Calendar Year 2027 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the Expanded HH Value-Based Purchasing Model; Medicare Provider Enrollment, Durable Medical Equipment (DME), and DME, Prosthetics, Orthotics, and Supplies (DMEPOS) Policies

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 414, 422, 423, 424, 484, and 498

[CMS-1844-P]

RIN 0938-AV80

Calendar Year 2027 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the Expanded HH Value-Based Purchasing Model; Medicare Provider Enrollment, Durable Medical Equipment (DME), and DME, Prosthetics, Orthotics, and Supplies (DMEPOS) Policies

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would set forth routine updates to the Medicare home health payment rates in accordance with existing statutory and regulatory requirements. In addition, this proposed rule discusses the behavior adjustment and proposes a temporary behavior adjustment and proposes to recalibrate the case-mix weights and update the functional impairment levels; comorbidity subgroups; and low-utilization payment adjustment (LUPA) thresholds for CY 2027. Additionally, this proposed rule discusses the provision of home health palliative care services and includes a request for information (RFI) on a home health specific wage index. This rule would also propose changes to the Home Health Quality Reporting Program (HH QRP) and summarizes potential initiatives to improve alignment between the HH QRP and expanded Home Health Value Based Purchasing (HHVBP) Model. Lastly, the rule would—clarify the application of the DMEPOS face-to-face encounter requirements for the replacement of DMEPOS items; make changes to the provider and supplier enrollment requirements; make changes regarding DME benefit expansion for infusion pumps and drugs; and discuss collection of information requirement changes regarding the DMEPOS Competitive Bidding Program (CBP) country of origin.

DATES:

To be assured consideration, comments must be received at one of the addresses provided in the

ADDRESSES

section, no later than 5 p.m. EDT on August 31, 2026.

ADDRESSES:

In commenting, please refer to file code CMS-1844-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1.

Electronically.

You may (and we encourage you to) submit electronic comments on this regulation to

https://www.regulations.gov/docket/CMS-2026-XXXX.

Follow the instructions under the “submit a comment” tab.

2.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1844-P, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.

By express or overnight mail.

You may send written comments via express or overnight mail to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1844-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, we refer readers to the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

For general information about the Home Health Prospective Payment System (HH PPS), send your inquiry via email to

HomeHealthPolicy@cms.hhs.gov.

For information about the Home Health Quality Reporting Program (HH QRP), send your inquiry via email to

homehealthqualityquestions@cms.hhs.gov.

For more information about the expanded Home Health Value-Based Purchasing (HHVBP) Model, please visit the Expanded HHVBP Model web page at

https://www.cms.gov/priorities/innovation/innovation-models/expanded-home-health-value-based-purchasing-model

or send your inquiry via email to

HHVBPquestions@cms.hhs.gov.

Nancy Allert (410) 786-4317, Jennifer Phillips (410) 786-1023, Olufemi Shodeke (410) 786-1649, Misty Whitaker (410) 786-4975, for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Encounter Requirements for Identical Replacement Items. Frank Whelan (410) 786-1302, for Medicare provider and supplier enrollment and DMEPOS accreditation.

For more information about the DME Benefit Expansion for Infusion Pumps and Drugs, send your inquiry via email to

DMEPOS@cms.hhs.gov.

Austin Gutowski, (410) 786-1643, for DME Competitive Bidding Program—Country of Origin.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received:

https://www.regulations.gov/.

Follow the search instructions on that website to view public comments.

Plain Language Summary:

In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this rule may be found at

https://www.regulations.gov/.

I. Executive Summary

A. Purpose and Legal Authority

1. Home Health Prospective Payment System (HH PPS)

As required under section 1895(b) of the Social Security Act (the Act), this proposed rule would update the CY 2027 Medicare payment rates for home health agencies (HHAs). In this proposed rule, we include an analysis of home health utilization, as well as analysis of the difference between assumed versus actual behavior change on estimated aggregate expenditures for home health payments as a result of the change in the unit of payment to 30 days and the implementation of the Patient Driven Groupings Model (PDGM) case-mix adjustment methodology. This proposed rule also discusses the permanent adjustments applied in previous years and proposes a temporary adjustment to the CY 2027 home health base payment rate. In addition, this rule proposes to recalibrate the PDGM case-mix weights and to update the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups under sections 1895(b)(4)(A)(i) and (b)(4)(B) of the Act for 30-day periods of care in CY 2027. This proposed rule proposes to update the CY 2027 fixed-dollar loss (FDL) ratio for outlier payments (so that outlier payments as a percentage of estimated total payments are projected not to exceed 2.5 percent,

as required by section 1895(b)(5)(A) of the Act).

