Healthcare compliance

The Centers for Medicare & Medicaid Services (CMS) issued the final rule for the PPS for SNFs for FY 2026 which was published in the Federal Register on August 4, 2025; the regulations in this rule are effective October 1, 2025.  

The rule: 

• Updates the PPS payment rates for SNFs for FY 2026 using the market basket update and budget neutrality factors effective October 1, 2025. 

• Updates the International Classification of Diseases, 10th Revision, Clinical Modification (ICF-10) code mappings used under PDPM. 

• Updates the SNF Quality Reporting Program (SNF QRP).

• Updates the SNF Value-Based Purchasing (SNF VBP) Program. 

2026 PPS rate calculations 

The final rule provides a productivity-adjusted market basket increase for SNFs of 3.2% beginning October 1, 2025, which reflects: 

• A market basket increase of 3.3% based on IHS Global Inc.’s (IGI’s) second quarter 2025 forecast with historical data through the first quarter of 2025.  

• An upward forecast error adjustment of 0.6% due to the difference between the estimated and actual percentage increase in the market basket exceeding the 0.5 percentage point threshold.  

• A downward 0.7 percentage point multifactor productivity adjustment (based on the 10-year period ending September 30, 2026).  

The unadjusted federal rates for FY 2026, prior to adjustment for case-mix, are as follows: 

FY 2026 Unadjusted Federal Rate Per Diem – Urban 

FY 2026 Unadjusted Federal Rate Per Diem – Rural 

The rates shown in the tables above are subsequently case-mix adjusted, and a facility-specific wage index—determined by the Core-Based Statistical Area (CBSA) in which each facility is located—is also applied. To assist you with the calculation of your facility-specific PPS rates for FY 2026, our experts at BerryDunn have updated our interactive rate calculator, which is part of the BerryDunn Senior Living Portal.  

Please note: The rates per our calculator are prior to any FY 2026 VBP adjustment. When CMS releases the final VBP incentive payment multipliers for FY 2026, BerryDunn will update the interactive rate calculator as necessary. 

CMS estimates that the aggregate impact of the payment policies in this final rule would result in a net increase of 3.2%, or approximately $1.16 billion, in Medicare Part A payments to SNFs in FY 2026. This estimate does not reflect a projected $208.36 million decrease as a result of the SNF VBP program reductions. 

The projected overall impact to providers in urban and rural areas is an average increase of 3.1% and 3.7%, respectively, with a low of 2.0% for urban Pacific providers and a high of 6.6% for rural Mountain providers—actual impact will vary. 

Changes in PDPM ICD-10 code mappings 

CMS has changed the clinical category assignment for 34 new ICD-10 code mappings that were effective October 1, 2024. These updated code mappings can be found on the PDPM website. 

SNF QRP Update 

Updates to the SNF QRP Program include: 

• CMS finalized removing four items that were previously adopted as standardized patient assessment data elements in the Social Determinants Of Health (SDOH) category, starting with the FY 2027 SNF QRP. These are: 

  • One item related to Living Situation,

  • Two items concerning Food

  • One item regarding Utilities   

• Finalized and codified changes to the reconsideration policy and process. Now, SNFs will be permitted to request an extension to file a reconsideration request. Additionally, CMS is updating the criteria that will be used to evaluate and potentially grant these reconsideration requests. 

SNF VBP Program update 

Updates to the SNF VBP Program include: 

• The Health Equity Adjustment (HEA) will be removed beginning in the FY 2027 program year, to streamline the scoring methodology and offer clearer incentives for SNFs.  

• Final performance standards for the FY 2028 and FY 2029 program years were provided to meet the SNF VBP Program's statutory notice deadline.  

• The previously established scoring methodology will be applied to the SNF Within-Stay Potentially Preventive Readmission (SNF WS PPR) measure, starting with the FY 2028 program year, to align the scoring methodology for this measure with the scoring methodology previously finalized and applied to all other measures in the measure set.  

• Adoption of a new reconsideration process, allowing SNFs to seek reconsideration on Review and Correction requests. 

The following table lists the measures that have been adopted for the SNF VBP Program, along with their status in the program for the FY 2026 program year through the FY 2029 program year. 

If you have any specific questions about the final rule or how it might impact your facility, please contact Ashley Tkowski or Melissa Baez. 

As financial institutions continue to navigate evolving regulatory landscapes, the recently enacted OBBBA legislation introduces a noteworthy incentive aimed at supporting rural and agricultural development. Effective July 4, 2025, the bill provides a 25% federal income tax exemption on interest income earned from qualifying rural or agricultural real estate loans.  

This represents a strategic opportunity for lenders to reassess their portfolios and tax planning strategies. With further guidance expected, institutions should begin preparing to identify eligible loans and evaluate the broader implications of this new provision. 

