providers still use a
HIPPS code, the characters in that code represent different things. For
example, the first character represents the PT and OT group into which
the patient classifies. If the patient is classified into the PT and OT
group ``TA'', then the first character in the patient's HIPPS code
would be an ``A.'' Similarly, if the patient is classified into the SLP
group ``SB'', then the second character in the patient's HIPPS code
would be a ``B.'' The third character represents the Nursing group into
which the patient classifies. The fourth character represents the NTA
group into which the patient classifies. Finally, the fifth character
represents the assessment used to generate the HIPPS code.
Tables 5 and 6 reflect the PDPM's structure. Accordingly, Column 1
of Tables 5 and 6 represents the character in the HIPPS code associated
with a given PDPM component. Columns 2 and 3 provide the case-mix index
and associated case-mix adjusted component rate, respectively, for the
relevant PT group. Columns 4 and 5 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant OT group. Columns 6 and 7 provide the case-mix index and
associated case-mix adjusted component rate, respectively, for the
relevant SLP group. Column 8 provides the nursing case-mix group (CMG)
connected with a given PDPM HIPPS character. For example, if the
patient qualified for the nursing group CBC1, then the third character
in the patient's HIPPS code would be a ``P.'' Columns 9 and 10 provide
the case-mix index and associated case-mix adjusted component rate,
respectively, for the relevant nursing group. Finally, columns 11 and
12 provide the case-mix index and associated case-mix adjusted
component

[[Page 17683]]

rate, respectively, for the relevant NTA group.
Tables 5 and 6 do not reflect adjustments which may be made to the
SNF PPS rates as a result of the SNF VBP Program, outlined in section
VII. of this proposed rule, or other adjustments, such as the variable
per diem adjustment.

Table 5--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate Nursing CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A.................. 1.45 $112.30 1.41 $101.65 0.64 $18.51 ES3.................. 3.84 $518.36 3.06 $311.66
B.................. 1.61 124.69 1.54 111.02 1.72 49.74 ES2.................. 2.90 391.47 2.39 243.42
C.................. 1.78 137.86 1.60 115.34 2.52 72.88 ES1.................. 2.77 373.92 1.74 177.22
D.................. 1.81 140.18 1.45 104.53 1.38 39.91 HDE2................. 2.27 306.43 1.26 128.33
E.................. 1.34 103.78 1.33 95.88 2.21 63.91 HDE1................. 1.88 253.78 0.91 92.68
F.................. 1.52 117.72 1.51 108.86 2.82 81.55 HBC2................. 2.12 286.18 0.68 69.26
G.................. 1.58 122.37 1.55 111.74 1.93 55.82 HBC1................. 1.76 237.58 ......... .........
H.................. 1.10 85.20 1.09 78.58 2.70 78.08 LDE2................. 1.97 265.93 ......... .........
I.................. 1.07 82.87 1.12 80.74 3.34 96.59 LDE1................. 1.64 221.38 ......... .........
J.................. 1.34 103.78 1.37 98.76 2.83 81.84 LBC2................. 1.63 220.03 ......... .........
K.................. 1.44 111.53 1.46 105.25 3.50 101.22 LBC1................. 1.35 182.24 ......... .........
L.................. 1.03 79.77 1.05 75.69 3.98 115.10 CDE2................. 1.77 238.93 ......... .........
M.................. 1.20 92.94 1.23 88.67 ......... ......... CDE1................. 1.53 206.53 ......... .........
N.................. 1.40 108.43 1.42 102.37 ......... ......... CBC2................. 1.47 198.44 ......... .........
O.................. 1.47 113.85 1.47 105.97 ......... ......... CA2.................. 1.03 139.04 ......... .........
P.................. 1.02 79.00 1.03 74.25 ......... ......... CBC1................. 1.27 171.44 ......... .........
Q.................. ......... ......... ......... ......... ......... ......... CA1.................. 0.89 120.14 ......... .........
R.................. ......... ......... ......... ......... ......... ......... BAB2................. 0.98 132.29 ......... .........
S.................. ......... ......... ......... ......... ......... ......... BAB1................. 0.94 126.89 ......... .........
T.................. ......... ......... ......... ......... ......... ......... PDE2................. 1.48 199.79 ......... .........
U.................. ......... ......... ......... ......... ......... ......... PDE1................. 1.39 187.64 ......... .........
V.................. ......... ......... ......... ......... ......... ......... PBC2................. 1.15 155.24 ......... .........
W.................. ......... ......... ......... ......... ......... ......... PA2.................. 0.67 90.44 ......... .........
X.................. ......... ......... ......... ......... ......... ......... PBC1................. 1.07 144.44 ......... .........
Y.................. ......... ......... ......... ......... ......... ......... PA1.................. 0.62 83.69 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table B5--PDPM Case-Mix Adjusted Federal Rates and Associated Indexes--Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nursing Nursing
PDPM group PT CMI PT rate OT CMI OT rate SLP CMI SLP rate Nursing CMG CMI rate NTA CMI NTA rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
A.................. 1.45 $128.02 1.41 $114.34 0.64 $23.32 ES3.................. 3.84 $495.28 3.06 $297.77
B.................. 1.61 142.15 1.54 124.88 1.72 62.68 ES2.................. 2.90 374.04 2.39 232.57
C.................. 1.78 157.16 1.60 129.74 2.52 91.83 ES1.................. 2.77 357.27 1.74 169.32
D.................. 1.81 159.80 1.45 117.58 1.38 50.29 HDE2................. 2.27 292.78 1.26 122.61
E.................. 1.34 118.31 1.33 107.85 2.21 80.53 HDE1................. 1.88 242.48 0.91 88.55
F.................. 1.52 134.20 1.51 122.45 2.82 102.76 HBC2................. 2.12 273.44 0.68 66.17
G.................. 1.58 139.50 1.55 125.69 1.93 70.33 HBC1................. 1.76 227.00 ......... .........
H.................. 1.10 97.12 1.09 88.39 2.70 98.39 LDE2................. 1.97 254.09 ......... .........
I.................. 1.07 94.47 1.12 90.82 3.34 121.71 LDE1................. 1.64 211.53 ......... .........
J.................. 1.34 118.31 1.37 111.09 2.83 103.13 LBC2................. 1.63 210.24 ......... .........
K.................. 1.44 127.14 1.46 118.39 3.50 127.54 LBC1................. 1.35 174.12 ......... .........
L.................. 1.03 90.94 1.05 85.14 3.98 145.03 CDE2................. 1.77 228.29 ......... .........
M.................. 1.20 105.95 1.23 99.74 ......... ......... CDE1................. 1.53 197.34 ......... .........
N.................. 1.40 123.61 1.42 115.15 ......... ......... CBC2................. 1.47 189.60 ......... .........
O.................. 1.47 129.79 1.47 119.20 ......... ......... CA2.................. 1.03 132.85 ......... .........
P.................. 1.02 90.06 1.03 83.52 ......... ......... CBC1................. 1.27 163.80 ......... .........
Q.................. ......... ......... ......... ......... ......... ......... CA1.................. 0.89 114.79 ......... .........
R.................. ......... ......... ......... ......... ......... ......... BAB2................. 0.98 126.40 ......... .........
S.................. ......... ......... ......... ......... ......... ......... BAB1................. 0.94 121.24 ......... .........
T.................. ......... ......... ......... ......... ......... ......... PDE2................. 1.48 190.89 ......... .........
U.................. ......... ......... ......... ......... ......... ......... PDE1................. 1.39 179.28 ......... .........
V.................. ......... ......... ......... ......... ......... ......... PBC2................. 1.15 148.33 ......... .........
W.................. ......... ......... ......... ......... ......... ......... PA2.................. 0.67 86.42 ......... .........
X.................. ......... ......... ......... ......... ......... ......... PBC1................. 1.07 138.01 ......... .........
Y.................. ......... ......... ......... ......... ......... ......... PA1.................. 0.62 79.97 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Wage Index Adjustment

Section 1888(e)(4)(G)(ii) of the Act requires that we adjust the
Federal payment rates to account for differences in area wage levels,
using a wage index that the Secretary determines appropriate. Since the
inception of the SNF PPS, we have used hospital inpatient wage data in
developing a wage index to be applied to SNFs. We will continue this
practice for FY 2027, as we continue to believe that in the absence of
SNF-specific wage data, using the hospital inpatient wage index data is
appropriate and reasonable for the SNF PPS. As explained in the update
notice for FY 2005 (69 FR 45786), the SNF PPS does not use the hospital
area wage index's occupational mix adjustment, as this adjustment
serves specifically to define the occupational categories more clearly
in a hospital setting; moreover, the collection of the occupational
wage data under the acute care hospital inpatient prospective payment
system (IPPS) also excludes any wage data related to SNFs. Therefore,
we believe that using the updated wage data exclusive of the
occupational mix adjustment continues to be appropriate for SNF
payments. As in previous years, we proposed to continue to use the pre-
reclassified IPPS

[[Page 17684]]

hospital wage data, without applying the occupational mix, rural floor,
or outmigration adjustment, as the basis for the SNF PPS wage index.
For FY 2027, the updated wage data are for hospital cost reporting
periods beginning on or after October 1, 2022, and before October 1,
2023 (FY 2023 cost report data).
Section 315 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554, enacted
December 21, 2000) gave the Secretary the discretion to establish a
geographic reclassification procedure specific to SNFs, but only after
collecting the data necessary to establish a SNF PPS wage index that is
based on wage data from nursing homes. To date, this has proven to be
unfeasible, due to the volatility of existing SNF wage data and the
significant resources that would be required to improve the quality of
the data. More specifically, auditing all SNF cost reports, similar to
the process used to audit inpatient hospital cost reports for purposes
of the IPPS wage index, would place a burden on providers in terms of
recordkeeping and completion of the cost report worksheet. Adopting
such an approach would require a significant commitment of resources by
CMS and the Medicare Administrative Contractors (MACs), potentially far
more than those required under the IPPS, given that there are nearly
five times as many SNFs as there are inpatient hospitals. While we do
not believe this undertaking is feasible at this time, we will continue
to explore implementation of a spot audit process to improve SNF cost
reports to ensure they are adequately accurate for cost development
purposes, in such a manner as to permit us to establish a SNF-specific
wage index in the future. We will continue to monitor the
appropriateness of using the hospital data as a proxy and adjust in
future rulemaking if we identify a better approach to the wage index.
In addition, we continue to use the same methodology discussed in
the SNF PPS final rule for FY 2008 (72 FR 43423) to address those
geographic areas in which there are no hospitals, and thus, no hospital
wage index data on which to base the calculation of the FY 2027 SNF PPS
wage index. For rural geographic areas that do not have hospitals and
therefore lack hospital wage data on which to base an area wage
adjustment, we will continue using the average wage index from all
contiguous CBSAs as a reasonable proxy. For FY 2027, the only rural
area without wage index data available is North Dakota. For urban areas
without specific hospital wage index data, we will continue using the
average wage indexes of all urban areas within the state to serve as a
reasonable proxy for the wage index of that urban CBSA. For FY 2027,
the only urban area without wage index data available is CBSA 25980,
Hinesville-Fort Stewart, GA.
In the SNF PPS final rule for FY 2006 (70 FR 45026, August 4,
2005), we adopted the changes discussed in OMB Bulletin No. 03-04 (June
6, 2003), which announced revised definitions for MSAs and the creation
of micropolitan statistical areas and combined statistical areas. In
adopting the CBSA geographic designations, we provided for a 1-year
transition in FY 2006 with a blended wage index for all providers. For
FY 2006, the wage index for each provider consisted of a blend of 50
percent of the FY 2006 MSA-based wage index and 50 percent of the FY
2006 CBSA-based wage index (both using FY 2002 hospital data). We
referred to the blended wage index as the FY 2006 SNF PPS transition
wage index. As discussed in the SNF PPS final rule for FY 2006 (70 FR
45041), after the expiration of this 1-year transition on September 30,
2006, we used the full CBSA-based wage index values.
In the FY 2015 SNF PPS final rule (79 FR 45644 through 45646), we
finalized changes to the SNF PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01, beginning in FY
2015, including a 1-year transition with a blended wage index for FY
2015. OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census and provided guidance on the use of the delineations
of these statistical areas using standards published in the June 28,
2010, Federal Register (75 FR 37246 through 37252). Subsequently, on
July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provided minor
updates to and superseded OMB Bulletin No. 13-01 that was issued on
February 28, 2013. The attachment to OMB Bulletin No. 15-01 provided
detailed information on the update to statistical areas since February
28, 2013. The updates provided in OMB Bulletin No. 15-01 were based on
the application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012, and July 1, 2013, and were adopted under the SNF PPS
in the FY 2017 SNF PPS final rule (81 FR 51983, August 5, 2016). In
addition, on August 15, 2017, OMB issued Bulletin No. 17-01 which
announced a new urban CBSA, Twin Falls, Idaho (CBSA 46300), which was
adopted in the SNF PPS final rule for FY 2019 (83 FR 39173, August 8,
2018).
As stated in the FY 2021 SNF PPS final rule (85 FR 47594), we
adopted the revised OMB delineations identified in OMB Bulletin No. 18-
04 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf">https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf</a>) beginning October 1, 2020, including a 1-year
transition for FY 2021 under which we applied a 5 percent cap on any
decrease in a hospital's wage index compared to its wage index for the
prior FY 2020. The updated OMB delineations more accurately reflect the
contemporary urban and rural nature of areas across the country, and
the use of such delineations allows us to determine more accurately the
appropriate wage index and rate tables to apply under the SNF PPS.
In the FY 2023 SNF PPS final rule (87 FR 47521 through 47525), we
finalized a policy to apply a permanent 5 percent cap on any decreases
to a provider's wage index from its wage index in the prior year,
regardless of the circumstances causing the decline. We amended the SNF
PPS regulations at 42 CFR 413.337(b)(4)(ii) to reflect this permanent
cap on wage index reductions. Additionally, we finalized a policy that
a new SNF would be paid the wage index for the area in which it is
geographically located for its first full or partial FY with no cap
applied because a new SNF would not have a wage index in the prior FY.
A full discussion of the adoption of this policy is found in the FY
2023 SNF PPS final rule.
As stated in the FY 2008 SNF PPS proposed and final rules (72 FR
25538 through 25539, and 72 FR 43423, respectively), this and all
subsequent SNF PPS rules and notices are considered to incorporate any
updates and revisions set forth in the most recent OMB bulletin that
applies to the hospital wage data used to determine the current SNF PPS
wage index. OMB issued further revised CBSA delineations in OMB
Bulletin No. 20-01, on March 6, 2020 (available on the web at <a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf</a>).
However, we determined that the changes in OMB Bulletin No. 20-01 do
not impact the CBSA-based labor market area delineations adopted in FY
2021. Therefore, we did not propose adopting the revised OMB
delineations identified in OMB Bulletin No. 20-01 for FY 2022 through
FY 2024.

