Centers for Medicare & Medicaid Services Proposes 2026 HH PPS & D

Every summer, CMS drops a proposed rule like it’s the season finale of a show nobody asked to binge-watchbut
everyone in home health and durable medical equipment has to watch anyway. The CY 2026 proposal tied to the
Home Health Prospective Payment System (HH PPS) and the “D” side of the house (read: DMEPOSdurable medical equipment,
prosthetics, orthotics, and supplies) isn’t just a rate update. It’s a bundle of payment math, quality-measure
reshuffling, program-integrity tightening, and competitive-bidding fine printplus enough acronyms to make your
spellcheck file for overtime.

This article breaks down what CMS proposed for 2026, what it could mean for home health agencies (HHAs), clinicians,
hospitals trying to discharge patients safely, DME suppliers, andmost importantlypatients and caregivers who just
want care at home without a scavenger hunt for services.

First, a plain-English cheat sheet

What is “HH PPS”?

HH PPS is Medicare’s payment system for home health agencies providing covered home health services to eligible
beneficiaries. Payments are built around 30-day “periods of care,” adjusted for patient characteristics and service
patterns under PDGM (the Patient-Driven Groupings Model).

What is the “D” in the title?

In this proposed rule, “D” is best understood as the DMEPOS side of Medicare policy: competitive bidding updates,
accreditation requirements, prior authorization policies, and other supplier-focused changes. Same rulemaking party,
different dance floor.

What CMS proposed for 2026 home health payments (the headline numbers)

CMS proposed a routine annual payment update for home health plus two big PDGM-related adjustmentsone
“permanent” and one “temporary.” That combo is why the proposal drew so much attention: the update sounds friendly,
but the adjustments are where the plot thickens.

The part that sounds nice: the 2.4% payment update

CMS proposed a 2.4% home health payment update for CY 2026. On its own, that’s the kind of number you
might frame and hang in the break room. But keep reading.

The parts that hurt: PDGM “behavior” adjustments (permanent and temporary)

Under the Bipartisan Budget Act of 2018, CMS must keep the PDGM transition budget neutral over time by comparing
assumed behavior changes to actual behavior changes. For 2026, CMS proposed:

• A -4.059% permanent adjustment to the 30-day payment rate to address differences
  between assumed and actual behavior changes under PDGM.
• A -5.0% temporary adjustment to begin recouping what CMS calculated as
  retrospective overpayments from CY 2020–2024.

Put together (along with other policy effects), CMS estimated an aggregate decrease in Medicare payments
to HHAs for 2026meaning, on average across the program, the policy package would reduce total spending compared to 2025.
That “aggregate” phrase matters: individual agencies could see different results depending on case mix, geography, and
operational patterns.

A quick “real-world math” example

Imagine a mid-size home health agency that receives about $10 million a year in Medicare fee-for-service home health
revenue. If the proposal translated into an overall ~6%+ reduction at the agency’s mix (not guaranteed, but plausible),
that’s roughly $600,000+ less in revenue for the yearwhile labor, fuel, and clinical documentation time
continue to do what they do best: go up.

Agencies don’t experience “aggregate” reductions as a neat line item. They experience them as staffing decisions, visit
coverage decisions, intake decisions, and hard conversations about service availability.

PDGM refinements: case-mix weights, LUPAs, outliers, and the “small levers” that add up

In addition to the big percentage adjustments, CMS proposed multiple technical updates that can materially shift payment
distribution across patient types.

Recalibrating PDGM case-mix weights using recent data

CMS proposed to recalibrate PDGM case-mix weights using the most recent complete utilization data available for
rulemaking (CY 2024 claims). The goal, on paper, is to align payment more closely with the types of patients agencies
are actually servingrather than paying today’s agencies with yesterday’s assumptions.

Updating LUPA thresholds, functional impairment levels, and comorbidity subgroups

Low Utilization Payment Adjustments (LUPAs) kick in when visit counts fall below certain thresholds. CMS proposed updates
to LUPA thresholds and related patient-grouping components (like functional impairment levels and comorbidity
adjustment subgroups). Operationally, this is where documentation quality, visit planning, and scheduling stability can
collide with payment policy.

In plain terms: if a patient’s visit pattern slips (because staffing gaps happen, patients decline visits, or needs shift),
reimbursement can change abruptly. That’s not new. But refreshed thresholds can change where those tripwires sit.

Outlier payments: updating the fixed-dollar loss (FDL)

Outlier policy is meant to protect agencies from unusually costly cases. CMS proposed an updated fixed-dollar loss
calculation for outlier payments. Even if you don’t live in the outlier world day-to-day, these settings matter for
agencies that care for complex patients whose costs don’t behave like averages.

Face-to-face encounters: a “quiet” proposal with workflow impact

The proposed rule also addressed the face-to-face encounter policy, aiming to broaden who may perform the face-to-face
encounter to better align regulations with CARES Act language. If finalized as proposed, it could reduce bottlenecks in
real-life transitions of careespecially when the clinician who knows the patient best isn’t the same person doing the
certification paperwork.