Key information for financial institutions 

• Effective date: Applies to qualifying loans originated on or after July 4, 2025. 
• Exemption: 25% of the interest income earned on these loans will be tax-exempt. 
• Ineligible loans: Refinanced loans do not qualify. 
• Qualified loans: Loans must be secured by rural or agricultural real estate, defined as property substantially used for: 

• Producing agricultural products (not defined) 
• Fishing or seafood processing 
• Aquaculture (hatcheries, rearing ponds, pens, etc.) 
• Leasehold mortgages on such real estate also qualify, provided they have lien status 

Please also note that, similar to municipal bond investments, these loans are subject to IRC Section 265, which may limit deductibility of interest expense allocable to the tax-exempt income. 

Considerations for financial institutions

Loan identification and tracking: Determine whether any existing lending activity aligns with these definitions and develop a method for flagging and tracking qualifying loans after the effective date. 

Strategic expansion: Assess whether this creates an incentive to expand your presence in agricultural or rural real estate lending. 

Loan pricing models: Revisit pricing for these types of loans to account for the blended tax benefit and any associated disallowed interest expense. 

Tax planning: Analyze how this partial exemption could affect your effective tax rate and broader tax strategies going forward, particularly as it creates a permanent tax difference. 

About BerryDunn

BerryDunn's dedicated audit, tax, and consulting professionals understand the financial services industry and its challenges and are committed to helping you meet and exceed regulatory requirements. We partner with you to bring tailored approaches to fit your needs and operations and provide guidance on best practices and recommendations that make sense for you. Learn more about our services and team.  

Executive Order (EO) 14221 released on February 25, 2025, directed the Secretaries of Labor, Health and Human Services (HHS), and the Treasury to implement changes to improve implementation and increase enforcement of the hospital price transparency (HPT) rule. On May 22, 2025, the agencies announced progress in implementing the EO, including issuance of a request for information (RFI), as well as providing updated guidance regarding requirements for machine readable files. 

HPT enforcement 

An HHS Office of Inspector General (OIG) audit report released in November 2024 estimated only 46% of hospitals were in compliance with HPT rule requirements. While the HHS OIG noted a variety of issues with shoppable services requirements, the most common areas of non-compliance observed related to the machine readable file (MRF), including: 

• Failing to update the file annually 

• Lack of appropriate naming conventions 

• Providing negotiated charges by payer/plan

Civil monetary penalties (CMP) for HPT non-compliance range from $300 to $5,500 per day, depending on hospital bed count. From 2021 – 2024, CMS issued CMP notices totaling approximately $5 million.  

Based on reports from our clients and anecdotes shared by compliance and finance colleagues and from presenters at recent conferences, HPT-related complaints from patients have remained minimal, whereas the pace of CMS non-compliance warning letters has increased. 

Practical tips for HPT compliance 

The risks related to non-compliance with HPT rules can be mitigated through a multidisciplinary team approach, establishing accountability, and engaging external resources to fill gaps in expertise. 

• Making certain to include the functions with an HPT role, such as finance, revenue cycle, revenue integrity, compliance, IT, and payer contracting 

• Considering the vendor as part of the team if any aspect of HPT rule compliance is outsourced 

• Designating an internal resource to monitor and advise your team on HPT-related announcements from regulators and CMS enforcement activity 

• Linking chargemaster/CDM and fee schedule updates to MRF and shoppable services maintenance activities supports compliance with multiple HPT requirements 

• Adding HPT-related audit items to the compliance work plan to demonstrate internal oversight 

BerryDunn’s healthcare compliance team incorporates deep, hands-on knowledge with industry best practices to help your organization manage compliance and revenue integrity risks. Learn more about BerryDunn’s team and services. 

Read this if you are a CFO or on the fundraising team at a nonprofit organization. 

Capital campaigns can be game changers for nonprofits, enabling bold investments in infrastructure, programs, and long-term growth. Whether you're building a new facility, expanding services, or upgrading technology, a capital campaign aligns fundraising with your strategic vision. 

When to consider a capital campaign 

A capital campaign may be right if your organization lacks the funds for a major initiative or your annual budget is unable to support a strategic opportunity. Capital campaigns are also ideal for: 

• Infrastructure improvements  

• Major construction or renovations  

• New or expanded programs 

Capital campaigns often inspire larger gifts and deeper donor engagement than annual appeals, especially when the purpose is clearly communicated.   

Key success factors 

A successful campaign requires more than passion; it demands planning, clarity, and commitment from leadership and the board. Consider these best practices: 

• Clear messaging: Campaign materials should define the fundraising goal, project purpose, and how funds will be used. Avoid overly restrictive language if flexibility is needed. 

