The Centers for Medicare & Medicaid Services (CMS) has released the CY 2027 Home Health Prospective Payment System (HH PPS) Proposed Rule, offering an early look at the changes that could affect home health agencies beginning January 1, 2027.
While the proposed rule includes a modest payment increase, it also continues CMS’s efforts to refine reimbursement under the PDGM, improve quality reporting, and strengthen program integrity. Although the rule is still open for public comment, now is a good time for agencies to understand what’s changing and begin preparing for the final rule.
1. Medicare Payments Proposed to Increase by 2.4%
CMS is proposing an estimated 2.4% increase in Medicare payments to home health agencies, representing approximately $420 million in additional payments nationwide.
The proposed update consists of:
- A 2.1% home health payment update
- A 0.3% increase** related to fixed-dollar-loss (FDL) outlier payments
While this is encouraging news, the impact will vary from one agency to another depending on factors such as case mix, wage index, and other payment adjustments.
Why it matters: A higher national payment estimate doesn’t necessarily translate into higher reimbursement for every agency. Understanding your own patient population and reimbursement trends remains essential.
2. Continued Refinements to PDGM
CMS is proposing its annual recalibration of PDGM, including updates to:
- Case-mix weights
- Functional impairment levels
- Low-Utilization Payment Adjustment (LUPA) thresholds
- Comorbidity adjustment subgroups
These annual updates are intended to better align Medicare payments with patient characteristics and the expected resources required to provide care.
Why it matters: Even small documentation or coding inaccuracies can affect case-mix assignment and reimbursement. As PDGM continues to evolve, accurate coding and complete OASIS documentation remain critical.
3. No New Permanent Behavioral Adjustment—But Payment Pressure Remains
One of the most notable aspects of the proposed rule is what CMS didn’t include.
CMS is not proposing an additional permanent behavioral adjustment for 2027, explaining that more time is needed to evaluate whether changes in provider behavior are solely attributable to PDGM.
However, CMS is proposing a temporary 3.0% reduction as part of its ongoing effort to recoup estimated overpayments from previous years.
Why it matters: Agencies avoid another permanent rate reduction this year, but reimbursement pressures continue. Improving operational efficiency and documentation quality remains one of the best ways to protect financial performance.
4. Updates to Quality Reporting
For high-risk patients, consider front-loading visits during the first two to three weeks after admission. This approach may be appropriate for patientCMS is proposing several updates to the Home Health Quality Reporting Program (HHQRP), including:
- Aligning OASIS and HHCAHPS reporting periods with the calendar year
- Updating OASIS assessment submission deadlines
- Seeking public feedback on a potential “Advanced Care Planning” quality measure
These proposals are intended to improve quality measurement while reducing unnecessary administrative burden.
For the Home Health Value-Based Purchasing (HHVBP) Model, CMS is not proposing any major changes for 2027. Instead, the agency plans to continue evaluating opportunities to better align HHQRP measures with HHVBP in future rulemaking.
Why it matters: Accurate and timely OASIS documentation remains essential—not only for meeting HHQRP reporting requirements but also for supporting strong performance under HHVBP. Agencies that maintain high documentation quality and focus on patient outcomes will be better positioned as CMS continues refining both programs.
5. CMS Is Looking Ahead to Palliative Care
While no new payment policies are being proposed, CMS is requesting public feedback on how the Medicare home health benefit could better support community-based palliative care.
This Request for Information (RFI) reflects CMS’s growing interest in improving care for patients with serious illnesses.
Although this proposal won’t immediately change agency operations, it provides insight into where future Medicare policy may be headed.
6. CMS Is Exploring a Home Health-Specific Wage Index
CMS is also seeking stakeholder feedback on whether Medicare should develop a wage index specifically for home health agencies, rather than continuing to use the current methodology.
No changes are being proposed for 2027, but CMS is gathering information to evaluate potential future reforms.
Why it matters: If adopted in future years, a home health-specific wage index could affect reimbursement differently across geographic markets.
7. Program Integrity and Compliance Continue to Be a Priority
CMS is proposing additional measures to strengthen Medicare program integrity by enhancing provider enrollment oversight and expanding circumstances under which Medicare enrollment may be denied or revoked.
These proposals are intended to reduce fraud, waste, and abuse while ensuring that Medicare providers meet compliance requirements.
Why it matters: Strong compliance programs, accurate documentation, and robust coding processes are becoming increasingly important—not only for reimbursement but also for reducing regulatory risk.
What Agencies Should Do Now
Although the 2027 Home Health Proposed Rule is not yet final, agencies can begin preparing by:
- Reviewing documentation and coding workflows.
- Staying current on PDGM and OASIS updates.
- Monitoring CMS announcements as the final rule is released.
- Investing in quality assurance processes that improve documentation accuracy and compliance.
While the 2027 Proposed Rule doesn’t introduce sweeping changes, it reinforces CMS’s continued focus on payment accuracy, quality reporting, and program integrity.
For home health agencies, the takeaway is clear: accurate coding and complete, high-quality OASIS documentation remain essential for maximizing reimbursement and maintaining compliance.
As CMS moves toward the final rule, agencies that stay informed and prepare early will be better positioned to adapt to the changes ahead.
