Home health in 2027: the proposed rate rule and what an agency controls

CMS has not yet published its final Medicare home health payment rule for 2027. Its proposed rule, published July 6, 2026, estimates that Medicare home health payments would rise 2.4%, about $420 million, in 2027. That follows an estimated 1.3% cut, about $220 million, under the final rule for 2026.

On top of the base rate, Medicare's quality model moves the traditional Medicare payments of each agency it can score by up to 5% either way. In 2026, it raised pay for 3,826 agencies and cut it for 3,395, by Kent Applied's count of CMS's agency file.

Is the 2027 home health rule final?

No. As of October 19, 2026, the Federal Register held only the proposed rule, and public comments on it closed on August 31, 2026. The rates CMS finalizes apply to care from January 1 to December 31, 2027. Last year's final rule was published on December 2, 2025, and took effect on January 1, 2026. Every 2027 figure below is CMS's proposal, and the final rule can change it.

What does the proposed rule do to the base rate?

It raises the base rate by a 2.1% payment update. A lower outlier threshold, the cost level above which Medicare pays extra for an unusually expensive period of care, adds an estimated 0.3% to total payments. CMS started from a 3.1% forecast, by the firm IHS Global, of how much the prices agencies pay for staff and supplies will rise, and subtracted a 1.0-point productivity adjustment, which the law requires. The proposed rule says both numbers may be updated in the final rule if more recent data arrive.

Two adjustments explain why 2027 looks so different from 2026. Both go back to 2020, when Medicare began paying home health in 30-day periods. The law said the switch to 30-day periods could not change what Medicare spent. Agencies' billing changed differently than CMS assumed when it set the rates, so Medicare paid more than the old system would have, and the law tells CMS to fix the rate and recover the difference.

• A permanent adjustment lowers the base rate from the year it is set onward. The 2026 rule applied a permanent cut of 1.023%. For 2027, CMS proposes no permanent adjustment.
• A temporary adjustment recovers past overpayments and applies only to the year it is set. The 2026 rule cut the 30-day rate 3.0% for this reason, and CMS proposes another 3.0% cut for 2027. Because both years carry the same cut, CMS counts it as no change between them.

The temporary cut is far from finished. By CMS's count, the overpayments for 2020 through 2025 come to $4.9 billion, a total that does not yet net out what the 2026 cut collected, and the 2027 cut would collect about $500 million of it. CMS says it may propose more temporary adjustments in future rules, so an agency's long-range budget should not assume the cut ends after 2027.

Who does the rule cover, and does every agency get 2.4%?

The rule sets Medicare's payment rates for home health agencies, and CMS's impact table covers 9,975 agencies. The 2.4% is an average. CMS says individual agencies will differ because of the wage index (its adjustment for local labor costs), how much of their pay comes from periods with few visits or unusually high costs, and how many Medicare patients they serve. By region, the estimates run from 1.7% in the East South Central and West South Central regions, the lowest, to 3.6% in the Mid-Atlantic region (360 agencies) and the outlying areas, the highest. The Pacific region's 2,880 agencies get 3.0%.

An agency that does not send CMS its required quality data gets a smaller update: under the proposal, 0.1% instead of 2.1%, because the law takes 2 percentage points off the update for those agencies.

How much does the quality model move an agency's pay?

Up to 5% either way. Under the expanded Home Health Value-Based Purchasing Model, CMS scores each eligible agency on a set of quality measures against agencies of similar size, and the result adjusts its traditional Medicare payments by between −5% and +5% in a later year. The 2025 adjustments were set from 2023 performance, and the 2026 adjustments from 2024 performance.

Kent Applied counted the 2026 adjustments in CMS's agency file. Of the 7,233 agencies with a 2026 adjustment, 3,826 got an increase, 3,395 a cut and 12 no change. 356 agencies reached the +5% maximum and 16 the −5% minimum, and the middle agency got +0.19%. Another 5,006 agencies in the file had no adjustment, because CMS found them ineligible or they had too few measures to score.

For 2027, CMS proposes no changes to the quality model. The measure changes already made in the 2026 rule apply from 2026 performance: CMS removed three patient survey measures and added four new ones, three on patients' function and one on Medicare spending.

What can an agency control?

The base rate, the temporary cut and the wage index are set by CMS. Four things that move an agency's Medicare pay are at least partly in the agency's hands.

An agency that misses its quality reporting loses 2 points of its update, so on-time reporting comes first. The next two are the measures CMS added for 2026 performance. Three of the new measures score improvement in bathing, upper body dressing and lower body dressing, from the OASIS assessments clinicians complete. The other new measure, Medicare spending per beneficiary, uses claims to measure the average Medicare spending per patient during and after the home health stay.

Last come referrals. The Commonwealth Fund found that the share of hospitalized Medicare patients referred to home health who received it fell from 66% to 59% between 2016 and 2022. Hospitals report a related problem: the American Hospital Association reported a 12.6% rise from 2019 to 2022 in the case-mix-adjusted length of stay of patients discharged to home health, shown in the chart of hospital stays by discharge destination, and tied the longer waits to staff shortages that left post-acute providers unable to accept new patients. An agency that knows how many of its referrals it starts, by hospital, can see where admissions are being lost.

How does an agency watch these numbers each week?

Home health rate cuts and quality pay are on Kent Applied's map of healthcare problems that need no patient data, because an agency can track them from reports it already has. For a home health agency or another post-acute or senior care operator, the Weekly Leadership Brief costs from $9,500 to build, then $350 a month. Each week it shows census, referral conversion, Medicare Advantage share and quality scores against budget and target, so leaders see a slipping score while there is still time to act on it.