• Community engagement: Events, media outreach, and visibility efforts help build momentum and attract new supporters. 

• Board involvement: Active leadership from your board and executive team is essential to credibility and success. 

If you're including an endowment component, remember: Endowed gifts are donor-restricted in perpetuity. Only investment returns, not the original gift, can be used for the restricted purpose. The availability of investment returns is typically determined by a board-approved spending policy that follows the Uniform Prudent Management of Institutional Funds Act (UPMIFA). 

Accounting for capital campaigns under GAAP 

Proper classification and reporting are critical. Follow FASB ASC 958-205 to ensure compliance: 

• Purpose-restricted gifts: Recognized as donor-restricted until the specified use or time condition is met. 

• Endowment gifts: Always classified as donor-restricted in perpetuity; only earnings may be used per the donor’s intent and your spending policy. 

Final thoughts 

In uncertain economic times, a well-executed capital campaign can provide the resources and energy your nonprofit needs to thrive. With the right strategy, your campaign can strengthen donor relationships, elevate your mission, and leave a lasting impact. 

BerryDunn’s team of professionals serves a range of not-for-profit organizations, including but not limited to educational institutions, foundations, behavioral health organizations, community action programs, conservation organizations, and social services agencies. We provide the vital strategic, financial, and operational support necessary to help nonprofits fulfill their missions. Learn more about our team and services.  

The FDIC's Quarterly Banking Profile for quarter one 2025 reports the performance for the 4,022 community banks evaluated. Here are the key highlights: 

Note: Graphs are for all FDIC-insured institutions unless the graph indicates it is only for FDIC-insured community banks. 

Financial Performance 

• Quarterly net income rose by $621 million (10.0%) from the previous quarter to $6.8 billion, with 55.8% of community banks reporting an increase. 

• Pretax return on assets increased to 1.18%, up 11 basis points quarter over quarter and 6 basis points year over year. 

• Net interest margin rose to 3.46%, up 2 basis points from the prior quarter and 23 basis points year over year.

Costs and Efficiency 

• Noninterest expense fell by $423.2 million (2.3%) from the previous quarter but increased 6.0% year over year. 

• Provision expenses declined by 19.0% quarter over quarter, but increased 34.3% year over year, signaling growing concern over potential credit losses. 

• Efficiency ratio improved to 64.69%, down 39 basis points from the prior quarter, indicating better cost control relative to revenue. 

Loan and Deposit Trends 

• Loan and lease balances increased by $15.1 billion (0.8%) quarter over quarter and 4.9% year over year, led by nonfarm nonresidential CRE and 1–4 family residential loans. 

• Domestic deposits rose 1.6% quarter over quarter and 5.2% year over year, with stronger growth in interest-bearing than noninterest-bearing accounts. 

• More than half (59.1%) of community banks reported loan growth, and 69.4% reported deposit growth during the quarter. 

Asset Quality 

• Past-due and nonaccrual loans (PDNA) increased 12 basis points to 1.32%, mainly driven by nonperforming farm and CRE loans. 

• Net charge-off ratio decreased 9 basis points from the prior quarter to 0.15%, matching pre-pandemic levels. 

• Reserve coverage ratio declined significantly to 168.8%, indicating that allowance growth lagged increases in noncurrent loan balances. 

Capital and Structural Stability 

• Capital ratios improved modestly across the board: CBLR rose to 12.30%, and the leverage capital ratio increased to 10.91%. 

• Unrealized losses on securities fell by $6.2 billion (12.4%) from the prior quarter to $43.9 billion total. 

• Community bank count declined by 24 during the quarter due to mergers, transitions, and one failure. 

Conclusion and Outlook 

The first quarter of 2025 was off to a hot start for the banking industry, as seen by the increase in net income, primarily driven by higher net interest income. Net interest margins benefited from a 23 basis point increase from the previous year—a stark change from a year prior. But challenges remain for the industry, as past-due and nonaccrual loans continue to climb (albeit from historically low levels). Even with the continued increase in past-due and nonaccrual loans, net charge-offs remain at historical lows and actually decreased from the previous quarter. 

Regulatory trends continue to dominate headlines, with the most notable changes surrounding tariffs and the recently signed One Big Beautiful Bill Act (OBBBA). Although both tariffs and the OBBBA may have significant direct implications for financial institutions, borrowers will also be significantly impacted, and possibly more so than financial institutions. Financial institutions should be proactive with borrowers, reaching out to inform them of potential changes and seeing how they believe they may be impacted prospectively. This proactive communication will not only signal to borrowers that you are looking out for them but will also allow you to identify potential problem areas early on. As always, your BerryDunn team is here to help!