Translation: fewer “We just need the right provider to sign the right thing in the right order” delayswhich sounds
boring until you’re the person stuck in the middle of it at 4:45 p.m. on a Friday.

Quality reporting (HH QRP) and HHVBP: measure changes, survey updates, and a push toward digital reporting

CMS didn’t just propose payment updates. It also proposed adjustments to the Home Health Quality Reporting Program
(HH QRP) and the expanded Home Health Value-Based Purchasing model (HHVBP). If you’ve ever felt that quality reporting
is a second job, you are not alone.

HH QRP: removing some items, modernizing other parts

Key proposals included:

• Removing the COVID-19 vaccination measure and its related OASIS data element.
• Removing four standardized patient assessment items tied to living situation, food, and utilities.
• Revising the reconsideration process for noncompliance determinations so providers can better demonstrate compliance.
• Implementing a revised HHCAHPS survey beginning with the April 2026 sample month.
• Updating regulatory text to reflect all-payer OASIS data submission requirements.
• Seeking input on shortening the final data submission deadline (from months to something closer to “while you still
  remember what happened”).
• Seeking feedback on the transition to digital quality measurement and interoperability standards like FHIR.

HHVBP: changing the scorecard

Because the HHCAHPS survey was proposed to change, CMS proposed removing three HHCAHPS-based measures from the expanded
HHVBP measure set. CMS also proposed adding four measures, including:

• Medicare Spending per Beneficiary – Post-Acute Care (MSPB-PAC) (claims-based)
• Three OASIS-based functional measures related to bathing and dressing

CMS also proposed updating measure weights and adding another measure removal factor to the HHVBP rules. The practical
takeaway is that agencies can’t treat HHVBP as “set it and forget it.” The target moves as survey instruments and
policy priorities evolve.

DMEPOS in the proposed rule: accreditation, competitive bidding, and prior authorization

On the DMEPOS side, CMS proposed changes intended to strengthen oversight and reshape program operations. These can
affect suppliers directly and can ripple into home health and discharge planning when equipment availability, supplier
participation, and administrative turnaround times change.

Accreditation: moving toward annual reaccreditation and tighter AO oversight

CMS proposed to require DMEPOS suppliers to be reaccredited more frequently (shifting toward an annual cadence), while
also proposing changes aimed at strengthening oversight of accrediting organizations (AOs). This includes clarifying
expectations around surveys and conflict-of-interest controls.

CMS’s stated direction here is program integrity: reduce vulnerabilities, strengthen accountability, and limit fraud.
Stakeholders, however, debated whether the added burden lands hardest on small suppliers with lean compliance staff.

Prior authorization: an “exemption” concept with a performance bar

CMS proposed a prior authorization exemption process for suppliers with strong approval histories. Conceptually, this
rewards consistent compliance and clean documentation. Practically, it introduces new tracking, reporting, and “don’t
fall below the line” pressureespecially for smaller operations.

Competitive bidding: policy tuning with real market effects

CMS proposed updates to the DMEPOS Competitive Bidding Program, including changes that would affect how contracts are
awarded and how single payment amounts are calculated. Competitive bidding is where policy meets market structure:
changes can encourage lower prices, but can also reshape who participates and how widely services are available,
especially in rural or niche product areas.

CGMs and insulin infusion pumps: a classification change that affects cash flow

CMS proposed reclassifying certain continuous glucose monitors (CGMs) and insulin infusion pumps into a payment category
with a different reimbursement structurean issue stakeholders flagged as potentially significant for supplier cash flow
and beneficiary access if the timing of payments shifts meaningfully.

Provider enrollment and “program integrity”: more levers for CMS

The proposed rule also included a suite of provider enrollment and program integrity changes. One example: proposals to
expand when revocations can be retroactivemeaning CMS could seek repayment for claims back to when noncompliance began.
CMS framed these steps as protecting taxpayer dollars and beneficiaries by limiting payments to noncompliant or
fraudulent providers and suppliers.

For compliant organizations, the practical message is simple: documentation, reporting timelines, and enrollment data
accuracy matter more than ever, because the downstream consequences can be faster and financially sharper.

Why stakeholders reacted so strongly

The proposed rule sparked intense debate because it sits at the crossroads of three tensions:
(1) controlling Medicare spending,
(2) maintaining access to home-based care,
and (3) combating fraud without punishing legitimate providers.

One viewpoint: “Payments are high; adjust them down”

Some policy voices have argued for years that Medicare margins in home health suggest payment adequacy concerns in the
opposite directionmeaning Medicare pays more than needed relative to costs. In that framing, CMS’s push to correct
PDGM budget neutrality is a statutory obligation, not an optional mood.

Another viewpoint: “Access is already frayingdon’t cut into a shortage”

Patient advocates and provider groups argued that access to servicesespecially for clinically complex beneficiaries,
those needing aide services, and those in underserved areashas been eroding. They warned that additional reductions
can lead agencies to limit admissions, reduce service intensity, or exit markets, which can push patients toward more
expensive settings like hospitals or skilled nursing facilities.

