Calendar Year (CY) 2026 Home Health Prospective Payment System Proposed Rule Fact Sheet (CMS-1828-P)

On June 30, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes updates to Medicare payment policies and rates for home health agencies (HHAs) under the Home Health (HH) Prospective Payment System (PPS) Proposed Rule for calendar year (CY) 2026. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for HHAs annually. This fact sheet discusses the major provisions of the proposed rule.

As required by the Bipartisan Budget Act of 2018, which amended section 1895(b) of the Social Security Act (the Act), this rule proposes a permanent prospective adjustment to the CY 2026 HH payment rate of -4.059% to account for the impact of implementing the Patient-Driven Groupings Model (PDGM). This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment. In addition to the proposed permanent adjustment, CMS is also proposing to apply a -5.0% temporary adjustment on a prospective basis to the CY 2026 base payment rate, in accordance with statutory requirements to recoup retrospective overpayments. We are not proposing that the -5.0% temporary adjustment would be applied each year after CY 2026. Rather, we will continue to analyze the data each year through CY 2026 claims as required by law, and, in a time and manner deemed appropriate, we will propose one or more additional temporary adjustments to account for retrospective overpayments.

In addition, CMS is proposing to recalibrate the PDGM case-mix weights; update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups; and update the fixed-dollar loss (FDL) for outlier payments for CY 2026. This rule also proposes changes to the face-to-face encounter policy to broaden the language to align with language in the Coronavirus Aid, Relief, and Economic Security Act, 2020 (CARES) regarding which practitioners can perform the face-to-face encounter.

The actions CMS is taking in this proposed rule would help improve patient care and protect the Medicare program’s sustainability for future generations. 

CY 2026 Proposed Payment and Policy Updates for HHAs 

This rule proposes routine, statutorily required updates to the HH payment rates for CY 2026. The proposed CY 2026 updated rates include the proposed CY 2026 HH payment update of 2.4% ($425 million increase); an estimated 3.7% decrease that reflects the net impact of the proposed permanent behavior adjustment, required by statute, ($655 million decrease); an estimated 4.6% decrease that reflects the net impact of the proposed temporary adjustment ($815 million decrease); and an estimated 0.5% decrease that reflects the effects of a proposed update to the FDL ratio ($90 million decrease). CMS estimates that Medicare payments to HHAs in CY 2026 would decrease in the aggregate by 6.4%, or $1.135 billion, compared to CY 2025, based on the proposed policies. 

PDGM and Behavior Assumptions 

On January 1, 2020, CMS implemented the HH PDGM and a 30-day unit of payment, as required by section 1895(b) of the Act, as amended by the Bipartisan Budget Act of 2018. The PDGM better aligns payments with patient care needs, especially for clinically complex individuals. The law required CMS to make assumptions about behavior changes that could occur because of the 30-day unit of payment and the PDGM. CMS finalized three behavior assumptions in the CY 2019 HH PPS final rule: clinical group coding, comorbidity coding, and the LUPA threshold. The law also requires CMS to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and to make temporary and permanent increases or decreases, as needed, to the 30-day payment amount to offset such increases or decreases. Additionally, in the CY 2019 HH PPS final rule (83 FR 56455), CMS stated that we interpret actual behavior change to encompass both behavior changes that were previously outlined, as assumed by CMS when determining the budget-neutral 30-day payment amount for CY 2020, and other behavior changes not identified at the time the 30-day payment amount for CY 2020 was determined. 

In the CY 2023 HH PPS final rule (87 FR 66790), CMS finalized a methodology for analyzing the impact of the differences between assumed and actual behavior changes on estimated aggregate expenditures and calculated levels of actual and estimated aggregate expenditures. Using this methodology, CMS applied a permanent adjustment to the 30-day payment rate in CYs 2023-2025, though the adjustments finalized represented only half of the permanent adjustments calculated at the time: 

For the CY 2026 HH PPS proposed rule, using CY 2024 claims and the finalized methodology, CMS determined that Medicare still paid more under the new system than it would have under the old system. Therefore, we are proposing an additional permanent adjustment of -4.059% to be made to the 30-day base payment rate. This proposal would continue to satisfy the statutory requirements at section 1895(b)(3)(D)(ii) of the Act to offset any increases or decreases on the impact of differences between assumed behavior and actual behavior changes on estimated aggregate expenditures, reduce the need for any future large permanent adjustments, and help slow the accrual of the temporary payment adjustment amount. The proposed permanent adjustment is also anticipated to lessen any potential temporary adjustment(s) in future years. 

