The headline number in the fiscal year 2027 CMS skilled nursing facility proposed rule is a modest one: a 2.4% payment update, built from a 3.2% market basket and a negative 0.8% productivity adjustment, effective October 1.
What's drawing more attention from operators is an early signal that CMS is preparing to rework how the Patient Driven Payment Model accounts for case mix, and that the next adjustment could be less modest.
Contained within the proposal is a request for information on what the agency describes as case-mix upcoding under PDPM. CMS is developing a framework to measure whether recent case-mix trends reflect real changes in patient acuity or what the agency calls "nominal" coding changes.
According to an analysis included in the rule, CMS analysis suggests case mix could decline by more than 4% on average if “expected” values were applied instead of reported values. If finalized in future rulemaking, this would land on top of whatever base rate update comes next.
Industry reaction to the proposal so far is split. LeadingAge's Linda Couch says the increase "barely keeps up with inflation," while AHCA/NCAL says the update is practical given the current economic picture.
Providers are also pushing back on the premise of the upcoding review. LeadingAge vice president of health policy Jodi Eyigor says that shifts in coding behavior likely reflect changes in focus rather than fraud, the same patients with the same acuity, assessed and coded according to what matters under PDPM rather than the older RUGS system.
CMS is also proposing to remove two COVID-19 measures from the SNF Quality Reporting Program beginning in FY28, and seeking feedback on a potential advanced care planning measure for future years.
The agency is tightening the QRP data submission timeframe from 4.5 months to roughly 45 days after the end of the calendar quarter, which will compress reporting windows for operators already stretched thin on administrative capacity.
The takeaway for senior care leaders: the FY27 increase is not likely to change anyone's financial trajectory, but the PDPM conversation signaled in this RFI is worth tracking.
Case-mix recalibration has historically been where real dollars move, so operators who can show clean coding tied to documented clinical need will be better positioned when the next round of changes lands.
The kind of environment where visibility into workforce deployment, such as who's on the floor, when, and against what acuity, becomes less of a nice-to-have and more of a requirement for planning.
Independent professional marketplaces like ShiftKey give operators real-time data on how their schedules are flexing against demand, which is the same kind of evidence base CMS is increasingly asking providers to bring to the table.
Comments on the proposed rule are open through the standard public comment window, with the final rule expected around August 1. Stay on top of developments with our latest updates.
Sources
“Cause For Concern’ as Feds Consider Major Cut to PDPM Base Rates,” (McKnight's Long-Term Care News).
“Fiscal Year (FY) 2027 Skilled Nursing Facility Prospective Payment System Proposed Rule (CMS-1843-P),” (CMS Fact Sheet).
“CMS Proposes 2.4% Medicare Increase for Skilled Nursing Facilities in 2027,” (Skilled Nursing News).
“CMS Releases Proposed Medicare SNF Prospective Payment System Rule,” (LeadingAge Minnesota).
