The Center For Medicare and Medicaid Services' reimbursement proposal for skilled nursing facilities falls far short of analysts' expectations, with the budgeted increase for FY22 significantly lower than the $750 million awarded last year. 

CMS' proposal for skilled nursing facilities includes a 1.3% year-over-year increase, accounting for about $444 million in Medicare Part A payment to SNFs next fiscal year.

In an analysis of the proposal, Omotayo Okusanya of Mizuho Americas Analyst REIT Research, noted that CMS "explicitly called out Medicare payments above their expectations with the new PDPM system, with cuts set to happen 'as soon as possible in order for CMS to achieve its initial goal of budget neutrality when the new reimbursement system was initially implemented." Okusanya also expressed worry that recent efforts in New York to cap profitability in the sector could spread to other jurisdictions, especially as the federal government increases regulation in the SNF sector post-COVID.