At Simple, we’re committed to helping SNFs stay ahead of regulatory changes that impact care, compliance, and reimbursement. On July 31, CMS issued the FY 2026 Final Rule  — an annual update that outlines key changes to Medicare payment policies and rates under the SNF Prospective Payment System (PPS).

This post highlights what SNFs need to know, including updates to the Patient-Driven Payment Model (PDPM), Value-Based Purchasing (VBP), and the Quality Reporting Program (QRP).

FY 2026 Final Updates to the SNF Payment Rates

For FY 2026, CMS is finalizing a 3.2% update to SNF PPS rates. This is based on a 3.3% final SNF market basket, a 0.6% forecast error adjustment, and a negative 0.7% productivity adjustment. Altogether, this results in a $1.16 billion increase in SNF PPS payments compared to FY 2025.

Keep in mind: These figures do not include potential SNF VBP reductions for certain SNFs subject to the net reduction in payments under the SNF VBP. Those adjustments are estimated to total $208.36 million in FY 2026.

Final Changes in PDPM ICD-10 Code Mappings

In FY 2020, CMS implemented the Patient-Driven Payment Model (PDPM) to improve payment accuracy and appropriateness by focusing on the needs of the whole patient, rather than focusing on the volume of services provided.

PDPM relies on ICD-10-CM codes in several ways, including using the resident’s primary diagnosis to assign patients to clinical categories. CMS is making several updates to the PDPM ICD-10-CM code mappings to allow providers to assign more accurate, consistent, and appropriate primary diagnoses that meet the criteria for skilled intervention during a Part A SNF stay.

In this Final Rule, CMS is finalizing 34 changes to the PDPM ICD-10-CM code mappings to maintain consistency with the latest ICD-10-CM coding guidance.

SNF VBP Program

The SNF VBP Program is a pay-for-performance initiative. By law, CMS withholds 2% of SNFs’ Medicare fee-for-service (FFS) Part A payments to fund the SNF VBP Program. This 2% is referred to as the “withhold.” CMS is then required to redistribute between 50% and 70% of this withhold to SNFs as incentive payments depending on their performance. CMS applies incentive payments prospectively to all Medicare fee-for-service (FFS) Part A claims paid under the SNF PPS for the applicable program year (beginning Oct. 1).

For FY 2026, CMS is finalizing several operational and administrative changes to the SNF VBP Program. Operationally, this includes finalizing statutorily required performance standards for Program measures and the removal of the Program’s Health Equity Adjustment from the scoring methodology. Final administrative updates include the adoption of a new reconsideration process and technical updates to the Program’s regulation text.

Final Updates to the SNF VBP:

• CMS is applying the Program’s previously finalized scoring methodology to the SNF Within-Stay Potentially Preventive Readmission (SNF WS PPR) measure beginning with the FY 2028 program year.
• CMS is finalizing performance standards for the FY 2028 and FY 2029 program years to comply with the program’s statutory notice deadline.
• CMS is finalizing a new reconsideration process that will allow SNFs to appeal CMS’ initial decisions for Review and Correction requests prior to CMS making any affected data publicly available.
• Finally, CMS is removing the SNF VBP Program’s Health Equity Adjustment from the Program’s scoring methodology.

SNF QRP Program

The SNF QRP is a pay-for-reporting program. SNFs that do not meet reporting requirements are subject to a 2% reduction in their Annual Payment Update (APU). Additionally, CMS publicly reports each SNF’s performance on measures adopted into the SNF QRP on the Care Compare website.

For the SNF QRP, CMS is finalizing its proposal to remove four standardized patient assessment data elements from the Minimum Data Set (MDS) beginning with residents admitted on or after Oct. 1, 2025. CMS is also updating the reconsideration request policy to offer more flexibility. In this Final Rule, CMS also reviewed stakeholder feedback on three RFIs included in the FY 2026 SNF PPS proposed rule.

Final Updates to the SNF QRP:

• CMS is finalizing its proposal to remove four standardized patient assessment data elements under the Social Determinant of Health (SDOH) category from the MDS beginning with residents admitted on Oct. 1, 2025, for the FY 2027 SNF QRP. These data elements are: one item for “living situation,” two items for “food,” and one item for “utilities.”
• CMS is finalizing its proposal to amend the reconsideration policy and process. Specifically, under this finalized policy and process, CMS will allow SNFs to request an extension to file a reconsideration request and is updating the bases on which CMS can grant a reconsideration request.
• CMS also summarized feedback it received on several RFIs included in the FY 2026 SNF PPS proposed rule, specifically:
  1. Future measure concepts on the topics of delirium, interoperability, nutrition, and well-being.
  2. Revisions to the current data submission deadlines for assessment data, which would allow CMS to provide SNFs with more timely quality data.
  3. Advancing digital quality measurement and the use of Fast Healthcare Interoperability Resources® in the SNF QRP.

RFI on Streamlining Regulations and Reducing Administrative Burdens in Medicare

CMS continues to seek public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program through a standalone Request for Information (RFI). Providers and stakeholders are encouraged to submit comments prior to Sept. 15, 2025.

Helpful resources

• SNF Final Payment Rule for Federal Fiscal Year 2026 (CMS-1827-F)
  • Associated Files:
    • SNF Wage Index (ZIP)– Urban and rural CBSA FY 2026 wage index table
    • PDPM Case-Mix (ZIP)– Tables 5 & 6 with updated FY 2026 PDPM federal rates
    • FY 2026 PDPM ICD-10 Mapping (ZIP)–  Final ICD-10 code mappings for PDPM classification
• SNF VBP Program
• SNF QRP Program

How Simple is Helping You Prepare

At Simple, we’re here to help you prepare, adapt, and stay ahead! As CMS rolls out these changes, we’ll continue to deliver the insights and tools you need to stay compliant and confident.

Join us in September for a national webinar where we’ll break down the Final Rule in more detail. Stay tuned to our blog for registration information.

Questions or feedback? Don’t hesitate to reach out — we’re here to help.