Providers push back on pay rule

The nursing-home industry is pressing federal regulators to raise Medicare payments beyond the increase proposed for fiscal 2027, arguing that labor costs, hiring pressures and sicker residents have outpaced the government’s formula. The Centers for Medicare & Medicaid Services on April 2 proposed a 2.4% update to skilled nursing facility payment rates for fiscal 2027, with the rule published in the Federal Register on April 7. Provider groups used the June 1 comment deadline to argue that the increase is too small and that the payment system is missing the cost of recruiting, training and retaining workers. A separate UCLA-led study published June 1 added new evidence to the staffing debate, finding lower staffing levels in states that shielded nursing homes from COVID-19 malpractice lawsuits. ### Why are providers objecting to a Medicare increase at all? The American Health Care Association said in a June 1 comment letter that CMS should add a sector-specific payment adjustment for nursing homes rather than rely on the market basket update alone. AHCA said the proposed 2.4% increase would be the smallest since a 1.2% raise in 2022 if no further adjustment is made. John Kane, the group’s senior vice president of reimbursement policy, said providers need Medicare to “keep up with increasing wage and benefit demands” so facilities can compete for caregivers. (cms.gov) LeadingAge, which represents nonprofit aging-services providers, made a similar argument in its comments to CMS. Jodi Eyigor, the group’s vice president of health policy, said the proposed increase would not adequately capture higher labor, supply, inflation and tariff-related costs facing nursing homes. ### What exactly did CMS propose in the 2027 rule? (mcknights.com) CMS said the proposed rule would update skilled nursing facility prospective payment system rates by 2.4% for fiscal 2027, based on a 3.2% market basket increase minus a 0.8% productivity adjustment. The agency also proposed changes to the Skilled Nursing Facility Quality Reporting Program and Value-Based Purchasing Program, including removing two COVID-19 vaccination measures from the reporting program beginning in fiscal 2028. The Federal Register notice said comments on the rule were due by June 1, 2026. CMS identified the proposal as file code CMS-1843-P and said the rule covers payment rates, quality reporting and value-based purchasing requirements for skilled nursing facilities. (cms.gov) ### What are providers saying about staffing? AHCA said Bureau of Labor Statistics data show nursing homes remain down 1.7% of their staff compared with pre-pandemic levels. The group told CMS that facilities continue to raise wages and benefits to recruit and retain workers while competing with other healthcare employers for the same labor pool. It asked CMS to study ways to reflect staffing costs prospectively in future payment years. (federalregister.gov) McKnight’s reported that providers are also arguing residents are arriving with greater acuity, adding to the mismatch between reimbursement and operating costs. AHCA separately said CMS should not characterize changing resident coding patterns as improper “upcoding,” but as facilities assessing residents with more complex needs. ### How does the UCLA study fit into this fight? (mcknights.com) UCLA Health said on June 1 that researchers examined data from 13,205 skilled nursing facilities from 2018 to 2023 and found staffing was 2.5% lower in states that granted nursing homes immunity from COVID-19-related lawsuits than in states that did not. The study said that translated into nearly eight fewer staff hours per day per nursing home for clinical care and other duties. Jill Horwitz, an emerita professor at the UCLA School of Law, said understaffing during the pandemic was worse in states with immunity from lawsuits. David S. Zingmond, the study’s corresponding author and a professor-in-residence at the UCLA David Geffen School of Medicine, said the size of the change was surprising because the policy did not set a fixed staffing target or direct monetary reward. UCLA said 86% of states enacted some form of tort immunity for nursing homes during the pandemic. (uclahealth.org) ### What happens next in the rulemaking process? June 1 was the deadline for public comments on the proposed rule, according to the Federal Register notice. CMS will review those submissions before issuing a final rule for fiscal 2027, which would govern payments beginning October 1, 2026, under the agency’s annual skilled nursing facility payment update cycle. (federalregister.gov) (uclahealth.org)