The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule for the 2026 Home Health Prospective Payment System (HH PPS), and the changes are significant. From payment cuts to new quality reporting measures, agencies must prepare now to navigate a shifting landscape. This article breaks down the highlights of the proposed rule and offers practical steps for home health agencies to stay ahead.
1. Proposed Payment Adjustments
One of the biggest takeaways from the 2026 proposed rule is the aggregate payment decrease of 6.4% compared to 2025. While CMS has included a 2.4% annual payment update, this is offset by:
- A permanent behavioral adjustment of about 4.059%
- A temporary adjustment recouping what CMS views as past overpayments (around 5.0%)
- Slight reductions in outlier payments through updates to the fixed-dollar loss ratio
For agencies, this means slimmer margins and the need to carefully analyze cost structures, staffing, and visit utilization.
2. PDGM Case-Mix and Visit Threshold Updates
CMS proposes recalibrations to the Patient-Driven Groupings Model (PDGM), which affect case-mix weights, comorbidity subgroups, and functional impairment levels. In addition, thresholds for Low Utilization Payment Adjustment (LUPA) episodes are expected to shift.
Agencies will need to revisit their coding, documentation, and scheduling strategies to ensure care delivery remains clinically appropriate while also financially sustainable.
3. Quality Reporting Program (HHQRP) Changes
The Home Health Quality Reporting Program (HHQRP) will also see changes in 2026:
- Removal of the COVID-19 vaccination measure and related OASIS item
- Elimination of several social determinants of health OASIS items (such as living situation, food, and utilities)
These changes may reduce reporting burden, but they also shift the dataset agencies use for quality monitoring. It’s critical to review dashboards and compliance reports to make sure they align with the new requirements.
4. Home Health Value-Based Purchasing (HHVBP) Expansion
The HHVBP Model will expand with new measures beginning in 2026:
- Three OASIS-based functional outcome measures (bathing, dressing, and toileting)
- A new claims-based measure: Medicare Spending per Beneficiary (Post-Acute Care)
These changes emphasize functional independence and cost efficiency. Agencies that deliver strong outcomes and control costs will be rewarded, while those with higher resource use may see penalties.
5. Compliance and Provider Enrollment
CMS is tightening provider enrollment and compliance rules, including:
- Expanded grounds for retroactive revocation of enrollment for noncompliance
- Possible deactivation of billing privileges if a provider does not certify or order services for 12 consecutive months
- Clarification that OASIS reporting applies to all-payer skilled patients, not just Medicare or Medicaid
Agencies must be proactive in monitoring compliance, conducting audits, and ensuring provider activity is up-to-date to avoid disruptions in billing and reimbursement.
6. Preparing Your Agency for 2026
With these changes on the horizon, agencies should take steps now to stay prepared:
- Run financial models to forecast the impact of payment cuts
- Tighten compliance protocols and internal audits
- Monitor quality outcomes to adapt quickly to HHVBP requirements
- Diversify referral sources and payer mix to buffer against Medicare payment volatility
- Engage in advocacy through associations and CMS comment periods to ensure agency concerns are heard
Final Thoughts
The 2026 CMS Home Health Proposed Rule presents both challenges and opportunities. While the payment reductions will put pressure on margins, agencies that strengthen compliance, optimize documentation, and focus on measurable outcomes can position themselves for long-term success.
Staying informed and proactive is the best defense against regulatory shifts. By planning ahead, your agency can not only withstand these changes but also continue to deliver high-quality care to the patients who depend on you.