Va’s 2026 Rate Cuts In Texas And New Mexico Raise Risk Of Broader State Reductions

The U.S. Department of Veterans Affairs recently released its 2026 VA fee schedule, which includes significant rate cuts for home health aide and homemaker codes in two states – and could prompt similar reductions in others.

The fee schedule, which will take effect on Jan. 1, includes small fee increases in five Texas areas but a 43% cut for much of rural Texas. New Mexico saw a 19% cut. These reductions will pass costs on to providers and, in turn, limit veterans’ access to care, according to Eric Reinarman, vice president of government relations at the Home Care Association of America (HCAOA).

“States that did not include annual incremental increases to Medicaid waiver rates are now in a bind to catch up with current cost of care delivery – such as Pennsylvania,” Reinarman told HHCN in an email. “The VA will experience the same without annual nominal increases. When reimbursement does not keep pace with inflation, providers must absorb rising costs that they cannot control, especially wages, payroll taxes, insurance, training and compliance. Over time, that creates a widening gap between the cost of care and what programs reimburse.”

Over time, this gap causes agencies to limit admissions, reduce their service areas or prioritize contracts that fully cover the cost of delivering care. Veterans would therefore have fewer providers equipped to handle their care and increased difficulty fulfilling authorized care hours.

In addition to the regional changes, the fee schedule failed to include an across-the-board 3% inflationary increase, which has been included in fee schedules for the past several years.

Rural areas, including some of the areas with the most significant cuts, pose additional challenges for providers. The VA does not reimburse for mileage or travel time, slimming margins when caring for veterans living in expansive rural areas, Reinarman said. Further complicating matters, the average length of visit in Texas is 3.4 hours statewide, an all-time low, he said. 

Additionally, the rate cuts could serve as a blueprint for cutting rates in other states. 

“Any time rates are cut in a way that does not reflect the actual cost of care, it raises questions about whether similar methodology changes could be applied elsewhere,” Reinarman said. “What we are emphasizing to VA leadership is that rate setting needs to track real-world cost drivers and local market variation. Home care is labor-driven, and it is delivered in the home, which means geography and travel matter. A single rate for the entire state of Texas or New Mexico does not make sense.”

HCAOA is urging VA leadership and lawmakers to reconsider these rate reductions and course-correct before the beginning of 2026. HCAOA is also asking the VA to set rates by specific localities rather than imposing a single rate across large, diverse states. 

“In terms of likely outcome, I think it is realistic that sustained engagement can lead to adjustments if the VA is presented with clear, consistent operational data showing that access will be harmed,” Reinarman said. “That is why we are encouraging VA-contracted agencies to share concrete information about caregiver wages, travel time, unfilled shifts, and any service reductions they would be forced to make. The stronger the evidence, the more likely the VA is to act.”

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