Medicare Update: New Plan to Prevent Pending Cut

A new bill aims to pause a Medicare rate cut for home health services effective in 2026 and 2027.

The Home Health Stabilization Act of 2025 would prevent the pending cut that lowers payments by $1.135 billion, or 6.4 percent, from this year’s levels.

Why It Matters

Nearly 70 million Americans are enrolled in Medicare coverage, and the health insurance is essential for seniors seeking both in-office, hospital and home health services.

The impending Medicare cuts could lead providers to reduce their services, forcing many seniors to seek more expensive care at hospitals and nursing homes.

What To Know

Representative Kevin Hern, an Oklahoma Republican, and Representative Terri Sewell, an Alabama Democrat, proposed the bill last week.

“Slashing home health payments not only undermines access to this critical benefit, but it also drives up overall Medicare costs by forcing patients into more expensive care settings. This bill ensures seniors can get the care they need at home,” Hern said in a statement.

Many seniors prefer to stay in their homes rather than move to nursing or assisted living facilities, but the prices often make it unaffordable.

Roughly 77 percent of adults 50 and older said they want to age in place in their homes, according to AARP. But many will rely on home health services to stay in their homes.

While Medicare covers home health care in certain circumstances, it does not provide 24-hour home care or services such as meal delivery and cleaning.

“Most pandemic-era thinking on home health care saw it as a temporary measure until the virus threat dramatically lessened. However, for millions of Americans, home health care became an essential component of their lives, as their conditions and proximity to clinical care were obstacles,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.

“Legislators are discovering this, as well, and starting to take measures like this bill to ensure coverage doesn’t get cut. Given that seniors make up a sizable voting block, any disruption to coverage could come with a swift voting backlash.”

The proposed cut was announced in June by the Centers for Medicare & Medicaid Services (CMS) and could dramatically impact health services for older Americans.

“The bill prevents what would be devastating compounding cuts to an already strained system,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. “Since 2020, over 1,000 home health agencies have closed. Even worse, nearly 1/3 of patients referred to home health care from hospitals are being turned away.”

Newsweek reached out to CMS for comment via email.

What People Are Saying

Representative Kevin Hern said in a statement: “Slashing home health payments not only undermines access to this critical benefit, but it also drives up overall Medicare costs by forcing patients into more expensive care settings. This bill ensures seniors can get the care they need at home.”

Finance expert Michael Ryan told Newsweek: “To me, this isn’t really about saving Medicare money. It’s about not forcing seniors into far more expensive care settings when home health gets cut to the bone. The bill addresses an immediate crisis but doesn’t solve Medicare’s broader sustainability challenge. It’s a necessary tourniquet, not surgery.”

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “The Home Health Stabilization Act is designed to stop the looming rate cuts set to hit home health care agencies across the country. Without it, more patients could be pushed into higher-cost care settings like nursing homes or hospitals, which may actually drive Medicare’s overall costs higher.”

What Happens Next

Thompson said Republicans may prevent this bill from passing through due to its impact on Medicare spending.

“If spending discipline is the goal, Republicans may see this as a non-starter since it would roll back cuts they just enacted. Passing it would raise Medicare spending and add to the deficit, which runs counter to the administration’s stated plan,” Thompson said.

“Long term, if home health agencies continue to close or reduce services, costs could rise anyway as seniors are left with fewer options, and in many cases, without the care they truly need.”