There is a version of regulatory uncertainty that is genuinely unpredictable where you cannot know what is coming or when. That is not the situation skilled nursing facilities are in.
CMS publishes a proposed rule every April. A final rule follows every July. It takes effect October 1. Every year. Without exception.
The rules change. The payment rates shift. New quality measures get added. Reporting requirements expand. Enforcement policies tighten. But the calendar does not change. The cycle is fixed.
This means the question for SNF operators is not whether the rules will change it is whether your organization is built to absorb annual change as a normal operating condition rather than a recurring crisis. The facilities staying ahead have answered that question. The ones perpetually catching up have not.
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The Annual Rule Cycle Is Not Going Away Build Around It
Every April, CMS issues a proposed SNF Prospective Payment System rule. Every July, the final rule is published. Every October 1, it takes effect. That cycle has repeated without interruption for decades and will continue to do so (CMS, 2026).
What changes inside that cycle every year: Medicare payment rates, quality measure additions and removals, MDS assessment item changes, Value-Based Purchasing program scoring updates, Quality Reporting Program reporting requirements, PDPM ICD-10 code mapping revisions, and enforcement policy adjustments.
The FY 2027 proposed rule published April 2026 is already in motion right now. It proposes requiring MDS data submission for all SNF residents regardless of payer, not just Medicare. It proposes removing two COVID-19 quality measures. It includes new VBP performance standards through FY 2030. The comment period is open. The final rule will drop in July 2026 and take effect October 1, 2026.
Operators who read the April proposed rule are three to four months ahead of operators who wait for the July final rule. That gap is where preparation happens or does not.
Your Medicare Revenue Is Already Tied to Performance Not Just Compliance
Most SNF operators think of the Value-Based Purchasing program as a compliance program something to track, report on, and avoid penalties from. That framing is costing them money.
The VBP program is a revenue program. Here is exactly how it works: CMS withholds 2% of every SNF’s Medicare fee-for-service Part A payments to fund the program. That 2% comes off every claim, automatically, before payment hits your account. CMS then redistributes 60% of that pool back to SNFs as incentive payments based on performance scores. The remaining 40% goes directly to the Medicare Trust Fund and does not come back.
This means two things. First, a facility that performs poorly on VBP measures does not get its 2% back it permanently subsidizes the facilities that perform well. Second, a facility that performs well earns back more than its 2% withhold effectively receiving a net payment increase from Medicare without a rate change.
At a median SNF operating margin of 1.8%, the difference between a facility that earns back its VBP withhold and one that does not is significant. It is not a rounding error. It is a material revenue difference that compounds year over year.
The VBP Program Just Got More Complex And It Is Not Going Back
Understanding the VBP program as it existed two years ago is not enough. The program has expanded substantially and will continue to expand.
For FY 2026, CMS expanded the SNF VBP program from a single measure to four measures: all-cause hospital readmissions, healthcare-associated infections resulting in hospitalization, total nursing staffing hours, and nursing staff turnover (AAPACN / Proactive LTC Consulting, 2025). Where facilities used to manage one financial variable in VBP, they now manage four.
Each of those four measures draws on different data sources claims data, payroll-based journal data, MDS assessments, and infection tracking. Each has its own baseline period, performance period, and scoring methodology. A facility that understands how it is scored on readmissions but not on staffing hours is flying blind on a financial variable that directly affects its Medicare revenue.
The direction of travel is clear. CMS is authorized to add up to nine additional measures to the VBP program beyond the original readmission measure. The program started with one. It now has four. The expansion is not finished.
Operators who build internal capacity to track VBP scoring across all active measures not just the one they understand best are the ones who will not be caught off guard when a new measure goes live and their score drops because they did not see it coming.
2027 Is a Hard Deadline MDS Accuracy Is About to Be Formally Audited
This is the most urgent near-term regulatory development most SNF operators are not paying enough attention to.
Starting with the FY 2027 program year — with the performance period beginning October 1, 2025 — CMS is implementing a formal MDS data validation process. This process audits the accuracy of MDS-based quality measures used in both the VBP and QRP programs. Facilities selected for validation will have their MDS data compared against medical records. Discrepancies between what was submitted and what the records support will affect scoring.
