CMS on Nov 28 finalized updates to the 2026 Home Health Prospective Payment System, outlining a 1.3% pay cut, permanent and temporary adjustments tied to the patient-driven groupings model, and new policies aimed at easing administrative burden and reducing fraud.
Nine things to know:
1. CMS estimates total Medicare payments to home health agencies will decrease by $220 million in 2026 compared to 2025, a net reduction of 1.3%. This reflects a 2.4% payment update offset by multiple downward adjustments, including permanent and temporary behavioral offsets and outlier recalibrations.
2. CMS has finalized a permanent adjustment to account for differences between assumed and actual behavior changes following the implementation of the PDGM and 30-day payment units. The adjustment reflects data from 2020 through 2022 and was reduced from initial proposals after stakeholder feedback.
3. In addition to the permanent cut, CMS will apply a -3.0% temporary adjustment in 2026 to address retrospective overpayments related to PDGM assumptions. The cumulative temporary adjustment from 2020 to 2022 totals $4.76 billion.
4. CMS is updating case-mix weights and low utilization payment adjustment thresholds across all 432 PDGM payment groups using 2024 utilization data. Functional impairment levels and comorbidity subgroups are also being recalibrated to better reflect current patient profiles.
5. The agency finalized updates to the face-to-face encounter policy to align with the CARES Act. Physicians, nurse practitioners, physician assistants and clinical nurse specialists may now perform the required encounter, regardless of whether they are the certifying provider or saw the patient in a prior setting.
6. CMS is removing five assessment items from the home health quality reporting program, including the COVID-19 vaccine measure and items related to living situation, food and utilities. A revised home health consumer assessment of healthcare providers and systems survey will launch in April 2026, and limited extensions will be granted for reconsideration requests tied to extraordinary events like natural disasters or cyberattacks.
7. CMS is removing three HHCAHP-based measures from the home health value-based purchasing model and adding four new ones — three OASIS-based functional metrics and one claims-based spending measure. Weighting for measures has been updated, and a new removal criterion (“not feasible to implement”) was codified.
8. To reduce fraud and abuse, CMS said it will now expand retroactive revocation authority, deactivate billing privileges for dormant providers, and revoke privileges when beneficiaries report services weren’t rendered. These changes aim to prevent improper Medicare payments.
9. CMS is implementing stricter accreditation standards for durable medical equipment, prosthetic devices, prosthetics, orthotics and suppliers and accrediting organizations. Accreditation will now be required annually, and accrediting bodies must report more detailed data. These changes address long-standing vulnerabilities in the program. Suppliers with a 90% approval rate may qualify for prior authorization exemptions. CMS also announced changes to the DMEPOS competitive bidding program and will begin renting continuous glucose monitors and insulin pumps to ensure timely access to newer technologies.
