A controller at a nine-building skilled nursing group opens next year's budget workbook in the first week of November. The revenue tab already carries the new Medicare Part A per diem that took effect on October 1. The dietary manager has asked whether the raw food line per patient day moves up by the same percentage.
The FY2027 SNF PPS final rule raises Medicare Part A payment rates to skilled nursing facilities by 2.4% from October 1, 2026, and the increase lands on revenue per Medicare day, not on the price of anything a building buys. A supply budget per patient day for 2027 should be set from last year's actual spend and the prices on the vendor contracts in force, with the rate update kept on the revenue side of the workbook.
What the FY2027 SNF PPS final rule changes
The FY2027 rule, CMS-1843-F, updates Medicare payment rates and policies for skilled nursing facilities for the fiscal year that began October 1, 2026. CMS issued it on July 29, 2026, and the Federal Register published it on July 31, 2026, at 91 FR 48588. The CMS fact sheet puts the net update at 2.4%, a 3.3% market basket update less a 0.9% productivity adjustment, and estimates the increase in aggregate SNF payments at $882.74 million.
The market basket is CMS's index of price change for the goods and services a skilled nursing facility buys, labor included. The productivity adjustment comes off that index, so the rate rises 0.9 points less than CMS's own forecast of input price growth.
Two more figures matter for a building's net. CMS estimates that SNF Value-Based Purchasing adjustments reduce aggregate payments by $203.60 million in FY2027, counted separately from the $882.74 million increase, and CMS describes that reduction as falling on certain SNFs, so a building's own VBP result can move its net. The labor-related share is 72.0%, and the 5% cap on wage index decreases continues.
| Figure in the FY2027 rule | Amount |
|---|---|
| Market basket update | 3.3% |
| Productivity adjustment | minus 0.9% |
| Net rate update, effective October 1, 2026 | 2.4% |
| Estimated increase in aggregate SNF payments | $882.74 million |
| Estimated SNF VBP reduction, counted separately | $203.60 million |
Does the 2.4% SNF rate increase apply to supply spend?
The 2.4% increase does not apply to supply spend. It changes what Medicare pays a facility for a Part A day under the SNF PPS. It does not change the price on a food or med supply invoice. Where the item is on contract, that price comes from the contract or GPO agreement in force when the order was placed.
A Medicaid day is paid under a state rate this rule does not set, and a Medicare Advantage day is paid under the plan's contract, which may or may not follow the Medicare rate. So the share of the update that reaches a building's revenue depends on its Part A share of census and on how its Medicare Advantage contracts are written. Supply spend covers every resident day regardless of payer, so the two lines should not move by the same percentage. The Medicaid side has its own post on Medicaid cuts and procurement margins.
How to set a supply budget per patient day for 2027
A supply budget per patient day starts from last year's actual spend divided by last year's resident days, by department and building. Per patient day, written PPD, is a dollar amount divided by the number of resident days in the same period, so a raw food figure stated per patient day holds as the census moves.
From that figure, the controller applies the price changes on the contracts in force for 2027, not the Medicare update, line by line where the GPO or distributor has published them. Census is the second input. The dollar total of a PPD budget for a month is the PPD figure times the expected resident days, so the dollar total moves with census while the PPD figure stays put. The mechanics are in how a per patient day budget moves when the census moves.
Set the budget at the sub-category level, with raw food and dietary supplies as their own lines, so the dietary manager can see which line moved when the invoices come in. Then put revenue per Medicare day and supply spend per patient day on the same tab. The first went up 2.4% on October 1. The second changes with the 2027 contract prices on each PPD line, and census sets the month's dollar total.
In Adelpo, the operator enters the per patient day budget by department or sub-category, and census syncs daily from the EHR, PointClickCare and MatrixCare among them, so the budget shows the month's dollar total next to the PPD figure. Adelpo reports last year's actual spend per patient day by department and building, and census can be split by payer, Part A or Medicaid days, if the operator sets it up. Adelpo holds no Medicare rate or revenue-per-day figure, so the comparison against the 2.4% update happens in the controller's workbook. What other operators spend per patient day is what the supply PPD benchmark survey is collecting.
Questions controllers ask about the FY2027 SNF rule
does the 2.4% snf rate increase apply to medicaid days?
The 2.4% increase does not apply to Medicaid days. The FY2027 SNF PPS final rule sets Medicare Part A payment to skilled nursing facilities, Medicaid days are paid under state rates it does not set, and Medicare Advantage days follow each plan's contract. The share of a building's revenue that moved on October 1, 2026 depends on its Part A share of census and on its Medicare Advantage contracts.
what is the snf market basket update for fy 2027?
The FY2027 SNF market basket update is 3.3%. CMS subtracts a 0.9% productivity adjustment, leaving the 2.4% net update, and applied no forecast-error adjustment because the difference stayed under the 0.5 percentage point threshold. The update took effect on October 1, 2026.
should a supply ppd budget go up 2.4% for 2027?
Not by that figure, because the 2.4% is a change in Medicare revenue per Part A day, not in supply prices. Set each department's supply budget per patient day from last year's actual spend per patient day and the price changes on the contracts in force for 2027, by sub-category where the GL supports it. The dollar total then moves with census, and the PPD figure changes only when contract prices do.