CMS has finalized several regulatory changes impacting SNF operations, coding practices and reimbursement strategies for FY 2026. This summary highlights the most critical updates for executive decision-making.

SDOH & Section R Removed from MDS
CMS has rescinded its plan to include Social Determinants of Health (SDOH) via Section R in the MDS, citing administrative burden.

Impact: No SDOH data collection required in MDS for FY 2026.

ICD-10 Code Revisions
Effective October 1, 2025:

• 33 ICD-10 codes reclassified as Return to Provider (RTP)
• 1 code (G90.81) moved from Acute Neurologic to Medical Management

Key Compliance Note:
These codes cannot be used as primary diagnoses to justify Medicare Part A SNF-level care. They may be listed as secondary diagnoses.

Medicare Part A SNF Eligibility Criteria

All four conditions must be met:

1. Skilled services ordered by a physician
2. Daily skilled care required
3. Services must be inpatient-only
4. Services must be reasonable and necessary

Quality Reporting Program (QRP)

• Penalty-based program
• FY 2026 APU data window: Jan. 1 – Dec. 31, 2024
• CMS will maintain current QRP measures through FY 2028

Value-Based Purchasing (VBP)

• Incentive-based program focused on rehospitalization reduction
• Performance period for FY 2028 incentives begins in FY 2026
• Annual benchmarks published in the Federal Register

QRP Submission Exceptions

• CMS will use the FY 2016 definition of “extraordinary circumstances,” including:
• Natural disasters
• Civil unrest
• Infrastructure damage affecting access to records

Strategic Actions for SNF Executives

• Audit ICD-10 coding for compliance with RTP exclusions
• Train MDS teams on Medicare Part A criteria
• Track QRP/VBP benchmarks to optimize reimbursement
• Prepare documentation protocols for exception requests