MedPAC to Congress: Cut by 3% SNF FY26 Medicare Rates

Following its review of the latest commission staff analysis of skilled nursing facility (SNF) payment adequacy in Medicare fee-for-service (FFS), the Medicare Payment Advisory Commission on December 12, 2024 recommended that Congress reduce SNF Medicare FFS rates by 3 percent in Fiscal Year 2026.

It should be noted that MedPAC recommendations are rarely, if ever, adopted by Congress and the cut cannot be adopted without Congressional or Administrative action.

MedPAC examines four criteria in determining adequacy: beneficiary access to care, quality of care, access to capital, and Medicare payments to costs (or FFS Medicare margin). In all four categories, staff concluded that the indicators were mostly positive though they did note a slight decrease in the available supply of SNF services.

While some commissioners expressed concerns about the financial pressures nursing homes are experiencing from Medicare Advantage payment rates, Medicaid payment and the pending staffing mandate, they still offered their support for the 3% reduction noting that they are only charged with examining the Medicare program. The report also included an examination of the nursing home staffing mandate rule and an analysis of nursing homes' ability to comply.

The analysis of nursing homes' compliance with the staffing mandate suggests that while only 59% could meet the total nursing staff hours per resident day (HPRD) requirement that 94% of nursing homes could be at a 80% of the requirement.

Several commissioners noted their disagreement with the rule given the current workforce challenges and others said they felt the requirements were arbitrary. While MedPAC is not taking a position on the rule, they have asked staff to monitor its effects on nursing home finances.