2026 Physician Fee Schedule Final Rule: Key Impacts on SNF and NF Care

The 2026 Medicare Physician Fee Schedule Final Rule finalized a small increase in the conversion factor but made significant practice expense (PE) adjustments that will directly affect clinicians practicing in skilled nursing facilities (SNFs) and nursing facilities (NFs). CMS’ new PE methodology reduces indirect practice expense values for services furnished in facility settings, creating lower overall reimbursement for services provided in the SNF setting, while increasing reimbursement for NF settings, thereby creating a differential in payment.

Under the finalized PE changes, it is critical for clinicians and billing teams to clearly distinguish whether a patient is in a Part A SNF stay or a non-Part A long-term care stay.

This is because:

• SNF services billed with place of service (POS ) 31 will now receive lower PE-adjusted reimbursement, while

• NF services billed with POS 32 will receive comparatively higher reimbursement under the new structure

In other words, the financial impact of the 2026 rule depends heavily on the correct assignment of POS codes.

The table below demonstrates the difference in payments made from the non-facility POS versus the facility POS rates.

CY 2026 POS 32 vs. POS 31 Payment Differential

To help support correct coding, PALTmed has put together a one-pager, How to Avoid Financial Clawbacks (or Worse) to ensure members are not misidentifying POS 31 and POS 32, which could result in not only compliance risk but also in substantial reimbursement loss. Facilities and clinicians must ensure reliable communication about each resident’s Part A status before each encounter.

PALTmed is actively advocating to ensure that the lower reimbursement for SNF POS 31 services is not permanent. Efforts are underway to reverse or mitigate the adjustment and to restore parity in facility-based care in nursing homes.