July 22, 2025  – The Centers for Medicare & Medicaid Services (CMS) released its proposed rule for calendar year 2026, projecting a 6.4% overall reduction in Medicare payments to home health agencies (HHAs). The estimated $1.135 billion decrease, compared to 2025, has sparked widespread concern across the home-based care sector.

The proposed cut includes a 2.4% payment update worth $425 million, offset by several downward adjustments. These include a permanent behavior adjustment of -3.7% ($655 million), a temporary adjustment of -4.6% ($815 million), and a functional impairment-based recalibration of -0.5% ($90 million). CMS explained these changes are tied to the continued implementation of the Patient-Driven Groupings Model (PDGM) and the need to recoup prior overpayments.

This marks the fourth consecutive year CMS has implemented permanent reductions to home health payment rates. A one-time 5% cut to the standardized 30-day payment rate is also proposed. The agency estimates this adjustment will reclaim $786 million.

Critics argue that the cuts come at a steep cost. Dr. Steve Landers, president and CEO of the National Alliance for Care at Home, called the proposal “flawed and shortsighted,” warning that reduced payments could force more providers to shutter services. “CMS has failed not just our providers, but the millions of Americans who depend on home health services,” Landers stated.

In addition to payment changes, the proposed rule includes several updates to the Home Health Value-Based Purchasing (HHVBP) model, recalibrating performance measures and revising the Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey. CMS also seeks feedback through a request for information (RFI) on adding new metrics such as major injury from falls and updating survey scoring criteria.

CMS plans to broaden who can conduct face-to-face encounters for care certification, aligning with provisions from the CARES Act. Meanwhile, new Medicare enrollment policies are being considered to help prevent fraud and ensure providers meet compliance standards.

Despite the proposed enhancements in oversight and quality metrics, industry leaders argue the financial reductions will make it difficult to deliver services. The Alliance urged CMS to reconsider the rule and instead invest in modernizing home health, including expanding telehealth and improving access for high-risk populations.

The full fact sheet on the proposed rule is available here.