Each year, the Centers for Medicare & Medicaid Services (CMS) releases a proposed Skilled Nursing Facility Prospective Payment System (SNF PPS) rule, outlining potential payment updates, quality reporting changes, and regulatory revisions that will affect SNFs nationwide. The FY 2027 proposed rule is particularly significant because it addresses several high-impact areas simultaneously.
In response, the American Association of Post-Acute Care Nursing (AAPACN) submitted extensive comments to CMS, advocating for changes that better reflect the operational and clinical realities facilities face every day. This article summarizes AAPACN’s focused advocacy on several major concerns:
- Adequacy of FY 2027 payment updates
- Request for information on potential adjustments for Patient-Driven Payment Model (PDPM) “case-mix creep”
- Proposed Skilled Nursing Facility Quality Reporting Program (SNF QRP) all-payer reporting requirements
- Removal of COVID-19 vaccination quality measures
- Operational timelines for QRP and Value-Based Purchasing (VBP) Program reporting
- Ongoing ICD-10 mapping concerns within PDPM
Continued Advocacy for Meaningful Payment
CMS proposed a 2.4% payment update for FY 2027 after the productivity adjustment. Any increase is notable, but AAPACN emphasized that many facilities will experience little meaningful financial improvement once sequestration reductions and the 2% SNF VBP withhold are factored in.
AAPACN again urged CMS to reconsider the current VBP methodology that withholds 2% from providers but redistributes only 60% of those funds back to SNFs as incentive payments. The organization recommended increasing the percentage returned to providers to better support facilities caring for increasingly complex residents amid ongoing workforce shortages and rising operational expenses.
Flaws in the PDPM “Case-Mix Creep” Methodology
AAPACN devoted significant attention to CMS’s request for information (RFI) for a potential case-mix adjustment related to PDPM “case-mix creep.” This phrase refers to the increase in Medicare reimbursement that CMS attributes to changes in provider coding and documentation patterns, rather than to actual increases in resident clinical complexity or care needs.
CMS argues that provider coding practices and documentation patterns under PDPM have resulted in higher-than-expected reimbursement levels. In response, the agency asked for provider feedback, without a current proposal to make any changes, on the methodology CMS used to analyze so-called case-mix creep, the data sources used, the time period used, and if a component-specific or system-wide adjustment would be favored.
AAPACN pointed out flaws and duplication in the methodology, data sources, and time periods analyzed. It advocated for any future proposed changes to be specifically addressed rather than system-wide adjustments that could have unintended consequences.
It was pointed out that the methodology used did not account for significant changes in the nursing home population during and following the COVID-19 public health emergency (PHE). Studies were cited along with CMS statements that supported the increased clinical complexity of nursing home residents, an increase in home health utilization with a decrease in hospital discharges to the SNF during and since the PHE.
AAPACN also noted that CMS’s extensive training campaign for PDPM and health-related social needs focused on improving coding accuracy and interdisciplinary collaboration on the same items now being scrutinized for having improved coding. The underlying Minimum Data Set (MDS) coding guidance has also changed over the time period reviewed, skewing the comparison data.
For example, AAPACN noted the extensive edits to the Patient Health Questionnaire (PHQ) interview and instructions since 2017, including the change from the PHQ-9 to the PHQ-2 to 9 in 2023. Also mentioned was increasing the flexibility of when the interview can be conducted by removing “preferably the day before or the day of the ARD [assessment reference date].” AAPACN cited studies that support an increase in depression during and following the COVID-19 PHE that cannot be ignored.
Data sources that included adjusted resident data from the COVID-19 PHE were also mentioned. CMS did not detail the methodology used to adjust the data to remove the PHE impact. However, AAPACN does not believe this adjustment is possible. The COVID-19 PHE did not just affect residents with a positive COVID diagnosis. It impacted everyone—all residents, all staff, and all the surrounding communities. From staffing shortages to supply challenges, from facility quarantine units to visitor restrictions, from social distancing to not seeing staff faces behind masks, the impacts were far-reaching. The impact of this time is simply not quantifiable, and this data should not be used for any payment adjustments.
AAPACN strongly opposed the time period, FY 2017 through FY 2024, used for this analysis. Most notably, AAPACN argued that this time frame includes years already evaluated during the original PDPM parity adjustment analysis finalized in the FY 2023 SNF PPS Final Rule. It stipulated when CMS would determine that increases in coding for depression, cognitive impairment, swallowing disorders, speech language pathology comorbidities, and mechanically altered diets would contribute to higher-than-anticipated PDPM payments.
CMS subsequently implemented a 4.6% parity adjustment phased in over FY 2023 and FY 2024 to restore budget neutrality. AAPACN questioned the duplicity of including pre-parity-adjustment data in the current case-mix creep analysis that effectively could adjust for the same coding trends twice. As a result, it was recommended that CMS limit future case-mix creep analyses to periods following full implementation of the parity adjustment, beginning with FY 2024 data. This would establish a more stable baseline that better reflects current assessment practices, adjusted reimbursement levels, and post-pandemic operational realities.
AAPACN also advocated for any changes to be specific adjustments or changes to underlying coding instructions, rather than broad system-wide modifications. Wide-sweeping reductions to PDPM case-mix methodology could create unintended consequences not only for Medicare reimbursement, but also for state Medicaid payment systems. Particular concern was expressed about the suggested reductions to the Nursing and Speech Language Pathology (SLP) components that appear disproportionate to the available data. They fail to account adequately for increasing resident complexity, behavioral health needs, and evolving clinical practices within SNFs.
