CMS Unveils Important Proposed Rule for Home Health Payments in 2027

On July 1, 2026, the Centers for Medicare & Medicaid Services (CMS) unveiled the Home Health Prospective Payment System Proposed Rule for Calendar Year 2027. This rule projects a 2.4% increase in Medicare payments to home health agencies, amounting to approximately $420 million more than the previous year. Stakeholders have until August 31, 2026, to submit their comments on this proposal.

For 2027, CMS plans a 2.1% payment update worth about $370 million, alongside a 0.3% increase in the fixed-dollar loss ratio to cover medical care variations. The Proposed Rule introduces a temporary -3.0% adjustment to recoup overpayments from 2020 to 2025, distinguishing it from the final rules of 2023-2026, which did not include permanent base payment rate cuts. It also expands CMS's power to retroactively deny or revoke Medicare provider enrollment, allowing for recuperation of improperly disbursed funds.

A lawsuit filed on June 29, 2026, in the U.S. District Court for the District of Massachusetts contests new Medicaid work requirements under the One Big Beautiful Bill Act. Effective January 2027, this act demands Medicaid expansion adults between 19 and 64 engage in community activities or meet income criteria for eligibility. Plaintiffs, including 23 states and the District of Columbia, argue that CMS's restrictive approach to "medically frail" exemptions in the IFR could detrimentally impact hospitals and rural health systems, escalating uncompensated care and potentially leading to closures.