2026 Home Health Quality, AI, and Payment Changes: What Agencies Need to Prepare for Now

Executive Summary

CMS is signaling a shift in expectations for home health agencies heading into CY 2026. Quality reporting timelines are tightening, federal oversight is becoming more data- and AI-driven, and Medicare payment pressure remains significant.

Agencies are being asked to demonstrate timely, defensible quality oversight, supported by structured, reliable data. While payment reductions are a real concern, the larger signal is operational: agencies that rely on reactive, manual, or fragmented compliance processes will feel the impact first.

Quality Expectations Are Rising and Timelines Are Shrinking

CMS is placing increasing emphasis on how quickly and accurately agencies can identify, correct, and act on quality data.

Today, home health agencies have 4.5 months to review and correct assessment data used to calculate quality measures. CMS is now actively seeking input on reducing that correction window to 45 days. While this change is not yet finalized, the direction is clear: quality data is expected to be reviewed and acted on much closer to real time.

If implemented, this shift would significantly alter internal workflows. Agencies would need earlier visibility into documentation gaps, more frequent review of OASIS and audit data, and far less reliance on end-of-quarter or retrospective cleanup. Quality oversight would move from a periodic exercise to a continuous one.

CMS has also finalized changes to the Home Health Quality Reporting Program, including the removal of the COVID-19 vaccine measure and several social determinants of health items, while simultaneously laying the groundwork for future expansion of digital quality measurement and interoperability. Together, these changes reinforce CMS’s expectation that quality programs evolve toward faster, more structured, and more actionable data use.

HHCAHPS and HHVBP: Delayed Impact, Long-Term Consequences

Significant revisions to HHCAHPS were also finalized, with direct implications for Star Ratings and the Home Health Value-Based Purchasing (HHVBP) model.

Although new HHCAHPS measures will not be publicly reported until October 2027, agencies should not underestimate their importance. CMS requires four quarters of data before public reporting begins, meaning the performance patterns agencies establish well before 2027 will ultimately shape how they are scored and perceived.

CMS is also seeking comment on whether future HHCAHPS measures under HHVBP should be evaluated based solely on achievement, rather than achievement and improvement. If adopted, this would reduce agencies’ ability to recover from early performance issues and place even greater weight on consistent, sustained quality outcomes.

The takeaway for agency leaders is simple: the clock is already running, even if public reporting is not.

The Federal AI Strategy: A Shift in How Oversight Will Work

At the same time CMS is tightening quality expectations, the U.S. Department of Health and Human Services has announced a department-wide AI strategy designed to modernize how federal agencies operate.

HHS has emphasized goals such as improving efficiency, increasing consistency in oversight, accelerating analysis of large datasets, and enhancing the ability to identify risk patterns and outliers. While the strategy does not introduce new regulations for home health agencies, it does signal how existing data will increasingly be reviewed and interpreted.

As federal oversight becomes more technology-driven, data structure, traceability, and consistency matter more than volume. Agencies that rely on spreadsheets, disconnected systems, or manual aggregation may struggle to keep pace in an environment where automated analysis highlights trends and gaps faster than human review alone.

In this context, quality programs are no longer just about compliance. They are about ensuring that the data agencies already produce can withstand more sophisticated scrutiny.

CY 2026 Home Health PPS: Understanding the Financial Reality

Against this backdrop of rising quality and data expectations, CMS has finalized the CY 2026 Home Health Prospective Payment System (PPS) rule, which introduces meaningful reimbursement pressure.

Although the rule includes a 2.4% payment rate update, that figure does not reflect the full financial impact. After applying permanent and temporary PDGM-related adjustments, the national standardized 30-day payment rate decreases from $2,057.35 in CY 2025 to $1,933.61 in CY 2026. That equates to nearly a 9% reduction, even for agencies that submit required quality data.

The Alliance for Care at Home has characterized this as the largest single-year cut in recent memory, underscoring the seriousness of the change.

PDGM Adjustments Continue to Drive Payment Volatility

CMS maintains that changes in provider behavior under PDGM resulted in spending above statutory targets, and it continues to apply adjustments to recoup those amounts.

From CY 2020 through CY 2026, CMS has implemented or proposed permanent payment adjustments totaling –12.8%, with the CY 2026 permanent adjustment alone set at –4.059%.

Temporary adjustments remain a major factor as well. CMS estimates that $5.3 billion in temporary adjustments were measured from CY 2020 through CY 2024, with $4.5 billion still outstanding. For CY 2026, CMS proposed an additional –5.0% temporary adjustment, representing approximately $786–$815 million in reduced payments across the industry.

For agencies, this means reimbursement uncertainty tied to PDGM is not resolved and must be factored into both short- and long-term planning.

Utilization Trends CMS Is Using to Support Cuts

CMS continues to rely on utilization data to justify payment reductions. Between CY 2020 and CY 2024, 30-day periods of care declined from 8.42 million to 8.12 million, while unique Medicare beneficiaries dropped from 2.85 million to 2.62 million. During the same period, average visits per 30-day period fell from 8.59 to 7.86.

CMS has also pointed to declining LUPA rates and has asserted that the 30-day payment rate remains approximately 33% higher than average costs, reinforcing its position that further reductions are warranted.

Whether agencies agree with CMS’s conclusions or not, these assumptions continue to shape policy and payment.

What This Means for Agencies Heading Into CY 2026

Taken together, these developments tell a consistent story. CMS and HHS are raising expectations around quality oversight, data readiness, and operational discipline, while reimbursement pressure continues to intensify.

A nearly 9% cut to the 30-day payment rate, combined with tighter quality timelines and more technology-driven oversight, leaves little room for inefficiency. Reactive compliance models and manual workarounds become more costly under these conditions.

Preparing Now, Not Later

Agencies that will be best positioned for CY 2026 and beyond are those that treat quality and compliance as ongoing operational functions, not episodic tasks. That means centralizing oversight, reviewing performance trends regularly, documenting QAPI activity as it happens, and reducing dependence on spreadsheets, binders, and last-minute data pulls.

In a tightening regulatory and reimbursement environment, these capabilities are no longer optional. They are foundational to financial stability, survey readiness, and long-term sustainability.

A Final Thought: Turning Pressure Into Preparedness

None of the changes outlined here exist in isolation. Tighter quality timelines, evolving oversight models, and continued reimbursement pressure are converging at the operational level. The agencies that navigate this environment most effectively will not be the ones working harder or reacting faster at the last minute. They will be the ones that have structure, visibility, and consistency built into how quality is managed day to day.

This is where purpose-built quality infrastructure matters. Platforms like QAPIplus were created specifically to help home health agencies centralize QAPI activity, monitor trends as they emerge, document improvement in real time, and maintain readiness without relying on spreadsheets, binders, or institutional memory. Not as a response to any one rule, but as a way to make quality oversight sustainable as expectations continue to rise.

As CY 2026 approaches, the question for agency leaders is less about any single policy change and more about whether their current systems can support faster insight, defensible documentation, and continuous improvement without adding burden to already-stretched teams.

The direction is clear. Preparedness is no longer episodic. It’s operational. Want to learn more about QAPIplus? Click here to book a consult with us today.