The Centers for Medicare and Medicaid Services released its draft payment rule for home health services covering calendar year 2027. The document marks a clear departure from the cuts floated in recent proposals. Industry observers noted the shift immediately, as the plan calls for an overall increase rather than another round of reductions.
This change arrives after two consecutive years in which CMS had suggested aggregate cuts of 6.4 percent and 1.7 percent. The new proposal instead outlines a 2.4 percent rise, which would add roughly $420 million to payments for home health agencies. Seniors and families who rely on these services stand to benefit if the increase survives the comment period and appears in the final rule.
A Departure From Recent Proposals
LeadingAge president and CEO Katie Smith Sloan welcomed the move, noting that the 2.4 percent update and the decision to skip an additional permanent behavioral adjustment spare agencies from further compounding pressure. The National Alliance for Care at Home issued a similar statement, crediting ongoing advocacy for helping CMS recognize the true costs of delivering care in the home.
Hillary Loeffler, the alliance’s vice president of policy and regulatory affairs, described her initial reaction as very optimistic. She said it appears CMS is attempting to turn a page and may no longer pursue permanent downward adjustments. The proposal also adds coverage for home health palliative care services and seeks public input on a home health-specific wage index.
Remaining Financial Pressures
Even with the headline increase, the draft rule retains a 3 percent temporary reduction tied to earlier overpayments. CMS estimates it must still recover $4.9 billion through these annual recoupments, which could stretch across a decade. Sloan pointed out that the 2.4 percent update does not fully offset current labor and operating cost pressures built up after years of prior reductions.
Loeffler noted that a temporary 3 percent cut remains preferable to a permanent one, yet the long timeline still raises concerns about whether payments will cover costs for the foreseeable future. Providers continue to press CMS to revisit its methodology and to recognize that margins are thinner than some official estimates suggest.
Broader Program Integrity Steps
The draft rule also advances several measures aimed at strengthening program integrity across Medicare. These provisions would apply to all providers and suppliers, not only home health agencies. They include expanded disclosure requirements during enrollment and more aggressive use of revocation authority for errors or omissions.
Officials have signaled that mistakes in paperwork could trigger enrollment bars lasting up to ten years and could affect other Medicare provider numbers held by the same organization. While the goal is to deter fraud, the changes raise the possibility that compliant operators could face significant disruption from inadvertent compliance issues.
What Comes Next
CMS has historically adjusted its initial proposals upward in final rules, most notably in 2022 when a 1.7 percent proposed increase became 3.2 percent. Inflationary pressures that drove that adjustment are no longer at the same post-pandemic peak, yet the public comment period still offers stakeholders a chance to shape the outcome.
The 2027 rule will take effect more than a year from now, giving agencies time to plan. For seniors who depend on home health visits to remain independent, the direction of the final payment levels will influence service availability and provider stability in communities across the country.
Key points to watch
- Net payment change after the temporary recoupment adjustment
- Scope of new palliative care coverage
- Final decisions on enrollment and revocation policies
- Whether CMS revisits permanent behavioral adjustments
