What the CY 2027 home health proposed rule means for your 30-day periods

What did CMS propose for home health payment in CY 2027?

CMS estimates that the proposed rule it issued on July 1, 2026, CMS-1844-P, would increase Medicare payments to home health agencies in CY 2027 by 2.4% in aggregate, or $420 million, compared with CY 2026¹. That net figure combines three moving parts: a proposed payment update of 2.1%, a $370 million increase; a temporary adjustment of -3.0% to the CY 2027 national, standardized 30-day rate; and the annual update to the outlier fixed-dollar loss ratio¹.

The rule also proposes to recalibrate the PDGM case-mix weights, functional impairment levels, comorbidity adjustment subgroups and LUPA thresholds with CY 2025 data, and it carries provider enrollment provisions that decide whether you keep billing at all¹.

Proposed means proposed: nothing here applies until CMS finalizes it, and the figures may change. The table puts the proposal beside what the 2026 final rule already did.

How does the -3.0% temporary adjustment interact with the 2.1% update?

They apply to the same rate in the same year, and the fact sheet’s +2.4% aggregate estimate already accounts for both¹. The update moves the national standardized rate up; the temporary adjustment is then applied to that CY 2027 rate as a -3.0% reduction¹.

The reason the aggregate lands above the update rather than three points below it is in the 2026 fact sheet: the CY 2026 rate already carried a -3.0% temporary adjustment, estimated as a 2.7% aggregate decrease, or $460 million². Because 2027 proposes the same -3.0% on its own rate, the temporary piece takes no second bite year over year; it keeps the rate 3% below where the update alone would put it. The fact sheet does not break out the remaining 0.3 points as a single line; the other moving part it names is the outlier fixed-dollar loss ratio, recalibrated each year so outlier payments do not exceed 2.5% of total payments¹.

Take the word “temporary” seriously. CMS describes the adjustment as continuing recoupment of retrospective overpayments for CYs 2020 through 2025 through “one or more” temporary adjustments¹, which is CMS saying the recoupment is not finished. The permanent adjustments already in the base, -3.925% in CY 2023, -2.890% in CY 2024, -1.975% in CY 2025 and -1.023% in CY 2026, are not coming back either¹.

What did the 2026 final rule already do to your rates?

It cut aggregate payments by an estimated 1.3%, or $220 million, compared with CY 2025². The pieces were a 2.4% payment update ($405 million), a -1.023% permanent adjustment estimated as a 0.9% decrease ($150 million), a -3.0% temporary adjustment estimated as a 2.7% decrease ($460 million), and an updated fixed-dollar loss ratio estimated as a 0.1% decrease ($15 million)².

The 2026 rule also let physicians, in addition to nurse practitioners, clinical nurse specialists and physician assistants, perform the face-to-face encounter regardless of whether they are the certifying practitioner². That is a documentation change, but it reaches the claim, because a period without a valid encounter does not get paid. The home health PDGM billing page covers the claim sequence under all of this.

What does recalibrating case-mix weights and LUPA thresholds change on a claim?

The expected payment for each 30-day period, and which periods fall under the visit threshold and pay per visit. Since January 1, 2020, agencies have been paid a national, standardized 30-day period rate when a period meets a visit threshold, adjusted for case-mix and geographic wage differences³. Each of the 432 PDGM payment groups has its own case-mix weight and LUPA threshold^1,3.

Recalibrating with CY 2025 data means a group’s weight can move up or down, and so can the visit count at which a period becomes a LUPA¹. Nothing about how you bill changes: the notice of admission still has to be on file, the period still goes out on an 837I built from the UB-04 fields, and the HIPPS code still comes from the assessment. What changes is the allowed amount to expect for each period, the number your expected-payment table and variance report are built on.

Outliers move too. Outlier payments go to periods whose estimated costs exceed a threshold, the 30-day rate multiplied by the fixed-dollar loss ratio and wage-adjusted, and the ratio is set each year so outlier payments stay within 2.5% of total payments¹. If your agency carries a meaningful outlier share, the ratio matters as much as the update.

Which enrollment and program integrity provisions are in the proposed rule?

The proposed rule has two enrollment and program integrity provisions that even a compliant agency needs to read: CMS proposes to make all revocation grounds retroactive, and to add grounds for denying or revoking enrollment tied to a change in majority ownership and to program or license suspension or termination involving the provider or its owners or managing employees¹.

The billing consequence of a revocation is total: no enrollment, no claims. So treat ownership and licensing records as billing data. Every owner and managing employee in PECOS should match the state license file and the agency’s own records, and a change in majority ownership should be reported on the schedule the enrollment rules set, not discovered by a contractor.

How do you model the change for your agency’s case mix?

Build an index from the fact sheets’ aggregate percentages, then correct it for your own LUPA and outlier shares. The per-period dollar rates are not on the fact sheets, so do not invent them; an index on the published percentages is honest about what it does and does not know.

Set your CY 2025 payment basis to 100; apply the CY 2026 aggregate components (update, permanent, temporary, outlier) from source 2; apply the CY 2027 proposed aggregate change from source 1; then compare the result with your actual 2026 revenue per period. The gap between the national index and your own number is your case mix, LUPA share and outlier share talking. A dedicated biller keeps that comparison on the weekly billing report so the final rule is a line change rather than a surprise. The home care billing page and the home care billing guide cover the revenue cycle around it.

What to do this week

1. Put the CY 2026 components² and the CY 2027 proposals¹ side by side in one sheet.
2. Build the index for your agency and write your LUPA share and outlier share next to it.
3. Pull three months of LUPA periods and ask whether a recalibration would add more.
4. Check every owner and managing employee in PECOS against your license file and the state’s record.
5. Re-read the CMS fact sheet the week the final rule is published and update the expected-payment table before the first January claim goes out.