SimiTree Expert Analysis Featured in Home Health Care News: CMS Payment Cuts Threaten Industry Survival 

Home Health Agencies Face Historic 6.4% Medicare Rate Reduction – SimiTree’s Financial Consulting Team Provides Critical Industry Guidance 

The home health industry is confronting what experts are calling an unprecedented crisis. The Centers for Medicare & Medicaid Services (CMS) has proposed devastating payment cuts for 2026, including a staggering 6.4% reduction in Medicare payments that will slash $1.135 billion from industry spending. As agencies nationwide scramble to understand the financial implications, SimiTree’s expertise has become a critical resource for industry leaders. Read the full proposed rule fact sheet now.   

SimiTree’s Vice President of Financial Consulting, Brian Harris, was extensively quoted from SimiTree’s recent webinar in Home Health Care News (HHCN) in their comprehensive coverage “Proposed CMS Cuts, Big Beautiful Bill Set Stage For Access Crisis, M&A Fallout In Home Health”, providing expert analysis on these sweeping changes that threaten to fundamentally reshape home health care delivery. Watch the full webinar by accessing our webinars page.  

The Scope of the Crisis: Understanding the CMS Payment Cuts 

This marks the fourth consecutive year of permanent reductions to home health payments, but industry experts warn that 2026 represents a turning point. As Harris explained in his HHCN coverage, “CMS has proposed these permanent adjustments every year in the proposed rule, and then, ultimately, especially in the last three rulemaking years, cut it in half come time for the final rule.” 

However, Harris cautioned agencies against assuming similar reductions will occur this year. “Even if they take a similar approach this year, it’s likely still going to result in an overall decrease in spending,” he noted. 

Key Components of the Proposed Cuts: 

• Permanent Adjustments: A 4.059% rate reduction targeting what CMS views as ongoing overpayments to the home health industry. 

• Temporary Behavioral Adjustments: For the first time since the Patient-Driven Groupings Model (PDGM) implementation, CMS is implementing an additional 5% reduction designed to “claw back” approximately $5.3 billion in perceived overpayments from previous years. 

• Wage Index Changes: 71 Core-Based Statistical Areas (CBSAs) face the maximum 5% wage index reduction, compounding the financial impact for agencies in these regions. 

Industry Leaders Sound the Alarm 

The reaction from home health providers and advocacy groups has been unprecedented. Dr. Steve Landers, CEO of the National Alliance for Care at Home, called the cuts a “life and death safety issue” and a “systematic dismantling of the home health safety net.” 

Katie Smith Sloan, president and CEO of LeadingAge, warned that the proposed cuts represent a “death knell for many quality agencies,” particularly impacting the 7% of agencies that are nonprofit organizations. 

As Harris noted in the HHCN coverage, “It’s important to note that even if they take a similar approach this year, it’s likely still going to result in an overall decrease in spending. We’re looking at just a 4.059% rate reduction specifically to this permanent adjustment factor. That doesn’t even count in some of the other pieces that we are looking at here.” 

Geographic Impact Varies Dramatically 

One of the most critical insights Harris shared in his HHCN interview is that the 6.4% figure represents a broad average that masks significant regional variations. As Harris explained in the coverage, agencies need to “analyze the true financial impact of the proposed cuts” because “while the 6.4% reduction is universal, each agency must study the actual financial impact of each of its branches.” 

SimiTree’s analysis revealed dramatic variations by geographic region: 

• Santa Fe, New Mexico: Facing a devastating 9.6% decrease in base rates 

• Reading, Pennsylvania: Experiencing roughly break-even rates despite an 8.85% positive wage index adjustment 

This geographic disparity underscores the importance of agency-specific financial analysis – exactly the type of expertise SimiTree provides to home health organizations nationwide. 

Clinical and Operational Changes Add Complexity 

Beyond the immediate financial impact, the proposed rule includes significant changes to the PDGM case mix system that will affect how agencies are reimbursed for patient care: 

• Comorbidity Adjustments: CMS proposes removing five comorbidity categories while adding three new ones, potentially impacting reimbursement for specific patient populations. 

• Functional Scoring Changes: Notable adjustments to functional impairment scoring, including significant point reductions for certain ambulation scores that could affect a substantial portion of home health episodes. 

