CY2026 HH PPS Final Rule: 1.3% cut, recalibrated case-mix, and 43 LUPA-threshold moves

The headline of the November 28, 2025 final rule is the payment number — a 1.3% net decrease, or about $220 million, down from the 6.4% cut CMS proposed in July. NAHC and Choice campaigned heavily for the smaller number and partly got their way. But the final rule does more than set a top-line: it recalibrates PDGM case-mix weights using CY2024 utilization data and shifts LUPA thresholds on 43 of the 432 case-mix groups. Those changes break the visit plans most agencies built last year.

The case-mix recalibration

CMS recalibrates PDGM weights periodically using the most recent year of complete claim data. The CY2026 rule pulls from CY2024 — which was the first full year after the 2023 PPS recalibration. The net effect varies by clinical group: musculoskeletal rehab and behavioral health move modestly upward, while wound care and complex nursing groups move modestly down.

Practically, the CMW assigned to your patient mix may shift by 1–4% even if your underlying clinical work doesn't change. Forecasted episode revenue should be re-modeled per clinical group before Q1 closes.

The LUPA threshold shifts

Out of 432 case-mix groups, 15 groups gained one LUPA visit and 28 lost one. That's the operational landmine. A group whose threshold dropped from 6 to 5 visits means agencies that previously hit the floor at 6 now have an extra visit's worth of margin — but a group whose threshold rose from 5 to 6 means visits that were "in the clear" last year now need one more to avoid LUPA.

If your scheduler is targeting "the last LUPA-safe visit count" out of habit, and you didn't update the targets when the rule came out, you have patients silently dropping into LUPAs that didn't exist in CY2025. Per-period revenue dies on those — typically a $1,500–$2,500 swing per episode.

What an agency should actually do

1. Pull a per-HHRG report of your CY2025 visit utilization vs the new CY2026 LUPA thresholds. Identify groups where you're now within 1 visit of the LUPA floor.
2. Update scheduler-side default visit counts per clinical group — the CY2025 default that "always cleared LUPA" may no longer.
3. Recompute payment forecasts per clinical group using the new CMW values. Wound care groups specifically need attention.
4. Make sure your PDGM Grouper data is on CY2026 — anyone running an external Grouper from CY2025 is mispricing every estimate.

What we built for this

Carelytic ships CY2026 PDGM data as part of the platform — 432 HHRGs, ~75K ICD-10 crosswalk codes, 504 CBSA wage indices, 117 comorbidity subgroups, the new LUPA thresholds. The Grouper Preview shows live HHRG/CMW/payment estimates against any draft OASIS, and the LUPA Risk Dashboard color-codes margin-vs-threshold for every open 30-day period — at-risk periods sort to the top so schedulers know what to fix this week, not next month.

The bigger lesson is operational: when CMS recalibrates, the work doesn't end at "we read the rule." It ends when your scheduler-side defaults, your billing-side margins, and your forecast models all reflect the new numbers.