This article is part of the HHCN+ membership
Home health care providers are reacting to a final rule released Friday as they face the largest ever proposed reduction in Medicare home health payment rates.
While the final rule includes a 1.3% cut in total Medicare payments to home health agencies, far short of the proposed 6.4% cut, home health officials are balancing good news with bad news. Experts told Home Health Care News that the cuts would still reduce access to care, and that questions remained about the methodology used to create the final rule.
Officials say they will continue to push for changes from Congress or for CMS to resume rulemaking.
Overall, the home care community expressed a dual feeling of relieved relief and a desire for greater change.
“While we acknowledge that CMS has made significant adjustments in the 2026 Home Health Perspective Payment System final rule in response to feedback from the Alliance and the home care community, this reduction will still have a negative impact on access to home care,” Dr. Steve Landers, CEO of the National Home Care Alliance, told HHCN in an email.
Landers emphasized that Medicare home health providers have been dealing with reimbursement cuts since 2019, which have already resulted in layoffs, agency closures, and reduced access to care.
Although the latest cuts are lower than proposed, they continue this trend and increase pressure on providers.
“While we appreciate that CMS has reduced the size of the cuts originally proposed, the $220 million reduction in Medicare home health payments still moves the industry in the wrong direction,” Justin Searle, president of home health at Bayada Home Health Care, told HHCN in an email. “For mission-driven health care providers like Bayada, annual workforce reductions make it more difficult to recruit and retain nurses and caregivers, maintain services in rural and underserved communities, and ensure that patients who can safely care at home continue to have that option available.”
Bayada, based in Pennsauken Township, New Jersey, is a global not-for-profit provider of home health care services.
Brent Korte, CEO of Dallas-based home health and hospice provider FrontPoint Health, praised the efforts of the home health industry and advocacy groups.
“That being said, while this is a relief for health care workers, clinicians, and patients, it ultimately does not cure the disease that the industry is addressing, which severely undervalues the value of home care,” Korte told HHCN in an email. “Until CMS, legislators, and payers understand the value of home care, I fear the industry will be stuck in a ‘Groundhog Day’ of payment reform.”
The proposed rule represents a 9% reduction for home health care providers, while the final rule represents a 4% reduction and is a “meaningful change,” according to a statement from VNS Health shared with HHCN.
“However, the final rule still results in a reduction in 2026, bringing the cumulative reduction since 2020 to nearly 14%, leaving home health agencies burdened with $4.7 billion in future cuts,” the company said. “Amid rising labor costs, workforce shortages, and increasing patient complexity, these cuts significantly destabilize the benefits that millions of older adults rely on.”
Based in New York City, VNS Health is a nonprofit provider of home and community-based health care services.
G. Scott Herman, founder and CEO of Fairview, Texas-based home health care provider New Day Healthcare, said the final cut of 1.3% was a “rational decision.”
“While we are satisfied that CMS considered comments from health care providers and determined rates in a reasonable manner, we believe that any reduction in the senior home care limit should be carefully evaluated,” Herman told HHCN in an email.
Effect of rules
Although the final reduction was much less drastic than the industry's worst-case scenario, industry participants still warned of the potential impact of further reductions in home health payment rates.
Lowering payment rates for home health care will impact providers' ability to serve older adults, said Molly Gurian, vice president of policy and government at LeadingAge, a nonprofit that provides services for seniors, including home health care.
“Our non-profit, mission-driven members have already absorbed significant reductions since 2016, when costs have been rising, so even this ‘improved’ number will put pressure on us if the agency needs more resources, rather than less,” Gurian told HHCN in an email. “Without Congressional intervention, these ongoing rollbacks will impact the industry for years, limiting the ability of government agencies to expand, invest in technology, and serve people in need of care. They could even lead to mergers and closures.”
Compass CEO Mike Aselta said continued interest rate cuts would put further pressure on an industry already in the throes of a labor crisis.
