Impending changes in Medicare payments affecting home health services

Impending changes in Medicare payments affecting home health services
Investors Hangout; by Riley Hayes; 7/1/25 
The Centers for Medicare & Medicaid Services (CMS) has introduced a proposed rule that outlines crucial adjustments in how Medicare compensates home health agencies (HHAs). ... [A] routine payment increase of 2.4% has been proposed, amounting to an additional $425 million in funding for home health agencies. However, accompanying this increase are three significant changes that are projected to lead to a reduction in overall payments:

• A permanent behavior adjustment that would trim payments by about 3.7%, equating to a $655 million decrease.
• A temporary adjustment that proposes a 4.6% reduction, hitting home health services with an $815 million cut.
• Finally, a modification to the outlier payment formula that could lead to an additional 0.5% cut, which represents about $90 million.

According to CMS's estimates, total Medicare payments to home health agencies in 2026 are set to witness a stark decline of approximately 6.4%, translating to around $1.135 billion less when compared to the previous year.