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The payment updates
All three rules, released July 29 and 30, take effect Oct. 1 and apply the same 0.9 percentage point productivity cut:
- Inpatient rehabilitation facilities: a 2.3% increase, from a 3.2% market basket less productivity. CMS proposed 2.8% in April, so the final figure is lower. An outlier threshold update is expected to add 0.4% to overall payments.
- Inpatient psychiatric facilities: a net 2.3% increase, worth about $60 million, from the same 3.2% market basket.
- Skilled nursing facilities: a 2.4% aggregate increase, from a 3.3% market basket.
New rules for rehab units
The IRF rule carries the most operational change. CMS finalized requirements that therapy begin within 36 hours of admission and that the first interdisciplinary team meeting occur within four days. It dropped a proposal to require documentation of current functional status on the preadmission screening. Units that rely on Monday starts for weekend admissions, or hold team conferences on a fixed weekly schedule, will need to adjust staffing and scheduling.
Psychiatric units get a reprieve
CMS finalized a cap on IPF outlier payments but delayed it until FY 2028 and exempted facilities with fewer than 50 stays a year. It also removed two quality measures on alcohol and tobacco screening and treatment. The standardized IPF Patient Assessment Instrument required by Congress will move forward with a lower compliance threshold and a longer runway before submission becomes mandatory.
More data from SNFs
For skilled nursing facilities, the quality reporting program will remove two COVID-19 vaccination measures, shorten the reporting timeline and require assessment data for all patients regardless of payer. Hospital-based SNFs and swing-bed operators should confirm their systems can capture Medicare Advantage and commercial patients in the same assessment workflow.
Questions for post-acute leaders
- Can our IRF start therapy within 36 hours seven days a week, and what does that cost in therapist hours?
- Which psychiatric unit cases drive outlier payments today, and how would a cap in FY 2028 change unit economics?
- Are assessment and data submission processes ready for shorter deadlines across IRF and SNF programs?
Paired with the 2.3% inpatient update, these rules leave little room for cost growth across the continuum. The operating changes, not the rates, will separate units that hold margin from those that do not.
Archive entry for Aug 3, 2026, added Nov. 11, 2026.