“Payroll and benefits make up the majority of costs for health care providers, and annual wage growth reflects the value and dedication of the care team,” Aselta told HHCN in an email. “Unfortunately, declining Medicare reimbursement rates threaten the economic viability of the workforce essential to providing this meaningful care. These reductions are especially difficult to reconcile given the proven value of home health services to both Medicare trusts and their beneficiaries.”
Based in Brentwood, Tennessee, Compassus provides home health, home infusion, palliative care, and hospice care services.
Bayada said he doesn't expect “one-time dramatic changes on any given day” because of the cuts included in the final rule, but the organization plans to continue implementing technology that eases documentation burdens and reduces readmissions and other adverse outcomes.
Additionally, Searle said Bayada will continue to evaluate its organizational structure to prioritize resources for front-line employees. In June, the organization laid off 10% of its headquarters staff due to repayment issues.
methodology
Home health officials also mentioned CMS' algorithm for determining Medicare payment rates. This topic came up repeatedly during the proposed year's public comment period.
“The real problem is that CMS sets payment rates using assumptions and analyzes that do not reflect what is actually happening on the ground, making the system easier for bad actors to exploit,” VNS Health said. “As a result, payments are lower than the actual cost of care, making it more difficult for seniors to receive the home health support they need.”
Landers said CMS' decision-making process has been improved over the proposed rule.
“We applaud CMS for reconsidering aspects of the materially flawed payment proposal, including the conclusion of a permanent payment adjustment through 2026 (using 2020-2022 data), based on the problems CMS acknowledged in separating PDGM behavior changes after 2023 from non-PDGM behavior changes,” Landers said.
“However, although CMS reduced the amount of overpayments informing temporary payment adjustments for CY 2020-2024 to $4.7 billion, home health agencies will continue to face several additional years of temporary adjustments without additional action,” he continued.
Commenters on the proposed rule often stated that rather than implementing across-the-board reductions in home health payment rates, CMS should target agencies that engage in billing fraud, as in the notable example of California. Other comments focused on other aspects of the organization's methodology, such as cost reports not representing the actual cost of care.
CMS responded to these comments in its final rule, stating that its methodology cuts out the top or bottom 1 percent of all home health agency cost reporting data to screen for questionable data. The group also said current policies do not allow for further cuts.
“Not all anomalous billing patterns are indicative of fraud, and additional evidence will be required to determine which providers with anomalous billing patterns may be engaging in fraud,” the final rule states. “Excluding data that some commenters considered 'anomalies' from the calculation of the national 30-day base payment rate would require CMS to develop a new policy that includes thresholds for determining which deviations are excluded from the analysis sample.”
A spokesperson for Accent Care told HHCN that CMS' failure to eliminate claims tainted by irregularities or fraud allowed “distorted data to continue to impact the nation's payment rates.”
Dallas-based AccentCare is a provider of personal care, home health, palliative care, and hospice services.
next step
Health care providers and advocacy groups called on Congress to take steps to protect Medicare home health benefits.
Acerta said systemic policy changes are needed to ensure access to home health care.
“We appreciate CMS’s willingness to ease proposed cuts to home health services,” Aselta said. “That said, we urge CMS to reevaluate its decision and eliminate all rate cuts while keeping seniors and Medicare trust at the forefront.”
Stakeholders including AccentCare and VNS Health called on CMS to resume rulemaking and update its methodology.
Health care providers and allies have some hope for the Home Health Stabilization Act of 2025. The bill would pause Medicare home health reimbursement rate reductions in 2026 and 2027 and give us time to “take a deeper internal look into how this happened,” Scott Levy, the alliance's chief government affairs officer, previously told HHCN.
“We cannot stand by and watch home health care face these false cuts,” Landers said. “Congress has an important role to play in ensuring long-term stability and maintaining access to quality home health care. We are urging further action to support and strengthen home health care, the most reliable, cost-effective, and patient-centered service in the Medicare program.”