DME suppliers: “Integrity is good; consolidation is not”

On DMEPOS policy, industry groups emphasized that most suppliers are small businesses and argued that certain proposals
could unintentionally accelerate market consolidation (favoring large, multi-region suppliers) and increase
administrative burden through more frequent accreditation and competitive bidding design changes.

How to prepare if you work in home health, discharge planning, or DMEPOS

Proposed rules aren’t final rulesbut they’re loud hints. Here’s a practical, non-theoretical checklist of what to do
when the proposal itself is already shaping planning conversations:

For home health agencies

• Run scenario budgets (best case / expected / worst case) using percentage-based sensitivity analyses.
• Audit visit patterns that drive LUPA exposureespecially for short, unstable episodes.
• Stress-test intake criteria for complex cases to ensure clinical capacity matches referral volume.
• Harden documentation workflows for comorbidities, functional status, and OASIS consistency.
• Track HHVBP measure changes and update internal dashboards before the scoring rules change on you.
• Coordinate with hospital partners on discharge expectationsbecause if home health access tightens, discharge delays rise.

For DMEPOS suppliers

• Map accreditation timelines and estimate the staffing needed if reaccreditation frequency increases.
• Build a prior authorization “clean file” playbook and track approval rates if exemptions become attainable.
• Model cash flow under any product reclassification proposals that could spread payments over longer periods.
• Watch competitive bidding design detailsthey determine who can realistically compete in your service areas.

For clinicians and referral partners

• Streamline face-to-face documentation so patients aren’t stuck waiting on a procedural technicality.
• Plan for access friction by identifying multiple home health and DME options, especially for complex discharges.
• Document medical necessity clearlyit’s the universal language that reduces denials and delays.

Conclusion

CMS’s 2026 HH PPS & “D” proposal is more than a rate update: it’s a broad attempt to reconcile PDGM budget neutrality,
refresh payment calibration with current data, modernize quality measurement, and tighten oversight across home health
and DMEPOS. Whether you view it as responsible stewardship or risky tightening depends on where you sitbut either way,
it’s a proposal that forces planning conversations now, not later.

Experience Addendum (about ): What this proposal feels like in real life

If you want to understand a proposed rule, don’t start with the Federal Register. Start with the calendar invite
titled “2026 Rate Modeling (URGENT).” It’s usually scheduled for 30 minutes, quietly becomes 90 minutes, and ends with
someone saying, “Okay, so… who’s updating the assumptions tab?” That’s where the proposal becomes real: not as a
percentage, but as a set of tradeoffs.

For a home health administrator, the PDGM adjustments land like a weather forecast that only predicts storms. The
“permanent” adjustment feels like a long-term diet plan you didn’t sign up for, while the “temporary” adjustment is
the surprise fee that shows up after you’ve already paid the bill. Even if your agency’s outcomes are strong, your
budget still has to absorb the math. Suddenly, staffing isn’t just a recruitment problemit’s a scheduling chess match.
One vacancy can turn a stable plan of care into a scramble that flirts with LUPA exposure, missed visits, and clinician
burnout.

For clinicians, the experience is less about the rate line and more about the ripple effects. Nurses and therapists
feel it when service intensity decisions shift. Intake teams feel it when referrals get “paused” because capacity is
tight or the case is complex. Documentation teams feel it when every OASIS detail matters more because payment
calibration is being refreshed and quality programs keep evolving. And yes, there’s always that moment when someone
says, “Good news, CMS wants more interoperability!” and the EHR instantly responds, “Greatplease schedule your next
upgrade and re-train everyone.”

For discharge planners, this proposal can feel like trying to land airplanes when the runway keeps changing length.
Hospitals want safe, timely discharges. Families want loved ones home. Home health agencies want to accept the patient
but need staffing and financial stability to do it safely. When access is tight, the discharge planner becomes part
care coordinator, part negotiator, and part professional phone-caller. The best days are when the plan clicks quickly:
face-to-face paperwork aligns, the agency confirms availability, and the patient transitions smoothly. The worst days
are when a medically complex patient needs skilled nursing and aide support, and every provider’s answer is some
version of “We wish we could.”

On the DMEPOS side, small suppliers often describe a constant tension between “do the right thing” and “do all the
paperwork for the right thing.” If reaccreditation becomes more frequent, the compliance workload isn’t just a binder
on a shelfit’s staff time, survey readiness, policy updates, and operational disruption. Add competitive bidding
uncertainty and prior authorization performance thresholds, and the work becomes a balancing act: keep documentation
clean, keep cash flow stable, keep service coverage broad. Meanwhile, patients don’t experience “policy changes.” They
experience whether their supplies arrive on timeand whether someone answers the phone when they have a question.

The weird truth is that everyone in this ecosystem wants the same outcome: more care at home, better quality, less
fraud, fewer delays. The hard part is that the path to that outcome runs through spreadsheets, staffing, and systems.
And that’s why CMS proposals matter: they don’t just change paymentthey change what organizations can reliably do on
Monday morning.