The FY 2027 SNF PPS Proposed Rule: What the 2.4% Rate Increase Actually Means for Your Facility

The 2.4% Increase, Broken Down

The 2.4% net increase doesn’t come from a single dial CMS turns. It’s the result of several adjustments layered on top of each other, some positive and some negative. Here’s what’s inside the number:

• Market basket update: +3.0%. The SNF market basket index measures price changes for the goods and services SNFs purchase — labor, supplies, equipment. CMS projects a 3.0% increase in those input costs for FY 2027.
• Productivity adjustment: −0.5%. Under the Affordable Care Act, CMS must reduce the market basket update by a productivity factor each year. For FY 2027, that reduction is 0.5 percentage points, leaving a base rate update of approximately 2.5%.
• Wage index and other adjustments: net negative. Changes to the wage index — which accounts for regional labor cost differences — create redistribution effects across facilities. Some facilities gain, some lose, depending on their CBSA (Core-Based Statistical Area). The net aggregate effect of wage index changes slightly trims the overall payment increase to the published 2.4%.

The result: for FY 2027 (October 1, 2026 through September 30, 2027), CMS proposes to increase aggregate Medicare payments to SNFs by approximately $1.1 billion compared to FY 2026. There are approximately 15,000 Medicare-certified SNFs in the country, so the average impact across all facilities is roughly $73,000 in additional annual Medicare revenue — before facility-specific factors like case mix, occupancy, and wage index apply.

What It Means in Real Dollars for Your Facility

Percentages are easy to skim past. Dollar figures are not. The actual revenue impact depends on your Medicare census, occupancy rate, and average per diem — but the math is straightforward.

A facility with a higher Medicare utilization rate (30-35%, common in post-acute-focused SNFs) would see proportionally larger gains. A facility running primarily Medicaid with 10% Medicare would see a fraction of these numbers.

What’s the practical takeaway? A 2.4% rate increase does not cover inflation in most markets. SNF labor costs have outpaced CMS rate increases for three consecutive fiscal years. This update is better than a cut — but it’s not a solution to the operational cost squeeze most facilities are managing. Submit your comments if you want CMS to hear how your facility is positioned.

Two COVID Reporting Requirements Get Cut

This is the cleanup provision of CMS-1808-P. CMS proposes to remove two Quality Reporting Program (QRP) measures that were added during the pandemic and are now considered outdated:

Measure 1: COVID-19 Vaccination Coverage Among Healthcare Personnel

This measure tracks the percentage of healthcare personnel at a SNF who are up-to-date on COVID-19 vaccinations. It was introduced as a high-priority surveillance measure during the public health emergency. CMS is proposing to remove it from the QRP, citing that COVID-19 vaccination coverage is now tracked through other federal infrastructure and that ongoing mandatory SNF-level reporting is no longer warranted at this stage of the pandemic.

Measure 2: NHSN COVID-19 Reporting

This measure required SNFs to submit COVID-19 data to the CDC’s National Healthcare Safety Network (NHSN) — weekly case counts among residents and staff, vaccination rates, and PPE supply data. Like the HCP vaccination measure, CMS proposes to remove this from the QRP, with CDC and NHSN maintaining broader population-level COVID surveillance separately.

The upside: this is net administrative relief. COVID reporting has consumed meaningful staff time in infection control and compliance departments since 2020. When these measures are formally removed, that reporting burden disappears. Fewer mandatory data submissions, fewer NHSN logins, fewer weekly check-ins to verify the data was accepted.

The All-Payer MDS Data Collection Mandate (2029)

This is the provision most facilities haven’t fully processed yet, and it will have the most lasting operational impact of anything in this proposed rule.

Current state: MDS assessments are required only for Medicare Part A and Medicaid residents. Privately insured residents, managed care residents (including Medicare Advantage), and private-pay residents are not subject to mandatory MDS submission to CMS. Most facilities still complete some form of clinical assessment for all residents, but the full OBRA/Medicare assessment schedule — with all its coding rigor and submission requirements — applies to a subset of your census.

What’s proposed: Beginning October 1, 2029, CMS would require SNFs to submit MDS assessments on all skilled nursing facility residents, regardless of payer source. Medicare Advantage, commercial insurance, Medicaid managed care, private pay — everyone in a skilled level of care would be included. To understand the full operational weight of what that expansion means, it helps to know what an MDS Coordinator already manages today just for the Medicare/Medicaid census.

Why CMS Is Doing This

The rationale is quality measurement and payment accuracy. Right now, CMS can only assess quality metrics for the roughly 50-60% of SNF residents with Medicare or Medicaid coverage. The remaining residents are invisible in the federal data. As Medicare Advantage enrollment continues to grow and more SNF residents have managed care as their primary payer, the CMS dataset becomes increasingly unrepresentative of actual SNF quality performance.

All-payer MDS data lets CMS: (1) measure quality across the full SNF census, (2) flag facilities that perform well on Medicare but poorly on commercial populations, and (3) build the data infrastructure for any future all-payer payment reforms. This is a long game move.

