2026 Medicare Home Health Prospective Payment Rule Finalized
(Dec. 2, 2025) The Centers for Medicare and Medicaid Services (CMS) finalized the Calendar Year (CY) 2026 Home Health Prospective Payment Rule on Nov. 28th. The final rule resulted in a net positive change of $915 million between the proposed rule’s rate reduction and the final version. While any cut is challenging for members, achieving such a large reduction in the proposed cut is a major advocacy win. LeadingAge National, LeadingAge NY, and the broader long term care community all voiced strong concern about the proposed 6.4% cut, which would have resulted in a $1.135 billion reduction for home health services. The final rate will impose a $220 million cut, which represents a 1.3% cut compared to last year's payment rule.
According to LeadingAge National, the final CY 2026 Home Health payment update includes an estimated 2.4% increase ($405 million increase), which is offset by an estimated 0.9% decrease that reflects the final permanent adjustment ($150 million decrease), an estimated 2.7% decrease that reflects the final temporary adjustment ($460 million decrease), and an estimated 0.1% decrease that reflects the updated fixed-dollar loss (FDL) ratio for outlier payments ($15 million decrease).
CMS made a significant change in its methodology for the rate. In relation to the permanent prospective payment adjustment based on behavioral assumptions relating to home health's transition to the Patient-Driven Groupings Model (PDGM), LeadingAge National argued that new behavioral incentives have been introduced since the introduction of PDGM, and it is impossible to distinguish whether providers’ behavior changes were due to PDGM or due to other factors. CMS agreed; they cannot effectively isolate the impacts of behavior due to PDGM versus other factors after CY 2022.
As a result, CMS recalculated the permanent prospective payment adjustment based only on years CY 2020-CY 2022; this is where they see the most behavior change and where they feel it can be clearly mapped to behavior related to PDGM. This change in approach resulted in the smaller permanent adjustment this year, and that calculation is finalized; it is not simply a delay. This change in approach caused a major shift in the rate. For several years now, CMS has "postponed" implementing these adjustments, and they have accumulated to a significant sum. LeadingAge National will advocate that future payment rules disregard the inclusion of the behavioral adjustments for 2023 and beyond, and that those postponed cuts not be implemented.
Please see the below resources:
- LeadingAge National Comments
- LeadingAge National, the National Alliance for Care at Home, LeadingAge NY, and over 150 home care and related health care provider associations sent a letter to congressional leaders calling for a pause of the rule.
- CMS Fact Sheet
- Full Rule Language
- LeadingAge National Statement on Final Rule
For those who were unable to attend the Home Health Member Network call on Dec. 2nd, LeadingAge NY will share the slides and notes directly. LeadingAge National will be providing a more detailed article on the rule shortly.
We greatly appreciate the advocacy of members on the 2026 Home Health Prospective Payment Rule and will continue to work to ensure reasonable payment rules moving forward.
Contact: Meg Everett, meverett@leadingageny.org