MedPAC Considers Cuts to Home Health Payment Rates

ALEXANDRIA, Virginia—The National Alliance for Care at Home says the Medicare Payment Advisory Commission’s (MedPAC) draft recommendations to cut home health payment rates by 7% for calendar year 2027 and eliminate payment updates for hospice care in fiscal year 2027 are “dangerous and misguided.” 

The Alliance said the commission’s vote would result in recommendations that, if implemented, would decrease Medicare spending by $750 million to $2 billion in one year for home health alone, with cumulative impacts of up to $25 billion over five years. For hospice, the elimination of payment updates would reduce spending by $250 million to $750 million over one year and between $1 billion and $5 billion over five years.

“As the Commission observed, these are vital benefits that some of our nation’s most vulnerable Medicare beneficiaries depend on, and it is important to ensure that older Americans can continue to access these benefits, wherever they may call home,” the Alliance said in an earlier letter written to MedPAC. “Recommendations to reduce the home health payment rates and to provide no payment updates for hospice care risk undermining provider capacity and patient access to services that are demonstrably cost-effective, align with patient and family preferences, and contribute to lower overall Medicare program spending.”

“MedPAC’s dangerous and misguided recommendations to reduce the Medicare home health base payment rate by 7% for CY 2027 and eliminate the update to the 2026 Medicare base payment rate for hospice do not reflect both home health and hospice agencies’ operating realities as well as the cumulative impact of recent policy changes,” said Steve Landers, CEO for the Alliance. “For home health agencies, any cut—let alone one of such great magnitude—will threaten the ability to meet individuals’ healthcare needs. Yet again, the commission is failing to understand the operating reality providers face and the potential patient harm that any further payment cuts pose.”

Home health agencies have already responded to cumulative year-after-year payment cuts by narrowing service offerings, reducing service areas and in some cases closing altogether, the Alliance said. In November, the Centers for Medicare & Medicaid Services made adjustments to the Home Health Prospective Payment System final rule for 2026 in response to industry advocacy that demonstrated flaws in the approach and signaled concerns about access to care, the group added.

The Alliance said the commission’s recommendation reflects a lack of understanding of the Medicare hospice benefit and how its services support patients and families in the setting they prefer most. 

“As a coalition of national industry organizations previously stated in a letter to Congress, any misguided attempts to incorporate hospice into Medicare Advantage ‘seek to solve a problem that does not exist, upending hospice as we know it, and subjecting dying patients to new administrative hurdles, reduced choice, and the risk of diminished care,’” the organization said.

The Alliance said it looks forward to working with MedPAC to ensure its understanding of the true value of home-based care. The Alliance added it is dedicated to advancing policies that support care at home for millions of Americans at all stages of life, including sustainable payment policy that supports patient access to care and targeted oversight to root out bad actors.

MedPAC’s final report with these recommendations is expected in March.