The 2027 Proposed Rule Is About Much More Than Payment

The 2027 Home Health Proposed Rule has been released, and agencies should not make the mistake of scanning the payment update, feeling relieved, and moving on.

Yes, the proposed payment rate is higher. That is welcome news. But this rule reaches far beyond reimbursement. It raises important questions about palliative care under the home health benefit, shortens the proposed timeline for certain OASIS submissions, requests feedback on a home health specific wage index, and introduces sweeping Medicare provider enrollment changes that could carry serious consequences.

The public comment period will remain open through August. We will share the exact deadline and submission details separately, but agencies should begin reviewing the proposals now. Meaningful comments take time to develop, especially when a rule is this broad.

The Proposed Payment Update Is Encouraging, but It Is Not the Whole Story

CMS is proposing a 2027 national standardized payment rate of $2,092.27, compared with the current rate of $2,038.22.

That increase is certainly encouraging. Home health agencies have absorbed rising labor costs, increased operational expenses, staffing challenges, and years of payment pressure. Any upward movement matters.

Still, this is not the time for a victory lap.

The proposed rate reflects the annual payment update, applicable wage index changes, and the continued temporary adjustment. CMS is also proposing the usual annual revisions to:

• Case mix weights 
• LUPA thresholds 
• Functional impairment levels 
• Wage index values 
• The Fixed Dollar Loss Ratio used for outlier payments 

CMS’s latest analysis of PDGM data is also included in the rule. That discussion deserves more attention than a few paragraphs because it helps explain how CMS continues to evaluate assumed versus actual behavior under PDGM and how that analysis may shape future payment policy.

The Temporary Adjustment Does Not Simply Build on Last Year’s Reduction

One point agencies need to understand is how CMS calculates the temporary adjustment.

CMS does not begin with a payment rate that already includes the prior year’s temporary reduction and then apply another adjustment on top of it. Instead, CMS returns to the preadjustment base rate before applying the calculations for the new year.

That matters.

Without that approach, a temporary reduction could quietly become embedded in the base rate and continue compounding year after year. By returning to the preadjustment amount, CMS avoids turning the prior temporary adjustment into a permanent reduction.

After the proposed calculations are completed, the 2027 national standardized payment rate would rise to $2,092.27.

That is good news. It just should not distract agencies from the rest of the rule.

LUPA Rates Would Increase

LUPA payment rates are proposed to increase with the annual market basket update. As in previous years, LUPA payments would not be subject to the behavioral adjustment.

CMS is not proposing changes to the LUPA add on factors. Those would remain unchanged if the rule is finalized as written.

Palliative Care Under the Home Health Benefit Deserves Serious Attention

One of the more complicated proposals involves palliative care services under the Medicare home health benefit.

This is not a minor policy question.

Palliative care can align well with home health when patients are managing serious illness, complex symptoms, declining function, caregiver strain, and changing goals of care. But fitting palliative services into the existing Medicare home health structure raises practical questions.

Agencies should be asking:

• What services would be covered? 
• How would eligibility be established? 
• How would palliative care differ from routine home health management of chronic or serious illness? 
• How would it interact with hospice eligibility and hospice election? 
• What documentation would support medical necessity? 
• What staffing, competency, and care planning expectations would apply? 

This proposal deserves careful review and thoughtful public comments. It could create meaningful opportunities for patients, but only if the final policy is operationally clear and does not create another layer of confusion for agencies already navigating a complicated benefit.

The OASIS Submission Window Could Shrink Dramatically

CMS is proposing a major change to the Home Health Quality Reporting Program.

Agencies currently have approximately four and a half months after the end of the reporting period to submit the OASIS assessments used to calculate certain quality outcome measures. Under the 2027 proposal, that window would be shortened to 45 days.

CMS reports that most OASIS assessments are already submitted within that timeframe. That may be true across the industry, but the proposal still deserves operational attention.

A shorter deadline leaves less room to resolve:

• Assessments stuck in processing 
• Submission errors 
• Missing discharge assessments 
• Incorrect completion dates 
• Assessments waiting for correction 
• Internal workflow delays 
• Vendor or transmission problems 

Timelier quality results would be useful. Agencies need feedback while it is still recent enough to act on, not months after the performance period has ended.

But faster reporting only works if agencies have reliable processes for monitoring submission status, correcting errors, and confirming acceptance. Agencies that treat OASIS submission as a routine clerical task rather than a quality reporting function may find themselves exposed.

No New HHVBP Changes Is a Welcome Relief

One of the best parts of the proposed rule may be what CMS did not include.

CMS is not proposing another round of changes to the Home Health Value Based Purchasing Model for 2027.

Agencies have already worked through major changes implemented in 2025 and additional requirements taking effect in 2026. A year without another redesign would give providers time to focus on execution instead of constantly rebuilding their strategy.

That does not mean agencies can relax. It means they may finally have room to improve performance under the measures already in place.

CMS also discusses the possible future use of the Discharge to Community Post Acute Care measure and the Discharge Function Score outside of HHVBP, including possible incorporation into the Quality of Patient Care Star Rating.

Nothing is being proposed yet, but agencies should pay attention. CMS rarely includes these discussions without signaling where future rulemaking may be headed.

The Provider Enrollment Proposals May Be the Most Serious Part of the Rule

The Medicare provider enrollment section may ultimately have a greater impact than the payment update.

These proposals extend beyond home health and would affect multiple Medicare provider types, including hospice. They address a broad range of enrollment and program integrity issues, including:

• Retroactive revocations 
• Shortened claim submission periods following revocation 
• Abuse of billing privileges 
• False or misleading information 
• High risk enrollments 
• Misdemeanor convictions 
• Hospice medical directors and administrators 
• Shared office suites 
• Misuse of identity 
• Owners, managers, and related parties 
• Changes in majority ownership 
• Reapplication bars 
• Affiliation disclosures 
• Payment suspensions 

This is not routine administrative cleanup. CMS is proposing stronger tools to deny, revoke, suspend, or restrict Medicare participation when it believes a provider or related individual presents a program integrity risk.

