Medicare's 2027 home health raise keeps a temporary 3% cut

Medicare’s home health rate goes up in 2027, but a temporary 3% cut stays on it. The Centers for Medicare & Medicaid Services (CMS) set the national 30 day rate at $2,092.69, up from $2,038.22. The final rule was published Nov. 9, 2026.

Without the temporary cut, the rate would be $2,157.41. That is $64.72 a period that CMS keeps to recoup what it says it overpaid since 2020.

CMS will tell you the update is 2.1%. The rate itself rises 2.67%. Total payments rise 2.4%, or $415 million. Those are three different numbers, and each measures something different.

What the data shows

Three numbers, three meanings

The 2.1% is the payment update. It is the 3.1% home health market basket minus a 1.0 percentage point productivity cut, per the rule.

The 2.67% is what happens to the rate. CMS also multiplies it by two budget neutrality factors, 1.0047 for case mix and 1.0009 for wage index, per Table B13. Those factors move the rate without adding money overall.

The 2.4% is CMS’s estimate of total spending. It is $415 million over a 2026 baseline of $17.399 billion, for about $17.8 billion in 2027. The update is $365 million of that. A lower outlier threshold, the fixed dollar loss ratio, adds $50 million. CMS cut that ratio to 0.29 from 0.37.

The cut that keeps coming back

CMS says the home health payment system it started in 2020 overpaid agencies. It puts the overpayment at about $4.9 billion through 2025. That total does not count anything CMS collected in 2026.

The 2027 cut is a 0.9700 factor on the rate. CMS estimates it recoups about $500 million, about 10% of the $4.9 billion. The 2026 rate carried the same 3% temporary cut, per Table 23’s notes.

The cut applies only to 2027. CMS will not build it into the 2028 starting rate, and it made no new permanent cut for 2027. It says it may propose more temporary cuts later.

MedPAC, the commission that advises Congress on Medicare pay, backed the cut. It told CMS the base rate already runs 34% above the cost of a typical 30 day period, per the rule’s comment summary.

Where the money goes

Every group in Table 23 gets a net increase. Some get more than others.

Rural agencies get 2.6%, across 1,389 agencies. Urban agencies get 2.4%, across 8,693. By region, the Mid Atlantic and the outlying territories lead at 3.6%. The Pacific is next at 3.0%. East South Central is lowest at 1.6%, with West South Central at 1.7%.

Table 23 splits agencies into six facility types. The 91 freestanding government agencies get the most, 4.3%. Proprietary freestanding agencies get the least, 2.3%. They are 8,598 of the 10,082 agencies CMS counted, so the most common kind of agency lands just under the 2.4% average.

Why it matters

Our read: agencies get paid off the rate, so the rate is the number to plan around. It rises 2.67%, and it still sits $64.72 a period below where it would be without the cut. CMS says it will propose more temporary cuts to recover the rest of the overpayment. It has not yet counted what it collected in 2026. The CY2028 proposed rule is where that count, and any next cut, shows up. The new rates take effect Jan. 1, 2027. We covered the other 2027 Medicare pay rules on Nov. 4.

How we got these numbers

• Rates. Tables B12 and B13 of the public inspection copy of the rule. The Federal Register web text shows those tables as images, so we read the PDF. $2,038.22 divided by 0.97 is $2,101.26. Times 1.0047, 1.0009 and 1.0210 is $2,157.41. Times 0.9700 is $2,092.69.
• Rate change. $2,092.69 divided by $2,038.22 is 1.0267, a 2.67% rise, or 102.7 on an index where 2026 is 100.
• Spending and groups. Table 23 and the rule’s impact section. Agency counts are Table 23 counts. Rural plus urban, and the ten regions, each add to 10,082.
• Periods. CMS estimates 7,680,775 home health periods of 30 days in 2027 to size the recoup. Those are billing periods, not people. The rule does not count patients, so we don’t either.
• Checks. We downloaded the rule again from the Federal Register on Nov. 9, 2026, and matched every number on this page and the chart. The CMS fact sheet was a cross check only.

This story is general information from public sources. It is not financial, legal or billing advice.