Section 1895(b)(3)(D) of the Act directs CMS to make any future permanent or temporary adjustments in a time and manner determined appropriate through analysis of estimated aggregate expenditures through CY 2026. Therefore, we are also proposing to implement a temporary 5.0% reduction to the CY 2026 national, standardized payment rate. This proposal would begin recoupment of the retrospective overpayments for CYs 2020 through 2024. Currently, the calculated temporary adjustment amount for CYs 2020 through 2024 is approximately $5.3 billion. A 5.0% reduction to the CY 2026 30-day payment rate would collect approximately $786 million of the total temporary adjustment dollar amount, equating to about 14.8% of the total $5.3 billion. We anticipate that we would need to make additional temporary adjustments for CY 2025 and 2026, once data for those years are available. We would not include the -5.0% temporary adjustment applied for CY 2026 when calculating the CY 2027 base payment rates, as the law requires us to analyze the claims data each year through CY 2026. Additionally, the law states that the temporary adjustment is to be applied only with respect to the year for which such temporary increase or decrease is made. However, to continue recoupment of the retrospective overpayments, we may propose additional temporary adjustments in future rulemaking. Given that the temporary adjustment has been accruing at approximately $1 billion per year since CY 2020, we believe beginning to adjust the base payment rate now to account for the calculated temporary dollar amount to date may help reduce the need for a larger reduction in future years. 

Recalibration of PDGM Case-Mix Weights

Each of the 432 payment groups under the PDGM has an associated case-mix weight and LUPA threshold. CMS’ policy is to annually recalibrate the case-mix weights and LUPA thresholds using the most complete utilization data available at the time of rulemaking. In this proposed rule, CMS is proposing to recalibrate the case-mix weights — including updating the functional impairment levels, comorbidity adjustment subgroups, and LUPA thresholds using CY 2024 data to more accurately pay for the types of patients HHAs are serving. 

Proposed Changes to the Face-To-Face Encounter Policy

Section 3708 of the CARES Act amended sections 1814(a) and 1835(a) of the Act to allow nurse practitioners (NPs), clinical nurse specialists (CNSs), and physician assistants (PAs) (as those terms are defined in section 1861(aa) of the Act), to order and certify patients for eligibility under the Medicare home health benefit and establish a plan of care. CMS is proposing to change the face-to-face regulation to allow physicians, in addition to NPs, CNSs, and PAs, to perform the face-to-face encounter regardless of whether they are the certifying practitioner or whether they cared for the patient in the acute or post-acute facility from which the patient was directly admitted to home health and who is different from the certifying practitioner. This proposed change would align regulations more closely with the CARES Act language by removing the limitation on which physicians are allowed to complete the face-to-face encounter and broadening the number of practitioners who can perform the face-to-face encounter.

Home Health (HH) Quality Reporting Program (QRP) 

CMS is proposing to remove the COVID-19 Vaccine: Percentage of Patients Who Are Up to Date Measure and the corresponding Outcome and Assessment Information Set (OASIS) data element. CMS is also proposing the removal of four assessment items in the standardized patient assessment: one Living Situation item, two Food items, and one Utilities item. This rule also proposes revising the reconsideration policy to allow providers to submit a request for reconsideration of an initial determination of noncompliance if they can demonstrate compliance. CMS proposes implementing a revised Home Health Consumer Assessment of Healthcare Providers and Systems® (HHCAHPS) survey beginning with the April 2026 sample month. Finally, this rule also proposes updates to the regulatory text to account for all-payer data submission of OASIS data. CMS is seeking information on a change to the final data submission deadline period from 4.5 months to 45 days. CMS is also seeking feedback on the digital quality measurement (dQM) transition for HHAs and the adoption of health information technology (IT), and standards including Fast Healthcare Interoperability Resources (FHIR). Finally, CMS is seeking input on future HH QRP quality measure concepts of interoperability, cognitive function, nutrition, and patient well-being.

Expanded Home Health Value-Based Purchasing (HHVBP) Model

Changes to the Applicable Measure Set

Beginning April 2026, CMS is proposing changes to the HHCAHPS survey. These changes affect the survey questions used to calculate three measures that are currently used in the expanded HHVBP Model. Due to the proposed changes to the HHCAHPS survey, CMS is proposing to remove these measures: 

• Care of Patients,
• Communications between Providers and Patients, and   
• Specific Care Issues. 

CMS is also proposing the addition of four measures to the applicable measure set. This includes three OASIS-based measures related to bathing and dressing, and one claims-based measure, the Medicare Spending per Beneficiary for the Post-Acute Care (PAC) setting measure.

Due to the changes to the Model’s applicable measure set, CMS is proposing to alter the current weights of individual measures and measure categories.

Additionally, CMS is proposing to add and codify an additional measure removal factor at § 484.358, Factor 9: It is not feasible to implement the measure specifications.

HHVBP Quality Measure Concepts Under Consideration for Future Years – Request for Information (RFI)

CMS is including in the proposed rule an RFI that would build on input from the expanded HHVBP Model’s Implementation and Monitoring technical expert panel (TEP). We are specifically asking for feedback about the addition of a respecified Falls with Major Injury measure as well as two potential changes to the HHCAHPS survey-based measures scoring rules and applicable measure set as they relate to the expanded HHVBP Model.

