CMS on April 2 released four proposed payment rules covering skilled nursing facilities, hospices, inpatient psychiatric facilities and inpatient rehabilitation facilities for fiscal year 2027.
Twelve things to know:
1. CMS proposes increasing SNF payment rates by 2.4% in 2027. The update does not include value-based purchasing penalties or bonuses.
2. The agency also flagged a separate issue that could draw scrutiny from some SNF operators: a request for information on potential updates to the Patient Driven Payment Model to address case-mix upcoding. The move suggests that CMS believes some facilities have been gaming the system to capture higher payments.
3. The agency plans to require submission of Minimum Data Set data on all SNF residents receiving covered skilled care, regardless of payer — not just Medicare patients. The change would align SNFs with other post-acute care settings and expand the data available for public reporting on Care Compare.
The 114-page proposed rule is available here.
4. CMS proposes a 2.4% hospice pay bump for 2027, which would result in an estimated $785 million increase over 2026 payments. Hospices that fail to meet quality reporting requirements would face a net 1.6% reduction in payments — a 4 percentage point penalty applied against the proposed update. The proposed 2027 aggregate cap is set at $36,210.11.
5. The agency pitched a new hospice scoring system — the Service and Spending Variation Index — that would assign each facility a public score based on metrics including non-hospice spending, live discharge rates and average minutes of care per routine home care day. Facilities with high scores could face additional oversight.
6. CMS is proposing to require hospices to proactively provide the hospice election statement addendum to all Medicare beneficiaries at the time of hospice election, not just upon request. The addendum explains in plain language which services and drugs fall outside the Medicare hospice benefit. CMS said the change will reduce beneficiary confusion and out-of-pocket costs at a particularly vulnerable moment for patients and families.
The 111-page proposed rule is available here.
Inpatient psychiatric facilities
7. CMS floated a 2.3% payment rate increase for inpatient psychiatric facilities in 2027. Total estimated payments to inpatient psychiatric facilities would rise by 2.1%, or $50 million, relative to 2026, according to the agency.
8. CMS plans to cap outlier payments at the facility level at 20% of an inpatient psychiatric facility’s total payments per year. It said it has identified a subset of facilities with unusually high routine costs — including labor, real estate and overhead — that have been drawing a disproportionate share of outlier payments. Facilities currently relying heavily on outlier payments will need to assess their exposure before the rule is finalized.
9. The agency is proposing to implement a standardized inpatient psychiatric facility patient assessment instrument, which would be the first CMS statutory quality reporting program to support data submission via Fast Healthcare Interoperability Resources standards. CMS also plans to remove two measures from the inpatient psychiatric facility quality reporting program: the alcohol use brief intervention measure and the tobacco use treatment at discharge measure.
The 115-page proposed rule is available here.
Inpatient rehabilitation facilities
10. CMS proposes updating inpatient rehabilitation facility payment rates by 2.4% for 2027, which would result in a $355 million aggregate payment increase, according to the agency.
11. CMS is proposing to clarify that all therapies must be initiated within 36 hours of admission to an inpatient rehabilitation facility, tightening a policy that had been inconsistently enforced across audits and oversight programs, according to the agency. The rule also revises the interdisciplinary team meeting requirement, mandating that the initial meeting occur on or before day four of admission, with subsequent meetings defined as weekly intervals of seven days from that initial meeting date.
12. CMS is seeking feedback on a potential overhaul of the inpatient rehabilitation facility case-mix classification system, which could move IRF payment toward a model more closely aligned with the SNF Patient Driven Payment Model. The agency is also soliciting input on advanced care planning as a potential future quality measure — a topic that appeared in both the SNF and IRF proposed rules.
The 91-page proposed rule is available here.
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