Medicare Issues 2027 Home Health Prospective Payment System Proposed Rule

Each year, the Centers for Medicare & Medicaid Services (CMS) updates its payment and coverage policies for the various practice settings, including payments to home health agencies (HHAs). CMS has released the proposed rule [PDF] modifying the home health prospective payment system (HH PPS) for Part A services provided to Medicare beneficiaries in 2027 with public comments due on August 31. Implementation is effective for dates of service on or after January 1, 2027. ASHA is reviewing the proposals in the rule and preparing comments in advance of the deadline.

Annual Payment Update

CMS proposes to reduce payments to the home health sector by 3% in 2027 as required under federal law. Specifically, as CMS was transitioning to the Patient Driven Groupings Model (PDGM) in 2020, Congress required it to assess the difference between assumed versus actual behavior change on estimated aggregate expenditures. CMS has found consistent reductions in the delivery of care each year since 2020, meaning payments to home health agencies have exceeded their costs. CMS notes in the proposed rule that payments to HHAs in 2025, the most recent year for which it has data, exceeded cost by approximately 34%. The 3% proposed reduction for CY2027 is intended to recoup these “overpayments.” If finalized, 2027 will mark the fifth year in a row CMS has provided a downward payment adjustment to home health payments.

Despite this reduction, CMS estimates that Medicare payments to HHAs in CY 2027 would increase in the aggregate by 2.4%, or $420 million, compared to CY 2026, based on the cumulative impact of its proposed policies. The estimated national standardized 30-day period payment for 2027 is $2,092.27. The national per visit payment amount for therapy services are as follows:

• physical therapy: $197.42;
• occupational therapy: $198.77; and
• speech-language pathology: $214.60.

While service delivery to home health beneficiaries has continued to drop since 2020, the clinical complexity of patients being treated under home health seems to be increasing, creating questions about what the data is really telling us. For example, CMS’ estimates of the number of patients with multiple comorbidities and high levels of functional impairment are lower than what has been reflected in the claims and OASIS data. Additionally, of 12 clinical categories that drive home health payments (along with indicators of clinical complexity), most home health patients were assigned to the musculoskeletal or neurological rehabilitation categories—the two categories that trigger a therapy payment. Despite this, nearly 37% of patients did not receive any therapy in 2025.

Based on these data points, at a minimum, therapy should be provided at the same rate as it was under the previous home health payment system. And this raises questions as to whether some home health patients need therapy based on their clinical presentation but are not receiving it, allowing some HHAs to control costs and maximize profits. ASHA will continue its analysis and provide feedback to CMS in its comments.

Find more information on the HH PPS, including resources to help SLPs maintain their clinical and ethical obligations to patients, on the ASHA website.

Palliative Care Services as Home Health Services

CMS included requests for information associated with coverage of palliative care across three proposed rules this summer, including the hospice, fee schedule, and home health rules.

In this proposed rule, CMS highlights that the home health prospective payment system guidelines are broad enough that palliative care could be provided in this setting without significant regulatory modifications. This is because home health services are covered by Medicare if they require the skills of a clinician, such as a SLP, and are designed to improve or maintain function for the patient.

ASHA appreciates CMS’ reinforcement of coverage for maintenance therapy, as the myth that improvement is required for coverage still persists despite the efforts of the agency to implement the settlement requirements of the Jimmo v. Sebelius ruling of 2013.

CMS also highlights the role of SLPs in the delivery of palliative care. As noted in the proposal, SLPs support safe eating and drinking and help facilitate communication and decision making for patients who need it. ASHA is developing comments to ensure CMS and other stakeholders understand the full scope of palliative care services provided by SLPs. In addition, CMS requests, and ASHA will supply, clinical examples of palliative care to include to the home health benefit policy manual [PDF].

Request for Information (RFI) on future measure concepts for the Home Health Quality Reporting Program (HH QRP)

CMS is soliciting comments on the importance, relevance, appropriateness, and applicability of the quality measure concepts related to advanced care planning and the HH setting more broadly. ASHA will support CMS’ interest in meaningful quality measurement while urging CMS to include communication, hearing, cognition, swallowing, nutrition, hydration, caregiver training, and comprehensive functional outcomes as core components of patient-centered outpatient care. ASHA will also highlight the importance of communication access in valid and meaningful advance care planning.

DMEPOS Encounter Requirements for Identical Replacement Items

Federal law requires that for an item of durable medical equipment, prosthetic, orthotic, or supplies (DMEPOS) to be covered, there must be an order from a physician or practitioner as well as a face-to-face encounter between the beneficiary and the physician/practitioner within six months of the order. However, CMS highlights in the proposed rule that this has created an increased and unnecessary burden in instances where the patient needs the exact same item if the original item is lost or damaged.

As a result, CMS proposes a regulatory change that would clarify that while an order would continue to be required for replacement DMEPOS items, a new face-to-face encounter would not need to occur to support payment for replacement of DMEPOS items if the replacement falls under the same Healthcare Common Procedure Coding System (HCPCS) code.

SLPs often work with patients who need DMEPOS, such as speech-generating devices (SGDs). For patients with ALS, autism, or other disorders who cannot communicate needs due to a damaged or lost SGD, waiting for a face-to-face encounter to replace the item can be challenging at best. Allowing for a replacement item of the same type to be ordered without this in-person encounter reduces burden for the patient and caregiver and ensures more timely access to the equipment the multidisciplinary care team has determined is medically necessary for the patient. As a result, ASHA supports this regulatory modification and will encourage CMS to finalize it in our comments.

