Four Months Into CY 2026: What the Home Health Final Rule Is Actually Doing to Operations

When CMS released the CY 2026 Home Health Prospective Payment System Final Rule on November 28, 2025, most of the industry coverage focused on the same thing: relief. The proposed 6.4% aggregate cut had landed at 1.3%.¹ ² Agencies exhaled. Trade press moved on.

It's now May. CY 2026 is four months old. The temporary adjustment, the recalibrated PDGM weights, and the new HHVBP measure set have all been in effect since January 1.¹ The revised HHCAHPS survey launched with the April 2026 sample month — last month.¹ OASIS-E2 went live April 1.³ Q1 books are closing.

This is the moment when the rule stops being a regulatory document and starts being a P&L. Here's a check-in on what's actually showing up in operations, and where the operational levers still are for the rest of 2026.

The 1.3% headline isn't what your agency is feeling

CMS estimated an aggregate 1.3% decrease in Medicare payments to home health agencies in CY 2026 versus CY 2025 — about $220 million across the industry.¹ That number is a national average. Your agency's actual change is a function of three things layered on top of each other, and only one of them is the headline rate.

The base rate change. The CY 2026 30-day base payment rate is $1,933.61 for compliant HHAs and $1,895.85 for non-compliant agencies, after a 2.4% market basket update was offset by a 1.023% permanent behavioral adjustment and a 3.0% temporary adjustment.¹ ⁴

The PDGM case-mix recalibration. All 432 PDGM payment groups have new case-mix weights based on CY 2024 utilization data.¹ Some clinical groups pay more than they did in 2025; some pay less. If your patient mix skews heavily toward particular clinical groups, comorbidity profiles, or functional levels, your effective rate change can deviate meaningfully from the national average — in either direction.

The LUPA threshold changes. Updated LUPA thresholds also took effect January 1, again based on CY 2024 claims data.¹ According to Applied Policy's analysis of the final rule, 18 case-mix groups saw a one-visit decline in their LUPA threshold.⁴ For groups whose threshold went up, missing a single visit can convert a full episode payment into a per-visit LUPA rate.

If you haven't already done a CY 2024 case-mix backtest against the new weights and thresholds, do it now. Q1 claims are starting to settle, and the gap between the 1.3% headline and your actual experience is the most important number on your desk this month.

The temporary 3.0% is a one-year window — use it that way

One detail that got lost in the November coverage: the 3.0% temporary adjustment applies to CY 2026 only.¹ It does not carry forward into CY 2027 base rates. CMS has signaled it will continue analyzing temporary adjustment data through CY 2026 claims and may apply additional temporary adjustments in future years to recoup the remaining portion of the $4.76 billion in calculated overpayments from CY 2020-2022.¹

Translation: the rate environment in CY 2027 is uncertain, and there's a non-trivial possibility it gets harder before it gets easier. Operational discipline built in 2026 is what carries you through whatever 2027 brings.

April 2026: two changes that just went live

Two of the most operationally significant changes in the final rule took effect last month, not in January.

The revised HHCAHPS survey launched with the April 2026 sample month.¹ The survey questions used to calculate three HHVBP measures were changed enough that those three measures were removed from the HHVBP applicable measure set as a direct consequence: Care of Patients, Communications between Providers and Patients, and Specific Care Issues.¹ Patient survey returns over the rest of CY 2026 will be the first data under the revised instrument — what your scores look like in May, June, and July is foundational for the next HHVBP performance window.

**OASIS-E2 went into effect April 1, 2026.**³ Documentation workflows, EMR templates, and clinician training that didn't get refreshed in March are showing up in May as data quality issues. The COVID-19 vaccine measure and four standardized patient assessment items (one Living Situation, two Food, one Utilities) are no longer collected.¹

If your agency is still reconciling its OASIS-E2 transition or seeing variable HHCAHPS response patterns this month, you're not alone. But this is the window where workflow gaps become measurable, and where fixing them protects the rest of the year.

HHVBP: a transitioning measure set in a live performance year

The expanded HHVBP Model adjusts Medicare fee-for-service payments by up to ±5% based on agency performance against quality measures.⁵ CY 2026 is a live performance year, and the measure set is being transitioned within it: HHCAHPS-derived changes hit the survey starting in April, while the new OASIS-based and claims-based measures apply for CY 2026 overall.¹ Performance measured this year feeds payment adjustments in future years — that's how the HHVBP model has always worked.⁵

Three new OASIS-based functional improvement measures (related to bathing and dressing) and one claims-based measure — Medicare Spending per Beneficiary for the Post-Acute Care setting (MSPB-PAC) — have been added.¹ The weights of individual measures and measure categories have also shifted as a result.¹

The MSPB-PAC measure is the one most likely to surprise agencies that haven't been tracking it. It assesses total post-acute care cost — including readmissions, ED utilization, and downstream services — not just home health quality in isolation. An agency that delivers excellent home health care but tends to discharge patients into expensive post-acute trajectories will see that reflected in its score. By the time the data is in, the performance year is over.

