The Payment Picture: Better Than Expected, Still Challenging

The final 2026 payment ratereflects multiple adjustments working in different directions. Agencies willsee a 2.4% market basket increase ($405 million), offset by a permanentbehavior adjustment of negative 1.023% ($150 million decrease), a temporary behavioradjustment of negative 3.0% ($460 million decrease), and a fixed-dollar lossratio update of negative 0.1% ($15 million decrease).

The net result is a 1.3%aggregate payment decrease, or approximately $220 million less in Medicarepayments to home health agencies compared to 2025.

What Changed from the Proposed Rule

The proposed rule called for apermanent adjustment of negative 4.059%, which would have resulted in a 6.4%aggregate reduction. CMS modified this after industry commenters raisedconcerns that behavior changes after 2022 may be attributable to factors unrelatedto PDGM implementation, including the introduction of OASIS-E, expansion ofvalue-based purchasing, and increased Medicare Advantage penetration.

The final permanent adjustmentof negative 1.023% focuses only on behavior changes from 2020 through 2022, asignificant and welcome modification.

The 30-Day Episode Rate

The final CY 2026 nationalstandardized 30-day period payment amount is $2,038.22, down from $2,057.35 in2025. Agencies that fail to submit required quality data face an additional 2percentage point reduction.

The Temporary Adjustment Debt

CMS continues to track whatthey calculate as overpayments since PDGM implementation. The temporaryadjustment amount from 2020 through 2022 now totals $4.76 billion. CMS willcontinue analyzing claims through 2026 to determine future temporary adjustments.This accumulated deficit remains a concern for future years.

HHVBP Changes: Four New Measures, New Weights

The Home Health Value-BasedPurchasing model sees significant changes in 2026, with payment adjustments ofup to 5% (upward or downward) based on 2024 performance data.

New Measures Added for 2026

CMS is adding four new measuresto the HHVBP applicable measure set.

The first is Medicare SpendingPer Beneficiary Post-Acute Care (MSPB-PAC), a claims-based measure designed toincentivize efficient resource use while maintaining quality.

The remaining three areOASIS-based functional measures: Improvement in Bathing (M1830), Improvement inUpper Body Dressing (M1810), and Improvement in Lower Body Dressing (M1820).These functional improvement measures complement the existing Discharge FunctionScore and provide a more holistic view of patient functional status.

Measures Being Removed

Due to revisions to the HHCAHPS survey, five HHCAHPS-based measures can no longer be calculated and are being removed from the HHVBP applicable measure set. These include Care of Patients,Communication Between Providers and Patients, Specific Care Issues, OverallRating of Care, and Willingness to Recommend the Agency.

Updated Measure Weights

With the shift in measure composition, CMS is adjusting how measures are weighted in the TotalPerformance Score calculation. For the larger-volume cohort, OASIS-based measures now carry greater weight, while HHCAHPS-based measures have reduced weight given the survey changes.

What This Means for Your Agency

The addition of the threeM1800-series functional items means accurate OASIS assessment of bathing and dressing improvement is now directly tied to your VBP payment adjustment.Agencies should review their OASIS accuracy processes and ensure clinicians understand the importance of these items.

Quality Reporting Program Updates

COVID-19 Measure Removal

The COVID-19 Vaccine:Percentage of Patients Who Are Up to Date measure is being removed from the HHQRP. The corresponding OASIS data item (O0350) will be removed from the OASIS data set effective April 1, 2026. Until then, agencies may submit any valid response (0, 1, or dash) on Transfer, Death at Home, or Discharge OASIS assessments without quality measure implications.

Social Drivers of Health Items Removed

CMS is removing four assessment items related to social drivers of health, including one Living Situation item, two Food items, and one Utilities item. These items were originally added to capture social determinants, but CMS has determined they should be removed from the QRP.

HHCAHPS Survey Changes: Major Updates Coming April 2026

The Home Health ConsumerAssessment of Healthcare Providers and Systems survey is undergoing significantrevision, effective with the April 2026 sample month.