[[Page 17685]]

On July 21, 2023, OMB issued OMB Bulletin No. 23-01, which updates
and supersedes OMB Bulletin No. 20-01 based on the decennial census.
OMB Bulletin No. 23-01 revised delineations for CBSAs which are made up
of counties and equivalent entities (for example, boroughs; a city and
borough, and a municipality in Alaska; planning regions in Connecticut;
parishes in Louisiana; municipios in Puerto Rico; and independent
cities in Maryland, Missouri, Nevada, and Virginia). As stated in the
FY 2025 SNF PPS final rule (89 FR 64059), we adopted the revised OMB
delineations identified in OMB Bulletin No. 23-01 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf</a>).
OMB has not published further delineation revisions since OMB Bulletin
No. 23-01. Therefore, for FY 2027, we proposed to maintain the current
CBSA delineations. The wage index applicable to FY 2027 is set forth in
Table A and B, available on the CMS website at <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>.
Once calculated, we will apply the wage index adjustment to the
labor-related share of the Federal rate. Each year, we calculate a
labor-related share, based on the relative importance of labor-related
cost categories (that is, those cost categories that are labor-
intensive and vary with the local labor market) in the input price
index. In the FY 2025 SNF final rule (89 FR 64060), we finalized a
proposal to revise the labor-related share to reflect the relative
importance of the 2022-based SNF market basket cost weights for the
following cost categories: Wages and Salaries; Employee Benefits;
Professional Fees: Labor-Related; Administrative and Facilities Support
Services; Installation, Maintenance, and Repair Services; All Other:
Labor-Related Services; and a proportion of Capital-Related expenses.
The methodology for calculating the labor-related-share beginning in FY
2025 is discussed in detail in the FY 2025 SNF PPS final rule (89 FR
64080 through 64081).
We calculate the labor-related relative importance from the SNF
market basket, and it approximates the labor-related share of the total
costs after accounting for historical and projected price changes
between the base year and FY 2027. The price proxies that move the
different cost categories in the market basket do not necessarily
change at the same rate, and the relative importance captures these
changes. Accordingly, the relative importance figure more closely
reflects the cost share weights for FY 2027 than the base year weights
from the SNF market basket. We calculate the labor-related relative
importance for FY 2027 in four steps. First, we compute the FY 2027
price index level for the total market basket and each cost category of
the market basket. Second, we calculate a ratio for each cost category
by dividing the FY 2027 price index level for that cost category by the
total market basket price index level. Third, we determine the FY 2027
relative importance for each cost category by multiplying this ratio by
the base year (2022) weight. Finally, we add the FY 2027 relative
importance for each of the labor-related cost categories (Wages and
Salaries; Employee Benefits; Professional Fees: Labor-Related;
Administrative and Facilities Support Services; Installation,
Maintenance, and Repair Services; All Other: Labor-Related Services;
and a portion of Capital-Related expenses) to produce the proposed FY
2027 labor-related share.

Table 7--Labor-Related Share, FY 2026 and FY 2027
----------------------------------------------------------------------------------------------------------------
Relative importance,
Relative importance, proposed labor-related
labor-related share, FY share, FY 2027 25:4
2026 25:2 forecast \1\ forecast \2\
----------------------------------------------------------------------------------------------------------------
Wages and Salaries............................................ 53.4 53.5
Employee Benefits............................................. 8.9 8.9
Professional Fees: Labor-Related.............................. 3.6 3.6
Administrative & Facilities Support Services.................. 0.4 0.4
Installation, Maintenance & Repair Services................... 0.5 0.5
All Other: Labor-Related Services............................. 2.0 2.0
Capital-Related (0.391 * Capital RI).......................... 3.1 3.1
-------------------------------------------------
Total..................................................... 71.9 72.0
----------------------------------------------------------------------------------------------------------------
\1\ Published in the Federal Register; Based on the second quarter 2025 IHS Global Inc. forecast of the 2022-
based SNF market basket.
\2\ Based on the fourth quarter 2025 IHS Global Inc. forecast of the 2022-based SNF market basket. The relative
importance of capital for FY 2027 is forecasted to be 8.0 percent.

To calculate the labor portion of the case-mix adjusted per diem
rate, we will multiply the total case-mix adjusted per diem rate, which
is the sum of all five case-mix adjusted components into which a
patient classifies, and the non-case-mix component rate, by the FY 2027
labor-related share percentage provided in Table 7. The remaining
portion of the rate will be the nonlabor portion. Under the previous
RUG-IV model, we included tables which provided the case-mix adjusted
RUG-IV rates, by RUG-IV group, broken out by total rate, labor portion
and non-labor portion, such as Table 8 of the FY 2019 SNF PPS final
rule (83 FR 39175). However, as we discussed in the FY 2020 SNF PPS
final rule (84 FR 38738), under PDPM, as the total rate is calculated
as a combination of six different component rates, five of which are
case-mix adjusted, and given the sheer volume of possible combinations
of these five case-mix adjusted components, it is not feasible to
provide tables similar to those that existed in the prior rulemaking.
Therefore, to aid interested parties in understanding the effect of
the wage index on the calculation of the SNF per diem rate, we have
included a hypothetical rate calculation in Table 9.
Section 1888(e)(4)(G)(ii) of the Act also requires that we apply
this wage index in a manner that does not result in aggregate payments
under the SNF PPS that are greater or less than would otherwise be made
if the wage adjustment had not been made. For FY 2027 (Federal rates
effective October 1, 2026), we apply an adjustment to fulfill the
budget neutrality requirement. We meet this requirement by multiplying
each of the components of the unadjusted Federal rates by a budget
neutrality factor, equal to the ratio of the

[[Page 17686]]

weighted average wage adjustment factor for FY 2026 to the weighted
average wage adjustment factor for FY 2027. For this calculation, we
will use the same FY 2025 claims utilization data for both the
numerator and denominator of this ratio. We define the wage adjustment
factor used in this calculation as the labor portion of the rate
component multiplied by the wage index plus the non-labor portion of
the rate component. The budget neutrality factor for FY 2027 is 0.9987.
We also propose that if more recent data becomes available (for
example, revised wage data and/or updated claims data), we would use
such data, if appropriate, to determine the wage index budget
neutrality factor in the SNF PPS final rule.

E. SNF Value-Based Purchasing Program

Beginning with payment for services furnished on October 1, 2018,
section 1888(h) of the Act requires the Secretary to reduce the
adjusted Federal per diem rate determined under section 1888(e)(4)(G)
of the Act otherwise applicable to a SNF for services furnished during
a FY by 2 percent, and to adjust the resulting rate for a SNF by the
value-based incentive payment amount earned by the SNF based on the
SNF's performance score for that FY under the SNF VBP Program. To
implement these requirements, we finalized- in the FY 2019 SNF PPS
final rule the addition of 42 CFR 413.337(f) to our regulations (83 FR
39178).
We refer readers to section VII. of this proposed rule for further
discussion of the updates we are proposing for the SNF VBP Program.

F. Adjusted Rate Computation Example

Tables 8 through 10 provide examples generally illustrating payment
calculations during FY 2027 under PDPM for a hypothetical 30-day SNF
stay, involving the hypothetical SNF XYZ, located in Frederick, MD
(Urban CBSA 23224), for a hypothetical patient who is classified into
such groups that the patient's HIPPS code is NHNC1. Table 8 shows the
adjustments made to the Federal per diem rates (prior to application of
any adjustments under the SNF VBP Program as discussed) to compute the
provider's case-mix adjusted per diem rate for FY 2027, based on the
patient's PDPM classification, as well as how the variable per diem
(VPD) adjustment factor affects calculation of the per diem rate for a
given day of the stay. Table 9 shows the adjustments made to the case-
mix adjusted per diem rate from Table 8 to account for the provider's
wage index. The wage index used in this example is based on the FY 2027
SNF PPS wage index that appears in Table 8 available on the CMS website
at <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex.html</a>. Finally, Table 10 provides the case-mix and wage index
adjusted per-diem rate for this patient for each day of the 30-day
stay, as well as the total payment for this stay. Table 10 also
includes the VPD adjustment factors for each day of the patient's stay,
to clarify why the patient's per diem rate changes for certain days of
the stay. As illustrated in Table 10, SNF XYZ's total PPS payment for
this patient's stay would equal $23,414.49.

Table 8--PDPM Case-Mix Adjusted Rate Computation Example
----------------------------------------------------------------------------------------------------------------
Per diem rate calculation
-----------------------------------------------------------------------------------------------------------------
Component VPD adjustment VPD adjusted
Component group Component rate factor rate
----------------------------------------------------------------------------------------------------------------
PT................................................. N $108.43 1.00 $108.43
OT................................................. N 102.37 1.00 102.37
SLP................................................ H 78.08 1.00 78.08
Nursing............................................ N 198.44 1.00 198.44
NTA................................................ C 177.22 3.00 531.66
Non-Case-Mix....................................... ........... 120.89 .............. 120.89
------------------------------------------------------------
Total PDPM Case-Mix Adjustment Per Diem........ ........... .............. .............. 1,139.87
----------------------------------------------------------------------------------------------------------------

Table 9--Wage Index Adjusted Rate Computation Example
--------------------------------------------------------------------------------------------------------------------------------------------------------
PDPM wage index adjustment calculation
---------------------------------------------------------------------------------------------------------------------------------------------------------
Total case mix
HIPPS code PDPM case-mix Labor Wage index Wage index Non-labor and wage index
adjusted per diem portion adjusted rate portion adj. rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
NHNC1.................................................. $1,139.87 $820.71 0.9346 $767.04 $319.16 $1,086.20
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 10--Adjusted Rate Computation Example
------------------------------------------------------------------------
Case-mix and
NTA VPD PT/OT VPD wage index
Day of stay adjustment adjustment adjusted per
factor factor diem rate
------------------------------------------------------------------------
1............................ 3.00 1.00 $1,086.20
2............................ 3.00 1.00 1,086.20
3............................ 3.00 1.00 1,086.20
4............................ 1.00 1.00 748.45
5............................ 1.00 1.00 748.45
6............................ 1.00 1.00 748.45
7............................ 1.00 1.00 748.45
8............................ 1.00 1.00 748.45

[[Page 17687]]

9............................ 1.00 1.00 748.45
10........................... 1.00 1.00 748.45
11........................... 1.00 1.00 748.45
12........................... 1.00 1.00 748.45
13........................... 1.00 1.00 748.45
14........................... 1.00 1.00 748.45
15........................... 1.00 1.00 748.45
16........................... 1.00 1.00 748.45
17........................... 1.00 1.00 748.45
18........................... 1.00 1.00 748.45
19........................... 1.00 1.00 748.45
20........................... 1.00 1.00 748.45
21........................... 1.00 0.98 744.43
22........................... 1.00 0.98 744.43
23........................... 1.00 0.98 744.43
24........................... 1.00 0.98 744.43
25........................... 1.00 0.98 744.43
26........................... 1.00 0.98 744.43
27........................... 1.00 0.98 744.43
28........................... 1.00 0.96 740.41
29........................... 1.00 0.96 740.41
30........................... 1.00 0.96 740.41
------------------------------------------
Total Payment............ ........... ........... 23,414.49
------------------------------------------------------------------------

IV. Additional Aspects of the SNF PPS

A. SNF Level of Care--Administrative Presumption

The establishment of the SNF PPS did not change Medicare's
fundamental requirements for SNF coverage. However, because the case-
mix classification is based, in part, on the beneficiary's need for
skilled nursing care and therapy, we have attempted, where possible, to
coordinate claims review procedures with the existing resident
assessment process and case-mix classification system outlined in
section IV.C. of this proposed rule. This approach includes an
administrative presumption that utilizes a beneficiary's correct
assignment, at the outset of the SNF stay, of one of the case-mix
classifiers designated for this purpose to assist in making certain SNF
level of care determinations.
In accordance with 42 CFR 413.345, we include in each update of the
Federal payment rates in the Federal Register a discussion of the
resident classification system that provides the basis for case-mix
adjustment. We also designate those specific classifiers under the
case-mix classification system that represent the required SNF level of
care, as provided in 42 CFR 409.30. This designation reflects an
administrative presumption that those beneficiaries who are correctly
assigned one of the designated case-mix classifiers on the initial
Medicare assessment are automatically classified as meeting the SNF
level of care definition up to and including the assessment reference
date (ARD) for that assessment.
A beneficiary who does not qualify for the presumption is not
automatically classified as either meeting or not meeting the level of
care definition but instead receives an individual determination on
this point using the existing administrative criteria. This presumption
recognizes the strong likelihood that those beneficiaries who are
correctly assigned one of the designated case-mix classifiers during
the immediate post-hospital period would require a covered level of
care, which would be less likely for other beneficiaries.
In the July 30, 1999 final rule (64 FR 41670), we indicated that we
would announce any changes to the guidelines for Medicare level of care
determinations related to modifications in the case-mix classification
structure. The FY 2018 final rule (82 FR 36544) further specified that
we would henceforth disseminate the standard description of the
administrative presumption's designated groups via the SNF PPS website
at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a> (where such designations appear in the paragraph
entitled ``Case-Mix Adjustment'') and would publish such designations
in rulemaking only to the extent that we actually intend to propose
changes in them. Under that approach, the set of case-mix classifiers
designated for this purpose under PDPM was finalized in the FY 2019 SNF
PPS final rule (83 FR 39253) and is posted on the SNF PPS website
(<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a>), in the paragraph entitled ``Case Mix Adjustment.''
However, we note that this administrative presumption policy does
not supersede the SNF's responsibility to ensure that its decisions
relating to level of care are appropriate and timely, including a
review to confirm that any services prompting the assignment of one of
the designated case-mix classifiers (which, in turn, serves to trigger
the administrative presumption) are themselves medically necessary. As
previously stated in the FY 2000 SNF PPS final rule (64 FR 41667), the
administrative presumption is itself rebuttable in those individual
cases in which the services actually received by the resident do not
meet the basic statutory criterion of being reasonable and necessary to
diagnose or treat a beneficiary's condition (according to section
1862(a)(1) of the Act). Accordingly, the presumption would not apply,
for example, in those situations where the sole classifier that
triggers the presumption is itself assigned through the receipt of
services that are subsequently determined to be not reasonable and
necessary. Moreover,

[[Page 17688]]

we want to stress the importance of careful monitoring for changes in
each patient's condition to determine the continuing need for Medicare
Part A SNF benefits after the ARD of the initial Medicare assessment.

