CMS cut Medicare home health payments 1.3% for calendar year 2026 — and has since proposed a 2.4% increase for 2027. Here’s what each rule actually does, why Orange County agencies are under pressure either way, and what to do if Medicare home health stops being an option for someone you love.
If you’ve been counting on Medicare to cover skilled home health care for an aging parent, the math just got worse. On November 28, 2025, the Centers for Medicare and Medicaid Services finalized the CY 2026 Home Health Prospective Payment System Final Rule (CMS-1828-F), which cuts aggregate Medicare home health payments by 1.3% — roughly $220 million — beginning January 1, 2026. The cut is smaller than the 6.4% reduction CMS proposed in June 2025, but it stacks on top of years of payment pressure that have already pushed home health agencies out of business across the country.
For Orange County families, this matters in a very practical way. Half of all U.S. counties have already lost home health agencies between 2020 and 2024. In more than 70% of counties, the agencies that remain are treating fewer Traditional Medicare patients. The squeeze is moving downstream: hospitals are holding patients longer because they can’t find a home health agency willing to accept them, families are getting fewer visits per episode, and the parts of care Medicare never covered in the first place — the daily personal care, supervision, and respite that keeps someone safely at home — are landing entirely on family budgets.
What the CMS 2026 Final Rule Actually Says
The headline number is “minus 1.3%,” but the rule is the result of four moving pieces that net out to that figure. Understanding the math helps you see why agencies in Orange County are still alarmed even though the proposed 6.4% cut got dialed back.
| Adjustment | Effect | Dollars |
|---|---|---|
| CY 2026 home health payment update (market basket) | +2.4% | +$405M |
| Permanent PDGM behavioral adjustment | −0.9% | −$150M |
| Temporary PDGM clawback | −2.7% | −$460M |
| Updated fixed-dollar loss (FDL) ratio for outliers | −0.1% | −$15M |
| Net change for CY 2026 | −1.3% | −$220M |
The rule also finalizes a permanent prospective adjustment of −1.023% to the standard CY 2026 30-day payment rate to recover overpayments CMS believes were made under the Patient-Driven Groupings Model (PDGM) from 2020 through 2022, plus a temporary 3.0% clawback for the same window. Translation: even when the market basket update goes up, CMS is using these recoupment mechanisms to claw money back. Industry groups including the National Alliance for Care at Home have told CMS that the cuts will continue to drive agencies out of business and reduce patient access, especially in rural and lower-income service areas.
What CMS Proposed for 2027 — and Why It Points the Other Way
On July 6, 2026, CMS published the CY 2027 Home Health Prospective Payment System proposed rule (CMS-1844-P, Federal Register document 2026-13602), and it reverses the direction of the 2026 rule. CMS estimates the proposals would produce a net increase in home health payments of 2.4 percent for CY 2027 — roughly $420 million nationally.
The proposed increase breaks into two pieces: a 2.1% home health payment update (about $370 million) plus an estimated 0.3% increase from an updated fixed-dollar loss ratio, which governs outlier payments (about $50 million). It is a routine rate update rather than a change of heart on policy — CMS still proposes a temporary behavior adjustment, recalibrated case-mix weights, updated functional impairment levels and comorbidity subgroups, and new LUPA thresholds for 2027.
| Rule | Status | Net national impact |
|---|---|---|
| CY 2026 HH PPS Final Rule (CMS-1828-F) | Final — effective January 1, 2026 | −1.3% (about −$220M) |
| CY 2027 HH PPS Proposed Rule (CMS-1844-P) | Proposed — comments closed August 31, 2026 | +2.4% (about +$420M) |
There is a California-specific detail worth knowing. CMS breaks its impact projections out by census region, and agencies in the Pacific region — 2,880 of them, which includes every Medicare-certified home health agency in Orange County — are projected at a 3.0% payment impact, above the 2.4% national average. If the rule finalizes anywhere near the proposal, our local agencies would be among the better-positioned in the country rather than the worst.
What one good year does not undo is the structural problem this article opened with. Agencies closed between 2020 and 2024 because of years of cumulative pressure, not a single bad rule, and a proposed 2.4% bump does not rebuild a network or restore visits per episode. More to the point for most families reading this: none of it changes what Medicare home health actually covers. The gap described in the next section is exactly the same in 2027 as it was in 2026.
The Critical Difference: Medicare Home Health Is Not Home Care
This is the single most important thing to understand if you’re navigating care for an aging parent in Orange County, and it’s the part that even adult children of long-time Medicare beneficiaries routinely get wrong.
