SNF BILLING · FY2026 UPDATE

PDPM, Consolidated Billing, and the FY2026 SNF Rule, Working as One System

Short answer: during a covered Part A SNF stay, PDPM sets what Medicare pays you per day, consolidated billing decides which outside services you must swallow inside that per diem, and the FY2026 SNF PPS final rule resets the dollar figure. You bill separately only the short list of services CMS excludes from consolidated billing. Everything else is yours to absorb.

PDPM case-mix Consolidated billing exclusions FY2026 SNF PPS final rule MDS 3.0 assessment

The three layers, stacked

One stay. Three rules deciding your money.

SNF operators lose margin when they treat these as three separate problems. They are one stack. Read them top to bottom: rate, bundle, then case-mix, because each layer sits on the one below it.

The dollar amount

FY2026 SNF PPS final rule sets the rate

The FY2026 SNF Prospective Payment System final rule updates the unadjusted federal per diem base rates that every PDPM component multiplies against. It carries a net market basket update built from the market basket increase, a forecast error correction, and the productivity adjustment. This is the number your whole per diem is scaled from, effective for services on or after October 1, 2025.

each layer feeds the one below

The bundle boundary

Consolidated billing decides what is inside

Under SNF Consolidated Billing (Social Security Act §1888(e)), the SNF is paid a bundled per diem and is responsible for nearly all services a resident receives during a covered Part A stay. Outside suppliers bill the SNF, not Medicare. Only a defined set of excluded services may still be billed separately to Part B. CMS republishes the excluded HCPCS code files every year, so a code that was separately billable last year can move.

each layer feeds the one below

The case-mix engine

PDPM classifies the resident into what you are paid

The Patient Driven Payment Model classifies each resident into case-mix groups across five components from the MDS assessment, not from therapy minutes. Primary diagnosis maps to a clinical category, Section GG function scores drive therapy indexes, and an NTA comorbidity score prices the medically complex resident. Get the MDS wrong and every layer above it is scaled off a wrong number.

Layer 3 · PDPM case-mix

Five components, priced separately, on one MDS

PDPM replaced RUG-IV in October 2019. Each component below carries its own case-mix group and index. Watch the variable per diem: PT and OT step down after day 20, and NTA is front-loaded at three times its rate for the first three days.

Physical Therapy

Clinical category plus Section GG function score sets the group.

VPD steps down after day 20

Occupational Therapy

Same clinical category and function logic as PT, own index.

VPD steps down after day 20

SLP

Speech-Language

Driven by comorbidities, cognitive status, and swallowing or diet.

Flat per diem

NURS

Nursing

Function score and clinical conditions, extensive services logic.

Flat per diem

NTA

Non-Therapy Ancillary

Comorbidity point score prices the medically complex resident.

3x for days 1 to 3

Layer 2 · the decision that leaks money

Absorb it, or bill it separately?

This is the single call that drains SNF margin. When a resident is in a covered Part A stay, almost everything belongs to you. Billing separately for something already inside the bundle is a denial waiting to happen. Absorbing something that was actually excluded is money you left on the table.

Inside the per diem

You absorb it

Bundled into your PDPM payment. The outside supplier bills the SNF, never Medicare Part B.

↓ PT, OT, and SLP therapy, in-house or contracted
↓ Routine drugs, most lab, and non-excluded radiology
↓ Medical supplies, dressings, and in-facility DME
↓ Nursing services, respiratory, and dietary
↓ Transportation not tied to an excluded service

Excluded from CB

Bill it separately

CMS excludes these from consolidated billing. The rendering provider bills Medicare Part B directly.

↗ Physician and qualified practitioner professional services
↗ Certain dialysis services and related items
↗ Specified chemotherapy drugs and their administration
↗ Specified radioisotope services
↗ Customized prosthetic devices on the excluded list

The excluded categories

The five major exclusion families, in plain terms

CMS organizes the separately billable services into major categories and republishes the exact HCPCS codes each year in the SNF Consolidated Billing annual update files. Treat the annual file as the source of truth, because codes migrate in and out.

Physician services

Professional services of physicians and certain qualified practitioners, billed to Part B under their own provider number.

Dialysis

Certain dialysis-related services and supplies furnished to a resident in a covered stay stay outside the bundle.

