The U.S. Centers for Medicare & Medicaid Services (CMS) released its CY 2026 home health proposed payment rule on Monday.

The rule projects a 6.4% aggregate reduction in Medicare payments to home health agencies in 2026, amounting to an estimated $1.135 billion decrease compared to 2025.

“The proposed CY 2026 updated rates include the proposed CY 2026 HH payment update of 2.4% ($425 million increase); an estimated 3.7% decrease that reflects the net impact of the proposed permanent behavior adjustment, required by statute, ($655 million decrease); an estimated 4.6% decrease that reflects the net impact of the proposed temporary adjustment ($815 million decrease); and an estimated 0.5% decrease that reflects the effects of a proposed update to the FDL ratio ($90 million decrease),” the CMS fact sheet read. “CMS estimates that Medicare payments to HHAs in CY 2026 would decrease in the aggregate by 6.4%, or $1.135 billion, compared to CY 2025, based on the proposed policies.”

The National Alliance for Care at Home (the Alliance) stated that, while the organization supports improving the quality of care, the payment update is “flawed and shortsighted” and would increase costs to the American health care system.

“The sustainable delivery of home health care nationwide hinges on this critical rule. CMS has failed not just our providers, but the millions of Americans who depend on home health services—whether they are recovering after a hospital stay or managing chronic conditions in the place they are most comfortable—at home,” Dr. Steve Landers, CEO of the Alliance, said in a statement. “We are alarmed by the negligent proposed payment update, which deepens a heartless pattern of insufficient adjustments that have already led providers to close their doors and reduce services, and now threatens to further diminish care access by compelling more HHAs to take similar actions.”

CMS announced a permanent reduction of 4.059% to the CY 2026 home health payment rate, which it attributed to the impact of the patient-driven groupings model (PDGM).

This is the fourth straight year that CMS has instituted permanent payment cuts to home health payments.

“This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment,” the fact sheet read.

The proposed rule also included a one-time 5% cut to the 2026 national, standardized 30-day payment rate in an attempt to recoup overpayments from 2020 to 2024. The cut would collect approximately $786 million of the total temporary adjustment dollar amount, which totals about $14.8% of the calculated temporary adjustment amount for 2020 through 2024.

CMS said it anticipates needing to make additional temporary adjustments for 2025 and 2026, once data from those years is available.

Katie Smith Sloan, president and CEO of LeadingAge, an association of over 5,400 nonprofit aging services providers, said the proposed 6.4% cut would be a “death knell for many quality agencies.”

“CMS, since CY2023 has slashed payments by nearly 9%; add today’s more than 6% reduction, and for many agencies, especially the 7% of all who are nonprofit, the administration’s announcement is essentially pushing them to exit the business, close or severely limit services,” Sloan said in a statement. “Research shows that older adults want to age in home and in community. But for them, their families, and our mission-driven nonprofit members who serve them, today’s announcement, amplified by Congress, which is moving toward the largest Medicaid cuts in history, is a bleak indication of future home-based care options.”

Post-acute care provider AccentCare said in a Monday statement that payment cuts create “significant” access challenges for Medicare home health patients.

“CMS continues to rely on a payment methodology that does not adequately account for outlier-driven distortions that are contributing to the erosion of the Medicare home health benefit,” the company said in a statement. “Since the implementation of PDGM in 2020, payment levels have declined by more than 20%, and over 1,300 home health agencies have exited the program. This has created significant access challenges for patients who rely on Medicare home health services. We are committed to working with our state and national associations, and with providers across the country, to submit detailed, data-informed comments urging CMS to consider policy adjustments that protect beneficiary access and uphold the integrity of a budget-neutral home health payment model.”

Dallas-based AccentCare provides home care, home health, hospice and palliative services from over 250 locations in 32 states and Washington, D.C. 

The Alliance urged CMS to reevaluate the proposed rule and use its “full authority” to reevaluate the rule and update it to ensure continued delivery of home health care.

“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,” Landers said.

The full fact sheet on the proposed rule can be viewed here.

Other proposed changes

The proposed rule would also recalibrate PDGM case weights, including functional impairment levels, comorbidity adjustment subgroups and low utilization payment adjustment (LUPA) thresholds using data from 2024 to “more accurately pay for the types of patients HHAs are serving.”

CMS would also change the face-to-face encounter policy. The proposed rule would allow physicians to perform face-to-face encounters regardless of whether the physician is the certifying practitioner or whether they cared for the patient in the facility from which the patient was referred.

“This proposed change would align regulations more closely with the [Coronavirus Aid, Relief, and Economic Security Act] (CARES) Act language by removing the limitation on which physicians are allowed to complete the face-to-face encounter and broadening the number of practitioners who can perform the face-to-face encounter,” the fact sheet read.

The expanded home health value-based purchasing (HHVBP) model would also receive modifications in the proposed rule.

CMS would revise the Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey beginning with the April 2026 sample month.

Specifically, CMS proposes to remove three measures that are currently used in the expanded HHVBP model: care of patients, communications between providers and patients and specific care issues. It also proposes to add four measures to the applicable measure set, including three OASIS-based measures relating to bathing and dressing, one claims-based measure and the Medicare Spending per Beneficiary for the Post-Acute Care (PAC) setting measure.

The proposed rule would also include a request for information (RFI). The RFI would ask for feedback about “the addition of a respecified Falls with Major Injury measure as well as two potential changes to the HHCAHPS survey-based measures scoring rules and applicable measure set as they relate to the expanded HHVBP Model.”

Citing CMS’ continued focus on fraud, waste and abuse, the proposed rule would create several new Medicare provider enrollment provisions and revise others.

Specifically, the proposed rule would increase the grounds upon which CMS can revoke a provider retroactively to the date that the provider’s noncompliance began, allowing CMS to collect money that was paid to the provider since the beginning of its noncompliance.

It would also add bases for Medicare provider revocation or deactivation. This change would allow CMS to amend its regulations to revoke providers when beneficiaries say a provider did not provide the services they claimed. It would also allow CMS to deactivate providers’ Medicare billing practices when enrolled physicians and practitioners have not ordered or certified services for 12 consecutive months, which CMS said leaves billing numbers “vulnerable to use by bad actors.”

“We believe these changes would help reduce improper Medicare payments and protect beneficiaries,” the fact sheet read.

Editor’s note: A previous version of this story mistakenly referred to the proposed rule as a final rule.