Nursing homes will receive a net $904 million increase in Medicare payments during fiscal 2023 under a final rule the Centers for Medicare and Medicaid Services issued Friday.

In April, CMS proposed cutting Medicare Part A payments to nursing homes by $320 million. The transition to a new nursing home payment model in 2019 inadvertently led to a 5% pay increase in fiscal 2020, requiring a decrease in payments next year, according to the draft regulation.

But the agency has changed course, and will phase in that payment correction over two years to ease the burden on providers still struggling with the COVID-19 pandemic, the final rule says. While this is relatively more advantageous for skilled nursing facilities that the initial proposal, it falls short of the three-year phase-in the American Health Care Association/National Center for Assisted Living requested.

Next fiscal year, nursing homes will get a 2.7% increase in Medicare rates. This does not factor in Value-Based Purchasing reductions for certain nursing homes, according to a CMS fact sheet.

The final rule caps the annual wage index adjustments for nursing homes, as well, so payments won’t decrease more than 5% from year to year.

CMS also finalized policies to add measures on healthcare-associated infections requiring hospitalization and total nursing hours per resident, per day to the skilled nursing facility value-based purchasing program starting in 2026. CMS will add a measure on successful discharges to the community in 2027. The agency will not apply its readmissions measure next year because of the ongoing public health emergency. Nursing homes will also have to submit data on how many of their healthcare workers get influenza vaccines.

CMS asked for feedback in its proposed rule on how to establish minimum staffing requirements for nursing homes, as President Joe Biden directed in his State of the Union address. CMS did not finalize any staffing policies in Friday’s rule and will take comments into consideration in future rulemaking. CMS plans to issue draft regulations on nursing home staffing this year, the agency said in April. The AHCA/NCAL, which opposes staffing mandates, recommended that CMS do more research before setting a policy.