SNF PPS FY2026 and FY2027 Medicare rate updates explained
Medicare’s skilled nursing payment rates rose 2.4% for fiscal 2027, which began October 1, 2026, after a 3.2% increase for fiscal 2026. CMS estimates the FY2027 update adds about $882.74 million to Part A payments to SNFs. For a facility whose Medicare days pay $627 each (the median Medicare PPS payment per Medicare day in CMS’s newest cost reports), 2.4% is roughly $15 a Medicare day.
How each update was built
| FY2026 | FY2027 | |
|---|---|---|
| Market basket increase | 3.3% | 3.3% |
| Forecast error adjustment | +0.6 points | none |
| Productivity adjustment | -0.7 points | -0.9 points |
| Net update | 3.2% | 2.4% |
| Estimated aggregate change | about $1.16 billion | about $882.74 million |
| Labor-related share | 71.9% | 72.0% |
| Final rule | 90 FR 37310, August 4, 2025 | 91 FR 48588, July 31, 2026 |
The forecast error adjustment applies only when the gap between forecast and actual market basket growth exceeds 0.5 percentage points. For FY2027 it did not, so the update is the market basket less productivity. CMS estimates rural providers see a 2.7% increase in total FY2027 payments once wage index and other changes are counted.
FY2027 unadjusted federal per diem rates
CMS corrected the FY2027 rate tables on September 30, 2026 (91 FR 61782), changing the wage index budget neutrality factor to 0.9988. The corrected rates by PDPM component:
| Component | Urban | Rural |
|---|---|---|
| Physical therapy | $77.45 | $88.30 |
| Occupational therapy | $72.10 | $81.10 |
| Speech-language pathology | $28.92 | $36.44 |
| Nursing | $135.01 | $128.99 |
| Non-therapy ancillary | $101.86 | $97.32 |
| Non-case-mix | $120.90 | $123.14 |
These are base amounts before each patient’s case-mix index and the facility’s wage index, so a facility’s actual rate per Medicare day is set by its own patients and location. The cost report figure above is a better read of what Medicare pays in practice.
A facility that does not meet the SNF Quality Reporting Program requirements has its market basket increase cut by 2 percentage points, as the statute requires.
What 2.4% does to total revenue
In CMS’s newest cost reports the median facility gets 7.5% of its days from Medicare and 62% from Medicaid. A 2.4% Medicare increase moves total revenue by well under 1% for most buildings. State Medicaid rates, which no federal rule sets, decide far more of a typical building’s revenue per day. See your state’s payer mix for where Medicare matters most.
Related: the federal staffing rule is gone
Staffing is the largest line in cost per day, so the rule’s fate matters as much as the rate update. The federal minimum staffing standard CMS finalized in April 2024 is no longer in force. Federal courts in Texas and Iowa vacated it in 2025, Public Law 119-21 (July 4, 2025) barred enforcement through September 30, 2034, and CMS repealed it by interim final rule published December 3, 2025, effective February 2, 2026, restoring the earlier requirement of a registered nurse on site 8 hours a day, 7 days a week.
Questions people ask
What is the FY2027 SNF PPS update?
CMS's final rule of July 31, 2026 raises SNF PPS payments by a net 2.4% for FY2027, starting October 1, 2026, about $882.74 million in Part A payments. It is a 3.3% market basket increase less a 0.9 percentage point productivity adjustment.
What was the FY2026 SNF PPS update?
3.2%, about $1.16 billion, effective October 1, 2025, under the final rule published August 4, 2025. It combined a 3.3% market basket, a 0.6 point forecast error adjustment and a 0.7 point productivity cut.