Late Friday afternoon, the Centers for Medicare & Medicaid Services (CMS) released the CY 2026 Home Health Prospective Payment System Final Rule, finalizing a 1.3 percent aggregate reduction in Medicare payments to home health agencies. While this is well below the initially proposed 6.4 percent reduction released in June, it will still have a significant impact on provider networks, operations, and patient access to services across the country.

 

But CMS left nuggets of hope throughout the final rule signaling that the worst could be behind us in future rulemaking years; at least as it relates to rulemaking adjustments in response to the Patient Driven Groupings Model (PDGM) implementation.

 

CMS partially agreed with industry comments that behavior changes after CY2021 are unrelated to the implementation of PDGM. CMS acknowledged and agreed that beginning in CY2023, there were several factors contributing to provider behavior changes, making it difficult to distinguish between PDGM and Non-PDGM related changes. As a result, CMS finalized permanent adjustments in this rule based on data between CY2020 and CY2022.

 

Most significantly, CMS writes, "We are only finalizing the remaining permanent adjustment needed to account behavior change attributable to the implementation of the PDGM."

 

Although CMS gives itself flexibility to issue additional permanent adjustments in future years, this may close the door on any additional permanent adjustments in the coming years. All told, there is potential for over $2 billion in payments coming back into the system between now and 2030.

 

I don't want to minimize the impact any amount of payment reductions will have on your agencies. Nor should we pretend that CMS won't implement additional cuts, or policy changes detrimental to home health agencies. However, at least for a short time, the industry should take some level of comfort that there could be more stability in the years ahead.