• Quality Reporting Updates: Multiple changes to Home Health Quality Reporting Program (HHQRP) measures and Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAPS) scoring methodology, the latter of which will also change the performance measurement for the Home Health Value Based Purchasing (HHVBP) program. 

SimiTree’s Strategic Recommendations for Survival 

Drawing from years of experience helping home health agencies navigate regulatory changes, SimiTree’s experts outlined critical steps for survival and success: 

1. Immediate Financial Impact Assessment 

As Harris emphasized in the HHCN coverage, companies should conduct a financial assessment at the branch level, analyzing wage index changes, case mix implications, and regional variations to understand the revenue impact. 

2. Comprehensive Organizational Assessment 

As Harris advised in the HHCN article, “I really recommend, now more than ever, perform an organizational assessment, identify both revenue and expense opportunities. You want to start that now.” 

3. Coding and OASIS Optimization 

With margins under unprecedented pressure, accurate coding becomes even more critical. As Harris noted in the HHCN coverage, companies should “ensure they optimize their reimbursement and outcomes by prioritizing coding and OASIS, including considering outsourcing some of these tasks.” SimiTree’s experts recommend evaluating whether in-house resources are adequate or if outsourcing is a strategic option. 

4. Technology and Efficiency Investments 

Harris highlighted the importance of “exploring technology partners” to help agencies operate more efficiently and manage the challenging financial landscape ahead. 

The Advocacy Imperative: Industry Must Act Now 

Perhaps most importantly, Harris stressed in his HHCN interview that historical patterns of CMS reducing proposed cuts in final rules don’t usually translate as aggressively. “We often see only half of the proposed cuts implemented,” as HHCN noted. However, Harris cautioned that “even if they take a similar approach this year, it’s likely still going to result in an overall decrease in spending.” 

“We need all the perspectives looking at this, we need everyone analyzing the data,” Harris urged. “This advocacy between now and August 30th is going to be crucial to getting CMS to dial back and fully understand the impact that this 6.4% spending decrease is going to have on agencies.” 

Why SimiTree’s Expertise Matters More Than Ever 

SimiTree’s recognition as a leading voice in home health financial consulting – as evidenced by our extensive coverage in HHCN – reflects our deep understanding of the complex regulatory environment facing the industry. Our team’s ability to translate complex CMS rules into actionable strategic guidance has never been more valuable. 

Our comprehensive approach includes: 

• Detailed financial impact modeling for individual agencies and branch locations 

• Case mix optimization strategies to maximize reimbursement under new PDGM parameters 

• Operational efficiency assessments to identify revenue and expense opportunities 

• Quality reporting and VBP preparation to protect future payment streams 

• Technology evaluation and implementation support for improved operational performance 

The Bottom Line: Survival Requires Expert Guidance 

The proposed CMS payment cuts represent an existential threat to home health agencies across the nation. As Harris noted in his HHCN coverage, “even companies that work aggressively to prepare for these changes may not remain unscathed if such deep cuts are implemented.” 

However, agencies that take immediate action – conducting comprehensive financial assessments, optimizing operations, and preparing for the new regulatory landscape – will be best positioned to survive and thrive despite these challenging circumstances. 

SimiTree’s team continues to analyze the proposed rule and develop strategic recommendations for our clients. Our expertise, as recognized by leading industry publications like HHCN, provides the guidance agencies need to navigate these unprecedented challenges. 

Take Action Today 

The window for preparation is closing rapidly. Don’t wait until the final rule is published to begin your strategic planning. SimiTree’s experts are ready to help you understand your agency’s specific financial impact and develop a comprehensive survival strategy. 

Contact SimiTree today to schedule your organizational assessment: 

• Fill out our contact form: https://simitreehc.com/contact-us/  

• Call us directly: 800-949-0388 

Our team is standing by to help you navigate the most challenging regulatory environment in home health history. Don’t face these CMS payment cuts alone – let SimiTree’s proven expertise guide your agency through the storm ahead. 

For more details on the proposed rule, visit the Federal Register.   

For additional information about the Home Health Prospective Payment System, visit: https://www.cms.gov/medicare/medicare-fee-for-service-payment/homehealthpps and https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.