Traditional MedicareReimbursementHigh impact
2026-07-30 - FY 2027 Skilled Nursing Facility Prospective Payment System Final Rule
Medicare/CMS·Geriatrics, Psychiatry·Payment
Effective date
Oct 1, 2027
We identified it
Jul 31, 2026
Summary
CMS issued final FY 2027 payment rules for skilled nursing facilities (SNF) and inpatient psychiatric facilities (IPF), increasing SNF PPS rates by 2.4% ($882.74M aggregate) and IPF rates by 2.3% ($60M aggregate). The policy also updates SNF and IPF Quality Reporting Programs, implements new IPF outlier payment caps (20% effective FY 2028), and includes requirements for clinical labs to report private payor data by July 31, 2026, with new DMEPOS conditions of payment for 20 additional items.
Action Required
REQUIREMENTS:
1. BY JULY 31, 2026 (IMMEDIATE DEADLINE): If your practice operates or bills for independent laboratories, physician office laboratories, or hospital outreach labs classified as 'applicable laboratories' under the Clinical Laboratory Fee Schedule (CLFS), the billing/compliance team must report private payor rate and volume data for January 1 – June 30, 2025, via the CLFS Data Collection System. Submit data including applicable HCPCS codes, associated private payor rates, and volume data. Failure to report by this deadline may result in civil monetary penalties. Contact your Medicare Administrative Contractor if unsure of applicable lab status.
2. BY OCTOBER 1, 2027 (FY 2027 EFFECTIVE DATE): Billing team must update rate tables and billing software to reflect the new SNF PPS payment rates (2.4% increase from FY 2026) and IPF PPS payment rates (2.3% increase from FY 2026). Verify that all SNF and IPF claims submitted after this date use the updated rates. Communicate new rates to providers and billing staff to ensure accurate claim submission.
3. BY OCTOBER 1, 2027: For SNF billing specifically, review updated SNF Quality Reporting Program (QRP) requirements and ensure compliance documentation is collected and submitted per CMS guidance. Review the SNF Value-Based Purchasing (VBP) Program updates on the SNF VBP webpage and adjust quality metrics tracking accordingly.
4. BY OCTOBER 1, 2027: For IPF billing specifically, update systems to reflect the revised outlier threshold to maintain estimated outlier payments at 2% of total IPF PPS payments. Beginning FY 2028, billing team must track and monitor that outlier payments for IPFs with 50+ stays per year do not exceed 20% of that facility's total IPF PPS payments annually. Remove the 2 measures being deleted from IPF QRP tracking and implement documentation requirements for the new standardized IPF patient assessment instrument.
5. IMMEDIATELY: Billing team must verify whether the practice bills for any of the 20 new DMEPOS items added to the Master List of Items Potentially Subject to Conditions of Payment (22 items added for face-to-face encounter/written order requirements; 8 items added for prior authorization). For affected items, update billing workflows to require either: (a) documentation of face-to-face encounter and written order prior to delivery, or (b) Medicare prior authorization before delivery. Consult the MLN Matters Article (PDF) and update encounter forms and billing system rules accordingly. Claims submitted without meeting these conditions will be denied.
6. BEFORE OCTOBER 1, 2027: Review and update vaccine billing to reflect 2026–2027 seasonal influenza and COVID-19 vaccine pricing on the CMS Vaccine Pricing webpage. Use the vaccine crosswalk (ZIP) to identify correct National Drug Codes (NDCs). Update billing software with correct Medicare payment allowances and effective dates. Check the CMS Vaccine Pricing webpage regularly for pricing updates throughout the season.