The Medicare Payment Advisory Committee (MedPAC) looks poised to again recommend a 7% payment cut for home health providers in its recommendations to Congress next spring.
 
MedPAC members met Dec. 5, 2025, to discuss payment adequacy for home health providers. Staff noted expectations that providers would see fee-for-service Medicare margins of 19% in 2026.
 
Based on cost report data, MedPAC estimates that 2024 margins for fee-for-service Medicare were at 21.2% for free-standing agencies. A quarter of all providers are seeing margins in excess of 31%, according to MedPAC.
 
For hospices, MedPAC again recommended that Congress roll back the 2.6% payment increase implemented in October.
 
Congress rarely moves in line with these recommendations, but MedPAC’s message complicates the industry’s arguments around broader payment relief — Medicaid and Medicare Advantage plans pay at a much lower rate than traditional Medicare.
 
In making the recommendations, MedPAC chairman Michael Chernew argued the proposed cuts are about sending a signal to Congress that something has to be done.
 
“The signal is that the margins are very high and we think the margins should be lower,” he said. “We don’t think they should go down as rapidly as one might, because we want to see how the sector responds. Within that basic framework, we’re just picking a number that is reasonable — more judgment than science.”
 
More info: See MedPAC’s presentation on home health payments at https://tinyurl.com/baea97w4.