The Centers for Medicare & Medicaid Services (CMS) has finalized its 2027 home health Medicare payment rule, approving a 2.4% increase in reimbursement rates compared to 2026. The adjustment, announced Wednesday, aligns with the 2.1% base update proposed in July and adds a 0.3% boost tied to updated loss calculations, resulting in an estimated $415 million in additional annual payments for home health agencies.
The rule also introduces a -3% temporary adjustment to the 2027 national payment rate, a measure designed to offset costs while CMS evaluates long-term impacts. The agency projects the changes will save taxpayers $82 million annually by tightening oversight on noncompliant providers and preventing high-risk entities from participating in Medicare.
CMS Administrator Dr. Mehmet Oz framed the updates as part of broader efforts to “hold noncompliant providers accountable” while ensuring access to care for seniors. The rule strengthens enforcement by making Medicare enrollment revocations retroactive, effective from the date noncompliance is detected, rather than the current 30-day notice period. This shift applies across all Medicare provider types, not just home health.
The policy also expands grounds for revocation or denial, including stricter scrutiny of majority ownership changes in home health agencies, hospices, and durable medical equipment suppliers. Providers undergoing such transitions must reenroll in Medicare and undergo new surveys or accreditation. CMS can now deny or revoke enrollment if they fail to comply, targeting both providers and their owners or managing employees linked to fraud or waste.
Beyond enforcement, the rule solidifies key payment structures. It maintains the 30-day unit of payment and the Patient-Driven Groupings Model (PDGM), a case-mix adjustment methodology that bases reimbursement on patient needs rather than service volume. While CMS did not propose a permanent rate cut to the 30-day base payment, it will continue analyzing 2026 claims to assess whether further adjustments are needed under PDGM.
The final rule also recalibrates PDGM case-mix weights, updates the fixed dollar loss amount for outlier payments, and adjusts low utilization payment adjustment (LUPA) thresholds, along with functional impairment levels and comorbidity adjustment subgroups. These technical changes aim to refine how payments reflect patient complexity and resource use.