Medicare home health is short-term, intermittent skilled care — a registered nurse, physical therapist, occupational therapist, speech therapist, or medical social worker visiting the home for a clinical reason after a hospitalization, surgery, fall, or change in condition. To qualify, your loved one must be certified as homebound by their doctor, need skilled services on an intermittent basis, and receive care from a Medicare-certified agency. It’s designed for recovery and stabilization, not for ongoing daily support. Most episodes last 60 days, and the visits inside that episode might total just a handful of hours per week.
Non-medical home care — what At Home VA Staffing provides — is the everyday help that keeps someone safely at home: bathing, dressing, meal preparation, medication reminders, mobility assistance, companionship, respite for family caregivers, and supervision for someone with dementia. It’s hourly. It’s typically paid out of pocket, through long-term care insurance, through Veterans Aid & Attendance, or through Medi-Cal Community Supports / IHSS — but never through Medicare. Medicare has never covered non-medical home care, and that hasn’t changed.
| Feature | Medicare Home Health | Non-Medical Home Care (AHVA) |
|---|---|---|
| What’s covered | Skilled nursing, PT/OT/ST, medical social work | Personal care, companionship, respite, supervision |
| Who pays | Medicare Part A or Part B | Family, LTC insurance, VA, Medi-Cal CalAIM, IHSS |
| Hours available | Intermittent skilled visits (avg 1–3 hrs/wk) | 1 hour to 24 hours/day, scheduled by family |
| Duration | Typically 60-day episodes | As long as needed — months or years |
| Homebound requirement | Yes — physician must certify | No — anyone, any setting |
| Affected by 2026 cut | Yes — fewer visits, fewer agencies | No — separate funding lane |
“Most Orange County families assume Medicare will cover the daily care their parent needs. It almost never does. Medicare home health is a brief medical bridge — it’s not the kind of help that gets your mom safely through breakfast every morning. The 2026 cut tightens that bridge even further, which is why families need to plan for the non-medical layer separately and earlier than they think they do.”— Robert Gordon, AHVA Home Care
Why Orange County Should Pay Attention
Even though Orange County is a high-income market with deeper agency density than most of California, the national pressure is showing up locally. A handful of factors stack on top of the 1.3% federal cut:
1. A separate federal crackdown is reshaping local supply
In April 2026, federal investigators suspended Medicare billing privileges for 23 home health organizations and 447 hospices across the greater Los Angeles area as part of a $600 million Medicare fraud action. Some of those providers served Orange County referrals. Even when the bad actors deserve to be shut down, the immediate effect for OC families is fewer agencies bidding for hospital discharges in Anaheim, Santa Ana, Garden Grove, and Westminster — so wait times stretch, and home health visits can be slower to start. (We’ve covered the broader fraud story in our piece on the Anaheim Operation Never Say Die hospice fraud sweep.)
2. Hospital discharge planners are shifting families toward private-pay sooner
UC Irvine, Hoag, MemorialCare Long Beach, Providence St. Joseph, and Kaiser Permanente Orange County discharge planners increasingly pair Medicare home health referrals with a recommendation to start non-medical care concurrently — because the Medicare visits will end in 60 days, and the daily care need won’t. The 1.3% cut tightens the visit count inside that window even more, so the gap between “Medicare ends” and “Mom is fully back on her feet” lands on the family budget faster.
3. The “Medicare Advantage home health benefit” is a different animal
Roughly half of Medicare-eligible Orange County residents are now enrolled in Medicare Advantage plans (CalOptima OneCare, SCAN, Alignment, Anthem, Humana, Kaiser, UnitedHealthcare). Some MA plans offer modest in-home support benefits — a few hours a week of personal care, meal delivery, transportation. These are not the same as Medicare home health. They’re plan-specific supplemental benefits that vary year to year. We walk through how to read those benefits in our Medicare Advantage in-home help guide.
