What you may have missed in home health news in 2025 – and what to look for in 2026

A practical year in review for home health care professionals in the United States

Home health in 2025 was defined by a familiar tension. Demand continued to rise as care shifted steadily into the home, while the operational cost of doing business increased at the same time. Caregiver retention concerns and staffing shortages persisted. Home health documentation requirements intensified. Payer friction became more routine. Audit risk, though often quiet, remained ever present. Together, these forces shaped a year that rewarded discipline rather than scale.

Agencies that performed best in 2025 were not necessarily the largest or the fastest growing. They were the ones that tightened execution across fundamentals that had long been discussed but were no longer optional. Clinical consistency, OASIS accuracy, schedule discipline, denial prevention, and referral reliability increasingly determined whether an organization could remain stable in a tightening environment. Volume alone was no longer enough to offset operational gaps.

What follows is an essential recap of the policy and market shifts that most directly affected front line clinicians, agency leaders, quality teams, and revenue cycle staff in 2025, along with what those shifts suggest for the year ahead.

The 2025 Home Health Care Industry Recap

Medicare payment in 2025: modest net growth with continued pressure under PDGM behavior adjustments

CMS finalized the Calendar Year 2025 Home Health Prospective Payment System updates with an estimated 0.5 percent aggregate increase, or approximately 85 million dollars, compared with 2024.

That topline update did not tell the full story. CMS continued applying permanent prospective behavior adjustments associated with the Patient Driven Groupings Model. In the 2025 rate materials, CMS described a permanent behavior adjustment of negative 1.975 percent, intended to account for differences between assumed and observed agency behavior under PDGM.

What this meant on the ground in 2025

Margins increasingly depended on operational accuracy. Coding precision, clinical grouping consistency, visit utilization discipline, and prevention of low utilization payment adjustments carried greater weight than in prior years.

Agencies with strong intake workflows, rapid start of care timelines, and disciplined care planning were better positioned to protect episode economics, even in a year with only modest net payment growth.

Revenue cycle teams saw clearly that documentation quality functioned as revenue protection, not simply a compliance exercise.

OASIS E1 effective January 1, 2025: a quality and payment inflection point

One of the most concrete operational changes in 2025 was the shift to OASIS E1, effective January 1, 2025. CMS released the revised OASIS manual with that implementation date.

Why OASIS E1 mattered in 2025

The OASIS data set is not paperwork. It functions as a risk adjustment and quality measurement tool that influences outcomes, star ratings, referral confidence, and value based purchasing results.

Throughout 2025, many agencies rebuilt field training around stronger consistency in scoring across clinicians, clearer start of care narrative support, and better alignment between functional scoring, diagnosis selection, and the plan of care.

Practical takeaway from 2025

Agencies that treated OASIS E1 as a framework for clinical reasoning rather than a form to complete generally experienced fewer denials, fewer avoidable quality assurance callbacks, and more stable performance outcomes.

HHVBP in 2025: value based purchasing moved into real payment impact

By 2025, the expanded Home Health Value Based Purchasing model was no longer theoretical. CMS confirmed that 2025 was a payment year, with adjustments applied based on prior performance and capped at plus or minus five percent.

CMS also released final annual performance reports and interim performance data through iQIES during the year.

What agencies experienced in 2025

HHVBP changed the competitive landscape. Referral growth alone was no longer sufficient. Agencies needed sustained performance on the quality measures that drive payment adjustment.

Quality teams moved from a supporting role into a central strategic function. Field staff education increasingly connected daily clinical decisions to patient experience scores and outcome measures because those metrics now carried direct financial consequences.

MedPAC’s view of home health economics: continued scrutiny of payment adequacy

In its March 2025 report, MedPAC projected a Medicare fee for service margin for home health agencies and stated that Medicare payments exceeded costs in its analysis.

Why this mattered for the industry

MedPAC’s framing is frequently cited in federal policy discussions. When margins are described as strong at a national level, it reinforces arguments for restrained payment updates in future rulemaking.

For agency leaders, this increased the importance of distinguishing between national fee for service margin analyses and the operational reality of payer mix, Medicare Advantage administrative burden, labor costs, audit exposure, and denial risk.

