The Centers for Medicare & Medicaid Services (CMS) is facing a torrent of feedback from nursing home providers following the release of its proposed 2026 Skilled Nursing Facility Prospective Payment System (SNF PPS) rule. While the proposed 2.8% Medicare Part A payment increase is a starting point, industry leaders are pushing for more substantial changes, particularly concerning reimbursement and a more accurate wage index, while simultaneously raising red flags about new technology mandates.
As the 60-day comment period concluded, major industry associations like the American Health Care Association (AHCA) and LeadingAge voiced strong appeals for improved financial support and a reconsideration of how labor costs are calculated. Their primary contention: the proposed payment hike falls short of addressing the escalating operational costs and persistent workforce shortages plaguing the sector.
“As the long-term care sector continues to face rising costs and workforce challenges, we urge policymakers to take a holistic approach to funding,” stated John Kane, the newly appointed senior vice president of reimbursement policy for the American Health Care Association. He emphasized that “sustainable Medicare and Medicaid policies are critical to expanding access to care, enhancing quality care, and investing in improvements.”
A key demand from both AHCA and the American Association for Post-Acute Care Nursing (AAPACN) is the creation of a SNF-specific wage index, moving away from the current reliance on hospital inpatient wage data. Providers argue that using hospital data fails to accurately reflect the true labor costs within nursing homes. AAPACN leaders suggested that the nearly 10 years of Payroll-Based Journal (PBJ) data could provide a more accurate basis for such an index, leading to “more equitable and accurate reimbursements.”
The urgency for better reimbursement is underscored by the ongoing staffing crisis. AHCA’s internal analyses indicate that nursing homes still require over 42,700 workers to return to pre-pandemic employment levels, even as other healthcare sectors have stabilized their staffing. This persistent shortage, coupled with rising wages needed to attract and retain staff, creates a significant financial strain that providers argue the current proposed rule doesn’t adequately address.
While united on the need for better pay, there’s a divergence in opinion regarding the inclusion of social determinants of health (SDOH) items in the Minimum Data Set (MDS). AAPACN advocated for retaining Section R of the MDS, which includes living situation, food, and utilities, for better discharge planning. However, AHCA and LeadingAge both expressed opposition, with AHCA suggesting that electronic health records (EHRs) and existing admission data are sufficient. LeadingAge reiterated its long-standing stance that these factors are not directly “reflective of nor impacted by the SNF stay.”
Perhaps the most vocal opposition from providers concerns CMS’s proposed quality measures aimed at gauging nursing homes’ digital readiness and capabilities. Both AHCA and LeadingAge strongly resisted this, citing the significant digital divide between nursing homes and other healthcare sectors. Unlike hospitals and primary care providers, nursing homes were largely excluded from the incentives and support provided by the HITECH Act of 2009, which spurred widespread EHR adoption.
“AHCA strongly recommends CMS does not prematurely develop and hold providers accountable to interoperability quality measures for SNFs… without first addressing the current systemic digital divide,” AHCA stated. LeadingAge echoed this, noting that a recent review by its CAST arm found only approximately 8% of providers are utilizing EHRs to ideal full interoperability. They argue that CMS should first work to understand and support providers in getting up to speed on health information interoperability before implementing “carrot-or-stick” incentives.
The clock is now ticking for CMS to review the extensive comments and considerations submitted by stakeholders. The final 2026 SNF PPS rule is anticipated to be released in late July, and the industry will be watching closely to see if their appeals for more appropriate reimbursement and a nuanced approach to technology adoption have been heard.