B. Consolidated Billing

Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (as added by
section 4432(b) of the BBA 1997) require a SNF to submit consolidated
Medicare bills to its Medicare Administrative Contractor (MAC) for
almost all the services that its residents receive during a covered
Part A stay. In addition, section 1862(a)(18) of the Act places the
responsibility with the SNF for billing Medicare for physical therapy,
occupational therapy, and speech-language pathology services that the
resident receives during a noncovered stay. Section 1888(e)(2)(A) of
the Act excludes a small list of services from the consolidated billing
provision (primarily those services furnished by physicians and certain
other types of practitioners), which remain separately billable under
Medicare Part B when furnished to a SNF's Part A resident. These
excluded service categories are discussed in greater detail in section
V.B.2. of the May 12, 1998, interim final rule (63 FR 26295 through
26297). Effective with services furnished on or after January 1, 2024,
section 4121(a)(4) of the Consolidated Appropriations Act, 2023 (CAA,
2023) (Pub. L. 117-328, enacted December 29, 2022) added marriage and
family therapists and mental health counselors to the list of
practitioners at section 1888(e)(2)(A)(ii) of the Act whose services
are excluded from the consolidated billing provision.
Section 103 of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA 1999) (Pub. L. 106-113, enacted November
29, 1999) amended section 1888(e)(2)(A)(iii) of the Act by further
excluding a number of individual high-cost, low-probability services,
identified by HCPCS codes, within several broader categories
(chemotherapy items, chemotherapy administration services, radioisotope
services, and customized prosthetic devices) that otherwise remained
subject to the provision. We discuss this BBRA 1999 amendment in
greater detail in the FY 2001 SNF PPS proposed and final rules (65 FR
19231 through 19232, April 10, 2000, and 65 FR 46790 through 46795,
July 31, 2000), as well as in Program Memorandum AB-00-18 (Change
Request #1070), issued March 2000, which is available online at
<a href="http://www.cms.gov/transmittals/downloads/ab001860.pdf">www.cms.gov/transmittals/downloads/ab001860.pdf</a>.
As explained in the FY 2001 proposed rule (65 FR 19232), the
amendments enacted in section 103 of the BBRA 1999 not only identified
for exclusion from this provision a number of particular service codes
within four specified categories (that is, chemotherapy items,
chemotherapy administration services, radioisotope services, and
customized prosthetic devices), but also gave the Secretary the
authority to designate certain additional, individual services for
exclusion within each of these four specified service categories. In
the FY 2001 SNF PPS proposed rule, we stated that the BBRA 1999
Conference report (H.R. Conf. Rep. No. 106-479 at 854 (1999))
characterizes the individual services that this legislation targets for
exclusion as high-cost, low-probability events that could have
devastating financial impacts because their costs far exceed the
payment SNFs receive under the PPS. According to the conferees, section
103(a) of the BBRA 1999 is an attempt to exclude from the PPS certain
services and costly items that are provided infrequently in SNFs. By
contrast, the amendments enacted in section 103 of the BBRA 1999 do not
designate for exclusion any of the remaining services within those four
categories (thus, leaving all those services subject to SNF
consolidated billing), because they are relatively inexpensive and are
furnished routinely in SNFs.
Effective with items and services furnished on or after October 1,
2021, section 134 in Division CC of the CAA, 2021 (Pub. L. 116-260)
established an additional fifth category of excluded codes in section
1888(e)(2)(A)(iii)(VI) of the Act, for certain blood clotting factors
for the treatment of patients with hemophilia and other bleeding
disorders along with items and services related to the furnishing of
such factors under section 1842(o)(5)(C) of the Act. Like the
provisions enacted in the BBRA 1999, section 1888(e)(2)(A)(iii)(VI) of
the Act gives the Secretary the authority to designate additional items
and services for exclusion within the category of items and services
related to blood clotting factors, as described in that section.
A detailed discussion of the legislative history of the
consolidated billing provision is available on the SNF PPS website at
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Legislative_History_2018-10-01.pdf</a>.
As stated in the FY 2001 SNF PPS final rule (65 FR 46790), and as
is consistent with our longstanding policy, any additional service
codes that we might designate for exclusion under our discretionary
authority must meet the same statutory criteria used in identifying the
original codes excluded from consolidated billing under section 103(a)
of the BBRA 1999: they must fall within one of the five service
categories specified in the BBRA 1999 and CAA, 2021; and they also must
meet the same standards of high-cost and low-probability in the SNF
setting, as discussed in the BBRA 1999 Conference report. Accordingly,
we characterized this statutory authority to identify additional
service codes for exclusion within the defined categories as
essentially affording the flexibility to revise the list of excluded
codes in response to changes of major significance that may occur over
time (for example, the development of new medical technologies or other
advances in the state of medical practice) (65 FR 46791).
In the FY 2001 SNF PPS proposed rule, we specifically solicited
public comments identifying HCPCS codes in any of these five service
categories (chemotherapy items, chemotherapy administration services,
radioisotope services, customized prosthetic devices, and blood
clotting factors) representing recent medical advances that might meet
our criteria for exclusion from SNF consolidated billing. We stated in
the FY 2001 SNF PPS proposed rule that we may consider excluding a
particular service if it meets our criteria for exclusion. We requested
that commenters identify in their comments the specific HCPCS code that
is associated with the service in question, as well as their rationale
for requesting that the identified HCPCS code(s) be excluded.
We also stated in the FY 2001 SNF PPS proposed rule that the
original BBRA amendment and the CAA, 2021 identified a set of excluded
items and services by means of specifying individual HCPCS codes within
the designated categories that were in effect as of a particular date
(in the case of the BBRA 1999, July 1, 1999, and in the case of the
CAA, 2021, July 1, 2020), as subsequently modified by the Secretary. In
addition, as stated in the FY 2001 SNF PPS proposed rule, the statute
(sections 1888(e)(2)(A)(iii)(II) through (VI) of the Act) gives the
Secretary authority to identify additional items and services for
exclusion within the five specified categories of items and services
described in the statute, which are also designated by HCPCS code.
Designating the excluded services in this manner makes it possible for
us to utilize program issuances as the vehicle for accomplishing
routine updates to the

[[Page 17689]]

excluded codes to reflect any minor revisions that might subsequently
occur in the coding system itself, such as the assignment of a
different code number to a service already designated as excluded, or
the creation of a new code for a type of service that falls within one
of the established exclusion categories and meets our criteria for
exclusion.
Accordingly, if we identify through the current rulemaking cycle
any new services that meet the criteria for exclusion from SNF
consolidated billing, we will identify these additional excluded
services by means of the HCPCS codes that are in effect as of a
specific date (in this case, October 1, 2024). By making any new
exclusions in this manner, we can similarly accomplish routine future
updates of these additional codes through the issuance of program
instructions. The latest list of excluded codes can be found on the SNF
Consolidated Billing website at <a href="https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling">https://www.cms.gov/Medicare/Billing/SNFConsolidatedBilling</a>.

C. Payment for SNF-Level Swing-Bed Services

Section 1883 of the Act permits certain small, rural hospitals to
enter into a Medicare swing-bed agreement, under which the hospital can
use its beds to provide either acute or SNF-level care, as needed. For
critical access hospitals (CAHs), Medicare Part A pays on a reasonable
cost basis for SNF-level services furnished under a swing-bed
agreement. However, in accordance with- section 1888(e)(7) of the Act,
SNF-level services furnished by non-CAH rural hospitals are paid under
the SNF PPS, effective with cost reporting periods beginning on or
after July 1, 2002. As stated in the FY SNF 2002 PPS final rule (66 FR
39562), this effective date is consistent with the statutory provision
to integrate swing-bed rural hospitals into the SNF PPS by the end of
the transition period, June 30, 2002.
Accordingly, all non-CAH swing-bed rural hospitals have now come
under the SNF PPS. Therefore, all rates and wage indexes outlined in
earlier sections of this proposed rule for the SNF PPS also apply to
all non-CAH swing-bed rural hospitals. As finalized in the FY 2010 SNF
PPS final rule (74 FR 40356 through 40357), effective October 1, 2010,
non-CAH swing-bed rural hospitals are required to complete an MDS 3.0
swing-bed assessment, which is limited to the required demographic,
payment, and quality items. As stated in the FY 2019 SNF PPS final rule
(83 FR 39235), revisions were made to the swing bed assessment to
support implementation of PDPM, effective October 1, 2019. A discussion
of the assessment schedule and the MDS effective beginning FY 2020
appears in the FY 2019 SNF PPS final rule (83 FR 39229 through 39237).
The latest changes in the MDS for swing-bed rural hospitals appear on
the SNF PPS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html</a>.

V. Other SNF PPS Issues

A. Technical Updates to the PDPM ICD-10 Mappings

1. Background
In the FY 2019 SNF PPS final rule (83 FR 39162), we finalized the
implementation of the Patient-Driven Payment Model (PDPM), effective
October 1, 2019. The PDPM uses International Classification of
Diseases, 10th Revision, Clinical Modification (ICD-10) diagnosis codes
in several ways, including assigning beneficiaries to clinical
categories under the PT, OT, SLP, and NTA components based on the
beneficiary's primary diagnosis. Although additional ICD-10 codes may
be reported as secondary diagnoses and recognized as comorbidities, the
PDPM does not use secondary diagnoses to assign beneficiaries to
clinical categories. The ICD-10 code to clinical category mappings and
the ICD-10 code to SLP comorbidity mappings and ICD-10 code to NTA
comorbidity mappings (collectively referred to as the PDPM ICD-10 code
mappings) are available on the CMS website: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>.
In the FY 2020 SNF PPS final rule (84 FR 38750), we described the
process for maintaining and updating the PDPM ICD-10 code mappings, as
well as the SNF Grouper software and other related patient
classification and billing products, to ensure they reflect the most
current ICD-10 codes. Beginning with FY 2020 updates, we have
implemented non-substantive changes to the PDPM ICD-10 code mappings
through a sub-regulatory process by posting the updated mappings on the
CMS website: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>. Such non-substantive changes are limited to
changes necessary to maintain consistency with the most current PDPM
ICD-10 code mappings.
Substantive changes that extend beyond maintaining consistency with
the most current PDPM ICD-10 code mappings--such as changes to the
assignment of a diagnosis code to a clinical category or comorbidity
list--are implemented through notice-and-comment rulemaking, as these
changes affect payment policy. As stated in the proposed rule, the
classification of diagnoses to the ``Return to Provider'' clinical
category, whether currently mapped or proposed to be mapped, is not
intended to reflect any judgment regarding the clinical significance of
these conditions or the importance of their recognition and treatment.
Rather, we believe there are more specific or appropriate diagnoses
that better reflect the primary reason for a Medicare Part A-covered
SNF stay.
2. Clinical Category Changes for New ICD-10 Codes for FY 2027
For FY 2027, we did not identify any substantive changes to the
PDPM ICD-10 code mappings. We identified only non-substantive updates,
which do not alter policy or payment methodology. Consistent with prior
practice, we implemented these non-substantive updates through a sub-
regulatory process by posting the revised PDPM ICD-10 code mappings on
the CMS website.
3. Request for Information: Methodology for Quantifying and Addressing
Case-Mix Creep Under the Patient Driven Payment Model
a. Background
On October 1, 2019, we implemented the Patient Driven Payment Model
(PDPM) under the SNF PPS, a new case-mix classification model that
replaced the prior case-mix classification model, the Resource
Utilization Groups, Version IV (RUG-IV). The previous RUG-IV model
classified most patients into a therapy payment group and primarily
used the volume of therapy services provided to the patient as the
basis for payment classification, thus creating an incentive for SNFs
to furnish therapy regardless of the individual patient's unique
characteristics, goals, or needs. The PDPM uses clinical data from the
Minimum Data Set (MDS), a core set of screening, clinical, and
functional status data elements, including common definitions and
coding categories, which form the foundation of a comprehensive
assessment for all residents of nursing homes certified to participate
in Medicare or Medicaid, consistent with the provisions of section
1888(e)(4)(G)(i) of the Act.
As discussed in the FY 2019 SNF PPS final rule (83 FR 39256), as
with prior system transitions, we proposed and finalized implementing
PDPM in a budget neutral manner. This means that the transition to
PDPM, along with the related policies finalized in the FY 2019

[[Page 17690]]

SNF PPS final rule, were not intended to result in an increase or
decrease in the aggregate amount of Medicare Part A payment to SNFs. We
believe ensuring parity is integral to the process of providing ``for
an appropriate adjustment to account for case-mix'', such mix shall be
based on appropriate data in accordance with section 1888(e)(4)(G)(i)
of the Act. Section V.I. of the FY 2019 SNF PPS final rule (83 FR 39255
through 39256) discusses the methodology that we used to implement PDPM
in a budget neutral manner.
Since PDPM implementation, we have closely monitored SNF
utilization data to determine if the parity adjustment finalized in the
FY 2020 SNF PPS final rule (84 FR 38734 through 38735) provided for a
budget neutral transition between RUG-IV and PDPM. In the FY 2023 SNF
PPS final rule (87 FR 22737 through 22743), we finalized the FY 2023
SNF PPS Parity Adjustment Methodology so that the PDPM was implemented
in a budget-neutral manner using a parity adjustment based on expected
payments under RUG-IV. More specifically, projected aggregate payments
using RUG-IV data were applied to the case-mix indexes (CMIs) to avoid
a change in aggregate payment under PDPM. Subsequent monitoring
indicated that actual payments under PDPM exceeded expected levels,
leading CMS to implement a 4.6 percent parity adjustment recalibration
phased in over two years.
As PDPM has matured, CMS has continued to monitor case-mix trends
to ensure that payment remains aligned with actual patient acuity
rather than changes in coding practices. CMS has collected data that
reflects coding behavior after the initial transition years under the
PDPM. With the COVID-19 Public Health Emergency (PHE) ending in May
2023, CMS has collected more recent data that better reflect trends in
typical care delivery and utilization patterns following the
establishment of PDPM as the SNF payment system.
As in the case Proposed Parity Adjustment Methodology finalized in
the FY 2023 SNF PPS final rule (87 FR 47525 through 47534), Section
1888(e)(4)(F) of the Social Security Act authorizes CMS to address
``changes in the coding or classification of residents that do not
reflect the real changes in case mix'' by adjusting SNF per-diem rates
to ``eliminate the effect of such coding or classification changes.''
Consistent with that authority, CMS is 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.''
b. Observed Case-Mix Trends
These data suggest significant increases in certain case-mix
indexes (CMIs) that are unlikely to reflect underlying health status
trends in the patient population. For example, reporting of the
malnutrition item (I5600) increased from a rate of 5 percent of stays
prior to PDPM implementation to 47 percent in FY 2024. Although only a
small number of items demonstrate changes of this magnitude, many
others show smaller but meaningful shifts. For example, swallowing
disorder (K0100) increased from 4 percent to 21 percent and depression
(D0160 or D0600) increased from 4 percent to 19 percent. Some items
also show declines, such as fever (J1550A) which decreased from 2
percent to 1 percent.
More broadly, as described at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research">https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research</a>, CMS has observed that average 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. For example, the median per-diem
PT costs decreased from $67 to $51, median per-diem OT costs decreased
from $58 to $45, median per-diem SLP costs decreased from $34 to $28,
and median per-diem NTA costs decreased from $43 to $39. This
divergence suggests a potential disconnect between reported acuity and
observed resource utilization. Collectively, 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.
c. Policy Rationale
As CMS continues monitoring case-mix trends to ensure that payment
remains aligned with actual patient acuity rather than changes in
coding practices, recent data suggests significant increases in certain
CMIs that are unlikely to reflect underlying health status trends of
the patients. These patterns underscore the need to address how much
observed case-mix growth reflects real changes versus changes in coding
or documentation and to make the appropriate adjustments.
CMS is exploring a potential approach that addresses the issue and
considers the changing patient caseload as well as underlying real-time
trends. This Request for Information is intended to receive feedback
from stakeholders on CMS observations of case-mix creep issue in the
PDPM and of the approach to address it. The following section includes
details of the methodology that CMS is considering for addressing the
case-mix creep that could be included in future rulemaking.
d. Methodology Overview
(1) Definitions and Conceptual Foundations
PDPM is designed to classify beneficiaries based on clinical
characteristics and service needs associated with resource use to
determine appropriate Medicare payment. Patient acuity reflects a
combination of diagnostic factors, comorbidities, functional status,
and treatment needs. The payment items, relying on both claims and
assessment data, are designed to capture differences in resource needs
across patient acuity groups, or PDPM case-mix groups (CMGs), measured
by a concise set of items that represent those clinical complexity
factors.
CMGs are determined by the composition of payment items across the
five case-mix adjusted components: PT, OT, SLP, NTA, and Nursing. Each
component has its own set of clinical complexity factors or payment
items, and by extension, its own set of CMGs.
Changes in case-mix over time can be assessed by examining changes
in the distribution of CMGs. The Case-Mix Index (CMI), a numerical
representation of CMGs, provides a summary measure of case-mix for each
component. Increases in average CMIs indicate higher reported patient
acuity and higher expected resource needs. This is a key feature that
makes CMIs crucial for measuring case-mix changes and that other
payment elements, such as base rates which only reflect average
resource use, do not possess.
For analytic purposes, ``Total Case-Mix Change'' is defined as the
overall observed change in CMGs and CMIs. This total change can be
separated into three components:
<bullet> Real Population Health and Utilization Changes (RPHU):
Changes in beneficiary demographics, clinical conditions, service
needs, and system-level utilization patterns.
<bullet> Real Time Trends: Systematic changes over time that occur
independently of PDPM.
<bullet> Nominal Change: Changes in coding or classification that
do not reflect real change in patient acuity and may indicate case-mix
upcoding.
The analysis described in this RFI focuses on quantifying the
``Nominal Change'' component. A detailed

