CMS proposes payment updates, PDGM revisions, quality reporting changes, and program integrity policies for calendar year 2027.
The Centers for Medicare & Medicaid Services (CMS) released the CY 2027 Medicare Home Health Prospective Payment System (HH PPS) Proposed Rule (CMS-1844-P) on July 1, 2026. The proposal outlines payment updates and policy changes that would take effect on January 1, 2027, if finalized.
The Proposed Rule Summarized
CMS estimates the proposed rule would increase Medicare home health payments by approximately $420 million (2.4%) in calendar year 2027. The proposed update reflects a 2.1% home health payment update ($370 million) and an estimated 0.3% increase ($50 million) resulting from the proposed update to the outlier fixed-dollar loss ratio.
The proposal also includes a 3.0% temporary reduction to continue recouping prior Patient Driven Groupings Model (PDGM) overpayments. CMS estimates the reduction would recover approximately $500 million, representing about 10% of the estimated temporary adjustment balance through CY 2025. Unlike previous years, CMS is not proposing an additional permanent adjustment, stating that more recent utilization changes appear to reflect multiple policy changes beyond PDGM.
CMS proposes a national standardized 30-day payment rate of $2,092.27 after applying the proposed temporary adjustment. The rule also includes updated per visit payment rates and annual PDGM recalibration, including revisions to case-mix weights, low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, comorbidity adjustments, and a reduction in the outlier fixed dollar loss ratio from 0.37 to 0.29.
Other Proposed Changes
The proposed rule would continue the current Home Health PPS wage index methodology, including the use of the hospital wage index and the permanent 5% cap on wage index decreases, while requesting stakeholder feedback on the development of a home health-specific wage index.
CMS also proposes several updates to quality reporting, including shorter Home Health Quality Reporting Program (HH QRP) submission timelines beginning with CY 2027 data and a transition to calendar-year reporting for OASIS and HHCAHPS Annual Payment Update requirements beginning with the CY 2029 APU.
No policy changes are proposed for the Home Health Value-Based Purchasing (HHVBP) Model, although CMS discusses potential future alignment between HHVBP and HH QRP reporting, quality measures, and Quality of Patient Care Star Ratings.
Additional proposals include requests for feedback on the inclusion of palliative care under the existing Medicare home health benefit, expanded Medicare enrollment and program integrity authorities, revisions to DMEPOS policies, and implementation of statutory Medicare coverage changes for certain home infusion therapies beginning April 1, 2027.
Homecare Homebase Response
The Homecare Homebase Product Management team is reviewing the proposed rule to evaluate its impact across the HCHB platform and determine any product enhancements needed if the rule is finalized.
HCHB Analytics has released the CY 2027 Home Health Proposed Rule Impact Model. The enhancement will incorporate the proposed CY 2027 payment methodology, allowing agencies to model the impact of the proposed changes using 2026 Medicare periods. Additional information regarding the updated impact analysis and expected availability will be shared as development progresses.
Homecare Homebase will continue to monitor the rulemaking process and provide updates as additional information becomes available.
Resources:
To help you explore the proposed rule in greater detail, refer to the official CMS resources below. Use these materials to review the full proposed rule, access CMS’s summary fact sheet, and reference supporting documentation.