Provider Enrollment

CMS proposes numerous changes to provider enrollment regulations that are not limited to home health but would apply across practice settings and payment systems.

Revocations and Denials of Enrollment

Under its current authority, CMS may revoke a Medicare provider’s enrollment if the provider:

• fails to adhere to Medicare enrollment requirements;
• is excluded by the Department of Health and Human Services Office of Inspector General;
• has a felony conviction within the previous 10 years;
• demonstrates a pattern of improper or abusive billing; and
• has been terminated by another federal health care program.

When revoking a provider, CMS generally bars them from re-enrolling in Medicare for a period of one to 10 years. CMS determines the length of this “re-enrollment bar” based on the severity of the provider’s actions.

Improper or Abusive Billing Revocation Proposed Changes

Currently, CMS has the authority to revoke an enrollment for a pattern of improper or abusive billing, including:

• The percentage of submitted claims that were denied during the period under consideration;
• Whether the provider or supplier has any history of final adverse actions and the nature of any such actions;
• The type of billing noncompliance and the specific facts surrounding said noncompliance (to the extent this can be determined); and
• Any other information regarding the provider’s or supplier’s specific circumstances that CMS deems relevant to its determination.

CMS proposes to remove these criteria to give itself maximum flexibility to address improper or abusive billing practices.

Expansion of Revocation Authority Based on Submission of False/Misleading Medicare Enrollment Information

CMS can also revoke or deny an enrollment if the provider or supplier certifies as ‘‘true’’ misleading or false information on the 855 enrollment applications. CMS proposes to expand its revocation authority to include the submission of false or misleading information on any Medicare enrollment-related form including, but not limited to:

• Form CMS–588 (Electronic Funds Transfer (EFT) Authorization Agreement; OMB Control Number 0938–0626), which must be submitted with the enrollment application;
• Documents required to demonstrate compliance with HHA capitalization requirements;
• Opt-out affidavits;
• Letters from a provider demonstrating that a particular provider official qualifies as an authorized or delegated official; and
• Any other required or requested enrollment-related documentation.

Revocation of All Enrollments Associated With a Single Provider

Under current regulation, if CMS revokes a provider’s existing enrollment(s), it may also revoke any and all of the provider’s other enrollments. However, it does not currently have the authority to revoke existing enrollments if an existing provider’s new enrollment is denied. For example, if Provider X has three existing enrollments and submits a fourth enrollment application that is ultimately denied, it does not impact the three existing enrollments. CMS proposes to revoke all existing enrollments if a new associated enrollment is denied.

Expansion and Reorganization of Retroactive Revocation Grounds

Existing Medicare regulations state that a revocation becomes effective 30 days after CMS mails notice of its determination to the provider. For example, the state revokes a clinician’s license to practice on March 1. CMS learns of this and sends a revocation notice to the provider on March 15, meaning the revocation would not be effective until April 15.

CMS is concerned that the current limitations on its revocation authority could lead to 45 days of improper payments under this scenario. Specifically, if it applied the prospective “30 days after mailing” timeframe, the clinician could conceivably bill and be paid for services furnished between March 1 and April 15 while unlicensed, resulting in potentially thousands of dollars in improper Medicare payments.

Moving forward, CMS proposes that all revocations, regardless of the rationale, would be effective from the date the noncompliance with Medicare requirements began. In the above scenario, the revocation would be effective March 1 as opposed to April 15.

Revocation rationales include:

• General Noncompliance, Licensure, and Provider Agreements
• Exclusions/Debarments, Felony Convictions, False Information, and Nonoperational Status
• Failure to Satisfy Enrollment Requirements
• Misuse of Billing Number
• Abuse of Billing Privileges
• Reporting Enrollment Data Changes
• Failure to Document or Furnish Documentation
• Termination From Another Health Care Program (e.g., state Medicaid program)
• False Claims Act (FCA) Civil Judgments
• Debts Referred to Treasury
• Revoked Under Different Name or Identity
• Billing From Noncompliant Location
• Patient Harm

CMS proposes to expand the rationales for revocations to include:

• Certain misdemeanor convictions such as assault, battery, neglect, or abuse of a patient (including sexual offenses);
• When a provider has its practice location in the same suite or office as another provider whose Medicare enrollment has been revoked or denied; and
• Program integrity improvements associated with hospice care.

Reporting of Private Equity and Real Estate Investment Trusts on Medicare Enrollment Applications

Since 2023, CMS has expressed concern about the impact of private equity and other forms of for-profit ownership of entities billing the Medicare program, such as private equity ownership of skilled nursing facilities. In this proposed rule, CMS suggests such ownership interests should be disclosed on the various Medicare enrollment applications such as the 855-B for business and 855-S for DMEPOS suppliers.

Reporting of Managing Employees on Medicare Enrollment Forms

Federal regulations define “managing employees” as a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider. CMS would expand the list of managing employees beyond hospice and skilled nursing facility medical directors to include:

• Anyone with the title “medical director,” regardless of practice setting
• Clinical directors
• Departmental heads (for example, a hospital’s chief of cardiology)
• Supervising physicians (not simply those at independent diagnostic testing facilities (IDTFs)
• Nursing directors
• Alternate administrators
• All other clinical personnel that meet the “managing employee” definition.

This expansion could have serious implications for audiologists and SLPs serving in clinical or administrative leadership roles in their organization.

ASHA is evaluating the impact of the enrollment updates on audiologists and SLPs and may comment to ensure that CMS develops policies that strike a balance between Protection of the Medicare trust fund and mitigating administrative burden for clinicians and their employers.

Resource

Check out the CMS Fact Sheet.

Questions?

Email reimbursment@asha.org.