On July 1, 2026, CMS published the Calendar Year 2027 Home Health Prospective Payment System Proposed Rule (CMS-1844-P) in the Federal Register. The proposed rule would increase Medicare payments to home health agencies by a net 2.4 percent — approximately $420 million — for calendar year 2027. That increase matters because it would be the first projected net payment increase for home health since CMS began implementing the Patient-Driven Groupings Model (PDGM) in 2020, after several consecutive years of cuts and recoupments. Comments are due August 31, 2026.
What the Proposed Rule Does
The 2.4% net increase is the headline number, but it comes with important caveats and attached policy changes that affect how home health nurses and agencies actually operate. The rule has three main components:
- Payment rate update: CMS proposes an aggregate 2.4% increase in home health payments for CY 2027, driven primarily by the home health market basket update minus a productivity adjustment. This is separate from the PDGM behavioral adjustment, which has been the source of most prior payment cuts.
- Temporary PDGM recoupment reduction: CMS proposes to reduce the PDGM behavioral offset recoupment for 2027, acknowledging that the agency's prior utilization assumptions were off. The recoupment mechanism — which reduced payments to account for predicted changes in agency behavior that didn't fully materialize — has been one of the primary reasons for recent net payment declines despite nominal rate updates.
- Provider enrollment changes: The rule includes sweeping Medicare enrollment policy changes affecting all provider types, including expanded grounds for enrollment revocation, new fraud detection triggers, and stricter surety bond requirements for high-risk provider categories. Home health agencies, which CMS has identified as a category with elevated fraud risk, face additional scrutiny under the proposed changes.
What It Means for Home Health Nurses
Home health nursing employs roughly 800,000 registered nurses across the United States, making it one of the largest nursing employment sectors. Rate cuts to home health agencies don't just reduce agency margins — they drive reductions in staff RN hiring, increased reliance on per-diem staffing, and in some cases agency closures that reduce patient access in rural and underserved markets.
The 2.4% increase, if finalized, would be the most favorable home health payment environment in five years. Whether it translates into RN compensation improvements at specific agencies depends heavily on each agency's payer mix, operating efficiency, and existing staffing model. Agencies that have been operating on thin margins during the PDGM recoupment years may use a payment increase to stabilize staffing or reduce per-diem reliance rather than immediately raising RN compensation. But the directional signal matters: sustained cuts push agencies toward thinner staffing; a net increase creates room for reinvestment in the workforce.
Buried in the proposed rule is a Request for Information (RFI) on whether CMS should develop a home health-specific wage index, separate from the hospital wage index currently used to adjust home health payments for local labor market differences. This is a long-standing issue in home health payment policy — the hospital wage index doesn't accurately reflect what home health agencies actually pay RNs and aides in a given market. CMS is asking stakeholders whether a standalone home health wage index would improve payment accuracy. If you work in home health or home health agency administration, the August 31 comment deadline is the right time to respond.
The PDGM Context
Understanding this rule requires context on PDGM. When PDGM launched in 2020, CMS projected that agencies would change their visit patterns in response to the new payment model in ways that would increase costs. CMS embedded an automatic behavioral adjustment into payment rates to recoup those anticipated cost increases upfront. The problem: the projected behavior changes didn't occur as CMS predicted, but the recoupment mechanism continued cutting payments regardless. The result was a multi-year gap between the nominal payment rate and what agencies actually received per episode.
The proposed 2027 rule partially unwinds this dynamic. That's not a minor technical adjustment — it's recognition that the payment model's core calibration was off in ways that have cost home health agencies real money for five years and, by extension, affected staffing decisions across the home health sector during that period.
Home Health Palliative Care
The proposed rule also includes discussion of home health palliative care services — a policy area that has been in regulatory limbo for years. CMS is exploring whether and how palliative care delivered in the home health setting can be better supported within the PDGM framework. For RNs working in home-based palliative care, this is worth watching: palliative care nursing in the home has been one of the fastest-growing subspecialty areas in home health, but payment policy has not kept pace with clinical practice. If CMS finalizes meaningful palliative care provisions in the final rule (due by November 1, 2026), it would clarify billing and documentation for a significant number of home health nurses who currently operate in regulatory gray areas on palliative care encounters.
Comment Deadline: August 31, 2026
The proposed rule is open for public comment through August 31, 2026. Home health nurses, agencies, and patient advocacy groups can submit comments at regulations.gov referencing docket CMS-1844-P. ANA, NAHC, and ACHC have all indicated they plan to submit formal comment letters. Individual nurses who want their clinical perspective on home health payment policy to reach CMS have until August 31 to do so — this is one of the few direct mechanisms nurses have to influence payment rules that shape their employment environment.