[[Page 17691]]

description of the analytic framework, including the study period, data
sources, and regression setup, is available at <a href="https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research">https://www.cms.gov/medicare/payment/prospective-payment-systems/skilled-nursing-facility-snf/pps-model-research</a>.
Real Population Health and Utilization Changes refer to shifts in
the characteristics and care needs of SNF beneficiaries, as well as
broader trends in how and where patients receive post-acute care. These
include demographic factors such as age, sex, and race; clinical
diagnoses and service needs; growth in Medicare Advantage (MA)
enrollment; and changes in site-of-care patterns across post-acute care
settings.
To assess the degree to which observed case-mix changes reflect
real shifts in patient needs, CMS evaluates measures derived from pre-
SNF inpatient claims and selected non-payment items of MDS admission
assessments that are less sensitive to PDPM coding incentives. Real
Time Trends represent systematic, non-random changes over time that are
not attributable to PDPM itself. To estimate these trends, CMS uses a
study period that spans FY 2017 through FY 2024, allowing pre-PDPM
years to establish baseline SNF patterns unrelated to the PDPM payment
structure. These estimated trends are projected into the PDPM period to
help isolate changes that would have been expected based on historical
patterns alone.
Nominal Changes refer to the portion of observed case-mix growth
that may result from changes in coding or classification practices
rather than from actual changes in patient acuity. These changes are
the primary focus of this analysis, as they may affect reported case-
mix levels without reflecting differences in clinical need.
Because PDPM payment is determined by a combination of several
interacting payment items, it is difficult to attribute nominal changes
to specific diagnoses or codes. To assess these effects, CMS evaluates
case-mix creep at the PDPM component level by examining the full
distribution of case-mix groups (CMGs). The component-specific Case-Mix
Index (CMI) provides a single summary measure of these distributions
and serves as a practical metric for quantifying nominal changes in
case-mix over time.
(2) Adjustment Factor Determination
Table 11 includes the PDPM component-level adjustment factors
calculated using the methodology for quantifying case-mix creep. The
Average Actual CMI represents the actual case-mix index that occurred
between FY 2020 and FY 2024 after adjusting for parity, reflecting real
population health changes, utilization patterns, real-time trends, and
nominal changes. The Average Target CMI represents the estimated case-
mix index over the same period that accounts for real population and
utilization changes and real-time trends but removes nominal shifts in
coding or classification. The ratio of Target to Actual is the Case-Mix
Creep Adjustment Factor.
Based on the data of this analysis, the factors would be
implemented through the CMI or the base rate for each component: +3.3
percent for PT, +4.1 percent for OT, -15.9 percent for SLP, -1.9
percent for NTA, and -10.6 percent for Nursing.
Alternatively, if a system-wide PDPM case-mix creep adjustment
factor is implemented, the resulting adjustment factor would be 0.957,
which can also be interpreted as a blanket 4.3 percent reduction in
CMIs or base rates, or a 3.6 percent reduction in total payment across
the payment system, which also includes the non-case-mix portion of
payment.

Table 11--PDPM Component-Level Case-Mix Creep Adjustment Factors
----------------------------------------------------------------------------------------------------------------
Average actual Average target
Component CMI CMI Case-mix creep adjustment factor
----------------------------------------------------------------------------------------------------------------
PT............................................ 1.440 1.487 1.033 (3.3% increase).
OT............................................ 1.439 1.498 1.041 (4.1% increase).
SLP........................................... 1.714 1.441 0.841 (15.9% decrease).
NTA........................................... 1.227 1.204 0.981 (1.9% decrease).
Nursing....................................... 1.661 1.485 0.894 (10.6% decrease).
-----------------------------------------------------------------
Case-Mix Total............................ .............. .............. 0.957 (4.3% decrease).
----------------------------------------------------------------------------------------------------------------

e. Request for Information
CMS is requesting information on the aforementioned approach to
identify and address case-mix creep. Specifically, CMS invites the
public to comment on the following:
<bullet> The overall methodology for quantifying case-mix creep,
including the conceptual framework that separates total case-mix change
into real population health and utilization changes, real-time trends,
and nominal changes.
<bullet> The data sources and measures used to assess real
population health and utilization changes, including the use of pre-SNF
inpatient claims and selected non-payment MDS items.
<bullet> The approach to estimating real-time trends using a study
period spanning FY 2017 through FY 2024.
<bullet> Alternative approaches to implementing case-mix creep
adjustments, including component-specific adjustments versus a system-
wide adjustment factor.
<bullet> Any other considerations CMS should consider when
finalizing a methodology to address case-mix creep in future
rulemaking.
Comments should be submitted in accordance with the instructions
provided elsewhere in this rule.
4. IPPS Wage Index
For FY 2027, we are proposing to continue to use the concurrent
pre-floor, pre-reclassified IPPS hospital wage index as the basis for
the SNF wage index. We continue to consider this an appropriate source
of wage index to estimate costs per day, in accordance with our
longstanding wage index policy at 42 CFR 413.337(b)(4). At the same
time, we routinely assess whether more recent or alternative data
sources may further enhance the accuracy and representativeness of our
estimates We note that other payment systems have explored and are
exploring alternative wage index methodologies under their specific
programmatic and statutory circumstances. For example, CMS finalized
changes to the End-Stage Renal Disease (ESRD) Prospective Payment
System (PPS) wage index using Bureau of Labor Statistics (BLS)
occupation-level wage data in the CY 2025 ESRD PPS final rule (89 FR
89116). While this approach was developed under the specific
programmatic and statutory circumstances of the ESRD PPS and may not be
directly transferable to the SNF

[[Page 17692]]

PPS, CMS is interested in exploring whether similar methodologies using
publicly available wage data could be adapted to better reflect the
geographic variation in labor costs for Skilled Nursing Facilities.
In its 2023 Report to Congress,\2\ Medicare Payment Advisory
Commission (MedPAC) discussed various conceptual approaches to Medicare
wage indexes, including the use of county-level wage data from BLS with
an occupational mix to construct wage indexes that are more specific to
the payment setting. MedPAC has previously written about using all-
employer, occupation-level wage data to establish different weights for
setting-specific occupational labor mixes as one approach to geographic
adjustments.
---------------------------------------------------------------------------

\2\ <a href="https://www.medpac.gov/wp-content/uploads/2022/07/Wage-index-March-2023-SEC.pdf">https://www.medpac.gov/wp-content/uploads/2022/07/Wage-index-March-2023-SEC.pdf</a>.
---------------------------------------------------------------------------

We are soliciting comments on whether we should consider using
alternative data sources to construct an SNF-specific wage index for
potential use in future years. CMS seeks feedback to better understand
the potential advantages and limitations of using alternative data
sources, such as BLS data and SNF cost reports, as well as other
methodologies that stakeholders believe could appropriately reflect the
geographic variation in labor costs for skilled nursing facilities. In
addition, as discussed elsewhere in the Federal Register, we note that
we are also considering the potential use of alternative data sources
in other payment systems including the Inpatient Rehabilitation
Facilities PPS, Inpatient Psychiatric Facilities PPS, and Hospice
payment system. We seek feedback on the unique considerations
applicable to SNFs that should inform how CMS could consider the
potential use of alternative data sources.

VI. Skilled Nursing Facility Quality Reporting Program (SNF QRP)

A. Background and Statutory Authority

The SNF QRP is authorized by section 1888(e)(6) of the Act. The SNF
QRP applies to freestanding SNFs, SNFs affiliated with acute care
facilities, and all non-critical access hospital (CAH) swing-bed rural
hospitals. Section 1888(e)(6)(A)(i) of the Act requires the Secretary
to reduce by 2 percentage points the annual market basket percentage
increase described in section 1888(e)(5)(B)(i) of the Act applicable to
a SNF for a FY, after application of section 1888(e)(5)(B)(ii) of the
Act (the productivity adjustment) and section 1888(e)(5)(B)(iii) of the
Act, in the case of a SNF that does not submit data in accordance with
sections 1888(e)(6)(B)(i)(II) and (III) of the Act for that FY. Section
1890A of the Act requires that the Secretary establish and follow a
pre-rulemaking process, in coordination with the consensus-based entity
(CBE) with a contract under section 1890(a) of the Act, to solicit
input from certain groups regarding the selection of quality and
efficiency measures for the SNF QRP. We have codified our program
requirements at Sec. 413.360.
In sections VI.C. and VI.D. of this proposed rule, we are proposing
to remove two measures, specifically the COVID-19 Vaccination Coverage
Among Healthcare Personnel (HCP) measure and the COVID-19 Vaccine:
Percent of Patients/Residents Who Are Up to Date measure, beginning
with the FY 2028 SNF QRP. In section VI.F.2. of this proposed rule, we
are proposing to revise the SNF QRP data submission deadlines beginning
with the FY 2029 SNF QRP. We are also proposing to require the
submission of MDS data on each resident receiving covered skilled care
in a SNF, regardless of payer, beginning with the FY 2031 SNF QRP as
described in section VI.F.3. of this proposed rule. Finally, we are
soliciting public comments on one Request for Information (RFI) on
future measure concepts for the SNF QRP in section VI.E. of this
proposed rule.

B. General Considerations Used for the Selection of Measures for the
SNF QRP

For a detailed discussion of the considerations that we
historically used for the selection of quality, resource use, or other
measures for the SNF QRP, we refer readers to the FY 2016 SNF PPS final
rule (80 FR 46429 through 46431).
The SNF QRP currently has 15 adopted measures, which are set forth
in Table 12. We did not propose to adopt any new measures for the SNF
QRP in this proposed rule.
For a discussion of the factors we use to evaluate whether a
measure must be removed from the SNF QRP, we refer readers to our
regulations at 42 CFR 413.360(b)(2) and to the FY 2019 SNF PPS final
rule (83 FR 39267 through 39269).

Table 12--Quality Measures Currently Adopted for the SNF QRP
------------------------------------------------------------------------
Short name Measure name and data source
------------------------------------------------------------------------
Assessment-Based
------------------------------------------------------------------------
Pressure Ulcer/Injury........ Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury.
Application of Falls......... Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay).
Discharge Mobility Score..... Application of IRF Functional Outcome
Measure: Discharge Mobility Score for
Medical Rehabilitation Patients.
Discharge Self-Care Score.... Application of IRF Functional Outcome
Measure: Discharge Self-Care Score for
Medical Rehabilitation Patients.
DRR.......................... Drug Regimen Review Conducted With Follow-
Up for Identified Issues--Post Acute
Care (PAC) Skilled Nursing Facility
(SNF) Quality Reporting Program (QRP).
TOH-Provider................. Transfer of Health (TOH) Information to
the Provider Post Acute Care (PAC).
TOH-Patient.................. Transfer of Health (TOH) Information to
the Patient Post Acute Care (PAC).
DC Function.................. Discharge Function Score.
Patient/Resident COVID-19 COVID-19 Vaccine: Percent of Patients/
Vaccine. Residents Who Are Up to Date.
------------------------------------------------------------------------
Claims-Based
------------------------------------------------------------------------
MSPB SNF..................... Medicare Spending Per Beneficiary (MSPB)--
Post Acute Care (PAC) Skilled Nursing
Facility (SNF) Quality Reporting Program
(QRP).
DTC.......................... Discharge to Community (DTC)--Post Acute
Care (PAC) Skilled Nursing Facility
(SNF) Quality Reporting Program (QRP).

[[Page 17693]]

PPR.......................... Potentially Preventable 30-Day Post-
Discharge Readmission Measure for
Skilled Nursing Facility (SNF) Quality
Reporting Program (QRP).
SNF HAI...................... SNF Healthcare-Associated Infections
(HAI) Requiring Hospitalization.
------------------------------------------------------------------------
National Healthcare Safety Network
------------------------------------------------------------------------
HCP COVID-19 Vaccine......... COVID-19 Vaccination Coverage among
Healthcare Personnel (HCP).
HCP Influenza Vaccine........ Influenza Vaccination Coverage among
Healthcare Personnel (HCP).
------------------------------------------------------------------------

C. Proposal To Remove the COVID-19 Vaccination Coverage Among
Healthcare Personnel (HCP) Measure Beginning With the FY 2028 SNF QRP

We refer readers to the FY 2022 SNF PPS final rule where we adopted
the COVID-19 Vaccination Coverage among HCP measure (HCP COVID-19
Vaccine measure) into the SNF QRP (86 FR 42480 through 42489) and the
FY 2024 SNF PPS final rule where we modified the HCP COVID-19 Vaccine
measure to account for updated COVID-19 vaccine guidance (88 FR 53223
through 53233). The HCP COVID-19 Vaccine measure requires SNFs to
report the COVID-19 vaccination status of HCP through the National
Healthcare Safety Network (NHSN). SNFs must collect current vaccination
status for all employees, licensed independent practitioners, adult
trainees, students, and volunteers, as well as certain contract
personnel one week out of each month and report these data on a
quarterly basis (88 FR 53227).
We are proposing to remove the HCP COVID-19 Vaccine measure
beginning with the FY 2028 SNF QRP under measure removal Factor 3: a
measure does not align with current clinical guidelines or practice (42
CFR 413.360(b)(2)(iii)).
When we originally adopted this measure, the United States was in
the midst of a Public Health Emergency (PHE) with millions of COVID-19
cases and over 550,000 COVID-19 deaths (86 FR 42480). In March 2021,
when this measure was being proposed, the United States was averaging
over 5,000 deaths per week. In April 2023, the last full month of the
PHE, the weekly number of deaths due to COVID-19 averaged around
1,300.\3\ While preventing the spread of COVID-19 remains a public
health goal, the PHE ended on May 11, 2023,\4\ and the COVID-19 death
rate has continued to decrease. The weekly number of deaths attributed
to COVID-19 during the past 6 months (weeks ending 8/2/25 through 1/31/
26) ranged from 188 to 488.\5\
---------------------------------------------------------------------------

\3\ Provisional COVID-19 Deaths, by Week, in The United States,
Reported to CDC. Accessed on March 27, 2025, via <a href="https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00">https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00</a>.
\4\ <a href="https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html">https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html</a>.
\5\ Provisional COVID-19 Mortality Surveillance <a href="https://www.cdc.gov/nchs/nvss/vsrr/covid19/">https://www.cdc.gov/nchs/nvss/vsrr/covid19/</a>.
---------------------------------------------------------------------------

With the end of the PHE and decrease in COVID-19 deaths, we
believed the continued costs and burden to providers of reporting on
this measure outweighed the benefit of continued information collection
on the HCP COVID-19 Vaccine measure in several settings. We have
already removed this measure from the Hospital Inpatient Quality
Reporting Program (90 FR 37010 through 37012), the Inpatient
Psychiatric Facility Quality Reporting Program (90 FR 37657 through
37658), the Ambulatory Surgical Center Quality Reporting (90 FR 53917
through 53919), the Hospital Outpatient Quality Reporting Programs (90
FR 53917 through 53919), and the Inpatient Rehabilitation Facility
Quality Reporting Program (90 FR 37700 through 37702).
Since the end of the PHE, the CDC's clinical recommendations for
COVID-19 vaccination have changed. In December 2020, the CDC's Advisory
Committee on Immunization Practices (ACIP) recommended that HCP should
receive a complete vaccination course.\6\ In the FY 2024 SNF PPS final
rule, we modified the measure to utilize the term ``up to date'' in the
HCP vaccination definition to stay aligned with evolving CDC guidance,
and we indicated the definition of ``up to date'' may change based on
CDC's latest guidelines (88 FR 53228). At the time the HCP COVID-19
Vaccine measure was adopted in August 2021, vaccination was a critical
part of the nation's strategy to effectively counter the spread of
COVID-19 in an effort to restore societal functioning.\7\ There were
well-defined parameters for receiving the COVID-19 vaccination intended
to capture routine, catch-up, and risk-based immunization
recommendations.
---------------------------------------------------------------------------