What Medicare Home Health Still Covers in 2026
The cut doesn’t change what Medicare home health covers — it changes how much agencies are paid for delivering it, which affects access. Here’s what’s still covered if your loved one qualifies:
- Part-time skilled nursing — wound care, IV therapy, injections, catheter management, post-surgical monitoring
- Physical, occupational, and speech therapy — gait training, post-stroke rehab, swallowing therapy, fall prevention exercises
- Medical social services — care coordination, community resource referrals (limited)
- Home health aide visits — but only when ordered alongside a skilled service, and only for short, task-specific visits (bathing, dressing) — never as ongoing daily care
- Durable medical equipment through Medicare Part B (walkers, hospital beds, oxygen) — covered separately, not affected by this rule
What Medicare home health does NOT cover
- 24-hour care, daily supervision, or live-in support
- Companionship
- Custodial / personal care without a skilled need
- Meal preparation, grocery shopping, housekeeping
- Respite for family caregivers
- Care for someone who is not certified homebound
If any of those bullets describe what your family actually needs day to day, Medicare was never going to be the answer — and the 2026 cut just makes it harder to even get the skilled visits Medicare does cover.
Your 10-Step Action Checklist if Medicare Home Health Is on the Horizon
Track Your Progress
How AHVA Fits — The Lane Medicare Cuts Don’t Touch
At Home VA Staffing operates entirely in the non-medical home care lane: hourly personal care, respite, dementia and memory care, companionship, and special-needs support across all 34 cities of Orange County. We are not a Medicare-certified home health agency, and we don’t bill Medicare. That’s actually a feature, not a bug — it means our funding model isn’t shrinking with the CMS 2026 final rule.
Our families pay for care through:
- Private pay — the most flexible option, with no eligibility hoops
- Long-term care insurance — most policies reimburse for licensed non-medical home care; we help with the documentation
- VA Aid & Attendance — wartime veterans and surviving spouses can offset all or most of their home care cost (see our 2026 VA Aid & Attendance guide)
- CalAIM Community Supports — for Medi-Cal members through CalOptima (we’re enrolled — see our CalOptima CalAIM guide)
- IHSS — for income-eligible OC residents via county social services
We coordinate seamlessly with whatever Medicare-certified home health agency your loved one is using, so the skilled visits and the daily care don’t trip over each other. When the 60-day Medicare episode ends, our hours stay constant.
Quick Quiz: Test Your Medicare Home Health Knowledge
5 Questions — How Well Do You Know the 2026 Rules?
Frequently Asked Questions
No. The rule cuts agency reimbursement, not coverage rules. If your loved one qualifies for Medicare home health (homebound, needs skilled care, has a doctor’s order, uses a Medicare-certified agency), the benefit still exists. But the cut puts financial pressure on agencies — fewer agencies will accept new patients, visits per episode may shrink, and wait times for non-urgent referrals can lengthen, especially in lower-margin ZIP codes.
Not really — at least not for the daily care most families actually need. Some Medicare Advantage plans (CalOptima OneCare, SCAN, Alignment, Anthem, Humana, Kaiser, UnitedHealthcare) offer modest supplemental benefits like a few hours of personal care, meal delivery, or transportation, but they’re plan-specific and usually capped at low hours per year. They don’t replace ongoing daily home care, and the benefit packages can shrink each annual enrollment period.
Yes, significantly. The 2026 VA Aid & Attendance benefit pays up to $2,795/month for a single veteran, $3,309/month for a married veteran, and $1,795/month for a surviving spouse — and it can be used to pay a non-medical home care provider like AHVA. It’s a separate funding stream from Medicare and isn’t affected by the CMS final rule. Start with the Orange County County Veterans Service Office (CVSO) at (714) 480-6555.
The CMS 2026 final rule only changes Medicare home health payments, not Medi-Cal. CalOptima members can still access In-Home Supportive Services (IHSS) for personal care and CalAIM Community Supports for personal care, respite, and meals through enrolled providers like AHVA. Federal Medicaid changes in the One Big Beautiful Bill Act will pressure California’s budget over time, but Medi-Cal home and community-based services for OC seniors remain available right now.
The same day, ideally. Hospital discharge planners frequently set up Medicare home health for the skilled visits, but the daily personal care, supervision, and respite need to start at the moment your loved one walks back through the front door. Waiting until the Medicare episode ends — day 60 — is the most common reason families end up in a re-hospitalization. AHVA can have a vetted caregiver in place within 24–48 hours across most of Orange County.
You usually can’t, until the day they call to say they can’t continue. Warning signs: fewer scheduled visits than the plan of care orders, frequent staff turnover, missed visits, or the agency telling you they’re “not accepting new referrals.” If your loved one is mid-episode and the agency closes, the discharging hospital’s case manager and your loved one’s primary care physician can help transfer the orders to another Medicare-certified agency. Layer non-medical home care underneath from day one and you have continuity even if the home health agency exits.
Worried About the 2026 Medicare Home Health Cuts?
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