The Medicare Payment Advisory Commission (MedPAC) conducted its annual its assessment of Medicare fee-for service (FFS)  payment adequacy for skilled nursing facility (SNF), and, in a December 4, 2025 presentation, revealed its conclusion on payments: more than adequate based upon four indicators.

MedPAC staff analysis shows that SNF access and quality are stable, and SNF access to capital and payment margins continue to be positive.  Therefore, commissioners threw their support behind MedPAC Chair Michael Chernew’s recommendation to propose to Congress that SNF Medicare 2026 rates be reduced 4 percent  for Fiscal Year (FY) 2027.

Members should note that this is merely a recommendation to Congress and these recommendations are rarely, if ever, followed. Typically, Congress leaves Medicare rate setting to the Centers for Medicare and Medicaid Services (CMS) in their annual rulemaking.

Interestingly, Commissioner Tamara Konetzka suggested that the Commission’s current metrics used to determine provider payment adequacy warranted another look. Specifically, she noted that SNF occupancy levels may not accurately reflect how many individuals are turned away, and the number of SNFs by county doesn’t reflect always accurately reflect patient’s access patterns (e.g. radius from their home).

In addition, she pointed out that the current hospital readmission measure calculates readmits after a SNF discharge and therefore measures similar outcomes as the discharge to community measure. She advocated for using the SNF value-based payment readmission measure in future as it looks at 30 days post hospital stay.

The Commission also examined requested staff analysis of alternative ways of calculating SNF Star Ratings that more heavily weight staffing measures and reduce the weight applied to nursing home inspections/surveys. The modeling of the alternatives under consideration (e.g. weight three domains equally, or weight staffing domain at 60%) showed that either of these alternatives would significantly reduce the percentage of nursing homes receiving 1-star or 5-star ratings. Commissioners indicated interest in continuing this work but asked staff to consider additional methodologies for determining the star ratings that allow for a more equal distribution of nursing homes across the stars and/or a smaller reduction in the inspection weight.

This work will be reported to commissioners in early 2026.