Rather than applying global payment reductions across all case-mix groups, CMS was encouraged to pursue more targeted policy refinements for any concerns regarding specific MDS coding patterns. For example, CMS could review the underlying coding criteria and payment methodology associated with swallowing disorders, malnutrition risk, or depression interviews directly instead of broadly reducing reimbursement rates.
Operational Concerns Regarding SNF QRP All-Payer Expansion
AAPACN expressed significant concern regarding the CMS proposal to expand the SNF QRP to an all-payer population, arguing that the policy fails to account adequately for the unique structure and operational realities of the SNF setting. Unlike other post-acute care (PAC) settings that exclusively serve short-term skilled populations, SNFs care for both short-stay post-acute residents and long-stay custodial residents who may transition in and out of skilled levels of care. Applying SNF QRP requirements broadly across all payer types could unintentionally capture long-stay residents in measures designed for post-acute populations, ultimately reducing the validity and comparability of quality outcomes across PAC settings.
Concerns were also raised about the lack of clear operational guidance surrounding the definition of “covered skilled services,” particularly given the variability among Medicare Advantage (MA) plans, payer transitions, denials, appeals, benefit exhaust situations, and indirect skilled services such as care plan management, observation, assessment, and teaching activities. AAPACN emphasized that these complexities create substantial compliance risk and administrative burden for facilities already managing extensive MDS, survey, and Medicaid reimbursement requirements.
It was further argued that the proposal significantly underestimates both the operational and financial burden associated with implementation. Facilities may be required to determine daily skilled status across all payer types, complete additional Other Skilled Care Admission and Discharge assessments, monitor ongoing skilled eligibility, and coordinate additional interdisciplinary documentation and assessment activities. The CMS estimate of approximately $88 million in annual implementation costs and more than a million additional burden hours nationwide was also questioned, particularly during an ongoing national staffing shortage.
Ultimately, AAPACN urged CMS to reconsider both the timing and scope of the proposal and offered several targeted recommendations to reduce burden while improving feasibility. Examples are implementing a phased approach limited initially to Medicare Part A and MA populations, adopting a voluntary reporting period before mandatory implementation, addressing the impact of MA authorization and denial practices on measure outcomes, and creating separate planned and unplanned discharge assessment requirements similar to those used in the long-term care hospital setting. AAPACN concluded that CMS should focus on aligning SNF QRP requirements more closely with other PAC settings while fully evaluating the impact on staffing, costs, assessment accuracy, and measure validity before moving forward with broad all-payer implementation.
Removal of COVID-19 Vaccination Measures
AAPACN supported the CMS proposal to remove the two COVID-19 vaccination measures (resident and healthcare personnel) from the SNF QRP. It also recommended CMS retire data collection and public reporting of these measures as soon as operationally feasible.
Suggestion for 90-Day Reporting Deadline
CMS proposed shortening both the SNF QRP assessment data submission deadline and the SNF VBP MDS-based measure “snapshot date” correction period to 45 days following the end of each reporting quarter. Reducing these current reporting and correction timelines may not provide adequate time for facilities to identify, review, and correct assessment errors, particularly for residents admitted near the end of a reporting quarter.
AAPACN urged CMS to adopt a 90-day deadline for both QRP and VBP reporting requirements that aligns with the 80 to 90 days following the quarter for the Five-Star Quality Rating and Care Compare data collections. The suggested 90-day deadline would allow adequate time for audits and corrections, align with other programs, and provide the shortened deadlines for improved data reporting.
ICD-10 Mapping Suggestions
AAPACN also continued advocating for specific ICD-10 mapping revisions within PDPM. CMS did not identify a need for substantive changes to PDPM ICD-10 mappings this cycle. But AAPACN disagreed and suggested several changes to move codes from “return to provider” to an appropriate clinical category:
- Z51.A – Encounter for Sepsis Aftercare
- F01.50 – Vascular Dementia
- R62.7 – Adult Failure to Thrive
- M62.81 – Muscle Weakness (Generalized)
AAPACN emphasized an important Medicare coverage principle from chapter 8 of the Medicare Benefit Policy Manual: a diagnosis alone should never determine whether care qualifies as skilled. Instead, coverage depends on the resident’s need for skilled services, including services to maintain function or prevent decline. Because skilled care may be indicated for these diagnoses, the current return to provider codes creates a gap in access to Medicare benefits.
This distinction is especially important in today’s SNF environment. Many residents require complex indirect skilled services for monitoring, management, and prevention of further deterioration rather than rapid rehabilitation alone.
What’s Next?
Each year, CMS releases the SNF PPS Proposed Rule in the spring to solicit stakeholder feedback through the federal rulemaking process before finalizing policy changes for the upcoming fiscal year. Following review and consideration of public comments, CMS publishes the Final Rule in the Federal Register, typically in August, with final policies generally becoming effective on October 1 of the applicable fiscal year.
Note: AAPACN members can keep track of these important dates and more by consulting the SNF Calendar: Key Dates for 2026 QM, VBP, QRP, and PBJ tool.
Conclusion
The FY 2027 proposed rule reflects CMS’s continued effort to refine SNF payment and quality programs. However, AAPACN’s comments highlight growing concern that regulatory expectations and payment adjustments may not fully align with current operational realities.
From case-mix adjustments tied to alleged “case-mix creep” to expanded all-payer reporting requirements, facilities continue to face increasing pressure to do more with fewer resources. AAPACN’s advocacy efforts repeatedly return to a powerful central message: reimbursement systems, quality programs, and reporting requirements must support—not hinder—the delivery of clinically appropriate resident-centered care.
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