Medicare will pay skilled nursing facilities 2.4 percent more starting October 1, 2026, the first day of the federal government’s 2027 fiscal year, under a final rule the Centers for Medicare & Medicaid Services published this summer. The increase is not a proposal still open for debate — CMS has already finalized it — and it works out to an estimated $882.74 million in additional payments flowing to nursing homes nationwide over the coming year. For families with a parent or spouse in a skilled nursing facility, or weighing whether one will accept a new resident, the update changes what Medicare pays the facility directly, which shapes both access and, indirectly, what a facility charges for services Medicare does not cover.
The 2.4 Percent, Broken Into Its Two Pieces
The figure comes from CMS’s fact sheet on the final rule, known by its regulatory number CMS-1843-F. The agency states: “For FY 2027, CMS finalized updating SNF PPS rates by 2.4% based on the final SNF market basket of 3.3%, reduced by a 0.9% productivity adjustment, for an estimated increase of $882.74 million in aggregate payments to SNFs.” The market basket is CMS’s measure of how much the cost of the goods and labor a nursing home needs — wages, supplies, utilities — has risen; the productivity adjustment is a separate, government-wide reduction applied to most Medicare payment updates to account for expected efficiency gains. Net the two together and skilled nursing facilities get 2.4 percent more per patient day starting with the fiscal year that begins October 1, 2026.
Inside the kit: 51 state Medicare cost-help packs, the new Part D out-of-pocket cap, the prior-authorization appeal steps and a medication and cost tracker. Open The Medicare Cost & Coverage Protection Kit.
A Separate $203.60 Million Comes Back Out
The 2.4 percent update is not the last word on what any individual facility actually receives. CMS’s Skilled Nursing Facility Value-Based Purchasing Program penalizes facilities that perform poorly on measures like hospital readmission rates by cutting their Medicare payments, and the agency estimates those VBP penalties will claw back $203.60 million in FY2027 — money that does not show up in the $882.74 million aggregate increase because it is calculated separately. A facility with strong quality scores keeps its full share of the 2.4 percent increase; a facility with weak scores loses part of it to the VBP penalty, which is why the same national update can translate into a smaller effective raise, or even a net cut, at a specific nursing home.
What the Rate Actually Pays For
The 2.4 percent update applies to the per diem rate CMS pays under the SNF Prospective Payment System for a covered Medicare Part A stay — the benefit that follows a qualifying hospital admission and can run up to 100 days per benefit period. Under the Patient Driven Payment Model, that per-diem rate is adjusted for each resident’s specific clinical needs, using case-mix classifications tied to the diagnosis codes CMS is now mapping under the FY2027 rule. The update does not change the separate coinsurance a beneficiary owes once a covered stay passes day 20; it changes what Medicare itself pays the facility on top of, or instead of, that coinsurance for every day of covered care.
What Changes for How Nursing Homes Report Data
Alongside the payment update, CMS finalized changes to the SNF Quality Reporting Program. Two measures tracking COVID-19 vaccination coverage among staff and residents are being removed starting with the FY2028 reporting cycle. CMS is also cutting the window facilities have to submit quality data from about four and a half months down to roughly 45 days, beginning with FY2029 reporting, which the agency says will let it publish comparison data for families up to three months sooner than it does now. Separately, CMS finalized a requirement that facilities submit Minimum Data Set assessments for every resident receiving skilled care, regardless of who is paying for that resident’s stay — Medicare, Medicaid, private insurance or out of pocket — a change meant to give CMS and consumers a fuller picture of a facility’s quality rather than one based only on its Medicare patients.
Why the Rule Lands on October 1
The date is fixed by how Medicare’s fiscal calendar works: the federal government’s fiscal year for nursing home and hospital payment rules runs from October 1 through September 30, and CMS is legally required to update SNF Prospective Payment System rates annually. CMS’s official regulation docket for CMS-1843-F lists the document’s full title as ending in “Final Rule,” not “Proposed Rule,” with a publication date of July 31, 2026, and the official Federal Register filing confirms the regulations are effective October 1, 2026, giving nursing homes roughly two months of lead time to adjust billing systems before the new rates and quality-reporting rules take effect with the start of FY2027.
What the Rule Does Not Settle
CMS also used the rulemaking to collect comments on a longer-running concern it has not yet acted on: whether nursing homes are “upcoding,” or classifying residents into higher-paying case-mix categories than their actual care needs justify, under the Patient Driven Payment Model. The fact sheet says CMS “will take the comments received under advisement in any potential proposed adjustments in future rulemaking,” meaning any changes to how case-mix classifications are paid would come in a future rule, not this one. For now, the 2.4 percent figure and the October 1 effective date are what CMS has actually finalized.
Where a Facility-Level Payment Rule Meets a Family’s Own Medicare Costs
A national payment update to skilled nursing facilities does not translate into a personalized statement showing what a specific resident’s Medicare coverage covers, what a facility can bill separately, or when a prior-authorization denial can be appealed. Those determinations happen on paperwork a family typically sees only after a stay has already started.
The Medicare Cost & Coverage Protection Kit is a 10-page kit built around the prior-authorization appeal steps and a medication and cost tracker, plus 51 state Medicare cost-help packs and the new Part D out-of-pocket cap.
Read the prior-authorization appeal steps in The Medicare Cost & Coverage Protection Kit.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources.
