Why It Matters
Medicare home health agencies face new payment rates and reporting requirements for 2027, changing how they are paid and what they must report, under a final rule the Department of Health and Human Services issued.
The Centers for Medicare & Medicaid Services (CMS) estimates a net increase of $415 million in payments to home health agencies in 2027, or 2.4% above its updated projected 2026 baseline. The rule's payment and quality reporting provisions take effect Jan. 1, 2027. CMS says the annual update is required under Section 1895(b) of the Social Security Act. The rule also affects Medicare beneficiaries receiving home health care, suppliers of durable medical equipment, prosthetics, orthotics and supplies, and Medicare Advantage and Part D providers and suppliers subject to enrollment requirements.
The Big Picture
The Medicare Payment Advisory Commission (MedPAC) supported the temporary payment reduction, stating that the home health base payment rate "currently exceeds the estimated cost of a typical 30-day payment period by 34 percent." Other commenters welcomed the projected increase but said the national figure "masks significant variation," citing labor shortages, wage inflation and transportation costs. CMS responded that its analysis is not intended to predict precise financial outcomes for individual agencies.
The payment provisions include:
- Payment update: A 2.1% home health payment update applies to the 30-day payment rate and per-visit rates, according to CMS. Agencies that fail to submit required quality data receive a 0.1% update.
- Temporary adjustment: A factor of 0.97000, representing a 3% reduction, applies to the 2027 base rate. The 2026 rate also included a 3% temporary adjustment, and CMS says the net effect of that component in its impact table is zero.
- Permanent adjustment: CMS calculated an illustrative permanent adjustment of 3.793% for 2027. The agency says behavioral changes reflected in data from 2023 through 2025 cannot be attributed solely to the payment model's 30-day payment period.
- Total spending: CMS estimates approximately $17.8 billion in home health payments for 2027, reflecting a $365 million increase from the payment update and a $50 million increase from the updated fixed-dollar loss ratio.
Currently, the durable medical equipment definition at 42 CFR 414.202 requires equipment to be "appropriate for use in the home," without an exception. The rule adds an exception beginning April 1, 2027, for an external infusion pump when the associated home infusion drug is administered under the supervision of a health care professional by a qualified home infusion therapy supplier and is infused at least 12 times annually.
Broader Context
The rule also adds language to 42 CFR 410.38 stating that "Items ordered as replacement items do not require a new face-to-face encounter."
CMS finalized four changes to provider enrollment requirements:
- False information: Revocation for false or misleading information will apply to any Medicare enrollment-related form, rather than only the enrollment application.
- Billing privileges: CMS removes the enumerated factors used to determine whether billing privileges should be revoked for abuse. Many commenters opposed the change and requested clear thresholds. CMS declined, saying mandatory factors had restricted use of the provision and that it would instead apply a "facts and circumstances" approach.
- Effective dates: Revocation may take effect retroactively to the date noncompliance began.
- Reapplication bar: A reapplication bar of up to 10 years will apply regardless of the reason for denial.
The Bottom Line
The revised infusion pump definition applies beginning April 1, 2027. Starting with the 2027 Home Health Quality Reporting Program, data submission deadlines move to the 15th day of the second month after each calendar quarter ends.
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