Additionally, this rule discusses provision of palliative care services under the Medicare home health benefit and includes a request for information (RFI) regarding the construction of a home health specific wage index.

2. Home Health (HH) Quality Reporting Program (QRP)

In accordance with the statutory authority at section 1895(b)(3)(B)(v) of the Act, we are proposing updated quality reporting policies. First, we summarize potential initiatives to improve alignment between the HH QRP and expanded HHVBP Model. We also propose to revise the HH QRP data submission deadlines beginning with the CY 2027 HH QRP. We also propose to revise the HH QRP OASIS and HHCAHPS Annual Payment Update (APU) reporting timeframe to report a calendar year of data (January 1 through December 31). We propose some revisions to regulatory text in support of rule proposals and to improve digital transfer of information during the reconsiderations process. Finally, we are soliciting public comments on one Request for Information (RFI) on future measure concepts for the HH QRP.

3. Expanded Home Health Value-Based Purchasing (HHVBP) Model

We are not proposing any expanded HHVBP Model-specific policy changes in this proposed rule. We have included a brief summary of the Model with context relevant to potential alignment between the HH QRP and the expanded HHVBP Model.

4. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Encounter Requirements for Identical Replacement Items

We propose clarifying the application of the DMEPOS face-to-face encounter requirements, as outlined in 42 CFR 410.38, and the related documentation necessary to support the replacement of DMEPOS items. We do not believe it necessary to require an additional in-depth beneficiary examination to “gather[ ] subjective and objective information associated with diagnosing, treating, or managing a clinical condition for which the DMEPOS is ordered” for replacement items. Such information should be recorded when the beneficiary is initially assessed and receives the item, and the practitioner should only write replacement orders for beneficiaries with ongoing medical need for the item(s). Therefore, we propose that an additional face-to-face encounter within the 6 months preceding an order/prescription for replacement of a DMEPOS item will not be required per 42 CFR 410.38. We clarify that for purposes of 42 CFR 410.38(d)(2), a “replacement” refers to the provision of an item that replaces an item falling under the same Healthcare Common Procedure Coding System (HCPCS) code; it does not include those situations involving the provision of a different item, for example, because of a change in medical condition.

5. Provider Enrollment and DMEPOS Accreditation

Consistent with section 1866(j) of the Act, we are proposing a number of Medicare provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. These include but are not limited to: (1) adding grounds for denying or revoking a provider's or supplier's Medicare enrollment; and (2) expanding the reasons for which CMS can apply a retroactive effective date for provider and supplier revocations. These changes are necessary to help ensure that payments are made only to qualified providers and suppliers, which we believe would assist in protecting the Trust Funds and Medicare beneficiaries.

We are also proposing several minor revisions to our DMEPOS accreditation provisions in § 424.58, such as clarifying certain timeframes by which DMEPOS accreditation organizations must report data to CMS. We believe these revisions would help improve the efficiency of the DMEPOS accreditation process.

6. Durable Medical Equipment (DME) Benefit Expansion for Infusion Pumps and Drugs

In section V.C. of this proposed rule, we propose to make changes to the Medicare Part B definition of DME at 42 CFR 414.202 to implement amendments made to the definition of DME at section 1861(n) of the Act by section 6222(a) of the Consolidated Appropriations Act, 2026 (CAA, 2026), expanding the scope of the benefit for DME to include certain external infusion pumps and associated home infusion drugs or other associated supplies. The legal authority for this proposed rule is provided by section 1861(n) of the Act, as amended by section 6222(a) of the CAA, 2026, and section 1871 of the Act.

7. DMEPOS Competitive Bidding Program—Country of Origin

We discuss requesting to revise the DMEPOS Competitive Bidding Program (CBP) information collection under Office of Management and Budget (OMB) Control Number 0938-1408 (CMS-10744) to require DMEPOS CBP contract suppliers to report the country of origin for the lead items furnished during the contract's period of performance. This information will allow beneficiaries and interested parties to learn where the DMEPOS item originated, if interested.

