Final Home Health Rule Brings 2.4% Payment Increase, More Enrollment Measures

WASHINGTON—The Centers for Medicare & Medicaid Services (CMS) issued its final rule for home health payments, saying agencies will see a total incrase of about 2.4% in 2027 compared to 2026, the same amount proposed in July.

The new rule also creates stronger requirements for home health agencies, hospices and home medical equipment providers enrolling or re-enrolling in the Medicare program as part of the agency’s ongoing anti-fraud efforts.

The Calendar Year (CY) 2027 Home Health Prospective Payment System (HH PPS) final rule, announced Nov. 4, sets out a home health payment update of 2.1% ($365 million increase) and an estimated 0.3% increase that reflects the updated fixed dollar loss amount ($50 million increase). CMS estimated in a fact sheet that Medicare payments to home health agencies (HHAs) would increase in the aggregate by 2.4% or $415 million based on the finalized policies. 

CMS is also continuing its implementation of a 30-day unit of payment and of the Patient-Driven Groupings Model (PDGM) case-mix adjustment methodology within the HH PPS as required by law. Specifically, it includes an analysis of the difference between assumed versus actual behavior change on estimated aggregate expenditures for home health payments linked to these changes. This rule also discusses the permanent adjustments to HH PPS payment rates applied in previous years and finalizes a temporary adjustment to the 2027 home health base payment rate of -3.0%. 

CMS didn’t propose an additional permanent adjustment but said it will continue to analyze the data annually and weigh future changes.

In addition, the rule finalized the recalibrated PDGM case-mix weights, updated the FDL for outlier payments, and updated the low utilization payment adjustment (LUPA) thresholds, functional impairment levels and comorbidity adjustment subgroups for CY 2027.

Medicare Provider Enrollment Limits

CMS included several measures setting limits on provider enrollment in Medicare, saying it was part of its ongoing effort to “crush” fraud, waste and abuse, including:

• Finalizing a policy to make all revocation grounds retroactive, which it said will help the government recover monies paid to non-compliant providers and help ensure taxpayer money is paid only to legitimate, compliant providers.
• Adding new grounds for revocation or denial of enrollment and expanding some of its existing grounds, including:
  • Change in Majority Ownership—Hospices, home health agencies and suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) must reenroll in Medicare as a new provider and undergo a survey/accreditation if they experience certain changes in majority ownership. CMS will have the authority to deny or revoke enrollment if the provider does not comply with this requirement. 
  • Program or License Suspension/Termination—CMS currently may deny or revoke enrollment if a provider has a suspended/revoked license in another state; or is suspended/revoked from Medicaid or another federal healthcare program. It is expanding this to include similar suspensions/revocations involving the provider’s owners or managing employees/organizations.

Palliative Care Under the Home Health Benefit

In the fact sheet, CMS said it “is interested in encouraging beneficiary access to community-based palliative care under the Medicare home health benefit and believes the Medicare home health benefit can be an important step in the care continuum when a patient needs palliative care.”

“In this rule, we respond to comments received on how to best promote access to community-based palliative care services through the Medicare home health benefit,” CMS wrote, but did not provide examples in the fact sheet. This final rule acknowledges the role of home health in palliative care services and confirms that CMS will provide examples of such services through future sub-regulatory guidance.

Changes to DME Rules for Infusion Pumps & Drugs & Replacement Items

The rule expands coverage under the DME benefit to certain external infusion pumps and associated home infusion drugs that would be considered appropriate for home use if certain criteria are met, such as the requirement for the drug to be administered by or under the supervision of a healthcare professional. The effective date of this provision is April 1, 2027.

CMS also said in the fact sheet that it is finalizing its proposal to clarify that an additional comprehensive beneficiary “face-to-face” examination to gather “subjective and objective information associated with diagnosing, treating or managing a clinical condition for which the DMEPOS is ordered” is not necessary when the item being ordered and furnished is a replacement item (for purposes of this final rule, a replacement item is an item described by the same Healthcare Common Procedure Coding System [HCPCS] code). If a claim for a replacement DMEPOS item is audited, the provider must nevertheless submit documentation from the original face-to-face encounter to demonstrate that medical necessity, billing, and coverage requirements have been satisfied. The change is consistent with the intent of 42 C.F.R. 410.38, which requires a face-to-face encounter for certain DMEPOS items and will continue to apply when the item is initially furnished; however, this clarification will make clear that the face-to-face encounter does not need to be repeated solely for replacement items.