CMS announces final rule for home health prospective payment system

The Centers for Medicare and Medicaid Services on November 28 issued a final rule that announces policy changes under the home health prospective payment system. The rule finalizes routine, statutorily required updates to the home health payment rates for 2026. The CY 2026 updated rates include the final 2026 home health payment update of an estimated 2.4% increase, or a $405M increase, which is offset by an estimated 0.9% decrease that reflects the final permanent adjustment, an estimated 2.7% decrease that reflects the final temporary adjustment, and an estimated 0.1% decrease that reflects the updated fixed-dollar loss ratio for outlier payments, the agency said in a statement. CMS estimates that Medicare payments to home health companies in 2026 will decrease in the aggregate by an estimated 1.3%, or $220M, compared to 2025, based on the finalized policies. Wells Fargo views the rule as a positive for both Pennant Group (PNTG) and BrightSpring Health (BTSG).