Homecare workforce in 2025: demand remained high while staffing constrained capacity

Workforce challenges continued to define the operational limits of home health. The Bureau of Labor Statistics projects strong growth in home health and personal care roles through the next decade, with a large number of annual openings driven by turnover and demographic demand.

How the workforce issue appeared in daily operations

Scheduling fragility became a defining issue. A single vacancy could disrupt coverage across an entire service area.

Competition for clinicians and aides intensified. Retention increasingly depended on realistic caseload expectations, reduced documentation burden, attention to safety and burnout prevention, and predictable communication from leadership.

Even when referral demand was strong, capacity rather than marketing became the limiting factor. Many agencies responded by tightening triage practices and accepting fewer referrals, especially when patients did not have reliable caregiver support.

Consolidation and antitrust: a pivotal development late in 2025

Consolidation continued to shape the home health landscape in 2025 and reached a pivotal moment late in the year.

Late in the year, the Department of Justice announced court approval of a settlement related to UnitedHealth Group’s proposed acquisition of Amedisys. The agreement required substantial divestitures and included a civil penalty related to merger review disclosures.

Reuters reported that UnitedHealth agreed to divest 164 locations and pay a 1.1 million dollar penalty.

Why frontline professionals should care

Consolidation shapes referral pathways, contracting leverage, technology investment, and clinical standardization. It also influences hiring dynamics, as larger organizations often have greater flexibility when competing for labor.

Prior authorization and interoperability reforms: 2025 as a preparation year

Although major compliance deadlines remain ahead, the CMS Interoperability and Prior Authorization Final Rule shaped planning throughout 2025. CMS stated that impacted payers must begin implementing certain provisions on January 1, 2026, with broader API requirements expected by January 1, 2027.

Why 2025 mattered

Many agencies used 2025 to press payers more directly on avoidable delays and to strengthen denial prevention workflows in anticipation of a more standardized authorization environment.

Agencies also invested in cleaner data exchange and more consistent documentation, recognizing that interoperability raises expectations for timely, complete, and retrievable records.

Technology in 2025: documentation burden became a strategic concern

Throughout 2025, agencies continued investing in tools designed to reduce administrative load and improve throughput. These included scheduling optimization, point of care documentation enhancements, and early use of AI assisted drafting tools rather than autonomous decision systems. The rise in AI across the healthcare spectrum, spanning from AI-enabled home health software to AI in medical-based technology made huge strides, with many providers incorporating AI roadmaps and features into their offerings. 

Home Health Care Technology did not resolve staffing shortages. It often determined whether a workday felt manageable or exhausting for clinicians.

Agencies that succeeded were not those that purchased the most tools, but those that implemented technology thoughtfully through standardized templates, targeted quality assurance triggers, and training that reduced rework.

Clinical complexity and rising expectations in the home

Home health continued to take on higher acuity discharges and more complex chronic disease management, and in 2025 this shift became much more evident in daily operations.

Agencies placed greater focus on working with primary care providers and specialists, improved medication management and reconciliation, and clarified escalation processes to reduce avoidable emergency department visits and rehospitalizations. These efforts also influenced quality outcomes and referral confidence.

Referral dynamics, payer behavior, and quiet operational risk

Beyond formal policy changes, referral patterns shifted noticeably in 2025. Hospitals, ACOs, and physician groups increasingly chose home health partners for their reliability and responsiveness, placing greater importance on timely starts of care and clear communication than on sheer capacity.

Agencies facing staffing instability often experienced a gradual decline in referrals rather than an abrupt stop. This created a feedback loop in which staffing challenges limited responsiveness, reduced referral confidence, and made workforce planning increasingly difficult.

At the same time, Medicare Advantage plans broadened their use of utilization management tools such as prior authorization, concurrent review, and retrospective audits. Even in the absence of major rule changes, many agencies noticed a steady increase in documentation requests and longer turnaround times. What had once been routine required more effort, and review cycles stretched longer than expected.

