Medicare would raise payments to home health agencies by $420 million next year after the Centers for Medicare & Medicaid Services issued a proposed Calendar Year 2027 rule on July 1, 2026 that would raise aggregate payments 2.4 percent. The package ties a 2.1 percent base payment update to an estimated 0.3 percentage-point uplift from outlier and fixed-dollar loss adjustments, with the 2.1 percent reflecting a 3.1 percent market basket increase less a 1.0 percentage-point productivity adjustment. CMS framed the rule as both a targeted payment update and a set of anti-fraud measures that would tighten provider enrollment across Medicare, including suppliers of durable medical equipment, prosthetics, orthotics, and supplies. The agency will accept formal public comments for 60 days after the rule is published in the Federal Register.

Providers would face expanded enrollment enforcement under the proposal because CMS would make revocations retroactive and broaden the grounds to deny or revoke enrollment, extendable across the entire Medicare program. The agency said those changes would let it remove linked providers and suppliers, recoup improper payments, and reduce fraud, waste, and abuse while improving access to home-based care.

How the payment math breaks down

The payment change is a mix of mechanics and policy offsets, CMS said, producing a 2.4 percent aggregate increase that amounts to roughly $420 million in additional payments. CMS tied about $370 million of that total to a 2.1 percent base payment update. That 2.1 percent is itself the result of a 3.1 percent market basket update less a 1.0 percentage-point productivity adjustment, the agency said. CMS said the remaining 0.3 percentage-point component reflects estimated increases tied to outlier or fixed-dollar loss calculations.

Separately, the American Hospital Association noted an element in the proposal that would apply a temporary 3.0 percent cut intended to achieve budget-neutral implementation of the Patient-driven Groupings Model. CMS described the broader set of payment-methodology, case-mix weight, and outlier-payment updates as steps to better align payments with current costs and caseloads in home health.

Enrollment, program integrity, and quality reporting

CMS proposed several specific program-integrity authorities to tighten oversight across Medicare, saying it would expand its ability to remove providers it identifies as linked to noncompliance. The agency estimated those enrollment and integrity actions would yield about $82 million in annual savings while also improving the timeliness of publicly reported home health quality information.

The proposal would update home health quality reporting timelines to bring the Home Health Quality Reporting Program into closer alignment with the Home Health Value-Based Purchasing program, while leaving VBP program parameters unchanged. CMS said it's seeking feedback on expanding access to home-based palliative care and on other quality-reporting and payment changes.

CMS also reiterated that it imposed moratoria earlier in 2026 on new enrollments by some hospice, home health, and DMEPOS providers as part of targeted efforts to address high-risk sources of improper payments. The agency framed the entire package as both a payment update and an anti-fraud campaign aimed at removing noncompliant providers, recovering improper payments, and improving the timeliness and alignment of quality reporting for care delivered in the home.

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CMS will accept formal public comments for 60 days after the rule is published in the Federal Register. Originally reported by fiercehealthcare.com.

This article was created with AI assistance.