July 21, 2026  – The Centers for Medicare & Medicaid Services (CMS) has released its proposed Calendar Year 2027 Home Health Prospective Payment System (HH PPS) rule, outlining payment updates, policy changes, and new program integrity measures that would affect Medicare-certified home health agencies nationwide.

If finalized, the proposal would increase overall Medicare payments to home health agencies by approximately 2.4%, representing an estimated $420 million increase compared to 2026. The increase reflects a 2.1% annual payment update along with other payment adjustments, including changes to the fixed dollar loss ratio used for outlier payments.

Unlike previous years, CMS is not proposing another permanent reduction to the 30-day home health payment rate tied to the Patient-Driven Groupings Model (PDGM). The agency said its latest review found that more recent changes in provider behavior may be influenced by factors beyond the payment model itself, including ongoing case-mix recalibrations, implementation of OASIS-E, and earlier payment adjustments.

However, CMS is proposing another temporary 3.0% reduction to the national standardized payment rate. The adjustment is intended to continue recouping what the agency considers historical overpayments made between 2020 and 2025 following implementation of PDGM. CMS stated that gradually recovering these funds may help avoid larger payment reductions in future years.

Several technical updates are also included in the proposal. CMS plans to recalibrate PDGM case-mix weights using 2025 claims data, update low utilization payment adjustment (LUPA) thresholds, revise functional impairment levels and comorbidity adjustment groups, and update the fixed dollar loss ratio for outlier payments.

Quality reporting remains another focus of the proposed rule. CMS recommends aligning reporting periods for the Home Health Quality Reporting Program and making administrative updates to improve data submission processes. The agency is also requesting public input on a potential Advanced Care Planning quality measure for future years.

Notably, CMS is not proposing significant policy changes to the expanded Home Health Value-Based Purchasing (HHVBP) Model for 2027. CMS will accept public comments on the proposed rule before issuing a final regulation later this year. If finalized, the payment and policy changes would take effect on January 1, 2027.