On Thursday, July 16, 2026, the Centers for Medicare & Medicaid Services released its proposed payment rule for the 2027 home health year, and on the surface, the headline was good news: a 2.4% payment increase for home health agencies, designed to keep pace with inflation and rising operational costs. It sounds straightforward — more money for the agencies that provide skilled nursing, therapy, and home health aide services to millions of older Americans. But the full picture is far more complicated.
The same week CMS proposed the rate increase, two other pieces of news emerged that paint a more nuanced and concerning picture. New research from McKnight's Home Care found that Medicare home health utilization is actually falling — fewer eligible beneficiaries are receiving services despite the population of older Americans growing. And in the Senate, a bipartisan bill was introduced to reverse rate reductions for veterans' home health care, after cuts had made it harder for aging veterans to access care in their own homes.
Taken together, these three stories tell a tale of an industry at a crossroads: one where payment rates are rising on paper, yet access to care is shrinking for the people who need it most. For families navigating home health care in 2026, understanding these cross-currents is essential to making informed decisions.
The CMS 2.4% Payment Increase: What It Actually Means
Let us start with the proposed payment rule itself. The 2.4% increase CMS has proposed for the 2027 home health payment year would boost the standard 60-day episode payment rate by roughly $160 to $180 per episode, depending on the patient's clinical grouping and functional level. For a home health agency serving hundreds or thousands of patients, that adds up to real revenue.
But context matters. Home health agencies have faced years of payment updates that barely kept pace with — or in some years, fell short of — inflation. The cost of fuel for home health nurses to drive between patients' homes has risen sharply. The wages needed to attract and retain nurses and therapists in a competitive labor market have gone up. The price of medical supplies, from wound care dressings to telehealth equipment, has climbed. A 2.4% increase in an environment where costs are rising at 3% to 5% annually does not represent growth — it represents a tighter squeeze.
The savingadvice.com article covering the CMS proposal noted that while the payment increase is intended to help agencies manage rising costs, it also reflects CMS's recognition that home health is becoming a more central part of the health care delivery system. The agency's proposed rule includes continued support for remote patient monitoring, expanded telehealth flexibilities, and new quality measures focused on patient experience. In other words, CMS is betting on home health — even as the data shows that fewer patients are actually receiving the benefit.
The Utilization Puzzle: Why Are Fewer Medicare Beneficiaries Getting Home Health Care?
The research published by McKnight's Home Care on July 15 paints a troubling picture. Despite a growing senior population and strong evidence that home health care reduces costs and improves outcomes compared to institutional care, the share of Medicare beneficiaries using the home health benefit is declining.
Several factors appear to be driving this decline.
**Medicare Advantage restrictions are a major contributor.** More than half of all Medicare beneficiaries are now enrolled in Medicare Advantage plans, and these private plans have far more tools to restrict access to home health care than traditional Medicare does. Prior authorization requirements, narrower provider networks, and utilization review processes that deny or limit services are all more common in Medicare Advantage than in traditional Medicare. A family whose loved one is on a Medicare Advantage plan may find that services that would be automatically covered under traditional Medicare require multiple levels of approval — and are often denied.
**A shrinking home health workforce limits capacity.** Even when a patient is referred for home health care, the agency may not have the staff to accept them. The direct care worker shortage that has dominated industry headlines shows no signs of abating. With home health aides earning near-poverty wages in many markets, agencies struggle to recruit and retain the workers they need. When an agency cannot staff its caseload, it stops taking new patients — or reduces the frequency of visits for existing patients. The result is that many eligible beneficiaries simply never get the care they were referred for.
**The "improvement standard" legacy persists.** Despite the Jimmo settlement making it illegal to deny care based on a patient's potential for improvement, many families and even some providers still operate under the old assumption that Medicare only covers home health if the patient is expected to get better. This misconception leads to fewer referrals, fewer completed episodes of care, and millions of dollars in benefits left on the table each year.
**Consolidation and administrative complexity.** As we covered in our analysis of the DAI-HCA mega-acquisition, the home health industry is consolidating rapidly. Larger corporate chains may prioritize high-margin patients and markets, leaving rural and lower-income communities with fewer options. Meanwhile, the administrative burden of Medicare compliance, quality reporting, and billing has grown heavier, creating a barrier to entry for smaller agencies that might otherwise serve underserved areas.
The McKnight's research suggests that the decline in utilization is not because seniors need less care — it is because the system is making it harder to access. And that should concern every family planning for home health care.
Bipartisan Action to Protect Veterans' Home Health: A Sign of Things to Come?
On the same day CMS released its proposed rule, Senators Heinrich (D-NM) and Leger Fernández (D-NM) introduced a bill aimed at reversing rate reductions that have made it harder for veterans to access home health care through the Department of Veterans Affairs. While the legislation specifically targets the VA's home health reimbursement rates, its implications reach far beyond the veteran community.