Agencies should take this section very seriously.

False or Misleading Information Could Carry Much Heavier Consequences

CMS is proposing stronger penalties when false or misleading information is submitted to Medicare.

Inaccurate information can already result in an enrollment denial. Under the proposed changes, the consequences could become much more severe, including a bar on reapplying to the Medicare program for up to 10 years.

The proposal would also extend beyond the initial enrollment application. Other forms, attestations, and documents submitted to Medicare could potentially trigger enforcement action.

That means agencies cannot treat enrollment forms as paperwork that simply needs a signature.

Every submission should be:

• Accurate 
• Complete 
• Supported 
• Reviewed by someone who understands the consequences 
• Updated when ownership, management, location, or other reportable information changes 

A careless answer, an outdated ownership record, or a form completed without adequate review could become far more than an administrative inconvenience.

Leadership Backgrounds and Prior Affiliations May Matter More

The rule also places greater emphasis on the backgrounds of key personnel, including hospice administrators and medical directors.

Providers may need to look more closely at an individual’s prior relationships with other Medicare enrolled organizations. If a person was associated with a provider that engaged in fraudulent or abusive conduct, that history could affect the new provider’s enrollment status or level of scrutiny.

Agencies already verify licenses, credentials, and work history. This proposal suggests that due diligence may need to go much further.

Hiring a leader may eventually require reviewing not only whether that person is qualified, but also where they previously worked, what authority they held, and whether those organizations had significant Medicare compliance problems.

That creates a real challenge. Providers will need clear standards for what they are expected to investigate and how far back they are expected to look.

Shared Suites, Ownership Changes, and Related Parties Are Under the Microscope

CMS continues to focus on arrangements it views as potential program integrity risks.

Multiple providers operating from the same address or suite may receive greater scrutiny. Legitimate shared office arrangements exist, especially in rural areas or among smaller providers, but agencies should expect to demonstrate that their operations are real, distinct, properly staffed, and not merely a billing address.

Changes in majority ownership would also receive closer attention. Transparency during ownership transitions is critical, particularly when a buyer, seller, owner, manager, or related organization has a history of compliance or fraud concerns.

Agencies cannot assume that a transaction is complete simply because the business documents have been signed. Medicare enrollment implications must be reviewed early, not after the ownership change has already occurred.

Payment Suspensions Can Threaten an Agency’s Survival

The rule also discusses Medicare payment suspensions while potential program integrity concerns are being investigated.

A payment suspension can create an immediate cash flow crisis. Payroll, benefits, contracted services, supplies, rent, insurance, and patient care obligations do not stop simply because Medicare payments have been frozen.

Agencies should review these provisions closely and understand:

• What may trigger a suspension 
• How notice would be provided 
• What appeal or rebuttal opportunities may exist 
• How long a suspension could continue 
• What records would be needed to respond 
• Whether the agency has a financial contingency plan 

This is not an issue agencies should wait to understand after payments have already stopped.

CMS Is Considering a Home Health Specific Wage Index

CMS is requesting feedback on whether a new home health specific wage index should be developed and how it should be structured.

The current wage index methodology has long created concerns for agencies whose labor markets and staffing costs do not fit neatly within hospital based geographic calculations. A home health specific index could be an opportunity to better reflect the realities of delivering care in the community.

But the details will matter.

CMS is asking about alternative data sources, and agencies should consider whether available data can accurately capture:

• Home health nursing and therapy wages 
• Rural recruitment challenges 
• Travel time and mileage 
• Competition with hospitals and other health care settings 
• Regional staffing shortages 
• Contract labor costs 
• Differences between urban and geographically dispersed service areas 

A new wage index is not automatically a better wage index. Agencies should comment on what data would produce a fair and workable result.

Advance Care Planning May Become a Future Quality Measure

CMS is also seeking feedback on whether advance care planning should be considered as a future home health quality measure.

This could be valuable. Home health clinicians frequently care for patients with serious illness, progressive decline, repeated hospitalizations, complex medication regimens, and unclear goals of care.

But this should not become a checkbox exercise.

A meaningful measure would need to distinguish between handing a patient a form and actually supporting an informed discussion about preferences, decision makers, treatment goals, and future care needs.

CMS should also recognize that home health clinicians cannot force a patient to complete an advance directive. Agencies should be measured on appropriate assessment, education, discussion, documentation, and coordination rather than whether every patient completes a particular document.

Agencies Need to Look Beyond the Rate Increase

The proposed payment update is encouraging, and agencies should acknowledge that.

But the rate increase is only one part of a much larger rule.

The provider enrollment proposals could change how agencies evaluate owners, leaders, locations, affiliations, and Medicare submissions. The palliative care proposal could affect how serious illness services are delivered under the home health benefit. The shorter OASIS submission timeline could require tighter quality reporting controls. A future home health specific wage index could reshape how geographic payment differences are calculated.

This is exactly why agencies should not wait until the end of the comment period.

Read the rule. Identify the provisions that affect your operations. Talk with your clinical, financial, compliance, quality, and enrollment teams. Develop specific examples of how the proposals would work in the real world. Then submit comments that explain not only whether you support or oppose a proposal, but why.

CMS needs to hear what these policies will actually look like inside a home health agency.

We will continue breaking down the major sections in upcoming Monday Minutes, including PDGM, palliative care, wage index methodology, OASIS submission deadlines, and Medicare provider enrollment. A more comprehensive review will also be included in our upcoming webinar on the 2027 Home Health Proposed Rule.