This article is part of the HHCN+ membership
What was supposed to be a very dark Friday for home health care providers finally brought some sunshine.
That's because the Centers for Medicare and Medicaid Services (CMS) announced final Medicare payment rules that are significantly larger than those proposed this summer.
But that relief alone isn't enough for health care workers to fully exhale. The final rule included a 1.3% reduction in total Medicare payments to home health agencies.
But the real victory in the final rule is not that CMS rescinded the largest rate cut ever proposed. The most important victory was the revised methodology CMS used to make its decisions.
This change in methodology indicates that CMS has listened to industry advocates and commenters on the proposed rule. This suggests a future in which the final rule may be something providers look forward to rather than fear.
This week's members-only HHCN+ update explains why the final payment rule for home health care brings hope to a tense industry, and provides analysis and key takeaways, including:
– What this rule suggests about the future of home health payment rates
– Why the revised methodology is important
– Why a bright future cannot outweigh a dark present
Reasons for suppressed enthusiasm and hope
This update may be mostly about hope, but it doesn't miss the reality of the final rules. A cut is a cut. And the rules included cuts.
“At a time of rising labor costs, workforce shortages, and increasing patient complexity, these cuts significantly destabilize the benefits that millions of seniors rely on,” Dan Savitt, CEO and president of VNS Health, told HHCN. “Despite consistent evidence from hospitals, institutions, caregivers, and families, the final rule fails to recognize how repeated rate cuts are exacerbating the shortage of home health services for Medicare patients.”
So when I say CMS is listening, I'm listening like a cat listens. It hears you and listens, but mostly continues what it was trying to do anyway. The cat may not completely change course, but may take a few steps towards you.
This reduction will still reduce access to health care. Smaller agencies may not be able to withstand another year of lower rates and may close. Rural and underserved areas may be further underserved.
Still, these few steps CMS has taken are important.
I started to feel how important they are when I attended a webinar on Thursday.
“Under this new payment system, authorized payments should increase starting in 2026,” Dr. Steve Landers, CEO of the National Alliance for Care at Home, said in a webinar hosted by law firm Polsinelli. “They're not at the standard level that we think they should be. They're wrong about this, and they're not supporting the American people the way they should in terms of cost-effective and safe home health care options. But at least we're going to be moving upwards now, not backwards.”
Specifically, according to the fact sheet, CMS amended the proposed permanent adjustments after commenters (many of them) emphasized that behavioral changes after 2022 may be due to factors other than implementation of the PDGM, such as “the introduction of OASIS-E ratings, expansion of home health value-based purchasing, and increased penetration of Medicare Advantage.”
“This sector is not vibrant enough to respond to any kind of cuts,” Landers said. “But the fact is that we had $1 billion squeezed out of it. And the good news is, if you look at the way they wrote this article, this wasn't just a fluff. We actually got them to finally re-evaluate some of their methodology and how they're thinking about calculating budget neutrality for 2022 and beyond.”
The problem with this victory, of course, is that it will lead to more rulemakings being announced after 2026. That would be great, but not right now. Healthcare providers will have to pay their clinicians and assistants every day through 2026, but the 2027 increase won't help that. In the meantime, smaller providers may really not be able to bear further cuts to their revenue streams.
“Without Congressional intervention, these ongoing rollbacks (in the form of temporary adjustments) will impact the industry for years, limiting the ability of government agencies to expand, invest in technology, and serve people in need of care,” Molly Gurian, Leading Age's vice president of policy and government, told me in an email Monday. “It could even lead to mergers and closures. While the final rule is better than the proposed version, the combined 1.3% reduction and continued recall threatens access and stability for health care providers across the country.”
Investment in technology is now the lifeblood of home health care. I have repeatedly asked providers and stakeholders how agencies can cut margins and invest in innovative technology, and the answer has always been that it is the only way for providers to survive. Limiting technology investment for even one year can seriously undermine a company's sustainability and lead to trickle-down closures in a few years.
methodology
From a methodological perspective, CMS did not significantly overhaul some problematic elements.
On Monday, I heard from multiple providers that CMS needs to restart rulemaking and eliminate fraudulent data (the fraud that occurred in Los Angeles County, California is a common example I've heard).
“CMS has stated that it cannot exclude anomalous or fraud-tainted claims from payment calculations, allowing skewed data to continue to influence the nation's payment rates,” Accent Care said in a statement shared with me on Monday. “We urge CMS to act quickly against those who misuse these benefits and to use its time and manners authority to resume rulemaking to restore access and payment systems for beneficiaries as Congress intended.”
VNS Health CEO Savit echoed this call, saying:
“We urge CMS to use its authority to resume rulemaking, correct distorted data, and address abusive and exploitative practices affecting the home health payment system.”
I'll write more about the possible reinstatement of the rules in a future news article, but I'd like to give my current (but subject to change) opinion on the possible final rules. That possibility is very low. One recent example of CMS effectively changing policy due to industry influence is the controversial federal staffing mandate for nursing homes. This final rule was controversial and was published in April 2024 and then rescinded by an interim final rule in September 2025.
So while CMS sometimes makes dramatic policy changes, the reversal of nursing home staffing rules was prompted by the political changing of the guard that occurred as a result of the 2024 election.
Despite many calls for further recalculations, industry officials credit the agency's change in methodology to the advocacy efforts of home health leaders and groups like LeadingAge and the Alliance. These agencies, along with home health care providers, have almost unanimously said they will work with CMS and lawmakers to advocate for stronger home health benefits.
Perhaps the industry voice will be loud enough to prompt CMS to restart rulemaking, change methodology, and further improve the current state of home health care. But for now, the final rule's silver lining is bright enough. Although CMS did not act on all comments submitted on the proposal, the sharp contrast between the proposed and final versions shows that progress can and did occur.
