CMS 2026 HHA & Hospice Payment Rules: Cost-Report Implications

§A — Home Health (HHA): CY 2026 PPS Final Rule

The CY 2026 HHA PPS Final Rule (CMS-1828-F) implements a +2.4% nominal payment update, but after the permanent and temporary behavioral-assumption adjustments that have been recurring features of the post-PDGM transition, the net effect is approximately −1.3% for agencies in aggregate. The wage-index variation is the wider story for most providers: re-weighting at the Core-Based Statistical Area level produces local impacts ranging from roughly −4.5% in some metro areas (notably Houston) to +29.4% in rural Montana. The local wage-index move can dwarf the headline national update.

On the cost report (Form CMS-1728-20), the worksheets that consume these changes are:

• Worksheet S-3 Part IV — per-payment-category visit and charge counts. The PPS reconciliation depends on accurate visit counts by discipline and payment category; the updated base rate and case-mix weights are applied to these counts in settlement.
• Worksheet D-1 — settlement reconciliation. This is where the rate × activity calculation lands and where any interim-payment-to-settlement variance is computed for the Notice of Program Reimbursement (NPR).

The CY 2026 30-day base rate dollar amount and the case-mix weight updates are published in the rate-update addenda referenced in the Final Rule preamble. Because rate transmittals can be updated mid-year by separate notices, the rate value used on a cost-report filing should be verified against the most recent CMS payment transmittal at the time of submission rather than relied on from a stale lookup.

§B — Hospice: FY 2026 Payment Rate Update

The FY 2026 Hospice Wage Index and Payment Rate Update Final Rule (CMS-1835-F, Federal Register notice 2025-14782) implements a +2.6% base rate update. Hospices that have not satisfied the Quality Reporting Program (QRP) requirements are subject to a −1.4% penalty; in those cases the penalty exceeds the base-rate increase and the net effect is a rate reduction. Per-diem rates by level of care — Routine Home Care (RHC), Continuous Home Care (CHC), Inpatient Respite Care (IRC), and General Inpatient Care (GIP) — each receive the update plus their respective wage-index adjustment.

The FY 2026 RHC national per-diem rate (geographic-neutral, days 1–60) is $236.61 — a figure used in cap-settlement repricing under 42 CFR § 418.302(f). The CHC, IRC, and GIP per-diem rates for FY 2026 should be looked up in the Final Rule's rate addenda or the most recent CMS hospice payment transmittal at the time of filing.

On Form CMS-1984-14, rate updates flow through:

• Worksheet F + F-1 — per-diem payment totals by level of care. The four per-diem rates × patient days by LOC produce the payment totals that feed cap calculation inputs.
• Worksheet S-1 Part III — utilization statistics (patient days by level of care). The patient-day counts pair with the per-diem rates to compute revenue and utilization ratios used in cap calculation.

A subtle point for first-time hospice filers: the cap calculation outputs are not on the cost report. The aggregate cap (42 CFR § 418.309) and inpatient cap (42 CFR § 418.302(f)) are determined by the MAC after submission via the CMS-379 Notice of Hospice Cap Determination process. The cost report carries the inputs (utilization and payment totals); the cap-limit dollar amounts, refund-due calculations, excess-day repricing, and final cap settlement are MAC-determined outputs.

§C — Cross-cutting cost-report considerations

A few items in the CY 2026 / FY 2026 rule cycle affect cost-report preparation regardless of provider type:

• Wage index methodology refinements — both rules re-anchor wage-index data to the most recent BLS occupational employment survey. Cost-finding allocations that touch wage-index adjustments should be re-verified rather than copied forward from a prior year's allocation methodology.
• Trial-balance mapping continuity — neither rule changes the form-level cost-center structure on the cost report itself; if your chart of accounts maps cleanly to the existing HHA or Hospice cost centers, no new GL accounts are required for filing under the new rule. Where changes do matter is in the rate × activity calculation, which is downstream of cost-finding.
• Per 42 CFR § 413.24, the cost-finding requirement is unchanged: providers must maintain adequate cost data to allow accurate apportionment of program and non-program costs. The rule cycle does not alter the documentation standard, only the rates that flow through the apportionment.

§D — What to do before filing under the new rule

A short checklist for the cost-report preparer in a CY 2026 / FY 2026 cycle:

1. Confirm which rule applies to your filing year. HHA CY 2026 applies to the cost report covering CY 2026 (Jan 1 through Dec 31, 2026), due May 31, 2027. FY 2026 Hospice applies to fiscal years that include any of the period Oct 1, 2025 through Sep 30, 2026. A non-calendar-year hospice will have a mixed-rate cost report and should partition utilization at the fiscal-year boundary.
2. Verify the rate values against the live transmittal. The 30-day HHA base rate and the four hospice per-diem rates are referenced in the Final Rule preamble, but the operative rate values come from the CMS payment transmittals published in the rule's rate addenda. Mid-year corrections to the transmittals are possible; verify at filing time.
3. Re-check wage-index moves at your CBSA. The local wage-index variation often dominates the headline national update. A provider in a falling wage-index area can experience a net rate decrease even with the +2.4% national update; a rural provider in a rising area can experience a much larger net increase than the headline implies.
4. Document MAC correspondence on edge cases. Mid-cycle clarifications, transmittal updates, and MAC-specific interpretations are common. Per 42 CFR § 413.24, the cost-finding documentation standard requires the underlying records — including any MAC clarifications relied upon — to be traceable to the figures filed.

We're building tooling that handles these worksheet and rate-update transitions for the November 2026 cohort. Not a CMS-approved vendor yet — pursuing that designation through the Office of Financial Management Part A Cost Report Division. The calc engine and audit-trail are designed so every customer-visible number traces back to its formula, inputs, and the regulatory citation that authorizes it.

§E — Frequently asked questions