The Centers for Medicare & Medicaid Services (CMS) has released the Calendar Year (CY) 2027 Home Health Prospective Payment System (HHPPS) Proposed Rule (CMS-1844-P), outlining Medicare payment updates and a broad range of policy changes affecting home health agencies beginning January 1, 2027.

For Florida’s Medicare-certified home health providers, the proposal represents a welcome improvement over recent years’ payment reductions, but it also reinforces CMS’s continued emphasis on program integrity, provider accountability, and Medicare enrollment oversight.

Among the proposal’s most significant developments are an estimated 2.4% aggregate increase in Medicare home health payments, no new permanent Patient-Driven Groupings Model (PDGM) behavioral adjustment, continued temporary PDGM payment reductions, expanded Medicare enrollment enforcement authorities, and new requests for stakeholder input on palliative care and a home health-specific wage index.

The proposed rule is open for public comment through August 31, 2026.

Medicare Payments Would Increase 2.4% Nationwide

CMS estimates that Medicare payments to home health agencies would increase by approximately $420 million nationally (2.4%) compared to CY 2026.

The proposed increase consists of:

• 2.1% annual payment update, reflecting a 3.1% market basket increase reduced by a 1.0 percentage point productivity adjustment
• 0.3% increase resulting from revisions to outlier payment calculations

While this represents a substantially more favorable proposal than recent payment rules, providers should recognize that the 2.4% increase is a national aggregate estimate. Individual agency impacts will vary based on numerous factors, including wage index, case mix, PDGM grouping distribution, Low Utilization Payment Adjustment (LUPA) rates, outlier utilization, and patient characteristics.

Florida agencies should carefully evaluate CMS’s detailed payment tables once available to determine their organization-specific financial impact.

CMS Declines to Propose Another Permanent PDGM Behavioral Adjustment

One of the proposal’s most notable developments is what CMS did not include.

Since implementation of PDGM in 2020, CMS has applied multiple permanent payment reductions intended to offset what it characterized as provider behavioral changes following implementation of the new payment methodology. Those reductions included:

• 3.925% in CY 2023
• 2.890% in CY 2024
• 1.975% in CY 2025
• 1.023% in CY 2026

For CY 2027, however, CMS does not propose an additional permanent behavioral adjustment.

The agency concluded that payment changes observed after 2022 appear increasingly attributable to factors beyond PDGM implementation itself, including ongoing OASIS-E adoption, annual case-mix recalibration, and prior payment adjustments. As a result, CMS determined that an additional permanent reduction is not warranted at this time.

For providers that have experienced several consecutive years of permanent payment cuts, this represents an encouraging policy shift.

Temporary 3% PDGM Reduction Would Continue

Although CMS is not proposing another permanent adjustment, it would continue the existing 3.0% temporary reduction intended to recover what the agency estimates were historical PDGM overpayments between 2020 and 2025.

CMS estimates this temporary adjustment would recover approximately $500 million during CY 2027.

Unlike permanent behavioral adjustments, temporary reductions are designed solely to recoup prior payments rather than permanently lower future reimbursement rates. Nevertheless, they continue to reduce current Medicare reimbursement.

National provider organizations, including the Alliance for Care at Home, have expressed continued concern that these temporary reductions are based on flawed assumptions regarding provider behavior and do not accurately reflect the cost of delivering care.

Routine PDGM Recalibration Continues

As expected, CMS proposes annual updates to several components of the PDGM payment methodology using CY 2025 claims data, including:

• Case-mix weights
• Functional impairment levels
• Comorbidity adjustment subgroups
• LUPA thresholds

These recalibrations are budget-neutral overall but may significantly affect individual providers depending on their patient populations and referral patterns.

CMS Proposes Significant Expansion of Medicare Enrollment Enforcement

While payment updates have received considerable attention, some of the proposal’s most consequential provisions involve Medicare enrollment and program integrity.

CMS proposes several new authorities designed to strengthen oversight of providers participating in Medicare.

Retroactive Revocations

Currently, certain Medicare enrollment revocations become effective prospectively.

CMS proposes making all revocation actions retroactive to the date the underlying noncompliance occurred.

If finalized, providers could face repayment obligations for claims submitted months—or potentially years—before a revocation is formally issued.

Ownership Changes

CMS also proposes expanding enforcement surrounding changes in majority ownership.