\6\ A complete vaccination course may require one or more doses
depending on the specific vaccine used. 2025-2026 COVID-19
Vaccination Guidance [verbar] Covid [verbar] CDC.
\7\ Centers for Disease Control and Prevention. (2020. COVID-19
Vaccination Program Interim Playbook for Jurisdiction Operations.
Accessed March 6, 2026 at <a href="https://www.cdc.gov/vaccines/imz-managers/downloads/Covid-19-Vaccination-Program-Interim_Playbook.pdf">https://www.cdc.gov/vaccines/imz-managers/downloads/Covid-19-Vaccination-Program-Interim_Playbook.pdf</a>.
---------------------------------------------------------------------------

However, these parameters no longer apply, due to evolving
circumstances. The latest CDC COVID-19 vaccination recommendations for
the 2025-2026 season are now based on shared clinical decision-making
(also known as individual-based decision-making).\8\ For shared
clinical decision-making, there is not a default decision to vaccinate
for a defined population.\9\ Given that there is no single default
recommendation to vaccinate a defined population, both receipt and
nonreceipt of vaccination may be consistent with the application of
shared clinical decision-making. This differs from the guidance in
place when this measure was finalized.
---------------------------------------------------------------------------

\8\ 2025-2026 COVID-19 Vaccination Guidance 2025-2026 COVID-19
Vaccination Guidance [verbar] Covid [verbar] CDC.
\9\ ACIP Shared Clinical Decision-Making Recommendations ACIP
Shared Clinical Decision-Making Recommendations [verbar] ACIP
[verbar] CDC.
---------------------------------------------------------------------------

On this basis, we are proposing to remove the measure from the SNF
QRP under removal Factor 3, measure does not align with current
clinical guidelines or practice.
If finalized as proposed, SNFs would no longer be required to
report CY 2026 HCP COVID-19 Vaccine measure data for purposes of the FY
2028 payment determination (that is, SNFs that do not report CY 2026
HCP COVID-19 Vaccine measure data would not be penalized for the FY
2028 annual payment update under the SNF QRP). Any CY 2026 HCP COVID-19
Vaccine measure data received by CMS would not be used for SNF QRP
compliance or public reporting.
We invite public comment on our proposal to remove the COVID-19
Vaccination Coverage among Healthcare Personnel measure from the SNF
QRP beginning with the FY 2028 SNF QRP.

[[Page 17694]]

D. Proposal To Remove the COVID-19 Vaccine: Percent of Patients/
Residents Who Are Up to Date Measure Beginning With the FY 2028 SNF QRP

We refer readers to the FY 2024 SNF PPS final rule (88 FR 53256
through 53265), where we finalized the COVID-19 Vaccine: Percent of
Patients/Residents Who Are Up to Date (Patient/Resident COVID-19
Vaccine) measure for the FY 2026 SNF QRP. The measure is an assessment-
based process measure that reports the percent of stays in which
residents in a SNF are up to date on their COVID-19 vaccinations per
the CDC's latest guidance.
We are proposing to remove the Patient/Resident COVID-19 Vaccine
measure beginning with the FY 2028 SNF QRP under removal Factor 3: a
measure does not align with current clinical guidelines or practice (42
CFR 413.360(b)(2)(iii)).
When we originally adopted the Patient/Resident COVID-19 Vaccine
measure, COVID-19 continued to be a major challenge for SNFs, with
older adults at a significantly higher risk of mortality, severe
disease, and death following infection (88 FR 53256 and 53257). In
August 2023, when this measure was adopted, CDC COVID-19 vaccination
guidance emphasized population-level vaccination expectations for older
adults and other high-risk groups, and the evidence base focused on
demonstrating broad protective benefit at the population level. CDC
data at that time showed that, among adults aged 50 years and older,
individuals who had received a primary vaccination series and booster
dose experienced significantly lower risks of COVID-19-related
hospitalization and death compared to those who were unvaccinated, and
that additional booster doses, including bivalent booster formulations,
further reduced the risk of severe outcomes, including hospitalization
and death, in the context of emerging variants (88 FR 53257). These
data supported an infection prevention framework under which being ``up
to date'' with COVID-19 vaccination was treated as a broadly applicable
expectation for high-risk populations and therefore appropriate for
monitoring through a facility-level quality measure.
At the time the Patient/Resident COVID-19 Vaccine measure was
adopted, it was intended to capture routine, catch-up, and risk-based
immunization recommendations. In the FY 2024 SNF PPS final rule (88 FR
53264), we recognized that the definition of ``up to date'' may change
based on the CDC's latest guidelines. Due to evolving circumstances,
the latest CDC COVID-19 vaccination recommendations for the 2025-2026
season are now based on shared clinical decision-making (also known as
individual-based decision-making).\10\ For shared clinical decision-
making, there is not a default decision to vaccinate for a defined
population.\11\ Given that there is no single default recommendation to
vaccinate a defined population, both vaccination and non-vaccination
may be consistent with the application of shared clinical decision-
making. This differs from the guidance in place when this measure was
finalized.
---------------------------------------------------------------------------

\10\ 2025-2026 COVID-19 Vaccination Guidance 2025-2026 COVID-19
Vaccination Guidance [verbar] Covid [verbar] CDC.
\11\ ACIP Shared Clinical Decision-Making Recommendations ACIP
Shared Clinical Decision-Making Recommendations [verbar] ACIP
[verbar] CDC.
---------------------------------------------------------------------------

When there were more narrow parameters for receiving the COVID-19
vaccination, the Patient/Resident COVID-19 Vaccine measure promoted
consumer transparency and choice by giving consumers clear information
on the number of patients in an SNF who were vaccinated. However, these
parameters no longer apply in light of current CDC clinical guidance
that recommends shared clinical decision-making for COVID-19
vaccination decisions. As a result, both vaccination and non-
vaccination may reflect an ``up to date'' status using the guidance of
shared clinical decision-making, and the Patient/Resident COVID-19
Vaccine measure may no longer provide information on the prevalence of
COVID-19 vaccination in the SNF setting. On this basis, we are
proposing to remove the measure from the SNF QRP under removal Factor
3: a measure does not align with current clinical guidelines or
practice.
Removing this measure would bring the SNF QRP into alignment with
other post-acute care settings since we have already removed this
measure from the Home Health Quality Reporting Program (HH QRP) (90 FR
55416 through 55418) and the Inpatient Rehabilitation Facility Quality
Reporting Program (IRF QRP) (90 FR 37702 through 37704).
We are proposing that beginning with residents discharged on or
after October 1, 2026, SNFs would no longer be required to collect and
submit the Patient/Resident COVID-19 Vaccine measure data to CMS. We
are also proposing to remove the Resident's COVID-19 vaccination is up
to date data element (O0350) from the MDS effective October 1, 2027,
since it is not technically feasible to remove this data element
earlier. However, under our proposal, this data element would become
voluntary and SNFs would not be required to collect and submit Patient/
Resident COVID-19 Vaccine measure data beginning with residents
discharged on or after October 1, 2026.
We invite public comment on our proposal to remove the COVID-19
Vaccine: Percent of Patients/Residents Who Are Up to Date measure from
the SNF QRP beginning with the FY 2028 SNF QRP.

E. SNF QRP Quality Measure Concepts Under Consideration for Future
Years--Request for Information

In the FY 2024 SNF PPS proposed rule (88 FR 21353 through 21355),
we included an RFI on a set of principles for selecting and
prioritizing SNF QRP measures, identifying measurement gaps, and
suitable measures for filling these gaps. We refer readers to the FY
2024 SNF PPS final rule (88 FR 53265 through 53267) for a summary of
the public comments received in response to the RFI.
We are seeking input on the importance, relevance, appropriateness,
and applicability of the quality measure concepts related to advanced
care planning. Advance care planning is a continuous process that
supports people in understanding and communicating their goals, values,
and preferences regarding future medical decisions.\12\ The Patient
Self Determination Act of 1990 \13\ supports this process by requiring
healthcare facilities to inform residents of their rights regarding
medical decisions, including advance directives and end of life
care.\14\ In post-acute care (PAC) settings, where residents recover
from acute illness, injury, or major procedures, their needs and goals
may evolve as their condition changes. Factors such as clinical
stability, functional status, therapy tolerance, cognition function,
prognosis, and personal preferences can all shift during recovery.
Regular reassessment and transparent communication are essential to
maintaining person-centered care, while advance care planning
facilitates shared decision-making by documenting resident preferences
and

[[Page 17695]]

ensuring goal-concordant care throughout care transitions.\15\
---------------------------------------------------------------------------

\12\ <a href="https://www.cms.gov/files/document/mln-advanced-care-planning.pdf">https://www.cms.gov/files/document/mln-advanced-care-planning.pdf</a> McMahan, R.D., Tellez, I., & Sudore, R.L. (2021).
Deconstructing the Complexities of Advance Care Planning Outcomes:
What Do We Know and Where Do We Go? A Scoping Review. Journal of the
American Geriatrics Society, 69(1), 234-244. <a href="https://doi.org/10.1111/jgs.16801">https://doi.org/10.1111/jgs.16801</a>.
\13\ Public Law 101-508, sections 4206, 4751.
\14\ <a href="https://www.congress.gov/bill/101st-congress/house-bill/5835">https://www.congress.gov/bill/101st-congress/house-bill/5835</a>.
\15\ McMahan RD, Tellez I, Sudore RL. Deconstructing the
Complexities of Advance Care Planning Outcomes: What Do We Know and
Where Do We Go? A Scoping Review. J Am Geriatr Soc. 2021 Jan;
69(1):234-244. doi: 10.1111/jgs.16801. Epub 2020 Sep 7. PMID:
32894787; PMCID: PMC7856112.
---------------------------------------------------------------------------

As we review new measure concepts, we will prioritize evidence-
based outcome measures that promote person-centered care practices. We
are seeking input on the relevant aspects of advanced care planning and
measures appropriate for the SNF setting.

F. Form, Manner, and Timing of Data Submission Under the SNF QRP

1. Background
We refer readers to the current regulatory text at 42 CFR
413.360(b) for information regarding the policies for reporting
specified data for the SNF QRP.
2. Proposal To Revise SNF QRP Data Submission Deadlines Beginning With
the FY 2029 SNF QRP
a. Background
Sections 1899B(f) and (g) of the Act require CMS to provide
feedback to SNFs and to publicly report their performance on SNF
quality measures specified under section 1899B(c)(1) of the Act and
resource use and other measures specified under 1899B(d)(1) of the Act.
More specifically, section 1899B(f)(1) of the Act requires the
Secretary to provide confidential feedback reports to SNFs on their
performance on the quality, resource use, and other measures specified
under section 1899B(c)(1) and (d)(1) of the Act. Section 1899B(f)(2) of
the Act provides that, to the extent feasible, the Secretary must make
these confidential feedback reports available not less frequently than
on a quarterly basis except in the case of measures reported on an
annual basis, in which case confidential feedback reports may be made
available annually. Additionally, section 1899B(g)(1) of the Act
requires the Secretary to provide for the public reporting of each
SNF's performance on the quality measures, resource use, and other
measures specified.
Section 1888(e)(6)(B)(i) of the Act provides the Secretary with
discretion to prescribe the manner and the timeframes for SNFs to
submit data as specified for reporting for the SNF QRP. For MDS
assessment-based measures, in the FY 2017 SNF PPS final rule (81 FR
52041 through 52043), we finalized that SNFs will have approximately
4.5 months after each quarterly data collection period to complete
their data submissions and make corrections to such data where
necessary. At that time, we received several comments supporting the
alignment of the data submission and correction timeframes with other
quality reporting programs, but we did not receive any comments on the
4.5-month data submission timeframe. We refer readers to the FY 2017
SNF PPS final rule (81 FR 52041 through 52043) for a discussion of our
proposal and summary of comments received and responses thereto.
We also finalized data submission deadlines for SNF QRP measures
that are submitted via the Centers for Disease Control and Prevention's
(CDC) National Healthcare Safety Network (NHSN). In the FY 2022 SNF PPS
final rule (86 FR 42494), we finalized that the COVID-19 Vaccination
Coverage among HCP measure is reported to the CDC through the NHSN at
least 1 week per month, with the CDC reporting data to CMS quarterly
and allowing for corrections in the NHSN application in alignment with
the CMS data submission deadlines. In the FY 2023 SNF PPS final rule
(87 FR 47555), we finalized that the data collection period for the
Influenza Vaccination Coverage among Healthcare Personnel (HCP) measure
would be October 1 through March 31, with a data submission deadline of
May 15th for each influenza season.
Public reporting of data collected under quality programs, such as
the SNF QRP, is designed to provide consumers and their families with
the most current information to empower them to make quality-informed
decisions about where to receive their care. We have identified that
the time between when data on measures is submitted to us and when
those data are publicly reported (approximately nine months) may be too
long to provide the most accurate and up to date information for the
public. For example, through technical expert panels, we have received
feedback from resident caregiver advocates that the aged data used in
publicly reported quality measures diminishes their value to consumers.
Furthermore, we have heard from SNFs that the SNF QRP measure results
they receive prior to public reporting are not useful for their quality
improvement efforts due to the aged data and the delay in when they
receive these reports.
Currently, the largest contributing factor to the 9-month lag
between the end of the data collection period and when measures are
publicly reported is the 4.5-month timeframe for data submission.
Reducing the data submission timeframe from 4.5 months to require data
submission the 15th day of the second month after the end of the
calendar quarter could reduce this lag by up to 3 months, resulting in
more timely public reporting of data for consumers and increasing the
value of publicly reported data. Additionally, this timeframe provides
SNFs with more recent data in support of their quality improvement
activities.
In the FY 2026 SNF PPS proposed rule, we included a request for
information (RFI) on reducing the MDS assessment data submission
deadline from 4.5 months to 45 days (90 FR 18608). We refer readers to
the FY 2026 SNF PPS final rule (90 FR 37343) for a full summary of the
public comments received.
b. Proposal To Revise the SNF QRP Assessment Data Submission Deadline
Beginning with the FY 2029 SNF QRP, we are proposing that SNFs must
complete their data submissions and make corrections to their MDS
assessment data where necessary no later than the 15th day of the
second month after the end of the calendar quarter. However, if the
15th day of the second month falls on a Friday, weekend, or Federal
holiday, the date is delayed until 11:59 p.m. EST on the next business
day. We are proposing that SNFs would follow the deadlines presented in
Table 13 for the FY 2029 SNF QRP. We are also proposing that similar
calendar year data submission deadlines would apply to future years'
payment determinations.

Table 13--Proposed Data Collection Timeframe and Data Submission
Deadlines for MDS Assessment Data Affecting the FY 2029 Payment
Determination
------------------------------------------------------------------------
Final data
Data collection submission deadlines
Calendar Year (CY) quarter timeframe for FY 2029 payment
determination *
------------------------------------------------------------------------
CY 2027 Quarter 1........... January 1-March 31, May 17, 2027.
2027.

[[Page 17696]]

CY 2027 Quarter 2........... April 1-June 30, August 16, 2027.
2027.
CY 2027 Quarter 3........... July 1-September 30, November 15, 2027.
2027.
CY 2027 Quarter 4........... October 1-December February 15, 2028.
31, 2027.
------------------------------------------------------------------------
* Data submission deadlines will follow a similar quarterly schedule for
subsequent CYs.

