The Centers for Medicare & Medicaid Services (CMS) released its CY 2027 home health final payment rule on Wednesday.
CMS estimates that the final rule will increase aggregate Medicare payments to home health agencies by 2.4% compared to calendar year 2026, in line with the increase that CMS proposed in July. The rate bump is estimated to increase home health payments by $415 million year-over-year.
The increase consists of a payment update of 2.1% and an estimated 0.3% increase reflecting the updated fixed dollar loss (FDL) amount.
The final rule also includes a -3% temporary adjustment to the 2027 national, standardized payment rate.
Additionally, the rule allows CMS to make Medicare enrollment revocations effective as of the date that noncompliance began.
CMS estimated that the final rule would save taxpayers approximately $82 million annually by strengthening the agency’s ability to recover Medicare payments from noncompliant providers and prevent high-risk providers from entering or remaining in the Medicare program.
“The Trump Administration is taking action to hold noncompliant providers accountable and ensure Medicare works with legitimate, qualified providers,” CMS Administrator Dr. Mehmet Oz said in a statement. “These changes will help protect seniors, safeguard taxpayer dollars, and preserve access to the care beneficiaries need.”
The final rule continues CMS’ implementation of a 30-day unit of payment and of the Patient-Driven Groupings Model (PDGM) case-mix adjustment methodology. CMS did not propose an additional permanent adjustment to the 30-day base payment rate, but the agency said it will continue to analyze CY2026 claims to determine if additional permanent adjustments are necessary to account for Patient-Driven Groupings Model (PDGM).
The rule finalized the recalibrated PDGM Case-mix weights, updated the FDL for outlier payments and updated the low utilization payment adjustment (LUPA) thresholds, functional impairment levels and comorbidity adjustment subgroups.
The full fact sheet on the final rule can be viewed here.
Fraud focus
The final rule includes several fraud-focused measures, most of which will apply to all provider types enrolled in Medicare, not just home health, according to CMS’ fact sheet.
The rule finalizes a policy making all Medicare enrollment revocations retroactive to the date that noncompliance began. This is a change from current regulations, which make certain Medicare enrollment revocations go into effect 30 days after CMS or its contractor mails the revocation notice.
CMS also added new grounds for revocation or denial of enrollment and expanded some of the existing grounds.
These new grounds include changes in majority ownership. This requires home health agencies, hospices and durable medical equipment suppliers undergoing certain changes in majority ownership must reenroll in Medicare as new providers and undergo a survey or accreditation. The final rule gives CMS authority to deny or revoke enrollment if a provider fails to comply with those requirements.
CMS also expanded existing enrollment denial and revocation grounds involving license or healthcare program suspensions and revocations to include a provider’s owners and managing employees or organizations.
“The final revocation/denial authorities address situations noted by CMS as involving provider noncompliance and actual and potential fraud, waste and abuse,” CMS’ fact sheet read. “They also would allow the agency to target improper activity by those who own or operate Medicare providers.”
Other final changes
The final rule responded to comments regarding how best the agency can promote access to community-based palliative care services through the Medicare home health benefit.
“This final rule acknowledges the role of home health in palliative care services and confirms that CMS will provide examples of such services through future sub-regulatory guidance,” CMS’ fact sheet read.
The final rule also responds to comments to its request for information (RFI) regarding the development of a home health-specific wage index from an alternate data source, such as the Bureau of Labor Statistics. The final rule did not announce an implementation plan or finalized methodology for a new home health-specific wage index.
Additionally, the rule amended the definition of durable medical equipment (DME) to certain external infusion pumps and associated home infusion drugs.
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