The U.S. Centers for Medicare & Medicaid Services has called for a 6.4% aggregate cut to home health payments for 2026 in a proposed rule released on Monday.

The total reductions amount to $1.135 billion. The proposed payment changes break down into a 224% increase in home health payments. This is offset by a 3.7% cut due to behavioral adjustments and a 4.6% cut related to updates of the Fixed Dollar Loss (FDL) ratio, which is used to calculate outlier payments for high-cost home health services.

The proposed rule had no hospice-specific provisions, though many hospice providers also offer home health services. In the past, CMS has occasionally included some hospice items in its home health rules.

The provider community was quick to react to the proposed cuts.

“CMS continues to rely on a payment methodology that does not adequately account for outlier-driven distortions that are contributing to the erosion of the Medicare home health benefit,” an AccentCare spokesperson told Hospice News in an email. “Since the implementation of [Payment-Driven Groupings Model] in 2020, payment levels have declined by more than 20%, and over 1,300 home health agencies have exited the program. This has created significant access challenges for patients who rely on Medicare home health services.”

Dallas-headquartered AccentCare provides hospice, home health, personal and palliative care across 32 states and in the District of Columbia. The company has an average annual census of more than 200,000 patients. AccentCare is a portfolio company of the private equity firm Advent International.

This is the fourth straight year in which CMS has cut or proposed to cut home health payments. Due to this proposed rule, the agency has “failed” providers, according to Dr. Steven Landers, CEO for the National Alliance for Care at Home.

“The sustainable delivery of home health care nationwide hinges on this critical rule. CMS has failed not just our providers, but the millions of Americans who depend on home health services — whether they are recovering after a hospital stay or managing chronic conditions in the place they are most comfortable — at home,” Landers said in a statement shared with Hospice News. “We are alarmed by the negligent proposed payment update, which deepens a heartless pattern of insufficient adjustments that have already led providers to close their doors and reduce services, and now threatens to further diminish care access by compelling more HHAs to take similar actions.” 

The proposal also contained a one-time 5% cut to the 2026 national, standardized 30-day payment rate to recoup overpayments from 2020 through 2024.

In addition to the proposed payment updates, the rule would recalculate PDGM case rates, modify the home health value-based purchasing (HHVBP) model and make revisions to the Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey, including the removal of three measures.

It also proposed changes to CMS’ face-to-face encounter policy for home health agencies, allowing physicians to perform those encounters regardless of whether they were the certifying practitioner or whether they cared for the patient in the referring facility.

CMS also included some provisions to address fraud, waste and abuse. It would allow CMS to revoke providers’ Medicare status if patients indicated that they did not receive the services included in their billing and claims, among other conditions. It would also allow CMS to retroactively recoup payments to home health providers with revoked status to the beginning of their noncompliance.