We believe that requiring SNFs to submit MDS assessment data by the
15th day of the second month after the end of the calendar quarter is
reasonable. We conducted an analysis on the potential impact of
reducing the timeframe by determining how many assessments are
currently being submitted by this deadline, which is approximately
within 45 days of the end of the quarter. Using 2024 data, we
identified that 97.18 percent of all MDS assessments were submitted to
CMS within a 45-day timeframe. Of the remaining 2.82 percent submitted
beyond 45 days, 0.13 percent were submitted after the current 4.5-month
data submission deadline and would not be further impacted by a change
in the data submission deadline. Therefore, only 2.69 percent of MDS
assessments would be impacted by changing the data submission deadline
from 4.5 months to require data submission by the 15th day of the
second month after the end of the calendar quarter.
c. Proposal To Revise the CDC NHSN Data Submission Deadlines
Beginning with the FY 2029 SNF QRP, we are proposing that SNFs must
complete their data submissions and make corrections to their CDC NHSN
data where necessary no later than the 15th day of the second month
after the end of the calendar quarter. However, if the 15th day of the
second month falls on a Friday, weekend, or Federal holiday, the date
is delayed until 11:59 p.m. EST on the next business day. We are
proposing that SNFs would follow the deadlines presented in Table 14
for the FY 2029 SNF QRP. We are also proposing that similar calendar
year data submission deadlines would apply to future years' payment
determinations.

Table 14--Proposed Data Collection Timeframe and Data Submission
Deadlines for CDC NHSN SNF QRP Measures Affecting the FY 2029 Payment
Determination
------------------------------------------------------------------------
Final data
submission
Measure Data collection deadlines for FY
timeframe 2029 payment
determination *
------------------------------------------------------------------------
COVID-19 Vaccination Coverage January 1-March May 17, 2027.
among HCP **. 31, 2027.
April 1-June 30, August 16, 2027.
2027.
July 1-September November 15, 2027.
30, 2027.
October 1-December February 15, 2028.
31, 2027.
Influenza Vaccination Coverage October 1, 2027- May 15, 2028.
among HCP. March 31, 2028.
------------------------------------------------------------------------
* Data submission deadlines will follow a similar quarterly schedule for
subsequent CYs.
** In section VI.C. of this proposed rule, we are proposing to remove
this measure effective with the FY 2028 SNF QRP.

We believe that requiring SNFs to submit CDC NHSN data by the 15th
day of the second month after the end of the calendar quarter is a
reasonable timeframe to submit one week of data per month to the CDC
NHSN to meet the data submission requirements of the HCP COVID-19
Vaccine measure. We note that there would be no change in the data
submission deadline for the Influenza Vaccination Coverage among HCP
measure, as the previously finalized data submission date is May 15th
for each influenza season.
We conducted an analysis on the potential impact of reducing the
timeframe by determining how many SNFs are currently reporting data by
this deadline, which is approximately within 45 days of the end of the
quarter. Using FY 2025 data, we identified that 95 percent of all SNFs
submitted CDC NHSN data within a 45-day timeframe. On these bases, we
believe revising the SNF QRP data submission deadline for MDS and CDC
NHSN data to require SNFs to submit CDC NHSN data by the 15th day of
the second month after the end of the calendar quarter would improve
the timeliness of public reporting by 3 months, which is beneficial to
both consumers and SNFs, with no change in burden to SNFs.
We invite comment on this proposal to require that SNFs complete
their data submissions and make corrections to their MDS assessment
data and CDC NHSN data where necessary no later than the 15th day of
the second month after the end of the calendar quarter beginning with
the FY 2029 SNF QRP.
3. Proposal To Require MDS Data Submission on All SNF Residents
Beginning With the FY 2031 SNF QRP

[[Page 17697]]

a. Background
For over a decade, spanning the implementation of the Improving
Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub.
L. 113-185) and the subsequent development of quality, resource use,
and other measures and standardized patient assessments in accordance
with the applicable statutory authority, interested parties have
provided their input on and support for the need to standardize data
collection across all payers in PAC settings.\16\ This includes input
that the quality measures used in the SNF QRP should be calculated
using data collected from all SNF residents, regardless of a resident's
payer, and that such data collection and submission is feasible in the
SNF setting.17 18 Additionally, we received feedback on this
topic in response to a Request for Information (RFI) in the FY 2018 SNF
PPS final rule (82 FR 36603 and 36604) and a proposal in the FY 2020
SNF PPS final rule (84 FR 38817 through 38819).
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\16\ MAP Coordination Strategy for Post-Acute Care and Long-Term
Care Performance Measurement. Feb 2012. Available at <a href="https://digitalassets.jointcommission.org/api/public/content/0309517406bf4b87972b9a433a689c87?v=0fa83028">https://digitalassets.jointcommission.org/api/public/content/0309517406bf4b87972b9a433a689c87?v=0fa83028</a>.
\17\ Public Comment Summary Report Posting for Transfer of
Health Information and Care Preferences. Available at <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-Cross-Setting-Transfer-of-Health-Information-Quality-Meas.pdf">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-Cross-Setting-Transfer-of-Health-Information-Quality-Meas.pdf</a>.
\18\ Technical Expert Panel Summary Report: Development and
Maintenance of Quality Measures for Skilled Nursing Facility Quality
Reporting Program. April 2018. Available at <a href="https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/TEP-Summary-Report_April-2018_Development-and-Maintenance-of-Quality-Measures-for-SNF-QRP.pdf">https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/TEP-Summary-Report_April-2018_Development-and-Maintenance-of-Quality-Measures-for-SNF-QRP.pdf</a>.
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In the FY 2018 SNF PPS proposed rule (82 FR 21077), we issued an
RFI on expanding the collection and submission of SNF MDS data to
include all SNF residents, regardless of payer, and we received
overwhelming support. Responding to our RFI in the FY 2018 SNF PPS
proposed rule, the Medicare Payment Advisory Commission (MedPAC) and
other commenters highlighted that such data would serve to better
inform beneficiaries on the broader quality of care within a SNF,
especially regarding those who are or will become long-term residents
of the same facility. Other commenters suggested it could support SNFs'
comprehensive quality improvement efforts across payers. Furthermore,
MedPAC added that while all data collection activity incurs some cost,
their work has found that some SNFs already routinely assess all SNF
residents regardless of payer because they feel that sorting which
residents require assessments is almost as much work as completing the
assessment. Additional commenters echoed MedPAC and added that
collecting and submitting MDS data on all payers would be easier than
having to determine which residents were Medicare fee-for-service
(FFS). For a more detailed discussion of these comments, we refer
readers to the FY 2018 SNF PPS final rule (82 FR 36603 and 36604).
In the FY 2020 SNF PPS proposed rule (84 FR 17678 and 17679), we
proposed to expand the collection and submission of MDS data to all SNF
residents regardless of payer for purposes of the SNF QRP. Although we
decided not to finalize the proposal in the FY 2020 SNF PPS final rule
(84 FR 38817 through 38819), we did receive comments from several
commenters who supported aligning data collection and submission under
the SNF QRP with the practices of other quality programs. These
commenters noted that our proposal would give consumers a more complete
picture of quality within a SNF and that ensuring quality of care is
essential to the overall well-being of all SNF residents and should not
be conditional on the payer source. However, other commenters did not
support the proposal and expressed concern about the lack of details
found in the proposal, including which residents would be captured
under an expanded SNF MDS data collection and submission policy, the
intended use of the data, and how this proposal would affect penalties
for non-compliance in the SNF QRP. Commenters were also concerned about
the reporting burden associated with expanding MDS data collection and
submission and whether the data would be publicly reported. As noted
previously, we did not finalize the proposal at the time but stated
that we would use the input we received to revise our policy and
propose it in future rulemaking. For a more detailed discussion of
these comments and our decision to not finalize this proposal, we refer
readers to the FY 2020 SNF PPS final rule (84 FR 38817 through 38819).
Since 2019, we have worked to address this feedback in anticipation
of a future proposal. Our work included gathering additional feedback
from interested parties on specific questions related to implementing a
policy to expand data submission for the SNF QRP during two national
SNF Listening Sessions hosted by our contractor in 2023 \19\ and
2024.\20\ During both listening sessions, we heard from SNFs that
submitting data on all SNF residents is feasible, and that some SNFs
currently collect MDS data on all residents, regardless of payer.
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\19\ Skilled Nursing Facility (SNF) QRP Listening Session
Summary: Possible Expansion of MDS Data Submission to All SNF
Residents Regardless of Payer. Summary Report. August 29, 2023.
Available at <a href="https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf">https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf</a>.
\20\ Skilled Nursing Facility (SNF) QRP Listening Session
Summary: Possible Expansion of MDS Data Submission to All SNF
Residents Regardless of Payer. Summary Report. October 1, 2024.
Available at <a href="https://www.cms.gov/files/document/snfallpayerlisteningsession2024summaryreportv3508.pdf">https://www.cms.gov/files/document/snfallpayerlisteningsession2024summaryreportv3508.pdf</a>.
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b. Support for Expanding MDS Data Submission on All SNF Residents
Regardless of Payer
The concept of requiring data submission on all patients/residents
regardless of payer is not new. We currently require data submission on
all patients regardless of payer as part of the Inpatient
Rehabilitation Facility (IRF) QRP, the Long-Term Care Hospital (LTCH)
QRP, the Home Health (HH) QRP, and the Hospice QRP (HQRP). Eligible
clinicians participating in the Merit-based Incentive Payment System
(MIPS) who submit quality measure data on Qualified Clinical Data
Registry (QCDR) measures, MIPS clinical quality measures (CQMs), or
electronic clinical quality measures (eCQMs) must submit such data on a
specified percentage of patients regardless of payer. Submitting such
data on all SNF residents, regardless of payer, in the SNF setting
would align the SNF QRP with the data submission practices of other CMS
programs.
Until SNFs adopt a policy to submit MDS data on all SNF residents
regardless of payer, the SNF QRP risks losing relevance to the SNF
community and SNF consumers. According to the Congressional Budget
Office (CBO), total Medicare Advantage enrollment in 2025 was estimated
to be 54 percent of all beneficiaries and by 2034, the number is
expected to rise to 64 percent of all beneficiaries.\21\ As a result,
if any of those beneficiaries require SNF services, they would not be
included in the SNF QRP since the program currently requires MDS data
submission only for Medicare FFS residents. Therefore, submitting MDS
data on all SNF residents, regardless of payer, would

[[Page 17698]]

provide the most robust and accurate representation of SNF quality.
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\21\ Ochieng, N., Freed, M., Biniek, J.F., Damico, A. Neuman, T.
Medicare Advantage in 2025: Enrollment Update and Key Trends. Kaiser
Family Foundation. Published July 28, 2025. Accessed November 14,
2025. Available at <a href="https://www.kff.org/medicare/medicare-advantage-enrollment-update-and-key-trends/">https://www.kff.org/medicare/medicare-advantage-enrollment-update-and-key-trends/</a>.
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In addition to aligning the SNF QRP with the data submission
practices of other CMS programs and providing the most robust and
accurate representation of SNF quality, we believe that submitting data
using the MDS should include all SNF residents regardless of payer for
other reasons. For instance, requiring submission of MDS data on all
SNF residents, regardless of payer, 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. This information exchange could
facilitate coordinated care, continuity in care planning, and the
discharge planning process. Furthermore, expanding data collection to
all SNF residents regardless of payer could support SNFs in their
quality improvement activities.\22\ Finally, adopting this policy could
contribute to better healthcare outcomes for our beneficiaries,
enabling them to make more informed decisions about where to receive
SNF care.23 24 As stated previously, unless we adopt a
policy to expand data submission to all SNF residents regardless of
payer, SNFs will continue to lag behind other PAC settings who already
submit this assessment information on all patients. However, we note
that we would not use these data from non-Medicare FFS residents to
update the payment rates used under the SNF PPS.
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\22\ CMS National Quality Strategy. Accessed November 14, 2025.
Available at <a href="https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy">https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy</a>.
\23\ Ibid.
\24\ Report to Congress: Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014 Strategic Plan for Accessing
Race and Ethnicity Data. January 5, 2017. Accessed November 26,
2024. Available at <a href="https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Research-Reports-2017-Report-to-Congress-IMPACT-ACT-of-2014.pdf">https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Research-Reports-2017-Report-to-Congress-IMPACT-ACT-of-2014.pdf</a>.
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c. Considerations for Expansion of MDS Data Submission to All SNF
Residents
As previously noted in section VI.F.3.a. of this proposed rule, we
received several constructive comments when we proposed to expand the
submission of MDS data in the FY 2020 SNF PPS proposed rule. We have
used these comments to inform our proposals for the form, time, and
manner of MDS data submission on all SNF residents regardless of payer
in the FY 2027 SNF PPS proposed rule.
Implementation of a policy requiring MDS data submission on all SNF
residents regardless of payer presents unique considerations for CMS
that have not been encountered in other settings because the MDS data
are required for reasons other than quality reporting and Medicare
payment. One consideration is the Omnibus Budget Reconciliation Act of
1987 (OBRA) (Pub. L. 100-203) that requires nursing homes that are
Medicare certified, Medicaid certified or both, conduct initial and
periodic MDS assessments for both long-term residents and short-term
residents in a rehabilitative program anticipating return to their
previous environment or another environment of their choice. Another
consideration is that data submitted in MDS assessments are used by
many state Medicaid payment and quality programs. These considerations
informed our proposals for the policies discussed next.
(1) Defining Skilled Services
In response to our FY 2020 SNF PPS proposal to expand SNF MDS data
submission to all SNF residents regardless of payer, we heard from
commenters that they needed to know how to identify the resident
population for whom they would be required to submit MDS data under an
expanded policy. Specifically, we received several questions about how
``skilled services'' would be defined for non-Medicare Part A FFS
residents receiving skilled care (84 FR 17678 and 17679).
We define a skilled nursing facility level of care under the
Medicare Part A benefit in the Medicare Benefit Policy Manual (MBPM)
(100-2), Chapter 8, Sec. 30.\25\ Care in a SNF is covered by the
Medicare Part A benefit when the following four factors listed are
listed are met:
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\25\ Medicare Benefits Policy Manual (100-2), Chapter 8.
Available at <a href="https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c08pdf.pdf">https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c08pdf.pdf</a>.
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<bullet> The patient requires skilled nursing services or skilled
rehabilitation services, that is, services that must be performed by or
under the supervision of professional or technical personnel (see MBPM
Sec. Sec. 30.2 through 30.4); are ordered by a physician and the
services are rendered for a condition for which the beneficiary
received inpatient hospital services or for a condition that arose
while receiving care in a SNF for a condition for which he received
inpatient hospital services.
<bullet> The patient requires these skilled services on a daily
basis (see MBPM Sec. 30.6).
<bullet> As a practical matter, considering economy and efficiency,
the daily skilled services can be provided only on an inpatient basis
in a SNF. (See MBPM Sec. 30.7)
<bullet> The services delivered are reasonable and necessary for
the treatment of a patient's illness or injury, that is, are consistent
with the nature and severity of the individual's illness or injury, the
individual's particular medical needs, and accepted standards of
medical practice. The services must also be reasonable in terms of
duration and quantity.
SNFs should be familiar with this definition since they use it
daily to make decisions about whether a Medicare Part A resident
qualifies for a covered SNF level of care.
We presented this definition to interested parties attending the
August 2023 SNF Listening Session: Possible Expansion of MDS Data
Submission to All SNF Residents Regardless of Payer.\26\ We sought
feedback about using this definition to identify SNF residents,
regardless of payer, requiring an MDS assessment for purposes of
submitting data. Participants of the 2023 SNF Listening Session
generally supported the idea of a standardized definition of skilled
services across all payers and stated that it would be feasible to use
a modified definition of skilled services as described in the Medicare
Benefits Policy Manual (Chapter 8, Sec. 30) to identify residents for
the purposes of MDS data submission.
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\26\ Skilled Nursing Facility (SNF) QRP Listening Session
Summary: Possible Expansion of MDS Data Submission to All SNF
Residents Regardless of Payer. Summary Report. August 29, 2023.
Available at <a href="https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf">https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf</a>.
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We are not proposing to change the coverage criteria for a Medicare
Part A FFS covered stay. However, given the SNFs' familiarity with the
definition of covered skilled services in the Medicare Benefits Policy
Manual, we believe a modified version of Chapter 8, Sec. 30 will work
for determining whether an expanded resident population meets a skilled
nursing facility level of care.
Therefore, we are proposing that SNFs would submit MDS data on all
SNF residents regardless of payer when all of the following four
criteria are met:
<bullet> When the resident is admitted to the SNF for covered
skilled nursing services or skilled rehabilitation services, that is,
services that must be performed by or under the supervision of
professional or technical personnel (see MBPM Sec. Sec. 30.2 through
30.4) and those services are ordered by a physician.
<bullet> The resident requires these skilled services on a daily
basis (see MBPM Sec. 30.6).