The bill reflects a growing bipartisan recognition that home health care is underfunded relative to need. Veterans, like the general Medicare population, overwhelmingly prefer to receive care at home rather than in institutional settings. But when reimbursement rates fall below what agencies need to cover their costs, those agencies stop accepting VA patients — creating gaps in care for the men and women who served the country.
The legislation proposes to reverse recent rate reductions and tie future VA home health payments to a more sustainable formula that accounts for regional cost differences and the actual cost of delivering care. If passed, it could serve as a model for broader Medicare payment reform.
For families, the takeaway is clear: even as policymakers acknowledge the importance of home health care at the highest levels — with both CMS and Congress taking action — the gap between policy intent and on-the-ground reality remains wide. A 2.4% payment increase helps agencies stay afloat. A bipartisan bill protects veterans' access. But neither addresses the fundamental challenges of workforce shortages, Medicare Advantage restrictions, and the administrative complexity that makes home health care harder to access than it should be.
What the Social Determinants of Health Has to Do With It
Home Health Care News reported on July 13 that home-based care providers are increasingly navigating when and how to address social determinants of health (SDOH) — the conditions in which people live, work, and age that shape their health outcomes. For home health agencies, SDOH are not abstract concepts. They are the reality that a patient recovering from a heart attack lives in a third-floor walk-up with no elevator. That a diabetic senior cannot afford both their insulin and their groceries. That a family caregiver must choose between staying home to care for mom and keeping their job.
The CMS proposed rule includes provisions that would allow home health agencies to more formally assess and address SDOH as part of the patient's care plan. This is a significant step forward. When a home health nurse identifies that a patient's home is unsafe, or that they lack reliable transportation to follow-up appointments, or that food insecurity is undermining their nutritional status, the ability to document and address those factors within the Medicare benefit can make the difference between a successful recovery and a hospital readmission.
But it also requires agencies to invest in social work services, community partnerships, and care coordination — none of which come cheap. The 2.4% payment increase may help, but it is unlikely to be sufficient for the comprehensive SDOH screening and intervention that advocates are calling for.
What These Conflicting Signals Mean for Your Family
If you are reading this as a family caregiver or as someone planning for your own future home health needs, the mixed messages from the policy world can feel confusing. Is home health care getting more funding or less? Is it easier or harder to access? Should you expect better options in the years ahead, or prepare for more challenges?
Here is the honest answer: it depends on where you live, what insurance coverage you have, and how proactive you are in navigating the system.
**If you have traditional Medicare**, you have the strongest legal protection for home health coverage. The home health benefit covers skilled nursing, therapy, and home health aide services at no cost when you meet the eligibility requirements. You can choose any Medicare-certified home health agency. The proposed 2.4% payment increase should help maintain access, though workforce shortages may still limit options in some areas.
**If you have a Medicare Advantage plan**, you need to be more vigilant. Check whether your plan requires prior authorization for home health services. Ask whether the home health agencies you are considering are in network. If your plan denies or limits services, you have the right to appeal — and you should exercise that right. The declining utilization numbers suggest that Medicare Advantage is a significant driver of reduced access.
**If you are a veteran**, the proposed legislation is good news, but it is not yet law. In the meantime, work with your VA primary care provider to explore home health options. The VA offers its own home health services as well as partnerships with community providers. Do not assume that reduced rates mean no care is available — ask specifically what options exist in your area.
**Regardless of your coverage**, the most important thing you can do is start early. The families who navigate home health care most successfully are the ones who begin exploring options before a crisis hits. Know which agencies operate in your area. Understand what your insurance covers. Build relationships with providers while you have time to research and compare.
The Bottom Line: Policy Is Catching Up, But the System Needs More
The conflicting news of July 2026 — a payment increase, a decline in utilization, and a bipartisan push for veterans' care — tells a single coherent story: the home health care system is under strain, and policymakers at every level are scrambling to respond. The CMS proposed rule represents a meaningful attempt to strengthen the Medicare home health benefit for the future. The Heinrich-Leger Fernández bill reflects a commitment to protecting access for veterans. And the research on declining utilization serves as a warning that policy changes alone may not be enough.
For families, the message is to stay informed, be proactive, and advocate fiercely for the care your loved one deserves. The system is moving in the right direction, but it is moving slowly — and in the meantime, millions of older Americans need home health care today, not after the next rule is finalized.
At Home Health Plan Finders, we help families navigate the home health care system every day — including understanding how policy changes affect coverage and access. Whether you are trying to find a home health agency in a tight market, appealing a denied claim, or simply trying to understand what your insurance covers, our care advisors are here to help with free, personalized guidance.
Visit homehealthplanfinders.com/get-quote to speak with a care advisor today. No cost, no obligation — just honest, caring advice from people who understand what families like yours are going through.