Proposed cuts to home health payments for 2026 could have somewhat of a ripple effect on hospices.

The U.S. Centers for Medicare & Medicaid Services (CMS) has called for a 6.4% aggregate cut to home health payments for 2026 in a proposed rule. The total reductions amount to $1.135 billion. 

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.”

While the cuts won’t affect hospices directly, providers should be watchful of what is happening in the home health space, according to Katie Wehri, vice president for regulatory affairs, quality & compliance at the Alliance. For one, what happens in home health is often a predictor for what happens in the hospice arena.

“We know that hospices tend to follow what happens in home health, and we see some changes in hospice now that were indicative of what’s happening in home health, things like fraud, waste and abuse, and CMS looking at how we can get standardized assessment here,” Wehri told Hospice News. “I also think there’s a patient perspective to it. If patients can’t get home health and they want additional services in the home, it’s not really natural to think, ‘Oh, they’re going to move just from home health to hospice,’ because they may not be at the end of life. But already, I am hearing from hospices that the patients they are getting are sicker.”

The proposed reimbursement changes for home health break down into a 2.4% increase in 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.

However, hospices may be somewhat shielded by statute, according to Hillary Loeffler vice president of policy & regulatory affairs for the Alliance.

“From a pure Medicare payment policy perspective, the statute instructs CMS to go do the cuts that they’ve been proposing [for home health]. So for hospice, there’s not that same authority for CMS,” Loeffler told Hospice News. “It’s slightly different from the home health statute. It’s a little more protected from some of the cuts we’re seeing in home health on that side in the law.”

The most significant impact of the home health cuts may be felt by providers who offer both hospice and home health services.

“If providers are trying to manage home health and trying to buffer that loss, they’re going to be looking at how they can do something with hospice for economies of scale and that type of thing,” Wehri said. “That could definitely happen, because they do look more holistically across service lines. If one area is taking a hit, what do I have to do with the rest of my segments to cover that?”