B. Summary of the Provisions of This Proposed Rule

1. Home Health Prospective Payment System (HH PPS)

In section II.B.1. of this proposed rule, we provide monitoring and data analysis on the PDGM utilization.

In section II.C.1. of this proposed rule, we discuss the permanent behavior adjustment and propose a temporary adjustment to the base payment rate under the HH PPS.

In section II.D. of this proposed rule, we propose to recalibrate the CY 2027 PDGM case-mix weights and to update the low-utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups.

In section II.E. of this proposed rule, we propose to update the home health wage index. We also propose to update the CY 2027 national, standardized 30-day period payment rates and the CY 2027 national per-visit payment amounts by the home health payment update percentage. Additionally, this rule proposes the CY 2027 fixed dollar loss (FDL) ratio to ensure that aggregate outlier payments are projected not to exceed 2.5 percent of the total aggregate payments, as required by section 1895(b)(5)(A) of the Act.

In section II.F. of this proposed rule, we discuss the provision of palliative care services under the Medicare home health benefit.

In section II.G. of this proposed rule, we include a request for information (RFI) on the construction of a home health specific wage index.

2. Home Health Quality Reporting Program (HH QRP)

In section III.D. of this proposed rule, we summarize potential initiatives to improve alignment between the HH QRP and expanded HHVBP Model.

In section III.E. of this proposed rule, we are proposing to revise the HH QRP data submission deadlines beginning with the CY 2027 HH QRP.

We are also proposing to revise the HH QRP OASIS and HHCAHPS Annual Payment Update (APU) reporting timeframe to report a calendar year of data (January 1 through December 31). Additionally, we propose some

revisions to regulatory text in support of rule proposals or to improve digital transfer of information during the reconsiderations process.

In section III.F. of this proposed rule, we are soliciting public comments on one Request for Information (RFI) on future measure concepts for the HH QRP.

3. Expanded Home Health Value Based Purchasing (HHVBP) Model

In section IV. of this proposed rule, we summarize the expanded HHVBP Model. We are not proposing any expanded HHVBP Model-specific changes in this proposed rule. We have included a brief summary of the Model with context relevant to potential alignment between the HH QRP and expanded HHVBP Model.

4. DMEPOS Requirements for Identical Replacement Items

In section V.A. of this proposed rule, we would clarify that while an order would continue to be required for replacement of DMEPOS items, a new face-to-face encounter would not need to occur to support payment for these DMEPOS items.

5. Provider Enrollment and DMEPOS Accreditation

We are proposing a number of Medicare provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. These include, but are not limited to, the following:

• Adding grounds for denying or revoking a provider's or supplier's Medicare enrollment.

• Expanding the reasons for which CMS can apply a retroactive effective date for provider and supplier revocations.

• CMS can currently impose a reapplication bar of up to 10 years if the provider or supplier is denied enrollment for submitting false or misleading information on or with their enrollment application. (This means they cannot reapply to Medicare for up to 10 years.) We propose to expand this to permit a reapplication bar regardless of the denial reason.

We believe these revisions would help keep unqualified providers and suppliers out of the Medicare program, which, in turn would prevent improper Medicare payments to such parties.

We also propose several minor changes to our DMEPOS accreditation provisions in § 424.58, such as proposing a timeframe by which an accrediting organization must report suspected fraud, waste, or abuse to CMS. We believe these changes would help improve the DMEPOS accreditation program's efficiency.

6. DME Benefit Expansion for Infusion Pumps and Drugs

In section V.C. of this proposed rule, we propose to revise the definition of DME at 42 CFR 414.202 to implement section 6222(a) of the CAA, 2026 by providing that certain external infusion pumps, associated home infusion drugs, or other associated supplies are treated as meeting the “appropriate for use in the home” requirement when specified statutory criteria are satisfied.

7. DMEPOS Competitive Bidding Program—Country of Origin

In section VI. of this proposed rule, we discuss our request to revise the collection currently approved under OMB Control Number 0938-1408 (CMS-10744) to collect from DMEPOS CBP contract suppliers the country of origin for the lead items furnished during the DMEPOS CBP contract's period of performance.

As done historically with the product information reported on Form C by a DMEPOS CBP contract supplier, the reported country of origin information would be populated in the Medicare Supplier Directory for the contract supplier during the contract period of performance.