Compliance and audit risk, which for some had faded into the background, returned as a regular part of the work. Documentation that previously moved through review without comment now prompted follow up questions or technical denials. Agencies responded by strengthening internal audits, clarifying medical necessity expectations, and reducing inconsistencies in documentation practices. Organizations that framed these efforts as support rather than discipline were better able to maintain staff engagement.

Home health leadership posture in 2025: clarity, steadiness, and visible decision making

Another defining feature of 2025 was how leadership showed up during sustained pressure. With constant adjustment, competing priorities, and limited room for error, staff paid close attention not only to the decisions being made, but to how those decisions were explained and carried out.

Agencies that navigated the year more successfully were often led by teams that chose clarity over reassurance. Instead of minimizing challenges or presenting every change as temporary, effective leaders spoke directly about constraints and shared the reasoning behind operational decisions. This reduced speculation, built trust, and helped staff understand where flexibility existed and where it did not.

In everyday operations, this approach showed up in practical ways. Clear expectations around visit productivity reduced confusion and frustration. Open communication about referral acceptance criteria helped clinicians understand why certain cases were declined. Regular updates on payer behavior, authorization delays, and audit activity gave teams context for documentation requests that might otherwise have felt arbitrary.

Home health care agency leadership presence also made a difference. In many organizations, leaders became more visible to frontline staff through regular check ins, open forums, or consistent written updates. This visibility did not eliminate frustration, but it reduced isolation.

Decision making speed also mattered. Agencies that delayed operational decisions while waiting for better conditions often experienced more disruption than those that acted sooner, even when decisions were imperfect. In a constrained environment, moving forward with incomplete information and adjusting as conditions changed proved more stabilizing than waiting for certainty.

By the end of 2025, many organizations recognized that leadership in home health requires both operational discipline and relational steadiness. How leaders show up during sustained pressure directly influences retention, performance, and adaptability.

What to carry into 2026: a practical playbook for home health agencies

Clinical and OASIS

Retrain OASIS E1 scoring using case based calibration across start of care, recertification, and discharge. Strengthen alignment between diagnoses, functional scoring, narrative support, and the plan of care.

Quality and HHVBP

Understand measure sets, baseline logic, and iQIES reporting cadence. Treat patient experience feedback as a process improvement signal rather than a public relations concern.

Revenue cycle and denial prevention

Strengthen intake documentation and medical necessity support. Audit common drivers of low utilization payment adjustments and avoidable denials.

Workforce

Focus retention efforts on workflow clarity by reducing redundant documentation, setting realistic expectations, and maintaining consistent communication.

Market awareness

Track consolidation activity in local markets and anticipate referral shifts that may follow changes in ownership or contracting relationships.

The Takeaway

The lessons of 2025 were clear. Accurate assessment, consistent documentation, denial prevention, and disciplined execution mattered more than ever. The center of gravity in health care continues moving toward the home, but the era of easy growth has ended.

2025 did not change the mission of home health. It narrowed the margin for error.

Other helpful blogs:

1. Tips for Caregivers during the Holidays
2. Caregiver retention through education 
3. Transitioning from Caregiver to Leadership | Home Health Care Podcast 
4. Five ways AI is revolutionizing home health care | Home Health Care Podcast
5. AI and home health care documentation

Sources and references

• Centers for Medicare and Medicaid Services. CY 2025 Home Health Prospective Payment System Final Rule and Fact Sheet.
• Centers for Medicare and Medicaid Services. OASIS E1 Guidance and Manual.
• Centers for Medicare and Medicaid Services. Home Health Value Based Purchasing Model and iQIES Reporting Materials.
• Medicare Payment Advisory Commission. March 2025 Report to the Congress.
• U.S. Bureau of Labor Statistics. Occupational Outlook Handbook for Home Health and Personal Care Aides.
• U.S. Department of Justice. UnitedHealth Group and Amedisys Settlement Announcement.
• Reuters. Coverage of UnitedHealth Group divestitures and antitrust settlement.

The Takeaway

The usual suspects, regulatory issues, EVV protocols, changes in OASIS, and caregiver retention are likely to still take center stage going into 2025. Stay tune to our thrive in homecare blog for our preview of regulatory changes you need to be aware of in the new year.