By VDC staff
In a move raising alarm among home health advocates, the Centers for Medicare & Medicaid Services (CMS) on June 30 released a proposed rule that would reduce Medicare payments to home health agencies by nearly 9% in 2026 — the largest single-year cut since the agency adopted prospective payments more than two decades ago.
The proposed 2026 Home Health Prospective Payment System (HH PPS) rule includes a 3.7% permanent reduction, a 4.65% temporary “claw back” of prior payments, and a 0.5% technical adjustment. While the cuts are partially offset by a 2.4% increase mandated by statute, providers say the overall impact could be devastating — especially in rural states like Vermont.
“A cut of this magnitude is an existential threat to home health and hospice access for Vermonters,” said the VNAs of Vermont in a statement. “This proposal, if finalized, could force agencies to reduce services, lay off staff, or even close entirely — especially in low-volume, high-need rural areas.”
The cuts stem from CMS’s longstanding belief that home health agencies have been “overpaid” under a payment model implemented in 2020. CMS maintains it is required by law to adjust payments accordingly, but industry leaders, including the Alliance for Care at Home, strongly disagree.
In particular, providers are sounding the alarm over CMS’s intent to begin clawing back payments dating as far back as January 1, 2020. “The authority CMS has to implement retrospective clawbacks puts home health agencies at serious financial risk for years to come,” the VNAs of Vermont said.
Efforts in Congress to block or soften the cuts — including several bipartisan bills introduced in recent years — have so far failed to gain traction.
Beyond payment changes, the proposed rule would:
- Update the Home Health Quality Reporting Program
- Launch a new Home Health Consumer Assessment of Healthcare Providers and Systems
- Revise the Home Health Value-Based Purchasing Program
- Propose new Medicare provider enrollment requirements
One provision drawing praise is a proposed change to face-to-face encounter requirements, allowing any physician or non-physician practitioner — not just the certifying one — to conduct the required encounter, a move expected to ease compliance burdens.
CMS is accepting public comment on the proposed rule through late August.
See a full summary of provisions in the CY2026 Home Health Prospective Payment System proposed rule.