C. Summary of the Regulatory Impact Analysis

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II. Home Health Prospective Payment System

A. Overview of the Home Health Prospective Payment System

1. Statutory Background

Section 1895(b)(1) of the Act requires the Secretary to establish a Home Health Prospective Payment System (HH PPS) for all costs of home health services paid under Medicare. Section 1895(b)(2)(A) of the Act requires that, in defining a prospective payment amount, the Secretary shall consider an appropriate unit of service and the number, type, and duration of visits provided within that unit, potential changes in the mix of services provided within that unit and their cost, and a general system design that provides for continued access to quality services. In accordance with the statute, as amended by the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), we issued a final rule which appeared in the July 3, 2000,

Federal Register

(65 FR 41128) to implement the HH PPS legislation.

Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v) to the Act, requiring home health agencies (HHAs) to submit data for purposes of measuring health care quality, and linking the quality data submission to the annual applicable home health payment update percentage increase. This data submission requirement is applicable for CY 2007 and each subsequent year. Pursuant to section 1895(b)(3)(B)(v)(I) of the Act, if an HHA does not submit quality data, the home health market basket percentage increase is reduced by 2 percentage

points. In the November 9, 2006,

Federal Register

(71 FR 65935), we issued a final rule to implement the pay-for-reporting requirement of the DRA, which was codified at § 484.225(h) and (i) in accordance with the statute. The pay-for-reporting requirement was implemented on January 1, 2007.

Section 51001(a)(1)(B) of the Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123) amended section 1895(b) of the Act to require a change to the home health unit of payment to 30-day periods beginning January 1, 2020. Section 51001(a)(2)(A) of the BBA of 2018 added a new subclause (iv) under section 1895(b)(3)(A) of the Act, requiring the Secretary to calculate a standard prospective payment amount (or amounts) for 30-day units of service furnished that end during the 12-month period beginning January 1, 2020, in a budget neutral manner, such that estimated aggregate expenditures under the HH PPS during CY 2020 are equal to the estimated aggregate expenditures that otherwise would have been made under the HH PPS during CY 2020 in the absence of the change to a 30-day unit of service. Section 1895(b)(3)(A)(iv) of the Act requires that the calculation of the standard prospective payment amount (or amounts) for CY 2020 be made before the application of the annual update to the standard prospective payment amount as required by section 1895(b)(3)(B) of the Act.

Additionally, section 1895(b)(3)(A)(iv) of the Act requires that in calculating the standard prospective payment amount (or amounts), the Secretary must make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of service under section 1895(b)(2)(B) of the Act and case-mix adjustment factors established under section 1895(b)(4)(B) of the Act. Section 1895(b)(3)(A)(iv) of the Act further requires the Secretary to provide a description of the behavior assumptions made in notice and comment rulemaking. CMS finalized these behavior assumptions in the CY 2019 HH PPS final rule with comment period (83 FR 56461).

Section 51001(a)(2)(B) of the BBA of 2018 also added a new subparagraph (D) to section 1895(b)(3) of the Act. Section 1895(b)(3)(D)(i) of the Act requires the Secretary annually to determine the impact of differences between assumed behavior changes, as described in section 1895(b)(3)(A)(iv) of the Act, and actual behavior changes on estimated aggregate expenditures under the HH PPS with respect to years beginning with 2020 and ending with 2026. Section 1895(b)(3)(D)(ii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, to provide for one or more permanent increases or decreases to the standard prospective payment amount (or amounts) for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Additionally, section 1895(b)(3)(D)(iii) of the Act requires the Secretary, at a time and in a manner determined appropriate, through notice and comment rulemaking, to provide for one or more temporary increases or decreases to the payment amount for a unit of home health services for applicable years, on a prospective basis, to offset for such increases or decreases in estimated aggregate expenditures, as determined under section 1895(b)(3)(D)(i) of the Act. Such a temporary increase or decrease shall apply only with respect to the year for which such temporary increase or decrease is made, and the Secretary shall not take into account such a temporary increase or decrease in computing the payment amount for a unit of home health services for a subsequent year. Finally, section 51001(a)(3) of the BBA of 2018 amends section 1895(b)(4)(B) of the Act by adding a new clause (ii) to require the Secretary to eliminate the use of therapy thresholds in the case-mix system for CY 2020 and subsequent years.