Chemotherapy

Specific chemotherapy drugs and the administration of those drugs, as listed by HCPCS in the annual file.

Radioisotope services

Specified radioisotope services identified by their HCPCS codes are billed separately to Part B.

Customized prosthetics

Customized prosthetic devices on the excluded list, distinct from routine DME which stays bundled.

Defined high-intensity outpatient

Certain emergency and high-intensity outpatient hospital services, plus ambulance in specific circumstances such as transport for dialysis.

Layer 1 · FY2026 SNF PPS final rule

How the FY2026 net update is built

The net update that scales your per diem is not a single number CMS picks. It is assembled from three moving parts. The market basket goes up, a forecast error correction adjusts for the prior estimate, and the statutory productivity adjustment pulls back down.

+3.3%

Market basket increase

+0.6%

Forecast error correction

−0.7%

Productivity adjustment

+3.2%

Net FY2026 update

Components as finalized in the FY2026 SNF PPS final rule. The net figure is the multiplier applied to the unadjusted federal per diem base rates before your PDPM case-mix indexes and area wage index are layered on. Always confirm the exact published values in the current final rule for your billing period.

The instrument underneath it all

The MDS assessment is where the money is set

Every dollar in the stack traces back to the MDS 3.0. Miss an item and PDPM misclassifies, which means the FY2026 rate is scaled off the wrong case-mix, which means consolidated billing is applied to a stay you priced incorrectly.

DAY 1

Admission and the assessment clock starts

The covered Part A stay begins. Consolidated billing responsibility attaches from day one, so outside orders route to the SNF.

ARD DAYS 1 TO 8

5-day PPS scheduled assessment

The single scheduled PDPM assessment. Its Assessment Reference Date locks the item set that classifies the resident across all five components for the payment period.

CLASSIFY

Primary diagnosis, Section GG, NTA score

Primary diagnosis maps to a clinical category, Section GG function items drive PT, OT, and nursing, and the NTA comorbidity list sets the ancillary score.

OPTIONAL

Interim Payment Assessment

The optional IPA lets you re-classify when the resident's condition changes materially. Use it deliberately, because it resets the variable per diem schedule.

TRANSMIT

Encode and submit on time

Late or inaccurate MDS transmission risks default rate billing and audit exposure. The assessment is the evidence behind every claim on the stay.

Putting the stack together

One resident, all three layers at once

A composite example, no real resident. A 120-bed skilled nursing facility archetype admits a post-surgical resident with chronic kidney disease on dialysis.

Composite archetype · covered Part A stay

Post-surgical resident, CKD on outpatient dialysis

Layer 3 · PDPM

Surgical primary diagnosis maps the PT and OT clinical category. The dialysis and comorbidity profile lifts the NTA score, front-loaded 3x for days 1 to 3.

Layer 1 · FY2026 rate

Each component index multiplies the FY2026 federal per diem base rate, adjusted by the area wage index, then scaled by the net update.

Layer 2 · absorb

In-house PT, OT, wound supplies, and routine labs are bundled. The dialysis center billing the SNF for a bundled item gets paid by the SNF.

Layer 2 · bill separately

The dialysis services on the excluded list and the attending physician's professional visits are billed to Part B by those providers, not by you.

Guidelines referenced

CMS FY2026 SNF Prospective Payment System final rule, updating the federal per diem base rates and the net market basket update effective for services on or after October 1, 2025.
Patient Driven Payment Model (PDPM) case-mix classification across the PT, OT, SLP, Nursing, and NTA components, with variable per diem adjustments, effective since October 1, 2019.
SNF Consolidated Billing under Social Security Act §1888(e), and the CMS SNF Consolidated Billing annual update files listing the separately billable excluded HCPCS codes.
MDS 3.0 assessment, including the 5-day scheduled PPS assessment and the optional Interim Payment Assessment, as the classification source of record.

Stop guessing which services belong inside the per diem

ASP-RCM Solutions runs SNF billing so PDPM classification, consolidated billing exclusions, and the FY2026 rate line up on every claim. We reconcile the annual CB file, defend the MDS behind each stay, and catch the bundled charges that quietly become denials. Fewer takebacks, cleaner Part A submissions, full per diem captured.

Talk to our SNF billing team →

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