Calendar Year (CY) 2027 Home Health Prospective Payment System Proposed Rule Fact Sheet (CMS-1844-P)

Administration Home health agencies Medicare Parts A & B Share Calendar Year (CY) 2027 Home Health Prospective Payment System Proposed Rule Fact Sheet (CMS-1844-P) On July 1, 2026, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces policy changes under the Home Health (HH) Prospective Payment System (PPS), consistent with the legal requirements to update Medicare payment policies for home health agencies (HHAs) annually. This fact sheet discusses the proposed rule’s major provisions. Medicare Provider Enrollment In its ongoing efforts to crush fraud, waste, and abuse, CMS is proposing several provider enrollment provisions. The provisions would affect any providers and suppliers participating in the Medicare program. T hese changes would help reduce improper Medicare payments and protect beneficiaries. The proposals include, but are not limited to, the following: Retroactive Revocations — Under current regulations, certain Medicare enrollment revocations become effective prospectively — specifically, 30 days after the date that CMS or the CMS contractor mails notice of the revocation to the affected provider or supplier (hereafter “provider”). However, other revocations take effect retroactively to the date the provider’s noncompliance began. The agency is proposing to make all revocation grounds retroactive. This action would help CMS recover monies paid to non-compliant providers and help ensure taxpayer money is paid only to legitimate, compliant providers. Adding or Expanding Bases for Revocation or Denial — CMS is proposing to add several new grounds for revocation or denial of enrollment and to expand some of our existing grounds. Among these proposals are the following: Change in Majority Ownership — Hospices; HHAs; and suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) must reenroll in Medicare as a new provider and undergo a survey/accreditation if they experience certain changes in majority ownership. CMS proposes to deny or revoke enrollment if this requirement is violated. Program or License Suspension/Termination — CMS currently may deny or revoke enrollment if a provider: (1) has a suspended/revoked license in another state; or (2) is suspended/revoked from Medicaid or another federal healthcare program. The agency proposes expanding this to include similar suspensions/revocations involving the provider’s owners or managing employees/organizations. The proposed revocation/denial authorities would address situations noted by CMS as involving provider noncompliance and fraud, waste, and abuse. They also would allow the agency to target improper activity by those who own or operate providers. CY 2027 Proposed Payment and Policy Updates for Home Health Agencies CMS’ proposals in this proposed rule would help improve patient care and protect the Medicare program’s sustainability for future generations. In this proposed rule, CMS includes an analysis of home health utilization. It also analyzes the difference between assumed versus actual behavior change on estimated aggregate expenditures for home health payments linked to changing the unit of payment to 30 days and implementing the Patient-Driven Groupings Model (PDGM) case-mix adjustment methodology. This rule analyzes the difference between assumed versus actual behavior change on estimated aggregate expenditures, discusses the permanent adjustments applied in previous years, and proposes a temporary adjustment to the CY 2027 home health base payment rate of 3.0%. CMS is not proposing an additional permanent adjustment to the CY 2027 30-day base payment rate; however, this proposal would continue to satisfy the statutory requirements at section 1895(b)(3)(D)(ii) of the Social Security Act (the Act) as we continue to annually analyze the data through CY 2026 claims, as required by law, to determine any additional permanent adjustments to account for the impact of implementing the PDGM. This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures because of the CY 2020 implementation of the PDGM and the change to a 30-day unit of payment. For CY 2023, 2024, and 2025, CMS previously applied reductions of 3.925%, 2.890%, and 1.975%, respectively, which were half of the estimated required permanent adjustment. CMS also applied a permanent adjustment of -1.023% in CY 2026. In addition, CMS is proposing to recalibrate the PDGM case-mix weights; update the fixed dollar loss (FDL) for outlier payments; and update the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2027. This proposed rule also discusses provision of palliative care services under the Medicare home health benefit and includes a request for information (RFI) regarding the construction of a home health specific wage index. This rule also proposes routine, statutori