CMS Proposes 6.4% Cut to Home Health Services

On Monday, the Centers for Medicare and Medicaid Services (CMS) published the proposed home health prospective payment system rule for 2026, which would substantially cut Medicare payments to home health agencies.

The prospective payment system update calls for a 6.4% cut to home health payments in 2026, or roughly $1.135 billion. Hospice News explains that the cuts break down into a 2.24% increase in payments offset by a 3.7% cut due to behavioral adjustments and a 4.6% cut related to the fixed dollar loss (FDL) ratio, used to calculate outlier payments.

The behavioral adjustment is related to the Patient-Driven Groups model, which was introduced in 2020 and based on patient characteristics and needs rather than total number of visits. Modern Healthcare reports that the adjustments are intended to recoup overpayments from potential upcoding.

According to the March 2025 MedPAC Report to Congress, in 2023, 2.7 million traditional Medicare beneficiaries received home health care and the program spent $15.7 billion on those services.

In recent years, home health care use has been rising for Medicare Advantage enrollees, though it tends to be used more frequently by traditional Medicare beneficiaries. In a Q&A, Leonard Davis Institute of Health Economics at University of Pennsylvania Executive Director Rachel M. Werner explains how home health care works within the broader Medicare system:

Home health care may increasingly be used to fill gaps in a long-term care system that remains fragmented and underfunded — especially for those who are not dually eligible and therefore lack access to Medicaid-funded home- and community-based services… It is still unclear whether we are moving toward a more person-centered long-term care model, or shifting responsibilities onto programs — and families — that may not be equipped to handle them.

CMS also proposes to remove the measure assessing the percentage of patients receiving COVID-19 vaccinations, the American Hospital Association notes. the agency intends to remove four standardized patient assessment data elements focused on living situation, food and utilities. CMS will accept comments on the proposed rule for 60 days.

The fact sheet for the proposed rule may be reviewed at the CMS website.