CMS REMAINS SCHIZOPHRENIC
On one hand Medicare pushes remaining at home in lieu of going to a SNF. Elderly patients do better at home surrounded by loved ones. Many patients do not have long term insurance coverage, which shifts them to state run programs under Medicaid. Caregivers are amongs the worst paid in health care.
Many patients require post op or acute care at home if a caregiver is present. Outcomes are very dependent upon proper care.
Medicare home health was just hit again. CMS backed off the brutal 6.4 percent payment cut it originally proposed and finalized a 1.3 percent cut instead. Providers are calling it relief, but temporary relief doesn’t solve a structural problem that has been building for years. The methodology used to calculate these rates is still broken. Costs are rising. Staff shortages are worsening. Agencies are closing. And beneficiaries are the ones who will feel it first.
Behind the scenes, cumulative cuts since 2020 now approach fourteen percent. CMS’s formula under PDGM has been flawed since implementation, relying on assumptions about agency behavior that simply never reflected real operations. Meanwhile, MedPAC continues to argue that agencies are overpaid based on its own margin analysis even as nonprofit agencies report the weakest financials they have ever seen. The entire system is drifting toward a collapse that policymakers refuse to acknowledge.
What makes this situation worse is that most Americans do not understand how limited Medicare home health coverage has always been. It does not provide the type of long term personal care or custodial care families expect. Medicare home health is medically necessary and intermittent. It requires a physician plan of care, the patient must be homebound, and services are tied to skilled needs such as nursing, therapy, or wound care. You cannot simply “get help at home” under Medicare. You cannot get daily long term care, bathing, meal preparation, or ongoing supervision. Even when a patient qualifies, the benefit is short lived and heavily restricted.
Cuts like these shrink provider capacity even further. When agencies lose staff because reimbursement doesn’t support wages, the first thing that disappears is visit availability. Homebound beneficiaries face longer wait times. Rural communities lose access entirely. Hospitals discharge patients sooner and sicker, expecting home health to pick up the work while funding is moving in the opposite direction. The disconnect keeps widening.
Absent action from Congress, CMS will continue applying temporary and permanent rate adjustments every year. Agencies will continue trimming services, laying off headquarters staff, and shifting resources away from complex patients. A benefit that was already narrow will become even narrower. For seniors and caregivers this means fewer visits, fewer agencies willing to accept new patients, and a higher chance of being redirected to a skilled nursing facility instead of staying at home.
There are also downstream consequences that are never mentioned. CMS actuaries have already warned that reducing home health capacity pushes more beneficiaries into skilled nursing facilities, increasing Part A spending over ten years. Meanwhile hospital systems are trying to expand at home programs because they reduce readmissions, but they cannot scale if the home health workforce keeps shrinking. The math no longer works.
New fraud crackdowns add another layer of distortion to the payment formula. Several multi million dollar home health fraud cases from 2024 and 2025 involved sham providers using stolen identities to bill Medicare. These cases inflate cost report data and influence rate setting. CMS acknowledged these anomalies but says it lacks authority to filter them out. Providers are left paying for the behavior of criminals rather than being rewarded for doing things correctly.
Medicare home health has never been designed to cover true home care. Now even the limited version is in jeopardy. Families cannot rely on Medicare alone. Agents need to be having the conversation now before someone learns the hard way that Medicare does not pay for what they assumed it would. There are two realistic private market solutions.
The first is standalone home health care insurance that provides cash benefits to help pay for skilled or custodial support in the home. The second is a Hospital Indemnity plan that includes a home care rider. These products fill the gap created by Medicare’s limited home health benefit and the widening gap caused by CMS’s annual cuts. They are inexpensive compared to traditional long term care insurance and they pay when Medicare will not.
As Medicare continues to tighten payments and agencies are forced to cut back, the burden shifts to families. If a client wants to stay home and avoid facility placement, they need additional coverage. The warning signs are here. The trend is undeniable. Agents who educate their clients today prevent financial and emotional chaos tomorrow.
These short term fixes emphasize the importance of a NATIONAL HEALTH TRUST for American health.
