The industry held its breath, and CMS waited until the final working day of November to exhale. The Home Health Final Rule for CY 2026 is here, and it brings welcome news: the massive reimbursement cut proposed in July has been significantly reduced.
The Headlines
The Cut: Reduced from a proposed -6.4% to a finalized -1.3%.
The Impact: This adds back $915 million in reimbursement to the industry.
The Behavioral Assumption Win: CMS recognized that, starting with the CY 2023, changes with PDGM annual recalibrations, LUPA thresholds and HHVBP have had an impact on behavior changes.
CMS conceded that certain factors driving case-mix changes were not related to PDGM gaming. Consequently, the permanent adjustment now only captures perceived behavior changes for CY 2020–2022, significantly lowering the cut originally proposed at -4.059%.
Final Rule Payment Adjustments
| Adjustment Type | Proposed Rule | Final Rule |
|---|---|---|
| Market Basket Update | +2.4% | +2.4% |
| Productivity Adjustment | 0.0% | 0.0% |
| Permanent Adjustment* | -4.059% | -1.023% |
| Temporary Adjustment* | -4.067% | -3.0% |
| FDL Ratio Update | -0.1% | -0.1% |
| Total Impact | -6.4% | -1.3% |
*The -1.023% permanent adjustment and -3.0% temporary adjustment apply only to national standardized 30-day period payments, not LUPA payments.
Other Notable Updates
CMS finalized several other operational changes previously noted in our CY 2026 Proposed Rule blog:
HHVBP: Updates to the model are finalized after just one year with the CY 2025 measure set.
HHCAHPS: Survey length has been shortened as proposed for surveys starting in April 2026.
Compliance: Face-to-Face (F2F) signature requirements are enhanced.
Quality Measures: The COVID vaccine measure has been eliminated for CY 2026.
Your Strategy for 2026
While the reduction in cuts is a victory, a -1.3% decrease combined with rising wages and inflation means margins are still tight. Agencies cannot rely on reimbursement rates alone; you must look inward for efficiency.
Success in 2026 will require:
Workflow Efficiency: Identifying new and existing tools that can be added to your workflow for time savings, such as the new SHP Saved Parameters and Patient Manager features.
Revenue Cycle Management: Ensuring you aren't leaving money on the table with Medicare FFS with the SHP Alert Worklists.
Back to Basics: Tighter management of patient caseloads, visit utilization, OASIS assessment accuracy, and improving quality outcomes.
Making the Cut with SHP
To offset these reductions, you need data. Ask yourself:
- Are we losing revenue due to inaccurate OASIS scores?
- Is our LUPA rate out of sync with national benchmarks?
- Are we over (or under) utilizing visits in pursuing quality outcomes?
SHP has the answers.
Join Chris Attaya, SME Kim Banker, and Education Development Manager Doug Balser for our exclusive webinar: "Making the Cut with SHP: Strategies for Home Health Success in 2026."
In this presentation, we will demonstrate exactly how your organization can use SHP data and reporting to protect your financial bottom line in 2026.
Ready to make the cut in 2026? Register for our upcoming webinar to learn how SHP's data and reporting tools can help your agency thrive despite reimbursement pressures.
