The Home Health Stabilization Act of 2025 amends section 1895(b)(3)(D) of the Social Security Act to blunt planned reductions to Medicare’s Home Health Prospective Payment System (HH PPS) for calendar years 2026 and 2027. It directs the Secretary of Health and Human Services to apply a positive adjustment that fully offsets two downward factors that appeared in the HH PPS proposed rule for 2026 and to set the 2026–2027 national standardized 30‑day payment rate on a 2025 base, with limited further adjustments.
Operationally, the bill prevents CMS from using certain statutory adjustment mechanics to claw back those additional payments for 2026 and 2027 by excluding the extra amounts from the ‘‘actual expenditures’’ calculation that triggers future offsets. The change aims to stabilize provider cash flow and beneficiary access to home health services in the near term, while raising budget and implementation questions about neutrality, scoring, and administrative discretion.
At a Glance
What It Does
The bill requires the Secretary to neutralize two negative adjustment factors applied in the CY2026 HH PPS proposed rule by adding a positive adjustment to the standard 30‑day payment rate for 2026 and 2027, and to base those years’ rates on the 2025 rate with only specified updates. It also directs CMS to exclude the extra payments from the formula that would otherwise trigger offsets under the statute.
Who It Affects
Primary targets are Medicare‑certified home health agencies (including rural and small providers), Medicare beneficiaries who rely on home health services, CMS/HHS as the implementing agency, and federal budget scoring (Medicare trust fund impacts). Medicare Advantage plans may feel secondary effects through underlying fee schedules and provider negotiations.
Why It Matters
This is a narrowly framed statutory intervention that suspends automatic, formulaic rate reductions for two years and uses exclusion language to prevent immediate statutory offsets — effectively creating a temporary carve‑out to protect short‑term access. That combination changes how CMS must calculate the HH PPS rate and how future reconciliations are performed.
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What This Bill Actually Does
The statutory change operates in three linked steps. First, for calendar years 2026 and 2027 the bill requires a positive upward adjustment to the standard national, standardized 30‑day HH PPS payment so that the two negative factors identified in the CY2026 proposed rule are fully offset.
Those two factors are a Permanent Adjustment Factor of −4.059 percent and a Temporary Adjustment Factor of −5.0 percent; the bill neutralizes their combined effect for the two specified years.
Second, the bill instructs CMS to set the 2026 and 2027 national standardized 30‑day payment rate by carrying forward the 2025 rate as the base, applying the positive offset described above, and then applying other routine statutory updates — but explicitly forbids relying on the statutory clauses that would otherwise reduce the rate under the normal multi‑year adjustment mechanics. In short, CMS must use the 2025 baseline plus the offset and may not apply the particular downward adjustments identified in the statute for those two years.Third, to prevent the payments from being later balanced out, the bill removes those added dollars from the ‘‘actual expenditures’’ figure used to calculate any statutory offsets under the statute’s reconciliation clauses.
This means CMS cannot count the extra payments when determining whether to adjust future rates downward to maintain budget neutrality. The bill also authorizes the Secretary to implement the positive adjustment by program instruction (an administrative action that can be quicker and narrower than notice‑and‑comment rulemaking).Finally, the bill contains a technical construction clause stating that this action should not be read as Congress endorsing the methodology CMS used in its earlier 2023 final rule, leaving methodological disagreements unresolved even as the statute mandates short‑term payment stability.
The Five Things You Need to Know
The bill instructs CMS to fully offset a −4.059% Permanent Adjustment Factor and a −5.0% Temporary Adjustment Factor applied in the CY2026 HH PPS proposed rule (90 Fed. Reg. 29108).
For 2026 and 2027 the statute ties the national standardized 30‑day period payment rate to the 2025 rate (with specified updates) rather than letting the identified statutory clauses reduce it.
CMS may implement the required positive adjustment by program instruction or another administrative mechanism rather than only through notice‑and‑comment rulemaking.
The bill directs CMS to exclude the additional amounts paid because of these adjustments from the ‘‘actual expenditures’’ calculation that triggers future offsets, preventing automatic budget‑neutral clawbacks for 2026–2027.
A separate provision clarifies that this act does not constitute congressional approval of CMS’s 2023 HH PPS methodology, preserving statutory disagreement about past rulemaking.
Section-by-Section Breakdown
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Short title
Designates the Act as the 'Home Health Stabilization Act of 2025.' This is purely formal but signals the bill’s focus on short‑term payment stabilization rather than a permanent statutory overhaul.
