The Centers for Medicare & Medicaid Services issued its calendar year 2026 proposed rule for the home health prospective payment system on June 30, which would reduce home health payments by an estimated 6.4%, or $1.13 billion, in CY 2026 relative to 2025.
CMS released its proposed rule for the home health prospective payment system for calendar year 2026. The rule implements multiple payment reductions totaling 6.4% or $1.13 billion compared to 2025 levels. The update includes a 3.2% market basket update, reduced by a 0.8 percentage point cut for productivity. CMS proposes several additional reductions to achieve budget-neutral implementation of the Patient-driven Groupings Model: a 4.1% permanent reduction to the standard payment rate to prevent future overpayments, a temporary but indefinite 5.0% reduction to recoup past overpayments, and a 0.5% reduction related to high-cost outlier payments.
For the Home Health Quality Reporting Program, CMS proposes removing the measure assessing the percentage of patients receiving COVID-19 vaccinations. The agency also would remove four standardized patient assessment data elements focused on living situation, food and utilities. The rule includes requests for information on changing the data submission deadline for HH QRP data, advancing digital quality measures and new measure concepts for the HH QRP.
CMS also proposes adding four new measures to the HH Value-Based Purchasing Model: Medicare Spending per Beneficiary and three measures assessing patient functional improvement in dressing and bathing.
The American Hospital Association expressed ongoing concern about the impact these cuts may have on access to care for patients, including those being discharged from hospitals, noting that these negative payment updates come on top of numerous other reductions in recent years.
CMS will accept comments on the proposed rule for 60 days following publication in the Federal Register. AHA members will receive a Special Bulletin with additional details on the rule in the coming days.
This substantial payment reduction specifically impacts home health agencies' ability to serve Medicare beneficiaries at a time when hospitals are discharging patients who need continued care at home. The 6.4% cut represents a financial strain on home health providers who are already operating under previous payment reductions from recent years. This creates a potential bottleneck in the healthcare system where hospitals may struggle to discharge patients if home health services become less available due to financial constraints. The timing is particularly concerning as the healthcare system continues to manage post-pandemic recovery and an aging population that increasingly relies on home-based care as an alternative to institutional settings.
Home health agencies face financial pressure from this proposed 6.4% payment cut, which could limit access to post-acute care services that keep patients out of hospitals. Healthcare organizations should prepare comments for the 60-day public comment period and assess how these reductions might affect their discharge planning and patient care coordination strategies.
It could lead to reduced staffing or hiring freezes as agencies try to control costs.
Eligibility rules are not directly affected, but agencies may limit the types of services offered.
Rural agencies may be disproportionately affected due to smaller margins and limited resources.
If home health access declines, hospitals could face higher readmissions or delays in discharge planning.