CMS proposes 2027 Medicare payment adjustments for home health and hospitals

The Centers for Medicare & Medicaid Services (CMS) released a Calendar Year 2027 proposed rule that would raise Medicare home health payments by an aggregate 2.4%, or about $420 million. The increase combines a 3.1% market‑basket update (reduced by a 1.0 percentage‑point productivity cut) and a 0.3 percentage‑point outlier payment boost, plus a 0.3 percentage‑point increase tied to the Fixed Dollar Loss ratio. At the same time, CMS proposes a temporary –3 % adjustment to the national standardized payment rate to recoup overpayments from 2020‑2025, meaning many providers could see a net effective reduction.

The rule also introduces stricter anti‑fraud measures, including retroactive Medicare enrollment revocations and new grounds for denial when agencies change majority ownership.

In a separate proposal for the Outpatient Prospective Payment System (OPPS) and ambulatory surgical centers, CMS suggests a 2.4 % base increase for hospitals but adds a 3 % cut to nondrug items and services. Crucially, it plans to slash 340B drug payments from ASP + 6 % to ASP ‑ 33.4 % and reduce imaging service payments, shifting the average net effect to a modest 1.9 % increase for most hospitals but a negative impact for many, especially those reliant on 340B drug pricing.