CMS Releases CY 2026 Home Health Proposed Rule with 6.4 Percent Rate Cut
(July 1, 2025) The Centers for Medicare and Medicaid Services (CMS) released its Calendar Year (CY) 2026 Home Health Proposed Rule on June 30th.
The rule projects a 6.4 percent aggregate reduction in Medicare payments to home health agencies in 2026, amounting to an estimated $1.135 billion decrease compared to 2025.
The CMS Fact Sheet states:
“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). 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.”
According to LeadingAge National, the proposed rule would make an aggregate -6.4 percent cut to the home health base payment. CMS is proposing a -4.059 percent permanent adjustment to the CY 2026 home health base payment rate.
Additionally, the temporary adjustment which has been accruing over the last several years now stands at $5.3 billion. If this were to be taken back in a single year, it would be a 35 percent reduction to the base payment, which CMS considers too much of a burden. Therefore, CMS is proposing to apply the first temporary adjustment in CY 2026 with an additional -5.0 percent on top of the proposed -4.059 permanent adjustment.
The minuscule market basket update for CY 2026 is proposed at only 3.2 percent. The estimated aggregate decrease for home health payments in CY 2026 is -6.4 percent, or -$1.135 billion.
Coupled with the -8.79 percent cut to the baseline since CY 2023, if this rule goes into effect, LeadingAge National believes this will threaten the very existence of non-profit, mission-driven home health. Between 2019 and 2023, the number of skilled home health agencies that treated more than 10 fee-for-service patients annually decreased or remained the same in 94.1 percent of U.S. counties. These are concerning statistics considering the growth in the older adult population and the focus on receiving care in the home. In addition to the devastating cuts, the rule includes removal of several measures in the Home Health Quality Reporting Program, Home Health Value-Based Purchasing quality measure set changes, and changes to the Conditions of Participation regarding all-payer Outcome and Assessment Information Set (OASIS) collection.
LeadingAge NY and National will share a more detailed analysis of the proposed rule after a thorough review of the document.
Contact: Meg Everett, meverett@leadingageny.org, 518-867-8871