Breaking Down the Skilled Nursing Reimbursement Hike Proposal

• The Centers for Medicaid and Medicare Service has proposed a 2.8% skilled nursing reimbursement hike for fiscal year 2026.  
• But the increase — related to facility reimbursements rather than employee wages — is still lower than years past, which saw increases of 4.2% and 4%. 
• The proposed CMS rule includes adopting a “reconsideration process” that allows facilities to appeal CMS decisions related to performance standards before data is publicly available. 

The Centers for Medicaid and Medicare Service has proposed a nearly 3% skilled nursing reimbursement hike for fiscal year 2026. But the increase — related to facility reimbursements rather than employee wages — is still lower than years past. 

“America’s nursing homes work hard every day to deliver the highest quality care, but they rely on government funding to be able to meet residents’ needs – of which Medicare is an essential part,” Clif Porter, president and CEO of the American Health Care Association, said in a statement. “As costs for goods, services, and labor continue to rise, skilled nursing providers need reliable resources and government rates to keep pace.” 

The changing rates (and their publication) are part of an annual requirement related to skilled nursing facilities. Their publication comes as nursing organizations and advocacy groups are speaking out against a potential $40 billion in cuts to Medicaid that are wrapped into a federal budget proposal. 

By the Numbers

Announced earlier this month, the increase is based on a proposed market increase of 3%, a 0.6% forecast error adjustment, and a “negative 0.8% productivity adjustment.” 

A CMS fact sheet also noted that the figures don’t incorporate value-based purchasing reductions. The value-based purchasing program is an incentive-driven part of CMS that encourages facilities “to improve the quality of care they provide to patients.” 

Joel VanEaton, executive vice president of PAC Regulatory Affairs and Education for Broad River Rehab, told McKnights Long-Term Care News that most of the 2.8% “will be eaten up” by the value-based purchasing program for many providers. 

In FY 2025, CMS issued a 4.2% payment increase and a 4% increase in FY 2024. 

Other Aspects of the Proposal

Porter said that while the proposal focused on Medicare fee-for-service rates, it should still be top of mind that “nearly two-thirds of nursing home residents rely on Medicaid, and an increasing percentage of short-term patients are now on a Medicare Advantage plan.” 

“We will continue to encourage policymakers to consider this tapestry of government programs that contribute to our providers’ ability to maintain access, enhance quality care, and invest in improvements,” Porter said. “Our nation’s leaders must ensure that our Medicare and Medicaid programs are strong, so that nursing homes can continue to care for America’s seniors and the most vulnerable.” 

CMS also has proposed adopting a “reconsideration process” that allows facilities to appeal CMS decisions related to performance standards. The appeals would be able to occur prior to any data being made public. 

The Bottom Line

The Centers for Medicare and Medicaid Services recently issued its proposed ruling on reimbursement pay for skilled nursing facilities. If approved, the pay hike would be 2.8%, compared to 4.2% and 4% the two previous fiscal years. It’s unclear at this time how the reimbursements will affect workers in these facilities.  

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