The Medicare Payment Advisory Commission (MedPAC) has released its March 2026 Report to Congress: Medicare Payment Policy, offering a detailed assessment of Medicare home health services and recommendations that could significantly impact providers nationwide.

While the report includes a mandated evaluation of recent payment reforms, it also advances policy recommendations that have raised serious concerns across the home care community.

PDGM Impact: Fewer Visits, Stable Quality

A central focus of the report is MedPAC’s evaluation of the Patient-Driven Groupings Model (PDGM), implemented in 2020 to shift home health reimbursement away from therapy volume and toward patient characteristics.

MedPAC found that PDGM has not significantly changed overall access to home health services. In 2023, approximately 8.6% of Medicare fee-for-service (FFS) beneficiaries used home health care — virtually unchanged from pre-PDGM trends.

However, the report identified a notable shift in service utilization:

• Home health visits per episode declined by approximately 15%, driven largely by fewer therapy visits
• Skilled nursing visits also decreased modestly, despite no direct payment incentive changes
• The average duration of care remained stable, with about 2.7 30-day periods per user

Importantly, MedPAC concluded that these reductions in visits were not associated with meaningful declines in quality outcomes. Measures such as hospitalization rates, functional improvement, and discharge outcomes remained largely unchanged.

The Commission suggests that the reduction in therapy may reflect a realignment of services with patient needs rather than overutilization driven by prior payment incentives.

Financial Performance Remains Strong — On Paper

Despite reductions in service volume, MedPAC reports that Medicare home health margins remain high. In 2023, average margins reached approximately 24.1%, with most provider categories exceeding 20%.

MedPAC interprets these margins as evidence that payments continue to exceed costs under current policy. However, the report acknowledges limitations in its methodology and the broader disruption caused by the COVID-19 pandemic, which may affect the interpretation of these findings.

MedPAC Recommends Payment Cuts

Based on its assessment of payment adequacy, MedPAC recommends that Congress reduce Medicare home health base payment rates by 7% for calendar year 2027.

These recommendations align with MedPAC’s long-standing position that Medicare payments for post-acute care sectors exceed costs.

Industry Pushback: “Dangerous and Misguided”

The National Alliance for Care at Home has strongly opposed these recommendations, warning that further payment reductions would exacerbate existing access challenges.

In a statement following the report’s release, the Alliance emphasized that continued cuts risk undermining provider capacity at a time of growing demand and workforce shortages. The organization noted that cumulative payment pressures have already forced agencies to scale back services, limit geographic coverage, or exit the market entirely.

“Recommendations to reduce home health payment rates…risk undermining provider capacity and patient access to services that are demonstrably cost-effective,” said Jennifer Sheets, CEO of the Alliance.

The Alliance also highlighted concerns that MedPAC’s analysis does not fully reflect current operating realities, including labor shortages, rising costs, and ongoing regulatory pressures.

What This Means for Providers

It is important to note that MedPAC’s report and recommendations are advisory in nature; Congress ultimately determines whether and how these policies are adopted and implemented.

However, the March 2026 MedPAC report reinforces several key trends shaping the home health landscape:

• Payment policy continues to prioritize cost containment over access considerations
• Utilization patterns are shifting under PDGM, with fewer visits per episode
• Quality outcomes remain stable, despite reduced service intensity
• Federal policymakers may pursue additional payment reductions in the near term

For providers, the report signals continued pressure on Medicare reimbursement and underscores the importance of sustained advocacy at both the federal and state levels.

HCAF will continue to monitor federal developments and work with national partners to ensure that policymakers understand the real-world impact of payment policy decisions on providers, patients, and access to care.