Division FF, section 4136 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328) amended section 1834(s)(3)(A) of the Act to require that, beginning with 2024, the separate payment for furnishing negative pressure wound therapy (NPWT) be for just the device and not for nursing and therapy services. Payments for nursing and therapy services are to be included as part of payments under the HH PPS. The separate payment for 2024 was required to be equal to the supply price used to determine the relative value for the service under the Medicare Physician Fee Schedule (as of January 1, 2022) for the applicable disposable device updated by the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The separate payment for 2025 and each subsequent year is to be the payment amount for the previous year updated by the percentage increase in the CPI-U (United States city average) for the 12-month period ending in June of the previous year reduced by the productivity adjustment as described in section 1886(b)(3)(B)(xi)(II) of the Act for such year. The CAA, 2023 also added section 1834(s)(4) of the Act to require that beginning with 2024, as part of submitting claims for the separate payment, the Secretary shall accept, and process claims submitted using the type of bill that is most commonly used by home health agencies to bill services under a home health plan of care.

2. Current System for Payment of Home Health Services

For home health periods of care beginning on or after January 1, 2020, Medicare makes payment under the HH PPS on the basis of a national, standardized 30-day period payment rate that is adjusted for case-mix and area wage differences in accordance with section 51001(a)(1)(B) of the BBA of 2018. The national, standardized 30-day period payment rate includes payment for the six home health disciplines (skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services). Payment for non-routine supplies (NRS) is also part of the national, standardized 30-day period rate. Durable medical equipment (DME) provided as a home health service, as defined in section 1861(m)(5) of the Act, is paid the fee schedule amount or is paid through the competitive bidding program and such payment is not included in the national, standardized 30-day period payment amount. Additionally, the 30-day period payment rate does not include payment for certain injectable osteoporosis drugs and disposable negative pressure wound therapy (dNPWT) devices, but such drugs and devices must be billed by the HHA while a patient is under a home health plan of care, as the law requires separate consolidated billing of certain osteoporosis drugs and dNPWT devices.

To better align payment with patient care needs and to better ensure that clinically complex and ill beneficiaries have adequate access to home health care, in the CY 2019 HH PPS final rule with comment period (83 FR 56406), we finalized case-mix methodology refinements, including the removal of therapy thresholds, through the Patient-Driven Groupings Model (PDGM) for home health periods of care beginning on or after January 1, 2020. The PDGM did not change eligibility or coverage criteria for Medicare home health services, and if the individual meets the criteria for home health services as described at 42 CFR 409.42, the individual can receive Medicare home health services, including therapy services. For more information about the

role of therapy services under the PDGM, we refer readers to the Medicare Learning Network (MLN) Matters article SE20005 available at

https://www.cms.gov/regulations-and-guidanceguidancetransmittals2020-transmittals/se20005.

To adjust for case-mix for 30-day periods of care beginning on and after January 1, 2020, the HH PPS uses a 432-category case-mix classification system to assign patients to a home health resource group (HHRG) using patient characteristics and other clinical information from Medicare claims and the Outcome and Assessment Information Set (OASIS) instrument. These 432 HHRGs represent the different payment groups based on five main case-mix categories under the PDGM, as shown in figure B1. Each HHRG has an associated case-mix weight that is used in calculating the payment for a 30-day period of care. For periods of care with visits less than the low-utilization payment adjustment (LUPA) threshold for the HHRG, Medicare pays national per-visit rates based on the discipline(s) providing the services. Medicare also adjusts the national standardized 30-day period payment rate for certain intervening events that are subject to a partial payment adjustment. For certain cases that exceed a specific cost threshold, an outlier adjustment may also be available.

Under this case-mix methodology, case-mix weights are generated for each of the different PDGM payment groups by regressing resource use for each of the five categories (admission source, timing, clinical grouping, functional impairment level, and comorbidity adjustment) using a fixed effects model. A detailed description of each of the case-mix variables under the PDGM have been described previously, and we refer readers to the CY 2021 HH PPS final rule (85 FR 70303 through 70305) for further information.

