Home health agencies are facing a proposed 6.4% decrease in Medicare payments in 2026, compared to 2025.
The Centers for Medicare and Medicaid Services released the proposed rule for home health agencies (HHA) Monday under the Home Health Prospective Payment System Proposed Rule for calendar year 2026. Comments are being accepted 60 days from the date of filing in the Federal Register.
The proposed rate includes a 2.4% increase; an estimated 3.7% decrease that reflects the net impact of the proposed permanent behavior adjustment, required by statute; an estimated 4.6% decrease that reflects the net impact of the proposed temporary adjustment; and an estimated 0.5% decrease that reflects the effects of a proposed update to the Fixed Dollar Loss ratio.
Under the proposed rule, CMS estimates that Medicare payments to HHAs in 2026 would decrease in the aggregate by 6.4%, or $1.135 billion, compared to 2025.
WHY THIS MATTERS
The National Alliance for Care at Home called the cut "alarming" in a statement posted online.
"The proposed rule includes policies that would reduce payments to HHAs by over $1 billion dollars in 2026, at a time when providers also continue to experience unmatched inflationary pressure in a challenging labor market – making it difficult, if not impossible in some areas, to deliver care to Medicare beneficiaries entitled to receive it," the alliance said. "CMS data from 2020 to 2024 highlights the growing crisis – half of all U.S. counties have already lost HHAs, and in over 70% of counties, agencies are treating fewer Traditional Medicare patients."
Dr. Steve Landers, CEO for the alliance said, "Instead of decimating this beloved, high-value program, CMS should focus on modernizing the home health benefit by expanding the role of telehealth, eliminating fraud, waste, and abuse and ensuring access to care for the most medically and socially vulnerable populations."
CMS has proposed temporary adjustments and said it may propose more in future rulemaking. The temporary adjustment has been accruing at approximately $1 billion per year since 2020, CMS said.
"We believe beginning to adjust the base payment rate now to account for the calculated temporary dollar amount to date may help reduce the need for a larger reduction in future years," CMS said.
THE LARGER TREND
CMS is also proposing to recalibrate the Patient Driven Groupings Model (PDGM) case-mix weights; update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups; and update the fixed-dollar loss (FDL) for outlier payments for CY 2026.
CMS is proposing to remove the COVID-19 Vaccine: Percentage of Patients Who Are Up to Date Measure and the corresponding Outcome and Assessment Information Set (OASIS) data element. CMS is also proposing the removal of four assessment items in the standardized patient assessment: one Living Situation item, two Food items and one Utilities item.
CMS proposes implementing a revised Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey beginning with the April 2026 sample month. CMS is proposing to remove measures regarding care of patients, communication between providers and patients and specific care issues.
CMS is also proposing the addition of four measures to the applicable measure set. This includes three OASIS-based measures related to bathing and dressing, and one claims-based measure, the Medicare Spending per Beneficiary for the Post-Acute Care (PAC) setting measure.
CMS is also seeking feedback on the digital quality measurement (dQM) transition for HHAs and the adoption of health information technology (IT), and standards including Fast Healthcare Interoperability Resources (FHIR).
Finally, CMS is seeking input on future quality measure concepts of interoperability, cognitive function, nutrition and patient well-being.
For more on the proposed rule, see the fact sheet.
Email the writer: SMorse@himss.org