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After fighting many battles against repeated Medicare payment cuts year after year, home health providers and industry advocates may have finally received the pathway to an armistice.
This came in the form of new legislation that, if passed, would halt cuts to the Medicare home health reimbursement rate for 2026 and 2027.
The Home Health Stabilization Act of 2025 was introduced last week by Representatives Kevin Hern (R-Okla.) and Terri Sewell (D-Ala.), and calls for the Secretary of Health and Human Services to apply a positive payment adjustment to counteract the 2026 proposed home health rule, which marks “the largest cut ever proposed.”
The bill has received strong support from home health stakeholders and advocates such as LeadingAge and the National Alliance for Care at Home (the Alliance) due to its ability to “relieve payment pressure” and “correct methodological errors.”
Since the bill was introduced, I’ve been pondering what home health agencies could do with a two-year reprieve. With stabilized Medicare rates, providers would finally have the breathing room to invest strategically and channel funds into initiatives that could future-proof their businesses. Allocating funds to workforce development pipelines and innovative technology could be a game-changer, reducing gaps in care.
Of course, those opportunities hinge on the bill’s passage. I reviewed the fates of other, similar bills to determine the precedent for this bill – and it’s far from guaranteed.
In this week’s exclusive, members-only HHCN+ Update, I’ll discuss why providers are excited about the new legislation and offer my predictions, including:
— How the Home Health Stabilization Act of 2025 could help the industry address its biggest pain point.
— The likelihood of this bill passing.
— Whether the legislation is sufficient to reshape the home health industry.
Ending the staffing shortage, improving efficiency
All signs point to the fact that the demand for home health care services isn’t slowing down anytime soon. However, we have often reported on how providers can’t always take on all of the patients that need these services.
Last year, Activated Insights found that 63.3% of providers turned down cases in 2023.
In 2023, we reported that the home health industry had a 42% referral rejection rate prior to the pandemic. That percentage had skyrocketed by more than 30% at the time of our report, according to data from WellSky.
We also saw widening gaps between referrals to the home health settings and providers’ capacity to take on new patients in the previous years.
The reason for the gap always remains the same — staffing.
Providers aren’t able to recruit enough staff to match the need for care. In fact, providers have sometimes been forced to make cuts to their staff.
Leaders have been vocal about how not having enough staff has impacted care.
Recently, Marisa Crecelius, deputy general counsel for the Pennant Group (Nasdaq: PTNG), explained that the proposed rule would worsen staffing shortages, especially since home health already has trouble competing with health systems and long-term care facilities for talent.
Indeed, in the past, I’ve written about how home-based care providers are often swimming in the same pool as hospitals when it comes to recruiting nurses.
“Hospitals are larger and have a better paying ability,” Rosanne Zabka, director of reports for the Hospital & Healthcare Compensation Service, told me at the time. “They have a better class of benefits because what the [nurses] receive is part of what the entire hospital packages for their physicians, etc. They have more funding under their belts versus a mom-and-pop home health agency that’s just as a single owner.”
If the Home Health Stabilization Act of 2025 were to pass, home health providers would be able to operate in a more stable reimbursement environment for a few years.
During this time, instead of looking for areas to cut costs, providers would be able to earmark more funds for higher staffing wages, as well as more attractive benefits packages. They could also focus on funding initiatives that would allow them to cultivate their own talent pools.
We are already seeing some providers do this. CenterWell Home Health, Humana’s (NYSE: HUM) home health provider arm, is one example. The company created the CenterWell Home Health Home Lab in partnership with Emory University’s nursing school in 2022.
This move was a proactive measure to strengthen the company’s talent pipeline. Granted, CenterWell is part of a massive company that has deep pockets, but I predict more home health leaders will form their own creative strategies to address the staffing crisis if they aren’t worried about the future survival of their business.
In addition to spurring more investments in staffing supports, a pause on home health cuts could create a cascade of technological investment.
Experts have told CMS that cuts to the home health reimbursement rate could limit providers’ abilities to invest in new technologies.
“What the policy makers need to understand is our operating surplus is part of our innovation fund,” Mike Johnson, chief researcher of home care innovation at Bayada Home Health Care, said on a Home Health Care News webinar. “How are we going to get better? We self-fund, we self-invest, we’re happy to do it. But we need to think about surplus as more than just money that’s going into the bank account of executives.”
Getting a two-year reprieve would therefore give home health agencies the opportunity to pour into their technology wishlist. Refreshed technology would improve efficiencies and thereby prepare providers for reimbursement rate cuts or other headwinds in the years to come.
Likelihood of passing
Home health stakeholders are, understandably, excited about the Home Health Stabilization Act of 2025, having been vocal about the damage that cuts would do to the industry. Hern and Sewell have referred to the bill as a “lifesaver” and “lifeline” respectively.
Still, it’s also important for providers to weigh the likelihood of the bill being passed and finalized. This isn’t the first time we’ve seen legislation aimed at pausing or stopping Medicare payment cuts.
At the start of the year, Rep. Andrew Clyde (R-Ga.) introduced resolution H. J. RES. 58 for congressional disapproval of the 2025 home health payment rule. H.J. RES. 58 was referred to the Committee on Ways and Means and the Committee on Energy and Commerce, but did not go further.
In 2023, Congresswoman Terri Sewell introduced S. 2137 and H.R. 5159 to eliminate the rate cuts. After being referred to committees, neither bill advanced.
In 2022, S.4605, the Preserving Access to Home Health Act of 2022, was introduced. The bill restricted CMS from lowering payments for Medicare home health services based on certain adjustments until 2026. The bill was read twice and referred to the Committee on Finance, but did not go any further.
If past legislation is any predictor of the future, the Home Health Stabilization Act of 2025 may not go the distance.
Even if the bill passes, it is worth asking if it goes far enough.
As it stands, the bill pauses cuts to the reimbursement rate for 2026 and 2027. Yet, the industry has seen consistent cuts for the last several years.
Stretching the timetable of the bill to address the past five years could have been a major game-changer for providers, potentially reshaping the industry and preparing providers to care for the increasingly aging population.
However, given the state of industry, the passage of legislation is a step in the right direction. My colleagues and I at Home Health Care News will be monitoring the bill closely for updates in the coming weeks and months.
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