Operationally, this means visit completion rates, care coordination with referring providers, and proactive flagging of clinical deterioration are now HHVBP variables, not just clinical-quality concerns. Agencies that have real-time visibility into their field operations have a structural advantage here over agencies relying on retrospective reporting.

What four months of CY 2026 has clarified

The rule looked manageable in November. Four months in, three things are clearer:

Operational efficiency is no longer a margin enhancer; it's a margin requirement. When per-episode payment compresses and LUPA thresholds shift, the only durable response is more visits per provider per day, fewer no-shows, less windshield time, and tighter visit-to-plan-of-care fidelity. Agencies that built that discipline before CY 2026 are absorbing the cut. Agencies that didn't are watching it flow to the bottom line.

Quality measurement is shifting toward outcomes you can't fake. The HHVBP measure set now leans more on functional improvement (OASIS-based) and total cost of care (MSPB-PAC) and less on patient survey perception. Both reward consistent, well-executed visit cadence and tight care coordination. Both punish operational sloppiness.

The data-and-documentation backbone is the choke point. OASIS-E2, the new HHCAHPS instrument, recalibrated PDGM weights, and the still-pending shift toward FHIR-based digital quality measurement¹ all point in the same direction: agencies that can't move clean, complete, structured clinical data through their systems are going to keep absorbing financial penalties they can't pinpoint.

The upcoming to-do list

Five concrete items for the rest of the quarter:

1. Run your Q1 numbers against your CY 2025 baseline. Don't wait for the year-end view. Compare Q1 2026 revenue per 30-day period, LUPA rate, and visits per provider per day against the same period last year. The variance tells you where the rule is hitting you.

2. Audit OASIS-E2 transition issues now. April was month one. May is when documentation gaps from incomplete training start showing up as scoring issues. Fix them before they roll forward.

3. Build an MSPB-PAC view, even a rough one. You don't have to wait for CMS to send you the score. Track readmission rates, ED utilization, and length of episode by referral source and patient segment. Knowing which patient profiles drive your downstream cost is the first step to managing it.

4. Pressure-test your face-to-face encounter workflow. The expanded face-to-face rules (effective January 1) widen the pool of practitioners who can perform the encounter.¹ ⁴ If your intake team is still operating on the old, narrower rule, you're leaving referral velocity on the table.

5. Inventory referring providers who haven't ordered or certified in 9+ months. The new deactivation rules can cost you billing relationships if a referring provider sits idle long enough. ¹ This is a five-minute report that protects your referral pipeline.

The bigger picture

Four months in, the CY 2026 final rule has done what most CMS rules do: it has separated the agencies that built operational discipline ahead of time from the ones that didn't. The rule itself isn't the story anymore. The Q1 numbers are.

At CareSMS, we work with home-based care organizations on the operational layer of this — scheduling and routing optimization, real-time visibility into field operations, bi-directional EHR integration, and reporting that turns operational data into decisions. If you want to learn more, we'd love to chat.

Sources

1. Centers for Medicare & Medicaid Services (CMS), "Calendar Year (CY) 2026 Home Health Prospective Payment System Final Rule (CMS-1828-F)" — Fact Sheet, November 28, 2025. Primary source for all final rule provisions, including aggregate payment impact, permanent and temporary behavioral adjustments, PDGM recalibration, LUPA threshold updates, HHVBP measure set changes, HH QRP changes, face-to-face encounter changes, provider enrollment provisions, and the April 2026 HHCAHPS survey change.https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-home-health-prospective-payment-system-final-rule-cms-1828-f
2. American Hospital Association, "CMS proposes 6.4% decrease to home health payments for CY 2026, updates to quality and value-based purchasing programs," June 30, 2025. Source for the proposed rule's 6.4% aggregate cut.https://www.aha.org/news/headline/2025-06-30-cms-proposes-64-decrease-home-health-payments-cy-2026-updates-quality-and-value-based-purchasing
3. Healthcare Provider Solutions, "CMS Releases 2026 Home Health Final Rule & Quality Update," December 2025. Source for OASIS-E2 implementation date of April 1, 2026.https://healthcareprovidersolutions.com/home-health-final-rule/
4. Applied Policy, "CY 2026 Home Health Rule Finalizes Smaller Permanent Adjustment and Sets One-Year Temporary 3.0% Rate Reduction," December 1, 2025. Source for the CY 2026 30-day base payment rates ($1,933.61 / $1,895.85) and the LUPA threshold change detail (18 case-mix groups with one-visit decline).https://www.appliedpolicy.com/cy-2026-home-health-rule-finalizes-smaller-permanent-adjustment-and-sets-one-year-temporary-3-0-rate-reduction/
5. CMS, "Expanded Home Health Value-Based Purchasing Model." Source for the ±5% payment adjustment range under HHVBP.https://www.cms.gov/priorities/innovation/innovation-models/expanded-home-health-value-based-purchasing-model
6. Federal Register, "Medicare and Medicaid Programs; Calendar Year 2026 Home Health Prospective Payment System (HH PPS) Rate Update," published December 2, 2025. Full final rule text for further reference.https://www.federalregister.gov/documents/2025/12/02/2025-21767/medicare-and-medicaid-programs-calendar-year-2026-home-health-prospective-payment-system-hh-pps-rate

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