This article is part of the HHCN+ membership
On Monday, the Centers for Medicare and Medicaid Services (CMS) in the US announced its proposal for the 2026 home health payment rules. Providers and industry advocates immediately spoke out to warn of risks associated with “the biggest reductions proposed to date.”
Home healthcare centers called the proposed reductions “catastrophic” and “the issue of life and death.” The industry's response to the rules came on the day the Senate passed a major tax and spending bill. This has significantly reduced Medicaid budgets.
If the proposed payment rules are completed as is, the provider will have a direct impact on the patient and their business.
“We're going to have to run out of care,” Beau Sorensen, Chief Operating Officer of First Choice Home Health & Hospice, told Home Health Care News via email. “Since the launch of (Pattern-Rated Grouping Model) (PDGM), we have been able to reduce our overall office costs by 50%, but we have reduced all the fats outside of clinical care. We hope that we will maintain margins and patients receive care to maintain patient visits.
Founded in 1996, Utah's First Choice Home Health & Hospice serves the Wasatchfront area. In addition to providing core home health and hospice, the provider offers a variety of Medicare Part B services
As part of the proposed rules, CMS is calling for an overall 6.4% reduction in home health payments. This will lead to a projected decline of $1.135 billion compared to 2025.
The proposed rule includes a 2.4% update, an increase of $425 million. It also includes a 3.7% decrease due to behavioral adjustments and a 4.6% decrease reflecting the net impact of the proposed temporary adjustments. Plus, a 3.2% market basket update.
According to Dr. Steve Landers, CEO of the National Alliance for Home, the total impact of the proposed rules will be even greater than the 6.4% total cut. Following an official statement from the alliance on Monday, the Landers explained why the move from the CMS is equivalent to “life and death.”
“The proposed payment reductions are devastating and represent the fundamental obstacles to understanding providers and patients facing realities from CMS,” he told HHCN in an email. “6.4% is actually a 9% payment reduction in the 30-day base payment rate. This is a permanent cut of 4% and a temporary cut of 5%, the biggest cut proposed. If half of all US counties are seeing payment reductions over $1 billion when they already lose their home healthcare, this is a false issue in policy.
A broad fallout from proposed rules
Bayada Home Health Care, a company that has built a strong presence in the care advocacy field at home bases, has expressed disappointment with the proposed reductions.
“Hearts for Home Care is deeply interested in yet another proposed reduction in Medicare home health payments,” Dave Totaro, president and executive director of Hearts for Hearts in Bayada, told Home Health Care News in an email. “Every year, our role becomes more important as more individuals choose to recover from home. They are often discharged earlier than ever. However, CMS continues to underestimate this critical care by suggesting reductions that threaten their ability to serve those who are most in need.
Bayada offers home health, home care, hospice and behavioral health services in 23 states. The company also has international locations operating in Germany, India, Ireland, New Zealand and Korea. Bayada has approximately 32,000 employees nationwide.
Bayada's recent layoffs serve as an example of the relationship between refund challenges and staffing. Totaro further highlighted the possibility of limiting access to this connection and care.
“Talent professionals are being forced out of their home health to hospitals and nursing facilities, where they often receive high pay, further weakening the system of commitment relying on them,” he said. “As inflation and service costs rise, continuous reductions in CMS risk enforce vulnerable individuals into more expensive and less priority institutional care. It's time for CMS to recognize that home health care is not merely cost-effective. It doesn't propose year-to-year cuts, but rather invest in strengthening this critical service to maintain the most fragile neighbours.”
Home hygiene is a small segment of its business, but Derby Anderson, Chief Government Officer at Addus HomeCare Corporation (NASDAQ: ADUS), described the cuts as “devastating.” Anderson also targeted the methodology CMS uses to determine budget neutrality.
“CMS continues to pay for home care based on flawed methodologies that do not provide the real cost of providing home care, nor does it provide the impact of Medicare's low (MA) rate,” he told HHCN in an email.
Based in Frisco, Texas, Addus provides home health, home care and hospice services to more than 62,000 consumers through 257 locations in 23 states.
Anderson is not alone in his view. For many years, home health advocacy organizations and stakeholders have opposed CMS' budget neutrality methodology.
The alliance, then known as the National Association of Home Care and Hospice (NAHC), appealed to the U.S. Department of Health and Human Services (HHS) on two separate occasions on the issue.
Anderson also noted that unlike the cuts over the past few years, CMS imposes some implementation of temporary cuts, exacerbating the impact of the proposed cuts in 2026.
“This clawback is regaining this whole cut across the industry, meaning that current providers will pay a portion of this cut from providers who have stopped operating, including those guaranteed,” he said.
Landers also noted that CMS data is inconsistent with policy decisions regarding the proposed rules.
“Medicare home health costs have been down year-on-year since 2020, but CMS continues to insist that they are paying too high,” he said. “This disconnect between data and policies, coupled with unprecedented inflationary pressures and previous inadequate adjustments already forced to close, represents the latest steps to systematically dismantle the home health safety net.”
Industry Partners condemn the proposed rules
Home health providers aren't the only ones expressing concern about the proposed cuts. Companies such as prominent industry partners like Axxess and Wellsky also weighed them.
Deborah Hoyt, Senior Vice President of Public Policy at Axxess, believes that CMS policymakers didn't take the big picture into consideration.
“Even considering the mix of traditional Medicare, Medicare advantages and full Medicaid home health provider payers will not result in calculations that reduce provider reimbursements for 2026 or any year under the PDGM payment system,” Hoyt told HHCN in an email. “Our advocacy is clear and consistent that CMS must consider MA and align the value of home healthcare delivery by rooting a small percentage of fraudulent players in correct federal policy decisions.”
Axxess is a home-based care technology company that provides cloud-based software solutions to agents. The Dallas-based company works with over 9,000 organizations serving more than 5 million patients worldwide.
Ultimately, Welsky's Chief Clinical Officer Tim Ash believes the proposed rules threatens to “dampen” access to critical care for millions of people.
Based in Overland Park, Kansas, Welsky is an acute technology company that uses software and analytics to help providers achieve better results at lower costs. The company is working with approximately 20,000 home health providers.
“These proposed cuts come when home healthcare providers are already struggling to meet the growing demand for home care,” he said in an email. “A further payment reduction jeopardizes our ability to recruit and retain qualified staff, invest in technology and provide high quality care. Home health providers are developing innovative ways to enable patients to receive care for their home and age, advancing their healthcare services needs.
