The Centers for Medicare & Medicaid Services late today released a final rule updating Medicare fee-for-service payments for skilled nursing facilities for fiscal year 2016. The rule provides an overall 1.2% update ($430 million) compared to FY 2015 payments, which includes a 2.3% market-basket update, a 0.6 percentage point forecast error reduction that accounts for the difference between the FY 2014 market-basket update and the actual market change for that year, and the statutorily mandated 0.5 percentage point productivity cut. The net update for rural hospital-based SNFs is estimated to be 0.6%, while the net update for urban hospital-based SNFs is 1.4%. Further, to meet the requirements of the Improving Medicare Post Acute Care Transformation Act of 2014, CMS establishes a SNF Quality Reporting Program, and finalizes three initial measures assessing skin integrity, patient falls and functional status. Beginning with FY 2018 payment, SNFs must meet all SNF QRP requirements to avoid a 2 percentage point reduction to their annual payment update factor. In addition, as required by the Protecting Access to Medicare Act of 2014, CMS adopts an all-cause readmission measure for use in the SNF value-based purchasing program, which will begin in FY 2019.