[[Page 17699]]

<bullet> As a practical matter, considering economy and efficiency,
the daily skilled services can be provided only on an inpatient basis
in a SNF (see MBPM Sec. 30.7).
<bullet> The services delivered are reasonable and necessary for
the treatment of a resident's illness or injury, that is, are
consistent with the nature and severity of the individual's illness or
injury, the individual's particular medical needs, and accepted
standards of medical practice, and are reasonable in terms of duration
and quantity.
(2) Identifying the Resident Population for the Submission of MDS Data
SNFs are distinct from the IRF and LTCH settings, which only
provide services to patients for limited periods of time and, in the
case of IRFs, for certain medical conditions. In 2025, 95 percent of
all SNFs were also certified under Medicaid as nursing facilities
(NFs).\27\ These dually certified SNFs/NFs are long-term care
facilities that furnish care continuously to both Medicare and Medicaid
beneficiaries in the nursing home, which is their place of residence.
The SNF QRP applies to freestanding SNFs, including dually certified
SNFs/NFs, SNFs affiliated with acute care facilities, and all non-
critical access hospital (CAH) swing bed rural hospitals. As such, our
proposal would cover the resident populations of these facilities. For
ease of reference, we will hereafter refer to these entities
collectively as SNFs.
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\27\ Distribution of Certified Nursing Facilities by
Certification Type [verbar] KFF State Health Facts. July 2025.
Available at <a href="https://www.kff.org/other-health/state-indicator/nursing-facilities-by-certification-type/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D">https://www.kff.org/other-health/state-indicator/nursing-facilities-by-certification-type/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D</a>.
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As noted previously, since residents can be admitted to a SNF for
different reasons, such as short-term skilled care, or long-term
services and supports for limitations in activities of daily living and
instrumental activities of daily living, it is important that we
further define the resident population for expanding the submission of
MDS data.
Long-term residents in SNFs may experience changes in the level of
care they require without leaving the facility. Specifically, a long-
term resident's level of care may change from non-skilled to skilled
without a hospitalization. Over the last several years, SNF care has
evolved in response to internal and external factors, including
increased clinical specialization of SNFs, an increasing number of
beneficiaries choosing MA benefits and the competition among SNFs to be
an `in-network provider,' an increased number of and attention to
resource use measures in the SNF QRP and VBP, and the COVID-19 public
health emergency (PHE). Increasingly, it is common practice for SNFs to
``skill-in-place'' their long-term residents who several years ago may
have been immediately sent to the emergency department for evaluation.
When a long-term resident is ``skilled-in-place'', the SNF provides
skilled services to address a long-term resident's change in condition
to prevent or in lieu of a hospital admission.
Furthermore, MA organizations may authorize coverage of SNF care in
the absence of a prior qualifying hospital stay. This includes long-
term residents who may be enrolled in a Special Needs Plan (SNP) \28\
or may have other commercial insurances or long-term care policies that
are covering their skilled care.
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\28\ Special Needs Plans [verbar] CMS. September 10, 2024.
Available at <a href="https://www.cms.gov/medicare/enrollment-renewal/special-needs-plans">https://www.cms.gov/medicare/enrollment-renewal/special-needs-plans</a>.
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Therefore, expansion of a policy to include the submission of MDS
data must address whether all residents receiving skilled services in a
facility would be included in the policy. This could include being
admitted after an inpatient stay for short term skilled services, or a
long-term resident who develops a need for skilled services and
receives them without being discharged to the hospital. We also heard
from participants in both the 2023 and 2024 SNF Listening Sessions that
identifying changes in level of care across different payers and
resident types would be challenging and burdensome. Specifically, we
heard in the 2024 SNF Listening Session that trying to manage a same
day change in a long-term resident's need for skilled services would be
difficult and add confusion to the process of determining which
assessments would be required given the complexity of balancing SNF MDS
assessments and MDS OBRA requirements.
In response to these concerns, we are proposing to require
submission of MDS data on residents admitted or readmitted for covered
skilled services regardless of payer, rather than any long-term
resident residing in the facility who becomes skilled in place, that is
requiring skilled services without leaving the facility. We are also
proposing that long-term residents who take a leave of absence \29\ and
return to the facility requiring skilled care would not require a
skilled care admission assessment and submission of MDS data, while
long-term residents that are discharged from the facility,\30\ and are
subsequently readmitted for covered skilled care would trigger the
submission of MDS data. We note, however, that under this proposal, we
would not require the submission of MDS data if the services were not
covered. Additionally, a short-term resident who was admitted for
covered skilled care, who left the facility for any reason and returned
to the same SNF requiring skilled services before the end of the
interruption window,\31\ would not require a new MDS assessment as long
as their services remained skilled and were covered. Instead, their
subsequent stay is considered a continuation of the previous skilled
care stay for purposes of the SNF QRP.
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\29\ A leave of absence occurs when a resident has a: temporary
home visit of at least one night; or therapeutic leave of at least
one night; or hospital observation stay less than 24 hours and the
hospital does not admit the resident.
\30\ A discharge occurs when: Resident is discharged from the
facility to a private residence (as opposed to going on an LOA);
Resident is admitted to a hospital or other care setting (regardless
of whether the nursing home discharges or formally closes the
record); Resident has a hospital observation stay greater than 24
hours, regardless of whether the hospital admits the resident.
Resident is transferred from a Medicare- and/or Medicaid-certified
bed to a non-certified bed. Resident's covered skilled stay ends,
but the resident remains in the facility.
\31\ An interruption window occurs when a resident leaves the
facility for a 3-day period, starting with the calendar day of
discharge and including the 2 immediately following calendar days.
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We believe that limiting the submission of MDS data to residents
admitted or readmitted to the SNF for covered skilled services would
align the SNF QRP population with other PAC QRPs, and meet the goal of
obtaining full and complete data regarding the quality of care provided
by the SNF to the residents receiving care in that facility.
Finally, while we appreciate that submitting MDS data on all SNF
residents regardless of payer may create additional burden, we also
note that this burden may be partially offset by the fact that SNFs
would no longer have to determine which residents admitted or
readmitted for covered skilled services require MDS data submission. We
have also learned that many SNFs already collect MDS data on non-
Medicare FFS residents but do not submit it.32 33 We

[[Page 17700]]

also acknowledge past concerns raised by some interested parties with
respect to the administrative challenges of implementing all payer data
submission and the need to account for the burden related to the
proposal. In section VIII.B. of the proposed rule, we provide an
estimate of additional burden related to the proposal.
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\32\ Skilled Nursing Facility (SNF) QRP Listening Session
Summary: Possible Expansion of MDS Data Submission to All SNF
Residents Regardless of Payer. Summary Report. August 29, 2023.
Available at <a href="https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf">https://www.cms.gov/files/document/snf-listening-session-2023-summary-report.pdf</a>.
\33\ Skilled Nursing Facility (SNF) QRP Listening Session
Summary: Possible Expansion of MDS Data Submission to All SNF
Residents Regardless of Payer. Summary Report. October 1, 2024.
Available at <a href="https://www.cms.gov/files/document/snfallpayerlisteningsession2024summaryreportv3508.pdf">https://www.cms.gov/files/document/snfallpayerlisteningsession2024summaryreportv3508.pdf</a>.
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d. Proposal To Require MDS Data Submission on All SNF Residents
Regardless of Payer for the SNF QRP
We are proposing to require the submission of MDS data on each
resident receiving covered skilled care in a SNF, regardless of payer,
beginning with the FY 2031 SNF QRP. Specifically, we are proposing that
SNFs would be required to submit these data for all SNF residents,
regardless of payer, beginning with residents admitted on October 1,
2029 for purposes of the FY 2031 SNF QRP.\34\ Starting in CY 2030, SNFs
would be required to submit data for the entire calendar year beginning
with the FY 2032 SNF QRP.
---------------------------------------------------------------------------

\34\ There is an exemption for residents where the third-party
insurer does not cover the cost of skilled services.
---------------------------------------------------------------------------

We are also proposing that SNFs would submit these data on all non-
Medicare FFS SNF residents at admission and discharge using the Nursing
Home PPS (NP) and the Nursing Home Part A PPS Discharge (NPE)
assessments and the corresponding Swing Bed assessments (SP and SD) in
use at the time of data collection. Based on feedback shared by the
SNFs during listening sessions, we believe many SNFs already collect
MDS data on non-Medicare FFS residents but do not submit it.
In order to facilitate the collection of this new data, we would
revise the current MDS for SNFs to submit data pursuant to the proposed
policy. Specifically, we would modify one item and add three new items
to the MDS. One item in the Type of Assessment section would be
modified to indicate when an assessment is being completed at admission
for a non-Medicare FFS resident receiving covered skilled services. The
first new item would collect information on the resident's primary
payer for the skilled stay at admission, and at discharge from covered
skilled services. A second new item would capture the start and end
dates of a covered skilled stay for a non-Medicare-FFS resident.
Finally, a third new item would be added to the Type of Assessment
section to indicate whether the assessment is being completed for a
non-Medicare FFS resident at the time of discharge from covered skilled
services. A draft of the proposed modified and new items can be found
in the Downloads section of the SNF QRP Measures and Technical
Information web page at <a href="https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information">https://www.cms.gov/medicare/quality/snf-quality-reporting-program/measures-and-technical-information</a>.
Furthermore, the Secretary must reduce the annual payment update
applicable to a SNF for a fiscal year by 2 percentage points if the SNF
does not submit data in accordance with the SNF QRP requirements
established by the Secretary. As set forth in our regulations at 42 CFR
413.360(f)(1)(ii), 90 percent of the MDS assessments SNFs submitted
through the CMS designated data system must contain 100 percent of the
required data. Therefore, we are proposing that the MDS data SNFs
submit under this proposal for all SNF residents, regardless of payer,
would be used to calculate SNF QRP compliance. The SNF QRP also
requires the data be submitted to CMS according to the established data
submission deadlines. The current SNF QRP data submission deadline for
MDS data is approximately 4.5 months after each quarterly data
collection period. In section VI.F.2. of this proposed rule, we are
proposing to revise the data submission deadline from 4.5 months to the
15th day of the second month after the end of the calendar quarter,
which would have implications for this proposal if finalized.
Finally, we want to clarify that, while expanding the submission of
MDS data to include all SNF residents admitted or readmitted for
skilled covered care regardless of payer would permit the SNF QRP to
make publicly available information regarding the quality of services
furnished to the SNF population as a whole, we are not proposing any
changes to our policies related to publicly reporting SNF QRP data
collected on non-Medicare FFS residents at this time. We routinely
monitor the SNF QRP data and any future changes related to the public
reporting of the SNF QRP all payer data would be communicated through
our normal communication channels.
We invite public comments on this proposal to require the
submission of MDS data on all SNF residents admitted for covered
skilled care regardless of payer beginning with the FY 2031 SNF QRP.

G. Policies Regarding Public Display of Measure Data for the SNF QRP

1. Background
We refer readers to the FY 2017 SNF PPS final rule (81 FR 52045
through 52048) for a discussion of our policies regarding public
display of SNF QRP measure data and procedures for SNFs to review and
correct data and information prior to their publication.
2. Proposal To End the Public Display of the COVID-19 Vaccination
Coverage Among Healthcare Personnel (HCP) Measure
In the FY 2022 SNF PPS final rule (86 FR 42496 through 42498), we
finalized our proposal to publicly report the COVID-19 Vaccination
Coverage among Healthcare Personnel (HCP) measure (HCP COVID-19
Vaccine) beginning with the October 2022 Care Compare refresh on
<a href="http://Medicare.gov">Medicare.gov</a>. In section VI.C. of this proposed rule, we are proposing
to remove the HCP COVID-19 Vaccine measure beginning with the FY 2028
SNF QRP. If finalized as proposed, a SNFs' HCP COVID-19 Vaccine measure
data would be publicly reported for the last time with the October 2026
Care Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>, based on data from Q4 of 2025.
Thereafter, we would no longer display a SNF's HCP COVID-19 Vaccine
measure data on the Care Compare tool at <a href="http://Medicare.gov">Medicare.gov</a>.
We invite comment on our proposal to end public display of the HCP
COVID-19 Vaccine measure data after the October 2026 Care Compare
refresh on the Care Compare tool at <a href="http://Medicare.gov">Medicare.gov</a>.
3. Proposal To End the Public Display of the COVID-19 Vaccine: Percent
of Patients/Residents Who Are Up to Date Measure
In the FY 2024 SNF PPS final rule (88 FR 53275 through 53276), we
finalized our proposal to begin publicly displaying data for the COVID-
19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure
(Patient/Resident COVID-19 Vaccine) beginning with the October 2025
Care Compare refresh. In section VI.D. of this proposed rule, we would
remove the Patient/Resident COVID-19 Vaccine measure beginning with the
FY 2028 SNF QRP. If finalized as proposed, the reporting of data for
the ``Resident's COVID-19 vaccination is up to date'' data element
would be voluntary effective October 1, 2026, and the Patient/Resident
COVID-19 Vaccine measure data would be publicly reported for the last
time with the October 2026 Care Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>, based
on data from Q4 of 2025.

[[Page 17701]]

We invite public comment on our proposal to end the public display
of Patient/Resident COVID-19 Vaccine measure data after the October
2026 Care Compare refresh on <a href="http://Medicare.gov">Medicare.gov</a>.

VII. Updates to the Skilled Nursing Facility Value-Based Purchasing
(SNF VBP) Program

A. Statutory Background

Through the SNF VBP Program, we award incentive payments to SNFs to
encourage improvements in the quality of care provided to Medicare
beneficiaries. The SNF VBP Program is authorized by section 1888(h) of
the Act, and it applies to freestanding SNFs, SNFs affiliated with
acute care facilities, and all non-critical access hospitals (CAH)
swing-bed rural hospitals. The SNF VBP Program has helped to transform
how Medicare payment is made for SNF care, moving toward rewarding
better value and outcomes instead of merely rewarding volume. Our
codified policies for the SNF VBP Program can be found in our
regulations at 42 CFR 413.337(f) and 413.338.

