Higher Rates, Heavier Scrutiny: Providers Break Down 2027 Medicare Home Health Rule 

With a higher Medicare base payment rate on the horizon for calendar year 2027, home health leaders are anticipating greater financial stability as well as heightened compliance demands as workforce issues persist.

The Centers for Medicare & Medicaid Services (CMS) finalized its calendar year 2027 home health payment rule on Wednesday, including a projected 2.4% aggregate payment increase. While the update gives providers a more predictable baseline to plan around, it does little to ease persistent clinical staffing and recruitment pressures, industry leaders told Home Health Care News. 

“Before we celebrate, we know increased costs from audits are on the way, and a 2.4% update doesn’t keep pace with what we pay to recruit and retain clinical staff,” Stacie Bratcher, CEO of LiveWell Partners, told HHCN in an email.

St. Louis-based LiveWell Partners provides home health care services within Illinois, Kansas, Ohio, Michigan and Missouri.

CMS estimates that the final rule will increase the Medicare home health payment rate by 2.4%, or about $415 million. That consists of the final CY 2027 home health payment update of 2.1% and an estimated 0.3% to the fixed dollar loss.

The rule also finalizes a 3% temporary reduction to the 2027 national standardized base payment rate to continue recouping what CMS calculates were retrospective overpayments associated with the payment model.

The finalized rule is a welcome relief, Patrick Harrison, vice president of policy and legislative affairs for the National Alliance for Care at Home (the Alliance), told HHCN in an email. The pay increase marks the biggest update in nearly two decades, outside of 2022.  

Bryony Winn, CEO of Bayada Home Health Care, was also relieved to see the final rule’s contents. The rate increase will support the work of its clinicians and staff and provide dependable funding to onboard new talent, she told HHCN in an email.

“My first thought was about our care teams and the patients who depend on them,” Winn said. “We ask so much of our nurses, therapists and aides, and it was encouraging to see a payment increase that recognizes the resources needed to support their incredible work.”

Bayada Home Health Care, based in Pennsauken Township, New Jersey, provides home health, personal care and other healthcare services across 22 states.

Insufficient support

Despite the increase, the rule does not fully address the financial pressures for providers, especially those serving rural areas where access to care can be a challenge.

“The Alliance acknowledges this move toward greater stability, but the continued -3% temporary adjustment still is a concern as it doesn’t reflect the true cost of care, and it relies on data tainted by bad actors,” Harrison said.

The Alliance, based in Alexandria, Virginia, is an advocacy network representing over 2 million home health, hospice, Medicaid home- and community-based care and other professionals in the home-based care industry. 

CMS withdrew or narrowed several enrollment proposals, which the Alliance said could have harmed patient access. Still, the Alliance is alarmed by wider provider enrollment provisions that can unintentionally impact legitimate providers, Harrison said.  

“Providers should be aware that broad-brush enrollment and disclosure provisions risk denying or revoking legitimate providers based on unrelated third-party conduct, a shared building, vendor relationships or administrative errors,” Harrison said. “This presents some risk, as CMS now treats clinical leadership titles as presumptively reportable managing employees, and a missed or late disclosure can support a revocation retroactive to the reporting deadline.”

Steven Gonzalez, CEO of HealthView Home Healthcare Services, told HHCN that the company is also alarmed by the enrollment provisions of the finalized rule, since CMS can make Medicare enrollment revocations effective as of the date noncompliance started.

“We lived through the LA County crackdown this year as a compliant provider — and it hurt,” Gonzalez said in an email. “I’m glad the tools are pointed at the bad actors. I want to see them used with precision so the honest agencies don’t pay for it a second time.”

Los Angeles-based HealthView Home Healthcare Services provides home health, hospice and palliative care services across Southern California’s Orange, Riverside, San Bernardino and Los Angeles counties.

What changes, what does not

Bratcher said the payment change will not affect LiveWell’s operations, but the rule will affect its compliance efforts because CMS has raised the stakes for every home health agency.

“[The finalized rule] rewards those that have invested in documentation and oversight. We see that as a good thing for patients and for the industry’s credibility,” Bratcher said. “It also means compliance infrastructure is a core operating cost now, not overhead.”

For HealthView, the finalized rule will require staff to participate in inefficient enforcement structures, Gonzalez said. CMS contractors tend to be siloed, Gonzalez explained. While CMS shares data with the Internal Revenue Service and other agencies, the contractors doing the audits and reviews communicate little with each other, he said. As a result, compliant agencies  answer the same questions more than once, diverting clinical and billing staff attention away from patient care. Agencies also face delays while waiting for responses to resolve potential issues, he said.  

“If the rule gives CMS more power to revoke and recover, the vendors carrying it out need to be connected so the good agencies aren’t stuck in limbo,” Gonzalez said.

Winn also said the final rule adds new time demands and requires additional resources from providers.

Beyond compliance, industry insiders said that the rule does not sufficiently address the difficulty of recruiting and retaining a workforce.

The rule’s modest payment increase, preceded by years of cuts, fails to allow home health agencies to compete with hospitals and other providers for the same nurses and therapists, said Dan Savitt, President and CEO of VNS Health.

New York City-based VNS Health is a nonprofit home- and community-based healthcare organization serving more than 99,000 patients and members daily. 

“Cumulative Medicare home health payment updates have totaled just 5.8% since 2020, compared with 20% or more for hospitals and skilled nursing facilities,” Savitt told HHCN in an email. “That growing gap makes it harder to recruit and retain clinicians, maintain capacity and ensure patients have access to the skilled care they need after leaving the hospital.”

The road ahead

For HealthView and LiveWell, the final rule supports the expansion of their organizations’ palliative care service lines.

CMS expressed interest in encouraging access to community-based palliative care services for beneficiaries under the Medicare home health benefit in the finalized rule. The agency acknowledged home health’s role in providing palliative care and said it would offer examples of such services in future guidance. 

“What I’m most excited about in the rule is the palliative care clarification,” Gonzalez said. “CMS spelled out that patients who qualify for home health can get skilled palliative care at home, including pain and symptom management. We’re building out palliative care, and this gives physicians more confidence to order it.”

LiveWell’s Bratcher said the final rule will help the organization to serve seriously ill patients earlier and with more consistent care.

Gonzalez anticipates that providers will increasingly exit the industry due to increased enforcement.

“We want to be ready for the patients, the clinicians and, where it makes sense, the smaller agencies that did things right but can’t carry the overhead alone,” Gonzalez said.

Overall, industry leaders agreed that more work needs to be done to ensure access to health services and a sustainable future for providers.

Payment policies and program integrity enforcement must support the sustainable delivery of high-quality home health care, Harrison said. Savitt added that CMS should reverse past behavioral adjustments and establish payment rates that reflect the true cost of delivering skilled care at home.

Whatever future advocacy occurs, it must extend beyond traditional Medicare payment updates to address Medicare Advantage reimbursement as well, Bratcher said.

“We also know we must keep pushing on the temporary payment adjustment and on Medicare Advantage rates,” Bratcher said. “Traditional Medicare is only part of the picture, and access to home health for all patients depends on both.”