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B. Monitoring the Effects of the Implementation of the PDGM

1. Routine PDGM Monitoring

CMS routinely analyzes Medicare home health benefit utilization, including but not limited to, overall total 30-day periods of care and average periods of care per HHA user; distribution of the type of visits in a 30-day period of care; the percentage of periods that receive the LUPA; estimated costs for 30-day period of care; the percentage of 30-day periods of care by clinical group, comorbidity adjustment, admission source, timing, and functional impairment level; the proportion of 30-day periods of care with and without any therapy visits, nursing visits, and/or aide/social worker visits; and number of home health visits using telecommunications technology and remote patient monitoring. For the monitoring included in this rule, we examine simulated data for CYs 2018 and 2019 and actual data for CYs 2020, 2021, 2022, 2023, 2024, and 2025 for 30-day periods of care. We refer readers to the CY 2022 HH PPS final rule (

86 FR 35881

) for discussion about simulated data for CYs 2018 and 2019.

(a) Utilization

Table 2 shows the overall utilization of home health services. This data indicates the average number of 30-day periods of care per unique HHA beneficiary was higher in CY 2025 compared to CYs 2021, 2022, and 2023. The data also indicates that overall, the number of 30-day periods of care decreased between CY 2018 and CY

2025. Table 3 shows the average utilization of visits per 30-day period of care by home health discipline. Table 4 shows the proportion of 30-day periods of care that are LUPAs and the average number of visits per discipline of those LUPA 30-day periods of care over time. The data show a decreasing trend in the average number of visits per 30-day period and average number of visits per discipline for LUPA 30-day periods of care between CY 2018 and CY 2025.

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(b) Analysis of 2024 Cost Report Data for 30-Day Periods of Care

In the CY 2026 HH PPS proposed rule (90 FR 29120), we provided a summary of analysis on FY 2023 HHA cost report data, as this was the most recent and complete cost report data at the time of rulemaking, and CY 2024 claims to estimate 30-day period of care costs. Our analysis showed that the CY 2024 national, standardized 30-day period payment rate of $2,038.13, was approximately 32 percent more than the estimated CY 2024 estimated 30-day period cost of $1,548.39.

Using this same process in this proposed rule to compare home health payment to costs, we examined 2024 HHA Medicare cost reports (CMS Form 1728-20, OMB No. 0938-0222), as this is the most recent and complete cost report data at the time of rulemaking. We also examined CY 2025 home health claims to estimate 30-day period of care costs. We excluded LUPAs and partial payment adjustments when calculating the average number of visits. We used the 2024 average NRS costs per visit, which was $4.89. To update the estimated 30-day period of care costs, we begin with the 2024 average costs per visit with NRS for each discipline and multiply that amount by the CY 2025 home health payment update percentage of 2.7 percent (or a home health payment update factor of 1.027). We then multiplied that amount for each discipline by the 2025 average number of visits by discipline to determine the 2025 estimated 30-day period costs. Table 5 shows the estimated average costs for 30-day periods of care by discipline with NRS and the total 30-day period of care costs with NRS for CY 2025.

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The CY 2025 national standardized 30-day period payment rate was $2,057.35, which is approximately 34 percent more than the CY 2025 estimated 30-day period cost of $1,532.84. Moreover, as shown in table 3 in this proposed rule, HHAs have reduced visits under PDGM in CY 2025.

(c) Clinical Groupings and Comorbidities

Each 30-day period of care is grouped into one of 12 clinical groups, which describes the primary reason for which a patient is receiving home health services under the Medicare home health benefit. The clinical grouping is based on the principal diagnosis reported on the home health claim. Table 6 shows the distribution of the 12 clinical groups over time.

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Thirty-day periods of care receive a comorbidity adjustment category based on certain secondary diagnoses reported on home health claims. These diagnoses are based on a home health specific list of clinically and statistically significant secondary diagnosis subgroups with similar resource use. We refer readers to section II.D. of this proposed rule and

the CY 2020 HH PPS final rule with comment period (

84 FR 60493

) for further information on the comorbidity adjustment categories. Home health 30-day periods of care can receive a low or a high comorbidity adjustment, or no comorbidity adjustment. Table 7 shows the distribution of 30-day periods of care by comorbidity adjustment category for all 30-day periods.

