CMS has released two major proposed rules that could significantly reshape Medicare payments for home health and End-Stage Renal Disease (ESRD) services in Calendar Year 2026. One rule cuts payments for home health agencies by 6.4% and the other brings modest updates and a major policy shift for dialysis providers. Public comments for both rules are due by September 2, 2025. Here’s what providers across both settings should keep an eye on. 

CMS has proposed a 6.4% decrease in aggregate Medicare payments to home health agencies for CY 2026—an estimated $1.135 billion reduction compared to 2025. Although the rule includes a 2.4% market basket increase, that bump is far outweighed by several downward adjustments: a 3.7% permanent behavioral adjustment, a 4.6% temporary clawback to recoup prior overpayments under the Patient-Driven Groupings Model (PDGM), and a 0.5% reduction tied to outlier recalibrations. Other provisions would allow non-physician practitioners to conduct face-to-face encounters, revise the HHCAHPS patient survey, and require agencies to submit OASIS data for all payers—not just Medicare. 

CMS’ proposed cuts align with recommendations from the Medicare Payment Advisory Commission (MedPAC) to reduce home health payments. According to MedPAC, home health agencies have high Medicare margins (averaging over 20% for freestanding home health agencies) and have altered care patterns under the new PDGM in ways that boost payments. MedPAC argues that these adjustments are necessary to bring payments more in line with actual costs and utilization trends. 

However, the proposed payment cuts are concerning to home health providers and advocates. The steep cuts could jeopardize patient access and disrupt care delivery models, especially for high-need and rural populations.  

The CY 2026 ESRD Prospective Payment System rule proposes a 2.6% increase to the base payment rate for dialysis services, raising it from $273.82 in 2025 to $281.06 in 2026. After adjustments, the net increase would likely be closer to 1.9%. The proposal also includes several technical updates, including the continuation of the Transitional Drug Add-On Payment Adjustment for qualifying new drugs and the introduction of a new geographic adjustment for dialysis providers in non-contiguous areas such as Alaska, Hawaii, and U.S. territories. There are also small refinements to the payment structure for acute kidney injury dialysis services. 

On the quality front, CMS is looking to simplify the ESRD Quality Incentive Program (QIP) by removing three equity-focused measures and cutting down the patient experience survey (ICH CAHPS) from 62 to 39 questions—changes that would take effect in payment year 2028. 

Perhaps the most significant change in this rule is CMS’ proposal to end the ESRD Treatment Choices Model at the end of 2025. CMS cited a lack of statistically significant progress in key areas like transplant waitlisting and home dialysis adoption, and estimates ending the model could save around $1 million in federal spending. 

What’s Next? 

Both rules highlight CMS’ broader goals of aligning payments with care needs, eliminating waste, and streamlining quality reporting. However, they also raise concerns about unintended consequences for patient access, care innovation, and provider sustainability—especially in home health. If you would like to submit feedback for these comments to AHPA’s public policy team, please email Rylie.Granville@AdventHealth.com. We’ll continue tracking developments and share updates as the final rules approach later this year.