CMS’s proposed Calendar Year 2026 Home Health Prospective Payment System and DMEPOS Competitive Bidding Rule has triggered alarms across the healthcare landscape.
With a 6.4% payment cut for home health agencies and sweeping DMEPOS changes, it represents a consequential regulatory shift.
The proposed policies squeeze margins and risk accelerating the creation of home health deserts, entire regions where patients have no access to in-home care or essential DME.
The Core of the 2026 Home Health Rule
CMS is proposing a net 6.4% reduction in home health payments, totaling $1.135 billion less in 2026 compared to the prior year.
This combines a modest market basket increase of 3.2% with a -0.8% productivity adjustment and a -4.059% permanent behavioral adjustment.
Layered on top is a -5% temporary adjustment intended to recoup $5.3 billion in alleged overpayments from 2020–2024.
For home health agencies already operating on tight margins, this is a potential structural shock.
The Emergence of Home Health Deserts
Access to home health services has already been declining. CMS data shows that half of all U.S. counties lost at least one home health agency between 2020 and 2024.
More than 70% of counties report declines in traditional Medicare patient volume served by home health providers.
The proposed rule threatens to accelerate this trend.
Rural and underserved areas are at greatest risk.
Thin margins, high travel costs, and limited staffing pools mean a 6.4% cut can tip an agency from barely sustainable to closed.
Once an agency exits a county, restarting access is slow and costly.
For patients with chronic conditions or post-acute needs, that gap can be life-altering.
What This Means for DME/HME Providers
DME suppliers are deeply tied to home health ecosystems. When agencies close or contract service areas, DME referrals drop.
Patients who would have been connected to equipment during home health episodes may never enter the referral pipeline.
The proposed rule also directly impacts DME through DMEPOS competitive bidding expansions and a shift to annual accreditation.
Competitive bidding for continuous glucose monitors, insulin pumps, and even urological supplies signals a major market shift. The move from purchase-based payments to monthly rentals for diabetes technology requires suppliers to rethink business models and cash flow.
Remote Item Delivery (RID) Competitive Bidding
CMS is introducing a new Remote Item Delivery bidding framework for mail-order and hybrid DME distribution.
This model acknowledges the growth of remote distribution but adds operational complexity: contracted suppliers must provide both mail-order and any required in-person services.
For suppliers specializing in remote distribution, this creates new compliance and staffing needs.
For local DMEs, it may mean competing with national players under a single bid program.
Annual Accreditation: Continuous Compliance
The rule proposes shifting all DMEPOS accreditation to an annual cycle.
Currently valid for three years, accreditation would now require full renewal every 12 months.
This means continuous survey-readiness, perpetual policy updates, and increased AO fees. CMS estimates $128M in new supplier costs industry-wide, though it projects $660M in Medicare Trust Fund savings by removing non-compliant suppliers.
For smaller DMEs, especially those serving rural areas, the cost and operational burden could be decisive.
Those that can’t sustain annual compliance infrastructure risk losing billing privileges, and leaving patients without local access.
Patient Care Consequences
Reduced access to home health and DME services leads to:
- Delayed hospital discharges due to lack of home support
- Increased readmissions and ER visits
- Loss of independence for seniors who rely on in-home care
- Worse chronic disease outcomes without timely DME provision
Ostomy and urological supplies in competitive bidding raise particular concerns.
These products are patient-specific, and poor product matching can result in infections, skin breakdown, and hospitalizations that far exceed any savings from bidding.
Strategies for DME/HME Businesses
While the proposed rule presents challenges, it also underscores the importance of operational excellence and strategic positioning.
- Invest in automation: Streamline billing, documentation, and intake to offset margin pressure and reduce manual labor costs.
- Prepare for annual accreditation: Implement continuous quality monitoring and centralized digital documentation to stay survey-ready.
- Model competitive bidding impacts: Analyze product lines and pricing scenarios to prepare for potential SPA reductions and rental transitions.
- Engage in advocacy: Submit comments to CMS, especially on access issues in rural markets and the risks of including complex supply categories in bidding.
- Evaluate partnerships: Consider strategic alliances or mergers to gain scale and share compliance costs.
Comment Period and Industry Response
The proposed rule is open for comment until August 29, 2025. Stakeholders must address:
- The impact of a 6.4% home health cut on access
- Feasibility of annual accreditation and cost burdens
- Risks of including patient-specific supplies in competitive bidding
- The potential creation of home health deserts in rural areas
The final rule will likely be published later in 2025, with implementation in 2026.
The industry’s coordinated response now will shape that outcome.
Conclusion
The 2026 home health rule is more than a simple payment update.
It’s a shift that could reshape care delivery, market dynamics, and patient access nationwide.
For DME and HME providers, it represents both a challenge and a call to action.
Providers that adapt early, investing in automation, compliance, and advocacy, can weather the storm and position themselves as essential anchors in their communities.
Those that delay may find themselves on the wrong side of a rapidly shifting landscape where access gaps widen into full-fledged care deserts.
