In February, we shared an overview of the Calendar Year 2026 Medicare Advantage Advance Notice, which proposed a 4.33% payment increase for Medicare Advantage (MA) plans. The Centers for Medicare & Medicaid Services (CMS) has since finalized the rate, and the news is even more favorable: MA plans will receive a 5.06% increase, translating to over $25 billion in additional payments in 2026.

This final rule marks a meaningful shift in the reimbursement landscape, especially for skilled nursing facilities (SNFs) that rely on managed care contracts with MA plans. With updates to growth rates, risk adjustment models, and quality measures, it's more important than ever for SNFs to assess the financial and operational implications of these changes.

Key Updates and Implications for SNFs

1. A Higher-Than-Expected Rate Increase

The finalized 5.06% payment increase exceeds the 4.33% estimate in the Advance Notice. It reflects a more favorable growth rate of 9.04% and accounts for changes in per capita costs, including a full implementation of a technical adjustment for indirect and direct medical education. For SNFs, this presents an opportunity to renegotiate managed care contracts and optimize reimbursement terms in light of the higher payment benchmarks.

2. Risk Adjustment Model Implementation

CMS is completing the final phase-in of the 2024 CMS-HCC risk adjustment model, which now accounts for 100% of risk scores. SNFs should prioritize clinical documentation and coding accuracy to ensure that patient acuity is properly captured under the updated model—critical for receiving appropriate reimbursement.

3. Updates to Star Ratings and Quality Measures

While MA Star Ratings bonuses are projected to remain unchanged at -0.69%, CMS has confirmed continued alignment with Universal Foundation quality measures and is soliciting feedback to simplify the program. SNFs participating in MA networks should monitor quality metrics closely and consider investing in performance improvement and staff training to meet evolving expectations.

4. Operational and Regulatory Considerations

With increased payments come increased oversight. SNFs must remain diligent in regulatory compliance, particularly around billing, medical necessity documentation, and coordinated care efforts. The evolving expectations around encounter data submissions for risk adjustment are especially relevant for SNFs engaged with PACE or similar care models.

What This Means for the Industry

This finalized rate increase brings a welcomed sense of stability to the Medicare Advantage program. It comes after a year of financial pressure on insurers, driven by high utilization and lower star ratings. For SNFs, the increased funding may ease reimbursement pressures and support more sustainable care delivery.

Positioning Your Facility for Long-Term Success

Our team can support your facility through:

• Comprehensive Tax Services
• Financial Statement Compilations, Reviews, and Audits
• General Accounting Support
• Operations Advisory
• Strategic Planning and Growth Initiatives
• Regulatory Compliance Assistance

Preparing for 2026 and Beyond

As we move toward 2026, SNFs must navigate a complex landscape of evolving benchmarks, value-based care requirements, and regulatory expectations. This finalized rate increase represents not just an opportunity—but a call to action for providers to strengthen their financial and operational frameworks.

If your team needs support evaluating your strategy in light of these updates, contact us today.