The Centers for Medicare & Medicaid Services’ (CMS) proposed home health payment rule for CY2027 is a mixed bag for providers and industry insiders, offering a long-awaited raise alongside the sting of unresolved retroactive cuts.

Experts told Home Health Care News that while the proposed aggregate payment increase of 2.4% could suggest that CMS’ home health approach is cooling its aggressive stance, the road to payment recovery remains steep. 

The proposed cut is “sorely needed,” according to Beau Sorensen, chief operating officer of First Choice Home Health & Hospice.

“It shouldn’t feel remarkable that home health is getting an actual, bona fide increase in payment…but it is! This is the first increase since the CY 2022 rule, and that is sorely needed,” Sorensen told HHCN in an email. “While it is not nearly enough after five years of cuts, getting any increase at all feels outstanding. … The inclusion of palliative care as a bona fide reason for home health services was one of the standout positives in the rule for me as well.”

The proposal indicates progress in CMS’s approach to home health, experts shared. The rule reflects a more balanced approach to the rulemaking and rate development process than the industry has seen in recent years, Jeff Shaner, CEO of Aveanna Healthcare Holdings (NASDAQ: AVAH), told HHCN in an email.

For Compassus CEO Mike Asselta, the proposal serves as recognition that home health is a labor-intensive service. Rate increases that reflect the true cost of that labor are essential to ensuring a high-quality Medicare home health benefit, he told HHCN in an email.

Hillary Loeffler, vice president of policy and regulatory affairs for the National Alliance for Care at Home (the Alliance), said she was optimistic about the pay bump — but the Alliance remained concerned about CMS’ methodology and the continued temporary adjustments. 

“It seems like CMS is trying to turn a page and they are no longer going to implement permanent adjustments, and they’ve shifted to a posture of maintaining temporary adjustments of around 3%, [which] is pretty positive for us,” Loeffler said. “[However,] the Alliance continues to believe that the previous permanent adjustments and the continuation of temporary adjustments are not appropriate. We have a lot of concerns with the methodology and how they were calculated. We continue to believe that these adjustments shouldn’t have applied in the past, and the temporary adjustments aren’t valid either.

Operators also expressed that the rule included some cause for concern, noting that the increase fails to account for years of payment cuts or inflation.  

“We remain concerned about the proposed temporary adjustments that do not reflect the true cost of providing high-quality home health care,” Shaner said.

The “modest” increase, which comes after years of cuts, does not offset the cost of delivering care amid rising inflation and pressure from Medicare Advantage, Justin Searle, president of Bayada Home Health Care’s home health division, said.

“The industry still needs a more durable and predictable reimbursement foundation that supports broader access to care at home,” Searle told HHCN in an email. 

Sorensen highlighted an additional cause for concern: visit numbers.

“Medicare is showing that they are clearly concerned about it (with the number of visits per period down over 2 visits since 2019), and it’s hard to blame them,” Sorensen said. “Ultimately, while they’re “buying outcomes,” they’re also looking at the cost of care per visit steadily increasing. This is caused by a lot of factors, including the cuts we saw from the CY 2023-2026 rules, increasing inflation and upward pressure on the administrative side. But we have to find a way to at minimum arrest the trend broadly.”

Operational strategy

After the proposed home health Medicare payment rule for 2026 dropped in 2025, some providers said they would have to consider changing their operational strategy. For example, Sorensen told HHCN last year that First Choice would have to cut care if the proposed 6.4% aggregate cut was finalized. 

This year, providers said that the proposed rule, if passed as proposed, would largely allow their organizations to continue operating as is.

“For our agency, I see an emphasis on maintaining the status quo,” Sorensen said. “There will be some operational shifts as we put a greater emphasis on OASIS submission timelines (not a big issue, but worth a little extra energy on) and we will put a focus on palliative needs patients and referral sources to make sure that patients who are eligible for services are getting them.”

First Choice will also closely monitor CMS’ efforts to develop a home health-specific wage index, Sorensen said, to determine if any adjustments are needed to account for a number potentially lower than expected.

Searle said that the proposed rule does not alter Bayada’s strategic priorities, which include improving quality, hiring and developing clinicians, standardizing operations and driving efficiencies.

“Any improvement in reimbursement helps us keep investing in our workforce, clinical excellence, and the care transitions that are essential to recovery at home,” Searle said. “But when reimbursement is difficult to predict, long-term planning becomes more challenging, especially for providers caring for higher-acuity patients and working to expand access. We are also interested to see how the proposed palliative care changes evolve and will continue evaluating the opportunities they may create.”

While providers anticipated maintaining relatively stable operations, Loeffler warned that the home health industry remains in jeopardy. Access to care will likely be compromised, she warned, because payments are not keeping up with inflation. 

The future of home health payment

Following the release of the final rule, providers have charted reasons for hope in CMS’ approach to home health reimbursement, as well as some reasons for concern.

The lack of a permanent adjustment in the proposed rule provided one reason for optimism – though that optimism was tempered by the temporary adjustment.

“Based on the language CMS put in the proposed rule, I do think that permanent adjustments are finished, though there is a significant temporary adjustment amount that continues to hang out there in the future,” Sorensen said. “Medicare’s language seems to indicate that while they are leaving their options open, this amount will probably be recouped over a significant period of time instead of trying to accelerate the collection period. This is good news for the stability of the industry, especially with all of the provider enrollment and access to care issues that we’ve seen over the past year.”

While concerned about the future of temporary adjustments, providers continue to support CMS’ program integrity efforts, while cautioning against a broad-brush approach to eliminating bad actors.

The fraud-focused components of the rule could inadvertently implicate legitimate providers due to minor mistakes, with severe penalties, Loeffler warned.

Providers also cautioned against overly aggressive fraud measures that could encumber compliant providers.   

“We also strongly support program integrity measures that do not overly burden legitimate providers or harm patient access to quality care, and are evaluating those and other provisions in developing our written comments to CMS,” Shaner said.

Industry insiders, including Loeffler and Searle, highlighted the continued role of advocacy to ensure oversight is targeted and precise.

“That allows compliant organizations to stay focused on patients, families and the clinicians delivering care every day,” Searle said.