This matters because MDS-based quality measures directly drive VBP and QRP scores which directly drive whether a facility earns back its 2% withhold or loses it. For years, the accuracy of that MDS data was largely self-reported. Starting in 2027, CMS is verifying it.
Facilities that have been submitting inaccurate MDS data whether through incomplete assessments, coding errors, or disconnected clinical documentation workflows will face scoring consequences that translate directly into Medicare revenue impact.
This is not a future risk to plan for at some point. The performance period for FY 2027 scoring is already running. The data being collected right now is the data that will be validated.
Accurate MDS coding and complete clinical documentation are not just compliance requirements they are the foundation of your VBP score, your QRP standing, and your ability to earn back the 2% that CMS is already withholding from every claim you submit.
What Staying Ahead Actually Requires
Staying ahead of the CMS annual rule cycle is not about having a compliance team that reads the Federal Register. It is about building four operational habits that most facilities do not have.
Read the April proposed rule not just the July final rule. The proposed rule tells you what CMS is planning three months before it is locked. That window is where preparation happens, financial modeling gets done, and staff education can begin before the pressure of an October implementation deadline.
Know your VBP score before CMS tells you. CMS sends quarterly confidential feedback reports through iQIES. Most facilities read them once and move on. The ones staying ahead are tracking their performance trajectory across all four measures every quarter and adjusting clinical and operational workflows when a measure starts trending the wrong direction.
Treat MDS accuracy as a revenue function. Every MDS assessment affects your quality measure scores. Every quality measure score affects your VBP multiplier. Every VBP multiplier affects the actual dollar amount Medicare pays you per claim. The chain from MDS coding accuracy to Medicare revenue is direct and quantifiable. Integrated clinical documentation that ensures every assessment is complete, accurate, and defensible is not a documentation upgrade it is a revenue protection investment.
Stay engaged with your state association. State associations track proposed rules, flag comment deadlines, and translate regulatory changes into operational impact assessments. For facilities without a dedicated compliance team, the state association is the early warning system.
Frequently Asked Questions
Every year. CMS publishes a proposed SNF Prospective Payment System rule every April and a final rule every July, effective October 1. Each annual rule cycle updates Medicare payment rates, quality measures, reporting requirements, PDPM coding mappings, and enforcement policies. This is not occasional it is a fixed annual cycle that has operated without interruption for decades.
The SNF VBP program withholds 2% of every facility's Medicare fee-for-service Part A payments and redistributes 60% of that pool back to SNFs based on performance scores on quality measures. Facilities that perform well earn back more than their 2% withhold effectively receiving a net payment increase. Facilities that perform poorly lose their withhold permanently. For FY 2026, performance is scored across four measures: hospital readmissions, healthcare-associated infections, staffing hours, and staff turnover.
Beginning with the FY 2027 program year, CMS will audit the accuracy of MDS-based quality measures submitted by skilled nursing facilities for use in VBP and QRP scoring. Facilities selected for validation will have their MDS data compared against medical records. Inaccurate or incomplete MDS data that does not match the underlying records will affect quality scores which directly affects VBP revenue. The performance period being collected right now will be subject to this validation process.
SNFs that fail to meet QRP reporting requirements face a 2 percentage point reduction in their annual Medicare payment update — on top of any VBP withhold they may not recover. These two penalties are separate and can compound. A facility that misses QRP reporting and performs poorly on VBP measures faces a significant combined reduction in effective Medicare reimbursement rates.
CMS is not going to stop rewriting the rules. The April proposed rule, the July final rule, the October implementation that cycle is permanent. The measures will keep expanding. The data validation will start in 2027. The VBP financial stakes will keep growing.
The facilities staying ahead are not the ones with the best lawyers or the largest compliance teams. They are the ones that read the proposed rule in April, track their VBP scores quarterly, treat MDS accuracy as a revenue function, and build the internal systems to absorb annual regulatory change without throwing the organization into crisis mode.
The rules will change again next April. The question is whether your facility will be ready before they do.
If you want to see how LTC Apps supports accurate MDS documentation and compliance tracking to protect your VBP performance and QRP standing request a demo and we will walk you through it.