The updated survey adds threenew questions and removes eight questions. It also includes revised surveymeasures, an updated calculation methodology for Patient Survey Star Ratings,and five new quality measures with updated weights for Star Rating calculation.

These survey changes willaffect both your public reporting scores and your HHVBP performance. Agenciesshould communicate these changes to staff and reinforce the importance ofpatient experience throughout the care episode.

Face-to-Face Encounter Policy: Welcome Flexibility

One of the most practical changes in the 2026 final rule is the update to face-to-face encounter requirements, aligning with Section 3708 of the CARES Act.

Previously, face-to-face encounter documentation was restricted based on whether the physician was the certifying practitioner or had cared for the patient in the referring facility.The final rule removes these restrictions.

Beginning January 1, 2026, physicians may perform face-to-face encounters regardless of whether they are the certifying practitioner or whether they cared for the patient in the facility from which the patient was referred. This provides much greater flexibility in documenting eligibility for home health services.

LUPA Threshold Updates

CMS has recalibratedLow-Utilization Payment Adjustment thresholds using 2024 claims data. Of theupdated thresholds, 389 case-mix groups have no change, 15 groups see theirthreshold increase by one visit, and 28 groups see their threshold decrease byone visit. Agencies should review the updated LUPA thresholds for their mostcommon case-mix groups to understand any impacts on reimbursement forlow-utilization episodes.

What Your Agency Should Do Now

The 2026 changes take effectJanuary 1, 2026, with HHCAHPS changes following in April.

Immediate Actions

First, review your financial projections. Model the 1.3% aggregate reduction against your payer mix and volume to understand the revenue impact.

Second, audit OASIS accuracy for functional items. With M1810, M1820, and M1830 now in the HHVBP measure set, accurate assessment of bathing and dressing improvement directly affects your payment adjustment.

Third, update face-to-face workflows. Take advantage of the new flexibility to streamline your certification documentation processes.

Fourth, communicate HHCAHPS changes to staff. Begin preparing for the revised survey launching in April.

Ongoing Priorities

Monitor your HHVBP performance closely. The October 2026 Interim Performance Report will be the first to calculate your Total Performance Score based on the new 2026 measure set.

Track quality trends andconnect your quality data to staff education so clinicians understand how theirdocumentation and care delivery affect agency performance.

Stay engaged in advocacyefforts. The temporary adjustment debt of $4.76 billion remains unresolved, andfuture rulemaking will determine how this is addressed.

Prepare for OASIS changes. Anew version of OASIS launches in April 2026 alongside the HHCAHPS changes.

The Bigger Picture: Quality and Payment Are Inseparable

The 2026 rule continues the trend of tying home health payment more closely to quality performance. BetweenHHVBP payment adjustments of up to 5% and the 2 percentage point reduction for failing to submit quality data, agencies can face a 7% payment swing based on quality reporting and performance alone.

This makes quality improvement not just a compliance exercise but a financial imperative. Agencies that invest in OASIS accuracy and clinician education, patient experience throughout the care episode, functional outcomes and discharge planning, and efficient care delivery without sacrificing quality will be better positioned to thrive undervalue-based payment models.

The Bottom Line

The 2026 Home Health Final Rule delivers a smaller payment cut than proposed, but still represents continued financial pressure on agencies. More importantly, the rule signals that CMS expects agencies to compete on quality, efficiency, and patient outcomes.

Agencies that treat qualityimprovement as a strategic priority rather than a compliance burden will bebest positioned to navigate these changes. Connecting your quality data tostaff education, monitoring your HHVBP performance, and maintaining accurateOASIS documentation are no longer optional. They're essential to your agency'sfinancial health.

HOP helps agencies close thegap between quality metrics and staff education. When your quality data revealsimprovement opportunities, HOP Huddles deliver targeted microlearning to theright clinicians at the right time. Because in a value-based world, qualityisn't just about patient outcomes. It's about agency survival.