Home Health Stabilization Act Pauses Over 9% in Medicare Payment Cuts for Home Care Agencies in 2026 and 2027

The newly introduced Home Health Stabilization Act of 2025 is a quick, two-year financial intervention aimed squarely at stabilizing the Medicare home health sector. Essentially, this bill tells the government to hit the pause button on significant payment reductions planned for home care providers in 2026 and 2027. It mandates that the Secretary of Health and Human Services must make a positive adjustment to the standard 30-day payment rate for home health services, specifically designed to completely wipe out two scheduled automatic cuts: a 4.059% “Permanent Adjustment Factor” and a 5.0% “Temporary Adjustment Factor.” If you’re a Medicare beneficiary or know someone who relies on in-home nursing or therapy, this is about keeping those services running smoothly.

The Two-Year Financial Lifeline

For home health agencies—the folks providing essential nursing visits, physical therapy, and other services right in your living room—this bill is a big deal. Without this intervention, they were facing a combined cut of over 9% to their Medicare payments starting in 2026. For a regional agency serving hundreds of patients, that kind of reduction can mean fewer staff, fewer services offered, or even closing doors, especially in rural areas where margins are already razor-thin. By cancelling these cuts for 2026 and 2027 (Section 2), the Act provides a critical two-year window of financial stability, ensuring that agencies can continue to pay their staff and cover operating costs without having to immediately scale back care.

Protecting Payments from Future Clawbacks

One of the smartest parts of this legislation is the fine print ensuring this temporary boost doesn't become a long-term headache. When the government calculates Medicare spending in future years—a process that often results in adjustments to provider payments—it is required to ignore the extra money paid out during these two stabilization years (Section 2). This means home health providers won't have to worry about the government using the higher 2026 and 2027 payments as justification to implement even steeper cuts down the road. It’s a clean injection of funds designed to keep the service sector afloat without setting up providers for a fall once the two years are up.

What This Means for Everyday Life

If you or a family member needs home health care—say, recovering from a hip replacement or managing a chronic condition—your primary concern is access and quality. This bill directly addresses that by reducing the financial pressure on the agencies that provide the care. When a home health agency is financially stable, they are more likely to hire and retain qualified nurses and therapists, which means you’re more likely to get the care you need, when you need it. The cost to the system, however, is that Medicare expenditures will be higher than they would have been otherwise during these two years, which puts a temporary strain on the Medicare Trust Fund. Essentially, the bill trades short-term increased spending for long-term stability of the essential service itself, ensuring that the system can still deliver care to its beneficiaries.