The Centers for Medicare and Medicaid Services (CMS) has finalized the CY 2026 Home Health Prospective Payment System (HH PPS) Final Rule, introducing updates that will affect reimbursement, compliance, and quality reporting for home health organizations. For clinicians, understanding these changes is essential to maintaining operational efficiency and delivering high-quality care.
Financial Impact and PDGM Adjustments
CMS projects an aggregate 1.3% decrease in Medicare payments to home health agencies, which is a decrease of about $220 million compared to CY 2025. This reflects several adjustments:
- Payment Update: +2.4% increase ($405 million)
- Permanent Adjustment: -0.9% ($150 million) tied to PDGM implementation
- Temporary Adjustment: -2.7% ($460 million) to mitigate single-year payment reductions
- Fixed-Dollar Loss Ratio: -0.1% ($15 million) for outlier payments
This decrease is significantly smaller than the 6.4% cut CMS initially proposed. After receiving more than 952,000 public comments from stakeholders across the industry, including warnings from Axxess and the National Alliance for Care at Home that such a deep cut would result in access-to-care challenges, CMS revised its approach.
CMS also finalized PDGM case-mix recalibration, updated LUPA thresholds, and revised functional impairment and comorbidity groupings using CY 2024 data. Clinicians should anticipate adjustments in visit planning and documentation to align with these changes.
Operational Flexibility: Face-to-Face Encounters
A major improvement is the expanded face-to-face encounter policy. Physicians, nurse practitioners, clinical nurse specialists, and physician assistants can now perform encounters, even if they are not the certifying practitioner or cared for the patient in an acute or post-acute setting. This flexibility reduces administrative burden and helps streamline admissions.
While the expanded face-to-face encounter policy offers flexibility, it applies only to the Certified Medicare program. Clinicians should confirm whether similar allowances exist for Medicare Advantage plans and review state-specific regulations, as these may differ.
Quality Reporting Updates
The Home Health Quality Reporting Program (HH QRP) introduces several changes:
- Measure Removals: CMS is eliminating the COVID-19 vaccine measure and four assessment items (living situation, food, utilities).
- Revised HHCAHPS Survey: Effective April 2026, expect updated patient experience questions.
- OASIS Data Submission: Agencies must submit all-payer OASIS data, reinforcing the need for accurate documentation across all patients.
- Verbiage Change: CMS removed the term “beneficiary” from home health language to reflect the requirement for all-payer OASIS data submission. This change aligns terminology with broader industry standards, as insurance companies typically refer to individuals as “patients,” not “beneficiaries.”
- Reconsideration Policy: Providers can request reconsideration of noncompliance determinations and extensions during extraordinary circumstances.
- Defining Extraordinary Circumstances: CMS is narrowly defining what constitutes an “extraordinary circumstance” for delayed data transmission. The exception is limited to things such as natural disasters. Issues such as software outages or technical problems do not qualify, and agencies attempting to claim these as exceptions will face penalties.
For clinicians, this means tighter alignment between care delivery and documentation to ensure compliance with evolving quality metrics.
Value-Based Purchasing Model Changes
The expanded Home Health Value-Based Purchasing (HHVBP) Model continues to evolve:
- Removed Measures: Three HHCAHPS survey-based measures will be retired.
- Added Measures: Three OASIS-based functional measures (bathing, dressing) and one claims-based measure (Medicare Spending per Beneficiary for PAC).
- Adjusted Weights: Measure weights will shift to reflect these changes.
Clinicians should focus on functional outcomes and cost efficiency, as these will increasingly influence agency performance scores.
Compliance and Program Integrity
CMS is strengthening provider enrollment rules to combat fraud and abuse. New provisions include retroactive revocations and deactivation for practitioners who do not order or certify services for 12 consecutive months. Accurate documentation and timely certifications remain essential for compliance.
Practical Takeaways for Clinicians
Arlene Maxim, RN, HCS-C, with the Axxess Professional Services team, shared these practical steps for adapting to the final rule:
- Review PDGM updates to understand how case-mix changes affect visit planning.
- Ensure OASIS accuracy for all patients, not just Medicare beneficiaries.
- Prepare for HHCAHPS revisions by reinforcing patient communication and experience.
- Stay vigilant on compliance—timely certifications and documentation protect your agency from enrollment risks.
Watch Arlene’s full webinar on the CMS Home Health Final Rule here.
Want to stay ahead of these changes? Explore Axxess Home Health software to streamline compliance, optimize documentation, and deliver exceptional care under the new CMS guidelines.
