New CMS Payment Rule for Home Health Services Set for 2027
The Centers for Medicare & Medicaid Services (CMS) has proposed a significant new payment rule for home health services, set for 2027. This proposal includes an overall payment increase of 2.4%, or $420 million, reversing previous trends of reductions. The increase comprises a 2.1% update equivalent to $370 million and a 0.3% increment associated with the Fixed Dollar Loss (FDL) ratio.
CMS has opted not to implement a permanent adjustment to the 30-day base payment rate for 2027. Instead, it will continue analyzing claims data through 2026 to evaluate the long-term effects of the Patient-Driven Groupings Model (PDGM). This proactive approach aims to reconcile discrepancies between anticipated and actual provider behavior post-PDGM implementation and the shift to a 30-day payment cycle.
While permanent modifications are pending, CMS has proposed a temporary -3% adjustment to the standardized payment rate for 2027. This temporary measure seeks to gradually recover overpayments made from 2020 to 2025, mitigating potential extensive financial reductions in upcoming years.
The National Alliance for Care at Home expressed significant concerns regarding the proposed temporary adjustment. The organization fears it may skew Medicare payment rates from true care delivery costs, potentially affecting access to crucial in-home services. CEO Jennifer Sheets emphasized, "While the proposed rate update results in increased payments relative to last year...the Alliance remains focused on working to stop unwarranted temporary adjustments that are based on a flawed methodology."
Combating Fraud and Improving Compliance
The rule introduces strategies to enhance fraud prevention within the home health sector, applicable to all Medicare-participating providers. Key proposals suggest making revocation grounds retroactive for reclaiming funds from non-compliant providers and broadening the criteria for Medicare enrollment denial or revocation.
Additionally, CMS is considering constructing a home health-specific wage index leveraging alternative data from sources like the Bureau of Labor Statistics to more accurately reflect labor costs. This proposal invites feedback on successfully incorporating such an index in alignment with statutory and regulatory compliance requirements.
Enhancing Quality and Reporting Standards
Furthermore, CMS is soliciting input on integrating community-based palliative care within the Medicare home health benefit to improve beneficiary access. The proposal also addresses the potential alignment of the Home Health Quality Reporting Program with the expanded Home Health Value-Based Purchasing Model, aiming to refine data submission deadlines and enhance digital information transfer starting from the 2027 program year.