In 2026, home health agencies face pressure to deliver excellent patient care while managing tight margins. Especially as:

• CMS projects HHA Medicare payments to fall by 1.3% ($220 million) in CY 2026 over CY 2025, following CMS’ 2026 Home Health Prospective Payment System Final Rule
• The Expanded Home Health Value-Based Purchasing (HHVBP) Model is transitioning Medicare reimbursements from fee-for-service to value-based payment, starting with Traditional Medicare. Based on the HHA’s performance, CMS will either lower or raise payments by -5% to 5%

Quality of Care is becoming the primary lever for economic performance. 

While CMS has only recently linked HHA payments to performance, it has long been interested in tracking performance and patient outcomes, beginning with the OASIS (Outcome and Assessment Information Set) survey in 1999, which serves as the basis for today’s Quality of Patient Care Star Ratings.

These star ratings summarize an agency’s quality of care on a simple 5-point scale, enabling patients and their providers to choose the most suitable home health care partner.

To remain competitive in 2026, HHAs must understand their care performance in context of the broader home health market and innovate to achieve better patient outcomes, higher star ratings, and sustainable economic growth.

‍

Statistics of Star Ratings

Star Ratings cannot be understood in a vacuum. 

To evaluate the effectiveness of their care-delivery processes, home health executives must first contextualize their performance within the broader HHA landscape. 

‍

Figure 1: Frequency distribution of HHA quality of patient care star ratings

‍

Of the 12,251 registered HHAs in the most recent reporting period, only 7928 (65.7%) had sufficient complete quality episodes and OASIS measure data to earn a star rating. 

Among the HHAs with a star rating, the above frequency distribution reveals:

• An average star rating of 3.24 stars, with a standard deviation of 1.02 stars
• A median (50th percentile) star rating of 3.5 stars

The table below shows how these HHA star ratings compare to those of adjacent provider institutions.

‍

Table 1: Comparing summary statistics of the distribution of star ratings for different provider institutions

Sources: Centers for Medicare & Medicaid Services. “Home Health Care Agencies.” January 14, 2026; “Hospital General Information.” February 25, 2026; “Provider Information.” February 25, 2026 [Table generated from internal analysis]

‍

For a typical HHA, improving star ratings is more difficult but yields an outsized competitive advantage relative to other provider institutions.

Compared with adjacent provider institutions (hospitals and nursing homes), HHAs have the highest mean and median star ratings and the least rating variability, as measured by standard deviation. This means that, for a typical 50th percentile HHA, a 1-star increase will improve its percentile ranking more than the same 1-star increase for a typical hospital or nursing home.

For example, being one star above the median puts you in the:

• HHA (4.5 stars): 88th percentile
• Hospitals (4 stars): 77th percentile
• Nursing Homes (4): 70th percentile

Small improvements in star ratings can go a long way. However, because the median HHA star rating is relatively high (3.5 stars), it appears that agencies have already realized most of the low-hanging fruit, making it harder to further optimize performance and star ratings.

For better and for worse, there’s only so much room for improvement.

HHAs now face two distinct growth paths:

1. Double down on tried, potentially exhausted strategies yielding diminishing returns
2. Innovate and explore new ways to improve care performance

But what aspects of patient care and outcomes matter most? How can HHAs improve these measures?

Looking Under the Hood: Individual Quality Measures

CMS factors seven individual quality metrics into the HHA star rating calculation. These include one process measure and six patient outcome measures, all scored as proportions of qualified patients, ranging from 0% to 100%.

The table below defines and summarizes how HHAs perform across all seven measures:

‍

Table 2: Comparing summary statistics of the distribution of individual quality measures used to calculate HHA star ratings.

* Coefficient of Variation: A statistical measure of relative variability, calculated by dividing the standard deviation by the mean and often expressed as a percentage.

Source: Centers for Medicare & Medicaid Services. “Home Health Care Agencies.” January 14, 2026; “Home Health Quality Measures – Outcomes.” 2025 [Table generated from internal analysis]

‍

The Timely Initiation of Care metric underscores that HHAs have reached a process-improvement ceiling. With an average on-time rate of 94%, a typical HHA is already operating at its peak timeliness. Further improvements will likely yield diminishing returns. 

HHAs must find new areas to differentiate and improve patient outcomes. Looking further down this table illuminates what alternative strategies might look like. 