Under the proposal, certain ownership changes involving Medicare-certified home health agencies would require reenrollment as a new provider. Agencies that fail to comply could face denial or revocation of Medicare enrollment.

Given the growing number of acquisitions and ownership transitions within Florida’s home health industry, providers contemplating transactions should closely evaluate these requirements if finalized.

Expanded Accountability for Owners and Managers

CMS further proposes expanding its authority to deny or revoke enrollment when owners, managing employees, or managing organizations experience:

• License suspensions
• Medicaid exclusions
• Federal health care program exclusions
• Certain criminal convictions
• Other adverse actions

The proposal reflects CMS’s increasing focus on individuals exercising operational control over providers—not solely the organizations themselves.

CMS Seeks to Expand Access to Community-Based Palliative Care

Among the proposal’s more encouraging policy discussions is CMS’s recognition of home health’s role in delivering community-based palliative care.

CMS emphasizes that palliative care may appropriately be provided under the Medicare home health benefit for eligible patients receiving skilled services, regardless of diagnosis or prognosis.

The agency is seeking public comment regarding:

• Improving beneficiary access to palliative care
• Clarifying existing Medicare benefit flexibility
• Potential future subregulatory guidance
• Additional examples for inclusion in the Medicare Benefit Policy Manual

Although no payment changes are proposed, the discussion signals growing federal interest in expanding access to palliative services within existing home health benefits.

CMS Explores a Home Health-Specific Wage Index

CMS is also requesting stakeholder feedback on whether Medicare should develop a home health-specific wage index, rather than continuing to rely primarily on hospital wage data.

Many providers have argued that hospital wage information does not accurately reflect the labor markets faced by home health agencies, particularly in rural communities and rapidly growing metropolitan areas.

While no immediate policy changes are proposed, the request for information could lay the foundation for future reimbursement reforms.

Quality Reporting Program Updates

CMS proposes several administrative modifications to the Home Health Quality Reporting Program (HH QRP), including:

• Accelerated OASIS submission and correction deadlines
• Transitioning OASIS and HHCAHPS reporting periods to calendar-year reporting
• Streamlining reconsideration procedures through digital notifications
• Soliciting feedback on a future Advance Care Planning quality measure

CMS also continues discussing long-term alignment between the HH QRP and the expanded Home Health Value-Based Purchasing (HHVBP) Model.

Importantly, no new HHVBP performance measures are proposed for CY 2027.

Other Proposed Changes

Additional provisions in the proposed rule include:

• Expanded Medicare coverage for certain external infusion pumps, home infusion drugs, and related supplies beginning April 1, 2027
• Country-of-origin reporting requirements for certain durable medical equipment suppliers
• Additional Medicare enrollment form revisions related to ownership disclosure and private equity participation

What This Means for Florida Home Health Providers

Overall, the CY 2027 proposed rule offers a more favorable reimbursement outlook than providers have experienced in recent years. The absence of another permanent PDGM behavioral adjustment and the projected national payment increase are encouraging developments after multiple years of payment pressure.

At the same time, CMS continues to strengthen Medicare enrollment oversight through expanded revocation authority, increased ownership scrutiny, and broader fraud prevention initiatives that could significantly affect provider operations and compliance responsibilities.

Florida agencies should pay particular attention to:

• The continuing 3% temporary PDGM adjustment
• Annual PDGM recalibration
• Proposed Medicare enrollment enforcement changes
• Ownership transaction requirements
• Future opportunities surrounding palliative care
• CMS’s request for input on a home health-specific wage index

Share Your Feedback and Submit Comments to CMS

HCAF is continuing its review of the proposed rule and welcomes feedback from members regarding its potential financial, operational, clinical, and compliance impacts. Providers are encouraged to share agency-specific concerns, supporting data, and recommended policy changes so they may help inform our formal comments to CMS. Please email feedback to Kyle Simon, Senior Director of Policy, Advocacy & Communications, at ksimon@homecarefla.org.

Members are also strongly encouraged to submit comments directly to CMS through the proposed rule’s online Federal Register page. Individual provider comments are especially valuable when they include concrete examples, agency-level data, patient access concerns, workforce impacts, or explanations of how a proposal would affect the delivery of home health services.

Comments must be submitted by August 31, 2026.

Click here to review the proposed rule and submit comments through the Federal Register⁠.