What It Means for MDS Coordinators

For some facilities, this changes very little — if you already complete full MDS assessments for all residents as a clinical practice, you’re mostly adding the submission step. For facilities that do abbreviated or informal assessments for non-Medicare/non-Medicaid residents, this is a significant workload expansion.

The 2029 effective date also means this will likely be a major focus of the FY 2028 and FY 2029 proposed rules, with CMS issuing implementation guidance, technical specifications, and potentially phased-in timelines. Facilities that have a rigorous MDS process today will have a much shorter path to compliance than those running informal assessment systems for their non-Medicare census.

Wage Index & Market Basket Updates

The wage index is what makes “2.4% nationally” meaningless at the individual facility level. CMS updates the wage index annually based on occupational mix data and Core-Based Statistical Area (CBSA) labor market information from hospital cost reports. The result is that facilities in different geographies receive meaningfully different actual rate adjustments.

How the Wage Index Works (Quick Version)

Every SNF is assigned to a CBSA based on its location. The wage index for that CBSA reflects the local labor market relative to the national average. A wage index of 1.00 = national average. An index of 1.15 means labor is 15% more expensive in your market, and your Medicare per diem is adjusted upward accordingly. An index of 0.85 means the opposite.

Each year’s proposed rule revises these CBSA wage indexes based on updated cost report data. CMS-1808-P includes the proposed wage index values for FY 2027. The key things to check for your facility:

• Did your CBSA wage index increase, decrease, or stay flat relative to FY 2026?
• If your CBSA boundaries changed (some CBSAs are reclassified periodically), how does your new assignment affect your index?
• Are you in a rural area that qualifies for the rural wage index floor?

The market basket update itself — the 3.0% pre-productivity-adjustment figure — is based on the SNF Input Price Index, which tracks what skilled nursing facilities actually pay for inputs: nursing labor, contract therapy, medical supplies, food service, and administrative overhead. The 0.5% productivity deduction is a statutory formula, not a CMS judgment call — it’s in the law and applies every year.

Comment Period — June 1 Deadline

The FY 2027 SNF PPS proposed rule was published in the Federal Register on April 2, 2026. The public comment period closes on June 1, 2026. That gives facilities, trade associations, and individual MDS coordinators, DONs, and administrators 60 days to submit written comments to CMS.

What Happens If You Don’t Comment?

Nothing immediately. CMS will finalize the rule (usually in August) regardless of how many comments it receives. But comments are the only formal mechanism through which facilities can influence the final rule. CMS is required to respond to substantive comments in the final rule preamble — meaning your comment gets a written response from CMS, on the record, whether they agree with you or not.

The all-payer MDS provision in particular is exactly the kind of high-impact, operationally complex change that benefits from a strong comment record. If your facility has concerns about the 2029 timeline, the scope of the assessment requirement, or the technical implementation, those concerns belong in a formal comment.

How to Submit Comments

CMS accepts comments electronically at regulations.gov (search for docket CMS-1808-P). Comments should reference the specific provision, explain the operational impact, and ideally provide quantitative data (staffing hours, cost estimates, census breakdowns). A brief, specific, data-supported comment is more useful to CMS than a long general objection.

What Your Team Should Do Now

This is a proposed rule. Nothing changes operationally until the final rule publishes in August and takes effect October 1, 2026. But three actions make sense right now:

1. Model the Revenue Impact for Your Facility

Pull your average daily Medicare census from the last 90 days. Multiply by your average Medicare per diem. Multiply by 2.4%. That’s your rough annual revenue gain estimate from the rate increase. Compare that to your projected FY 2027 labor cost increases. If the gap is meaningful, start building the case for operational adjustments before October 1.

2. Assess Your MDS Coverage for Non-Medicare Residents

The 2029 all-payer MDS mandate is three years away, but understanding your current assessment gap is the right first step. How many skilled residents currently bypass the full MDS assessment process? What’s the payer mix? Estimate the staffing and software capacity you’d need to absorb those residents into your standard MDS cycle. Share this with your MDS coordinator now — they should be part of how your facility shapes its comment if you choose to submit one. Not sure where your current compliance documentation practices stand? The Survey Readiness Quiz gives you a 5-minute baseline across the key areas surveyors check.

3. Submit a Comment Before June 1

You don’t need a lobbyist or a regulatory attorney. A one-page comment from a facility administrator with real data is genuinely useful to CMS. The comment record shapes the final rule. If the all-payer MDS timeline is a concern, the right time to say so is now — not when the final rule publishes and the decision is locked.

The MDS coordinator role is already one of the most documentation-intensive positions in long-term care. The all-payer expansion of MDS requirements in 2029 will amplify that. Facilities that invest now in tightening their MDS process — assessment accuracy, coding consistency, tracking tools — will be in a meaningfully better position than facilities that treat 2029 as a distant abstraction. Our MDS Bundle is built for exactly that kind of proactive preparation.

The FY 2027 proposed rule closes on June 1. The final rule publishes in August. The payment changes take effect October 1. Three dates that every SNF finance and compliance team should have on the calendar right now.