Shares in leading medical device makers declined sharply Tuesday after the Centers for Medicare & Medicaid Services (CMS) unveiled a proposal to reduce payments to home health agencies, potentially affecting providers of diabetes care products. Tandem Diabetes Care Inc (NASDAQ:TNDM) saw its shares fall 6.4%, DexCom Inc (NASDAQ:DXCM) dropped 4.9%, and Insulet Corporation (NASDAQ:PODD) declined 2%.
The CMS proposal for the 2026 calendar year suggests cutting Medicare payments to home health agencies by 6.4%, which translates to about $1.135 billion less compared to 2025. These reductions consist of a permanent cut of 4.059% and a temporary 5.0% recoupment adjustment intended to recover what CMS identifies as retrospective overpayments.
Market participants are concerned that these payment cuts could have an adverse effect on manufacturers of diabetes devices. Many patients using continuous glucose monitors (CGMs) and insulin pumps depend on Medicare coverage, making companies like DexCom — a CGM producer — and insulin pump makers Tandem and Insulet especially vulnerable.
Issued on June 30, 2025, the proposed rule is part of CMS’s yearly update to Medicare payment policies under the Home Health Prospective Payment System. Although it includes a 2.4% payment increase worth roughly $425 million, this boost is outweighed by the combined permanent and temporary reductions.
Another notable change in the proposal involves reclassifying all CGMs and insulin pumps into the “frequent and substantial servicing payment category.” CMS explains this move would enable beneficiaries to access the latest technology without the usual five-year waiting period.
Regarding the impact of these adjustments, CMS stated, “would help improve patient care and protect the Medicare program’s sustainability for future generations.”