Positive offset for 2026–2027 to neutralize two downward factors
Adds a clause requiring the Secretary to apply a positive adjustment for 2026 and 2027 that fully offsets the two downward adjustment factors identified in the CY2026 proposed rule. Practically, this requires CMS to reverse those specific proposed percentage cuts when calculating the HH PPS standard 30‑day payment for the two years. The clause expressly permits CMS to implement that change by program instruction, which shortens the administrative path but raises procedural questions (see The Fine Print).
Base 2026–2027 rates on 2025 level and limit further statutory reductions
Directs CMS to calculate the national standardized 30‑day payment rate for 2026 and 2027 using the 2025 rate as the base, applying the positive adjustment from clause (iv) and other standard statutory updates, but prohibits further adjustments under the particular statutory clauses (the normal multi‑year adjustment clauses) that would otherwise lower the rate. This creates a two‑year freeze relative to the downward mechanics targeted by the bill while preserving other update authorities.
Exclude added payments from expenditure reconciliations
Requires CMS to exclude the extra amounts paid because of clauses (iv) and (v) from the 'actual expenditures' measure used under the statute’s reconciliation provisions, and bars using clauses (ii) or (iii) to offset those amounts. Operationally, this prevents the statutory reconciliation process from treating the two‑year increase as a spending spike that would trigger automatic downward adjustments in subsequent years.
Construction clause about prior CMS methodology
States that nothing in the new law should be read as congressional approval or disapproval of CMS’s underlying HH PPS methodology from the CY2023 final rule. That preserves legal distance from prior rulemaking choices while mandating a limited two‑year payment intervention.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicare-certified home health agencies (especially rural and small providers) — The two‑year offset and 2025 base reduce the immediate downward pressure on revenue, improving near‑term cash flow and lowering the risk of closures or service reductions.
- Medicare beneficiaries who rely on home health services — Stabilized provider finances aim to preserve access to in‑home care and reduce potential service interruptions, particularly in areas with thin provider networks.
- State Medicaid programs and local providers that coordinate with Medicare home health — Reduced churn in home health capacity can ease coordination challenges for dual‑eligible and post‑acute care pathways.
- Trade associations and provider networks — Industry groups gain a predictable two‑year reprieve to plan operational and financial responses without sudden rate cuts.
Who Bears the Cost
- The Medicare Trust Fund / federal budget — Higher payments in 2026–2027 raise near‑term outlays; excluding those dollars from reconciliation shifts or delays budgetary correction, affecting actuarial projections and potential future rates.
- CMS/HHS administration — The agency must implement carve‑outs, adjust rate‑setting calculations, and prepare legal defensibility for using program instruction, imposing operational work and potential litigation risk.
- Medicare Advantage plans and downstream payers — Insurers that negotiate with home health providers or build rates off Medicare fee schedules may face higher negotiated rates or cost pressures.
- Taxpayers and federal deficit managers — If the added payments are not offset elsewhere, the cost must be absorbed within Medicare financing or broader appropriations, creating pressure on future policymaking.
Key Issues
The Core Tension
The bill pits two legitimate goals against each other: preserving immediate beneficiary access and provider viability by neutralizing short‑term payment cuts, versus maintaining budget neutrality and the integrity of the statutory rate‑setting framework; stabilizing payments today may protect access but shifts financial and actuarial consequences into the future and reduces CMS’s flexibility to enforce cost discipline.
The bill creates a tidy near‑term fix but leaves several operational and policy questions unresolved. First, authorizing CMS to use program instruction accelerates implementation but increases exposure to procedural challenge: program instructions are less robust than notice‑and‑comment rules and courts sometimes scrutinize whether an agency exceeded delegated authority when it sidesteps rulemaking.
Second, excluding the additional payments from the 'actual expenditures' calculation effectively prevents the statute’s budget‑neutral reconciliation mechanism from operating over these two years. That achieves stability now but pushes the budgetary consequence into the future or onto other parts of Medicare financing, complicating actuary scoring and long‑term solvency assumptions.
Third, tying 2026–2027 rates to a 2025 base while barring certain statutory adjustments may create a ‘‘cliff’’ risk: once the two‑year window closes, adjustments that were deferred could trigger larger corrections later or create incentives for behavioral responses (such as changes in coding or service intensity) during the protected period. Finally, the bill explicitly disclaims endorsement of CMS’s prior methodology, which keeps methodological disagreements alive and could lead to parallel rulemaking or litigation about the correct long‑run approach to HH PPS price‑setting.
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