For the second consecutive year, the Medicare Payment Advisory Commission (MedPAC) has issued a draft recommendation advising Congress to reduce Medicare payments to home health agencies by 7% beginning in 2026.

During its December meeting, MedPAC discussed the adequacy of Medicare payments across various provider settings and reviewed its draft recommendations to Congress regarding payment updates for 2026.

MedPAC staff evaluated several factors to assess payment adequacy, including beneficiaries’ access to care, quality of care, access to capital, and the relationship between Medicare payments and costs. Most notably, the commission recommended payment updates for hospitals and physicians that exceed the requirements set by current law.

“The recent recommendations by MedPAC regarding Medicare home health and hospice policy are misguided and deeply troubling,” National Alliance for Care at Home CEO Dr. Steve Landers said in a statement to Home Health Care News. “With respect to home health, the recommendation for drastic cuts is based on a flawed analysis of agency margins that fails to account for all payers and the true financial health of the home health system.”

In his report to Congress on home health recommendations, commission member Evan Christman noted that access to home health services remains strong. However, he pointed out a steady decline in the percentage of fee-for-service (FFS) hospital inpatients discharged to home health, which decreased from 20.1% in 2020 to 18.2% in the first ten months of 2023.

In 2023, there was an increase in patients discharged to the community, rising from 79.3% to 80.6%.

As of 2023, more than 12,000 home health agencies in the U.S. served more than 2.7 million patients, according to the report. 

“While MedPAC recommendations are rarely, if ever, adopted by Congress and cannot be adopted without Congressional action, the thought of adding a 7% cut on top of the nearly 9% permanent cut to home health payment since 2023 is simply unsustainable,” Mollie Gurian, vice president of policy and government affairs at LeadingAge, told HHCN. “Future payment reductions and clawbacks are certain under the agency’s interpretations of its current statutory obligations. Without a change in course by Congress and by CMS, access to care will continue to decline – and we hope that MedPAC will continue to think about the role of Medicare Advantage on provider viability and margins and amend their definition of access.”

Additionally, the MedPAC staff presented recommendations for other provider settings, including a 3% increase for physicians and other professional health services; maintaining the current 1.7% payment for outpatient dialysis services; maintaining payments for hospice; a 3% reduction in skilled nursing facility payments and a 7% reduction in inpatient rehab facility payments.

MedPAC plans to vote on these formal recommendations at its next meeting on Jan. 11 and 12. Recommendations that are approved during this vote will be included in its March 2025 report to Congress.