B. SNF VBP Program Measures

1. Background
Our current measure selection, retention, and removal policy is
codified at 42 CFR 413.338(k). We also refer readers to the FY 2024 SNF
PPS final rule for background on the measures we have adopted for the
SNF VBP Program (88 FR 53276 through 53297). Table 15 lists the
measures that have been adopted for the SNF VBP Program, along with
their status in the program for the FY 2027 program year through the FY
2030 program year.

Table 15--SNF VBP Program Measures and Status in the SNF VBP Program for the FY 2027 Program Year Through the FY
2030 Program Year
----------------------------------------------------------------------------------------------------------------
FY 2027 program FY 2028 program FY 2029 program FY 2030 program
Measure year year year year
----------------------------------------------------------------------------------------------------------------
Skilled Nursing Facility 30-Day Included.......... .................. .................. .................
All-Cause Readmission Measure
(SNFRM).
Skilled Nursing Facility Included.......... Included.......... Included.......... Included.
Healthcare-Associated Infections
Requiring Hospitalization (SNF
HAI) measure.
Total Nurse Staffing Hours per Included.......... Included.......... Included.......... Included.
Resident Day (Total Nurse
Staffing) measure.
Total Nursing Staff Turnover Included.......... Included.......... Included.......... Included.
(Nursing Staff Turnover) measure.
Discharge to Community--Post- Included.......... Included.......... Included.......... Included.
Acute Care Measure for Skilled
Nursing Facilities (DTC PAC SNF).
Percent of Residents Experiencing Included.......... Included.......... Included.......... Included.
One or More Falls with Major
Injury (Long-Stay) (Falls with
Major Injury (Long-Stay))
measure.
Discharge Function Score for SNFs Included.......... Included.......... Included.......... Included.
(DC Function) measure.
Number of Hospitalizations per Included.......... Included.......... Included.......... Included.
1,000 Long Stay Resident Days
(Long Stay Hospitalization)
measure.
Skilled Nursing Facility Within- .................. Included.......... Included.......... Included.
Stay Potentially Preventable
Readmissions (SNF WS PPR)
measure.
----------------------------------------------------------------------------------------------------------------

2. Proposed Regulation Text Technical Update
We are proposing to update a reference within our codified measure
selection, retention, and removal policy that we finalized in the FY
2025 SNF PPS final rule (89 FR 64126 through 64127) but did not update
when finalizing other updates to the regulations in the FY 2026 SNF PPS
final rule (90 FR 37345 through 37352). Specifically, we are proposing
to update 42 CFR 413.338(k)(3) to reference Sec. 413.338(k)(2) of the
regulations for details on the measure selection, retention, and
removal policy rather than Sec. 413.338(l)(2).
We welcome public comment on this proposed technical update to our
regulation text.

C. SNF VBP Performance Standards

1. Background
Our current definitions for the performance standards are codified
at 42 CFR 413.338(a), and our current performance standards
notification and updates policies are codified at 42 CFR 413.338(m). We
also refer readers to the FY 2024 SNF PPS final rule (88 FR 53299
through 53300) for a detailed history of our performance standards
policies. In the FY 2026 SNF PPS final rule (90 FR 37348 through
37349), we adopted the final numerical performance standards for the
remaining measures applicable to the FY 2028 program year, and the
final numerical performance standards for the FY 2029 program year for
the Discharge to Community--Post-Acute Care Measure for Skilled Nursing
Facilities (DTC PAC SNF) and Skilled Nursing Facility Within-Stay
Potentially Preventable Readmissions (SNF WS PPR) measures.
2. Estimated Performance Standards for the FY 2029 Program Year
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are providing estimated numerical performance standards for the
remaining measures applicable to the FY 2029 program year: the SNF
Healthcare-Associated Infections Requiring Hospitalization (SNF HAI)
measure, Total Nurse Staffing Hours per Resident Day (Total Nurse
Staffing) measure, Total Nursing Staff Turnover (Nursing Staff
Turnover) measure, Percent of Residents Experiencing One or More Falls
with Major Injury (Long-Stay) (Falls with Major Injury (Long-Stay))
measure, Number of Hospitalizations per 1,000 Long Stay Resident Days
(Long Stay Hospitalization) measure, and Discharge Function Score for
SNFs (DC Function) measure. In accordance with our methodology for
calculating performance standards previously finalized in the FY 2017
SNF PPS final rule (81 FR 51996 through 51998), the estimated numerical
values for the FY 2029 program year performance standards are shown in
Table 16. We will provide the final numerical performance standards for
these measures for the FY 2029 program year in the FY 2027 SNF PPS
final rule.

[[Page 17702]]

Table 16--Estimated FY 2029 SNF VBP Program Performance Standards
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
SNF HAI Measure............................ 0.92183 0.94491
Total Nurse Staffing Measure............... 3.29119 5.87448
Nursing Staff Turnover Measure............. 0.42696 0.76652
Falls with Major Injury (Long-Stay) Measure 0.95455 0.99951
Long Stay Hospitalization Measure.......... 0.99768 0.99963
DC Function Measure........................ 0.41935 0.80879
------------------------------------------------------------------------

3. Estimated Performance Standards for the FY 2030 Program Year
To meet the requirements at section 1888(h)(3)(C) of the Act, we
are providing estimated numerical performance standards for the FY 2030
program year for the DTC PAC SNF and SNF WS PPR measures. In accordance
with our methodology for calculating performance standards previously
finalized in the FY 2017 SNF PPS final rule (81 FR 51996 through
51998), the estimated numerical values for the FY 2030 program year
performance standards for the DTC PAC SNF and SNF WS PPR measures are
shown in Table 17. We will provide the final numerical performance
standards for these two measures for the FY 2030 program year in the FY
2027 SNF PPS final rule.
We will provide the estimated numerical performance standards
values for the remaining measures applicable to the FY 2030 program
year in the FY 2028 SNF PPS proposed rule.

Table 17--Estimated FY 2030 SNF VBP Program Performance Standards
------------------------------------------------------------------------
Achievement
Measure short name threshold Benchmark
------------------------------------------------------------------------
DTC PAC SNF Measure........................ 0.43478 0.68049
SNF WS PPR Measure......................... 0.86219 0.92400
------------------------------------------------------------------------

D. Proposed Updates to the SNF VBP Review and Correction Process

1. Background
We refer readers to the FY 2026 SNF PPS final rule (90 FR 37350
through 37352) and to 42 CFR 413.338(f) for details on the SNF VBP
Program's confidential feedback reports policies, the two-phase review
and correction process, the reconsideration process, and public
reporting policies that we have adopted for the Program. We also refer
readers to the SNF VBP Program website (<a href="https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/confidential-feedback-reporting-review-and-corrections">https://www.cms.gov/medicare/quality/nursing-home-improvement/value-based-purchasing/confidential-feedback-reporting-review-and-corrections</a>) for technical details on our
review and correction process and reconsideration process.
In Phase One of the review and correction process, codified at 42
CFR 413.338(f)(2), we accept correction requests for 30 days after
distributing the baseline period and performance period quality measure
quarterly reports, which contain the baseline period and performance
period measure results, respectively. SNFs may submit requests for
corrections to the measure results contained in those reports. The
underlying data used to calculate the measure results are not subject
to review and correction during this process. As provided in 42 CFR
413.338(f)(1), measure results included in those reports are calculated
using data current as of specified dates for each measure. These
specified dates are referred to as ``snapshot dates.'' If a SNF desires
to correct their underlying data used to calculate a particular measure
result, the underlying data must be corrected by the specified snapshot
date to confirm the correction will be reflected in the SNF VBP
Program's quarterly confidential feedback reports.
In Phase Two of the review and correction process, codified at 42
CFR 413.338(f)(3), we accept correction requests for 30 days after
distributing the Performance Score Report, which contains the SNF
performance score and ranking. SNFs may submit requests for corrections
to the SNF performance score and ranking contained in this report.
Under our review and correction policy, the SNF must identify the
error for which it is requesting correction, explain its reason for
requesting the correction, and submit documentation or other evidence,
if available, supporting the request. As provided in 42 CFR
413.338(f)(2) and (f)(3), correction requests must contain all of the
following:
<bullet> The SNF's CMS Certification Number (CCN).
<bullet> The SNF's name.
<bullet> The correction requested.
<bullet> The reason for requesting the correction, including any
available evidence to support the request.
We review all review and correction requests and notify the
requesting SNF of our decision. We also implement any approved
corrections before the affected data becomes publicly available on the
website CMS uses to make quality data available to the public,
currently the Provider Data Catalog website (<a href="https://data.cms.gov/provider-data/">https://data.cms.gov/provider-data/</a>).
In the reconsideration process, codified at 42 CFR 413.338(f)(6),
we allow SNFs to seek reconsideration of a valid review and correction
request if they are not satisfied with our decision on the review and
correction request submitted under 42 CFR 413.338(f)(2) or (f)(3). We
accept reconsideration requests for 15 days, starting the day after the
date we issue a decision via email on the review and correction request
(as noted on that decision). As provided in 42 CFR 413.338(f)(6), SNFs
that seek reconsideration of a review and correction request decision
have to submit their reconsideration requests via email in the form and
manner specified by CMS in the review and correction decision, and the
reconsideration request has to contain all of the following:
<bullet> The SNF's CMS Certification Number (CCN).
<bullet> The SNF's name.
<bullet> The issue for which the SNF submitted a review and
correction request, received a review and correction request decision,
and are requesting reconsideration of.
<bullet> The reason why the SNF is requesting reconsideration,
which can be supported by any applicable documentation or other
evidence.
We review all reconsideration requests and provide a written
decision to the SNF in a timely manner before any affected data becomes
publicly available on the website CMS uses to make quality data
available to the public, currently the Provider Data Catalog website
(<a href="https://data.cms.gov/provider-data/">https://data.cms.gov/provider-data/</a>).
In this proposed rule, we are proposing to update the ``snapshot
dates'' codified at 42 CFR 413.338(f)(1)(v) for two MDS-based measures,
beginning with FY 2027 data, to maintain alignment with the proposed
revisions to SNF QRP submission deadlines for MDS assessment data
included in section VI.X. of this proposed rule.

[[Page 17703]]

2. Proposal To Update ``Snapshot Dates'' for the SNF VBP Program's MDS-
Based Measures
In the FY 2024 SNF PPS final rule (88 FR 53286 through 53293), we
adopted the Falls with Major Injury (Long-Stay) and DC Function
measures, both beginning with the FY 2027 SNF VBP program year. These
two measures are calculated using assessment data reported by SNFs on
the MDS 3.0.
In the FY 2025 SNF PPS final rule (89 FR 64136), we finalized
application of the existing Phase One review and correction process to
SNF VBP Program measures calculated using MDS data. That is, SNFs may
submit requests for corrections to the measure results for the MDS-
based measures adopted by the SNF VBP Program during Phase One of the
review and correction process. We also adopted ``snapshot dates'' for
the Falls with Major Injury (Long-Stay) and DC Function measures, the
current two MDS-based measures adopted by the SNF VBP Program. For
corrections to the underlying MDS assessment data to be reflected in
the SNF VBP Program's quarterly confidential feedback reports, a SNF
must make any corrections to the underlying data via the internet
Quality Improvement Evaluation System (iQIES) before the ``snapshot
date,'' and we finalized that the ``snapshot date'' is the February
15th that is 4.5 months after the last day of the applicable baseline
or performance period. However, if February 15th falls on a Friday,
weekend, or Federal holiday, the data submission deadline is delayed
until 11:59 p.m. EST on the next business day. For example, for the FY
2027 SNF VBP program year, the performance period is FY 2025 (October
1, 2024, through September 30, 2025). The ``snapshot date'' for this
performance period would normally be February 15, 2026. However, since
February 15, 2026, falls on a Sunday, the snapshot date was extended
until the next business day, which is Tuesday, February 17, 2026, due
to Monday, February 16, 2026, being a Federal holiday. This is
consistent with the SNF QRP QM User's Manual available at <a href="https://www.cms.gov/files/document/snf-qm-calculations-and-reporting-users-manual-v70.pdf">https://www.cms.gov/files/document/snf-qm-calculations-and-reporting-users-manual-v70.pdf</a>.
However, in the FY 2026 SNF PPS final rule (90 FR 37342 through
37343), we included a Request for Information (RFI) regarding
shortening the SNF QRP's MDS assessment data submission deadline from
4.5 months to 45 days to improve the timeliness of measure calculations
and public reporting. Many commenters noted their support for such a
change, as timely reporting would be valuable for consumers,
professionals, and facilities, and in section VI.X. of this proposed
rule, we are proposing to update the MDS assessment data submission
deadline from 4.5 months to the 15th day of the second month after the
end of each calendar quarter, beginning with CY 2027 data, to expedite
the reporting of MDS assessment data via iQIES. As discussed in section
VI.X. of this proposed rule, this expedited deadline will improve the
timeliness of public reporting by 3 months, which is beneficial to both
consumers and SNFs, with minimal impact on data completeness, as the
vast majority of SNFs submit their MDS assessment data within 45 days.
To maintain alignment with the proposed revisions to the SNF QRP's
submission deadline for MDS assessment data, we propose to update the
``snapshot date'' definition for the DC Function and Falls with Major
Injury (Long-Stay) measures beginning with data collected in FY 2027.
We propose to redefine the ``snapshot date'' as the 15th day of the
second month after the last day of the applicable baseline or
performance period. However, if the 15th day of the second month after
the last day of the applicable baseline or performance period falls on
a Friday, weekend, or Federal holiday, the snapshot date is delayed
until 11:59 p.m. EST on the next business day. We expect this revision
will be consistent with the updated SNF QRP QM User's Manual, to be
published prior to the start of CY 2027.
We also propose to codify this proposed revision to the ``snapshot
date'' for the DC Function and Falls with Major Injury (Long-Stay)
measures by updating 42 CFR 413.338(f)(1)(v). We invite public comment
on our proposals.

E. SNF VBP Extraordinary Circumstances Exception Policy

1. Background
We refer readers to 42 CFR 413.338(l) for details on the SNF VBP
Program's Extraordinary Circumstances Exception (ECE) policy. The ECE
policy allows SNFs to request an exception to the SNF VBP Program's
requirements for one or more calendar months if the SNF is able to
demonstrate that an extraordinary circumstance beyond the control of
the SNF affected the care provided to its residents, and subsequent
measure performance, or affected the SNF's ability to report SNF VBP
data on one or more measures by the specified deadline.
SNFs must submit an ECE request within 90 days of the date that the
extraordinary circumstance occurred.
We review exception requests, and at our discretion, based on our
evaluation of the impact of the extraordinary circumstance on the SNF's
care and/or its ability to report data, CMS will respond to the SNF
with a decision as quickly as is feasible.
If we approve a SNF's ECE request, we exclude the SNF's underlying
data for the calendar months during which the SNF was affected by the
extraordinary circumstance from the SNF VBP Program's measure
calculations, and calculate a SNF performance score for the program
year that does not include the SNF's performance on the measure or
measures during the months the SNF was affected by the extraordinary
circumstance.
2. Proposed Regulation Text Technical Updates
We are proposing to update certain references within our codified
Extraordinary Circumstances Exception (ECE) policy that we finalized in
the FY 2025 SNF PPS final rule (89 FR 64136 through 64137) but did not
update when finalizing other updates to the regulations in the FY 2026
SNF PPS final rule (90 FR 37345 through 37352). Specifically, we are
proposing to update 42 CFR 413.338(l)(3) to reference 42 CFR
413.338(l)(4) and (2) of the regulations for details on the ECE policy
rather than 42 CFR 413.338(m)(4) and (2).
We welcome public comment on these proposed technical updates to
our regulation text.

VIII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
through 3520, we are required to provide notice in the Federal Register
and solicit public comment before a collection of information
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. To fairly

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