CMS proposes a 2.4% home health payment increase for 2027 and keeps the 3.0% temporary cut

This story describes a proposed rule. CMS can change any of it in the final rule.

CMS published its calendar year 2027 home health proposed rule (CMS-1844-P, 91 FR 41216) on July 6, 2026. Comments closed August 31. As of midday October 19, a search of the Federal Register's docket for the final rule (CMS-1844-F) returned no documents.

The headline number: +2.4%

CMS estimates the proposals would raise home health payments by 2.4 percent, about $420 million, over a projected CY 2026 baseline of $17.575 billion, for total spending of about $18 billion. The pieces:

• 2.1 percent proposed payment update, about $370 million
• 0.3 percent from an updated fixed-dollar loss ratio for outlier payments, about $50 million. By law, outliers can't exceed 2.5 percent of total payments.

CMS says the combined effects vary by type of provider and by location, and that individual agencies within the same group may see different results.

The 3.0% temporary cut, again

CMS proposed no new permanent behavior adjustment for 2027. It did propose a 3.0 percent temporary reduction (a 0.9700 factor) to the CY 2027 national, standardized payment rate to continue recouping what CMS calls retrospective overpayments for 2020 through 2025. CMS finalized the same size of cut for CY 2026.

• CMS estimates the cut would collect about $500 million, about 10 percent of the $4.9 billion total it shows in the rule. CMS says that total does not account for any money recouped in 2026, because it didn't have that figure when it wrote the proposal.
• The cut shows as 0 percent in CMS's impact table because CY 2026 rates already include a 3.0 percent temporary adjustment, so year over year it nets out.
• Under the statute CMS cites, a temporary adjustment applies only to its own year and isn't included when the next year's rate is computed. CMS also says it will keep analyzing the data and will propose "one or more temporary adjustments" in future rulemaking as it deems appropriate.

Other proposals

• Recalibrate PDGM case-mix weights and update LUPA thresholds, functional impairment levels and comorbidity subgroups
• Update the wage index, keeping the 5 percent cap on decreases that CMS adopted in earlier rules
• A discussion of palliative care under the Medicare home health benefit, and a request for information on how to build a home-health-specific wage index
• Quality reporting: revised Home Health Quality Reporting Program data submission deadlines beginning with the CY 2027 program, and a calendar-year (January 1 through December 31) reporting period for OASIS and HHCAHPS data used in the annual payment update. CMS also asks for comment on future measure concepts. It proposes no policy changes specific to the expanded Home Health Value-Based Purchasing Model.
• Durable medical equipment (DMEPOS) items: clarifying that a new face-to-face encounter would not be needed to support payment for replacing an item, plus provider enrollment changes and DME benefit expansion for infusion pumps and drugs

What to watch in the final rule

Whether the 3.0 percent temporary cut and the 2.1 percent update stay as proposed, and whether CMS finalizes the quality reporting changes. When the final rule posts, we'll publish it as a separate story and update this one. We are not predicting the final numbers.

Sources

• Federal Register, CY 2027 HH PPS proposed rule (CMS-1844-P)

Related: our health alerts and deadlines.

It is general information, not clinical, billing or legal advice.*

Drafted with AI assistance from primary sources and reviewed by Monsaur Othman before publication. Read how we use AI, our editorial policy and our corrections policy.

Informational only, not billing, legal or clinical advice. Check the linked primary source and your Medicare Administrative Contractor.