Medicare Provider Enrollment

In its ongoing efforts to prevent fraud, waste, and abuse, CMS is proposing several new and revised provider enrollment provisions. We believe these changes would help reduce improper Medicare payments and protect beneficiaries. Our principal proposals include, but are not limited to, the following:

• Retroactive Revocations – Under current regulations, certain Medicare enrollment revocations become effective prospectively – specifically, 30 days after the date that CMS or the CMS contractor mails notice of the revocation to the affected provider or supplier (hereafter “provider”). However, there are several grounds for which CMS can revoke a provider’s enrollment retroactively to the date the provider’s noncompliance began. Retroactive revocation allows CMS to collect monies that have been paid to the provider since the beginning of its noncompliance. For this reason, we are proposing to increase the number of grounds for which CMS can revoke a provider retroactively. We believe this proposal would help ensure taxpayer money is paid only to legitimate, compliant providers.
• Adding Bases for Revocation or Deactivation – CMS has seen situations where: (1) beneficiaries attest that a provider did not furnish them the service(s) they claimed; and (2) enrolled physicians and practitioners have not ordered or certified services for 12 consecutive months, leaving their billing numbers vulnerable to use by bad actors. Therefore, CMS is proposing to amend its regulations to revoke providers in the first situation and deactivate their Medicare billing privileges in the second. 

Durable Medical Equipment, Prosthetic Devices, Prosthetics, Orthotics, & Supplies (DMEPOS) Accreditation

As part of CMS’ longstanding and ongoing efforts to address DMEPOS fraud, waste, and abuse, DMEPOS suppliers must be accredited by a CMS-approved accrediting organization (AO) to enroll in and bill Medicare. The purpose of accreditation is to confirm that the supplier meets the DMEPOS quality standards.^[1] However, the CMS DMEPOS accreditation regulations have not been updated since their original promulgation in 2006, and we believe that program integrity vulnerabilities have risen substantially in the DMEPOS accreditation program over the years. 

We are particularly concerned that there may be instances where: (1) AOs are accrediting DMEPOS suppliers that do not meet the DMEPOS quality standards; and (2) DMEPOS suppliers are falling out of compliance with the quality standards (sometimes for extended periods) after becoming accredited. As a result, we are concerned for beneficiaries’ health and safety when they utilize such suppliers, as well as for the many millions of Medicare dollars that may have been paid to noncompliant suppliers since 2006. Therefore, we are proposing to update and enhance our regulations so we can exercise greater scrutiny over DMEPOS suppliers and the AOs.   

Our specific proposals center around two general principles:

• More Frequent DMEPOS Supplier Surveys and Reaccreditations – Currently, DMEPOS suppliers are resurveyed and reaccredited every three years. We are proposing to require DMEPOS suppliers to be resurveyed and reaccredited annually.   
• Stricter Requirements for Becoming and Remaining a DMEPOS AO – CMS proposed provisions regarding stronger oversight of the AOs include, but are not limited to:
  • Increasing the amount, specificity, and frequency of data that AOs must submit to CMS;
  • Expanding CMS’ ability to closely monitor and review AOs’ operations; and
  • Strengthening CMS’ ability to act against poorly performing AOs. 

We believe that these and other DMEPOS accreditation provisions we are proposing would help protect Medicare beneficiaries and the taxpayers from unqualified DMEPOS suppliers. 

Proposed Exemption Process for the Prior Authorization of Certain DMEPOS Items

CMS is proposing additional specificity for the DMEPOS prior authorization exemption process. Modeled on a similar exemption process in the hospital outpatient department prior authorization program (§419.83(c)), CMS proposes that suppliers achieving a target approval rate of 90% be offered an exemption from required prior authorization. To determine supplier eligibility for continued exemption, the DME Medicare Administrative Contractors (MACs) would complete a post payment medical review sample. From this claim sample, suppliers must again meet a claim approval rate of 90% or greater to continue their exemption. Suppliers who did not meet the compliance rate threshold must continue submitting prior authorization requests as required. By achieving the compliance rate percentage, the supplier has demonstrated an understanding of the requirements for submitting accurate claims. The DME MACs would provide suppliers notice of an exemption or withdrawal of an exemption at least 60 days prior to the effective date.

Proposed Improvements to the DMEPOS Competitive Bidding Program

CMS is proposing improvements to the DMEPOS Competitive Bidding Program so that we can protect the Medicare trust fund and beneficiaries can have lower copays. Currently, we are not announcing what product categories we are bidding, nor are we announcing the specific timeframe for the next competition. A future announcement will provide those details. In addition, CMS is proposing that all continuous glucose monitors (CGMs) and insulin infusion pumps be reclassified under the frequent and substantial servicing payment category, giving beneficiaries access to current, fully supported technology that meets evolving safety and performance standards, rather than having to wait five years.

Request for Information on Well-being and Nutrition

CMS is seeking public input on measures that assess overall health, happiness, and life satisfaction that could include aspects of emotional well-being, social connections, purpose, and fulfillment. The Request for Information (RFI) also seeks public input on tools and measures that promote healthy eating habits, exercise, nutrition, or physical activity.

Request for Information on Streamlining Regulations and Reducing Administrative Burdens in Medicare

Additionally, CMS is seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program through a standalone RFI available at https://www.cms.gov/medicare-regulatory-relief-rfi. The public should submit all comments in response to this RFI through the provided weblink.

Resources

For additional information about the Home Health Prospective Payment System, visit: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps and https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.

For additional information about the Home Health Patient-Driven Groupings Model, visit https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM. 

The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/d/2025-12347.

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