CY 2026 Home Health Final Rule Overview

Late this afternoon, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2026 Home Health Final Rule. Under the finalized policies, Medicare payments to home health agencies (HHAs) will decrease by an estimated 1.3%, or $220 million, compared to CY 2025.

The final payment update includes:

• +2.4% payment update ($405 million increase)
• -0.9% permanent budget neutrality adjustment ($150 million decrease)
• -2.7% temporary budget neutrality adjustment ($460 million decrease)
• -0.1% update to the fixed-dollar loss (FDL) ratio for outlier payments ($15 million decrease)

Taken together, these adjustments result in a net -1.3% overall payment reduction for CY 2026. This marks the fourth consecutive year in which CMS has ultimately backed off from significantly deeper proposed cuts.

Comparison to the Proposed Rule

In June, CMS proposed an aggregate -6.4% payment update, which would have resulted in an estimated $1.135 billion reduction compared to CY 2025. The proposal included:

• +2.4% annual payment update
• -3.7% permanent budget neutrality adjustment
• -4.6% temporary adjustment
• -0.5% decrease related to the proposed FDL ratio update

Impact on Providers and Access to Care

While CMS has scaled back from what would have been truly devastating payment reductions, a 1.3% overall reduction in payments will still have a significant impact on provider operations and patient access to care. Continued financial pressure is likely to drive further service reductions, additional home health agency closures, and more patients waiting in higher-cost care settings instead of receiving care at home.

Key Resources

• Final Rule (Federal Register)
• CMS Fact Sheet
• Wage Index Tables & Supporting Materials

The Home Care Alliance will continue to review the full scope of the Final Rule and provide additional analysis in the coming days. Members with questions are encouraged to reach out to the HCA team.