Medicare's proposed 2027 home health pay rule: what's in it, and what comes next

Every year Medicare updates what it pays home health agencies. For 2027, CMS has proposed an overall increase of 2.4%, or about $420 million, compared with 2026. The public comment period closed Aug. 31, and as of Oct. 2 the final rule had not been published. Here is what the proposal (known as CMS-1844-P) contains.

The money, in plain terms

According to CMS's fact sheet:

• A 2.1% payment update (about $370 million), the routine yearly update required by law.
• About $50 million more from an outlier update, which adjusts the extra payments for unusually costly patients. CMS's estimate puts the combined effect at the 2.4% figure above.
• A 3.0% temporary reduction to the 2027 base rate. This continues CMS's effort to recover what it calculates were overpayments in 2020 through 2025, after Medicare switched to its current payment model (the Patient-Driven Groupings Model, or PDGM) in 2020.
• No new permanent cut. CMS made permanent reductions in each of 2023, 2024, 2025 and 2026. This time it says changes in agency behavior seen since 2023 "may not be directly attributable to the PDGM," so it is not proposing another one.

CMS also proposes routine updates to its case-mix weights and to the thresholds for low-use periods of care.

A nod to palliative care

CMS says the home health benefit "can be an important step in the care continuum when a patient needs palliative care," meaning care focused on comfort and quality of life during a serious illness. The rule asks for comments on how to improve access to community-based palliative care through existing Medicare benefits, and CMS says it will give examples of such services in later guidance.

Home Health Care News reported that home health providers have welcomed the change, and that it does not change who is eligible for the benefit. But Katy Barnett of LeadingAge told Palliative Care News, as quoted by Home Health Care News, that home health's bundled payments often leave agencies with limited money for the social, spiritual and aide visits that full interdisciplinary palliative care involves.

Other proposals agencies should know

• Tougher enrollment rules for all Medicare providers: making all enrollment revocations retroactive to when noncompliance began, and adding new grounds to deny or revoke enrollment. One would apply when an agency fails to re-enroll after certain changes in majority ownership.
• Quality reporting: changes to data submission deadlines, and a request for input on a possible future Advance Care Planning measure.
• A request for information on building a home health-specific wage index, possibly from Bureau of Labor Statistics data.
• Home infusion: wider durable medical equipment coverage for certain external infusion pumps and home infusion drugs, effective April 1, 2027, carrying out a 2026 law.

What commenters said

Home Health Care News reported that commenters largely welcomed CMS's decision not to propose another permanent cut, but said the 2.1% update doesn't make up for years of reductions or settle their dispute over how CMS calculates the PDGM adjustments. Separately, an Aug. 31 letter from LeadingAge and 18 other organizations argued that the enrollment proposals expand CMS's enforcement powers without objective standards and procedural safeguards, Home Health Care News reported.

What it means for families

This is a payment rule. CMS's fact sheet doesn't describe any change to who qualifies for Medicare home health care. You still generally need to be homebound and need part-time skilled care ordered by a provider. Our Medicare home health basics guide explains the rules. Payment levels can affect how agencies staff and which patients they're able to take on, so it's worth asking any agency about availability when you call.

What comes next

CMS will publish a final rule responding to comments. The final numbers can differ from the proposal. We'll cover the final rule when it's released.