‍

Clinical innovation drives simultaneous improvements across functional measures

The average scores for Improvement in Ambulation (83.08%), Bed Transferring (82.9%), and Bathing (85.44%) are remarkably similar in both mean and variability. 

These three functional measures likely respond to the same clinical interventions, including physical and occupational therapy, in-home environmental modifications, and durable medical equipment and supplies that promote physical independence.

An HHA that innovates in one of these functional ADL (activities of daily living) areas will likely see a correlated boost across all three, providing a more efficient path to a 5-star rating.

‍

Potentially Preventable Hospitalization (PPH) is the most difficult measure to control

Potentially Preventable Hospitalization is where home health fails:

• For the Patient, hospitalization is precipitated by failing health or sentinel events, requiring hospital-grade resources to correct
• For the Payor, hospitalization means higher utilization of expensive services
• For the HHA, hospitalization undermines the agency’s reputation for quality care, negatively affecting star ratings, reimbursements, and patient volume.

With a coefficient of variation of 28.62%, PPH exhibits the highest variability and is likely the most difficult measure to control. This measure also counts lower-acuity outpatient observation stays the same as acute care hospitalizations, making the metric more sensitive to downturns in patient health.

These hospitalization rates, although key in determining HHA star ratings and payment, are also heavily influenced by other healthcare providers involved during and after the episode of care.

Choosing the right external partner can keep patients out of the hospital and secure a home health win for everyone.

Bridging the Gap: From Data to 5-Star Performance

In 2026, Quality of Care and star ratings have evolved into powerful drivers of an agency's economic performance, serving as a critical buffer against mounting margin pressures. HHAs looking to move beyond the current industry process ceiling must adopt tools that translate these high-level clinical goals into measurable outcomes. 

Verse Medical facilitates this transition by streamlining the inefficiencies that bottleneck patient care.

‍

Solution: Invest in clinical interventions impacting multiple functional measures

Data for Improvement in Ambulation (83.08%), Bed Transferring (82.9%), and Bathing (85.44%) suggest these three functional measures likely respond to the same clinical interventions. HHAs can maximize their improvement efficiency by focusing on treatments that drive these correlated results. 

But even with the highest-quality clinician support, patients cannot fully participate in their treatment plans without necessary DME and supplies, such as rollators for mobility and gait training, transfer benches for self-bathing, etc.

Especially when most incumbent DMEPOS providers take 1-2 weeks to deliver supplies, delayed orders can easily throw off recovery timeliness. 

Verse Medical enhances the timeliness and accuracy of care through its 99% order accuracy rate and 95% on-time delivery rate (mail orders are delivered in just 1-3 days), ensuring patients receive the specific supplies they need to support these treatments, nurture physical independence, and improve ADL outcomes.

‍

Solution: Prevent potentially preventable hospitalizations and readmissions by partnering with qualified external providers

DMEPOS providers are intimately involved in the home health recovery process. Yet the industry-standard, one- to two-week delivery timelines for equipment and supplies can lead to preventable hospitalizations for high-risk patients. Despite the sensitivity of these deliveries, HHAs are often left in the dark once an order is placed, unaware of its status and unable to contact qualified support.

Verse Medical provides preferred partners with a dedicated Account Manager, transforming the DMEPOS provider into a genuine extension of the HHA care team. This single point of contact understands the agency's specific operations and ensures SLAs are met, enabling better care coordination and timely delivery to prevent readmissions.

Through Verse Medical’s electronic ordering system, clinicians can also track DMEPOS orders as they would an Amazon package and view dashboard metrics on overall order volume, payer mix, cost savings, and performance. This transparency ensures that HHA clinicians and patients know exactly which brand of equipment is arriving and when, eliminating the risk of surprise delays or unauthorized substitutions.

By ensuring the right equipment is in the home exactly when it's needed, Verse helps prevent the avoidable complications that lead to in-episode hospitalization.

‍

Source: Verse Medical: Internal Clinician Order and Survey Data

Conclusion: The Future of Home Health Excellence

As the home health industry navigates the value-based landscape of 2026, the margin for error is razor-thin. The statistical reality is that traditional process-improvement strategies have reached their limit. 

Improving care quality is no longer a localized effort. Because patient outcomes are influenced by the entire care continuum, choosing a reliable DMEPOS partner is a strategic clinical decision. 

By partnering with providers like Verse Medical that prioritize care delivery and logistical transparency, HHAs can enhance patient outcomes and prevent in-episode hospitalizations, transforming complex care challenges into a distinct competitive advantage.