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(d) Admission Source and Timing

Each 30-day period of care is classified into one of two admission source categories—community or institutional, depending on what healthcare setting was utilized in the 14 days prior to receiving home health care. Thirty-day periods of care for beneficiaries with any inpatient acute care hospitalizations, inpatient psychiatric facility (IPF) stays, skilled nursing facility (SNF) stays, inpatient rehabilitation facility (IRF) stays, or long-term care hospital (LTCH) stays within 14-days prior to a home health admission are designated as institutional admissions. The institutional admission source category also includes patients that had an acute care hospital stay during a previous 30-day period of care and within 14 days prior to the subsequent, contiguous 30-day period of care and for which the patient was not discharged from home health and readmitted. All other 30-day periods of care would be designated as community admissions.

Thirty-day periods of care are classified as “early” or “late” depending on when they occur within a sequence of 30-day periods of care. The first 30-day period of care is classified as early and all subsequent 30-day periods of care in the sequence (second or later) are classified as late. A subsequent 30-day period of care would not be considered early unless there is a gap of more than 60 days between the end of one previous period of care and the start of another. Information regarding the timing of a 30-day period of care comes from Medicare home health claims data and not the OASIS assessment to determine if a 30-day period of care is “early” or “late”. Table 8 shows the distribution of 30-day periods of care by admission source and period timing.

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(e) Functional Impairment Level

Each 30-day period of care is placed into one of three functional impairment levels (low, medium, or high) based on responses to certain OASIS functional items associated with grooming, bathing, dressing, ambulating, transferring, and risk for hospitalization. The specific OASIS items that are used for the functional impairment level are found in table 7 in the CY 2020 HH PPS final rule with comment period (

84 FR 60490

). Responses to these OASIS items are grouped together into response categories with similar resource use and each response category has associated points. A more detailed description as to how these response categories were established can be found in the technical report, “Overview of the Home Health Groupings Model” posted on the HHA web page

1

. The sum of these points results in a functional impairment score used to group 30-day periods of care into a functional impairment level with similar resource use. The scores associated with the functional impairment levels vary by clinical group to account for differences in resource utilization. A patient's functional impairment level remains the same for the first and second 30-day periods of care unless there is a significant change in condition that warrants an “other follow-up” assessment prior to the second 30-day period of care. For each 30-day period of care, the Medicare claims processing system looks for occurrence code 50 on the claim to correspond to the M0090 date of the applicable assessment. Table 9 shows the distribution of 30-day periods by functional impairment level.

1

https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.

EP06JY26.031

(f) Therapy and Non-Therapy Visits

Beginning in CY 2020, section 1895(b)(4)(B)(ii) of the Act eliminated the use of therapy thresholds in calculating payments for CY 2020 and subsequent years. Prior to implementation of the PDGM, HHAs could receive an adjustment to payment based on the number of therapy visits provided during a 60-day episode of care. We examined the proportion of actual 30-day periods of care with and without therapy visits. To be covered as skilled therapy, the services must require the skills of a qualified therapist (that is, PT, OT, or SLP) or qualified therapist assistant and must be reasonable and necessary for the treatment of the patient's illness or injury. As shown in table 4, we monitor the number of visits per 30-day period of care by each home health discipline. Any 30-day period of care can include both therapy and non-therapy visits. If any 30-day period of care consisted of only visits for PT, OT, or SLP, then this 30-day period of care is considered “therapy only”. If any 30-day period of care consisted of only visits for skilled nursing, home health aide, or social worker, then this 30-day period of care is considered “no therapy”. If any 30-day period of care consisted of at least one therapy visit and one non-therapy visit, then this 30-day period of care is considered “therapy + non-therapy”. Table10 shows the proportion of 30-day periods of care with only therapy visits, at least one therapy visit and one non-therapy visit, and no therapy visits. Figure 2 shows the proportion of 30-day periods of care by the number of therapy visits (excluding zero) provided during 30-day periods of care.

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Both figures 2 and 3 indicate there have been changes in the distribution of both therapy and non-therapy visits in CY 2025 compared to CY 2024. For example, the proportion of 30-day periods with one through five therapy visits during a 30-day period increased in CY 2025 compared to prior years. However, when comparing therapy utilization from before the PDGM (CYs 2018 and 2019) to after the implementation of the PDGM (CYs 2020-2025), we also see stabilization in overall therapy visits across all clinical groups, as shown in figure 3.

EP06JY26.034

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We also examined the proportion of 30-day periods of care with and without skilled nursing, social work, or home health aide visits. Table 11 shows the number of 30-day periods of care with only skilled nursing visits, at least one skilled nursing visit and one other visit type (therapy or non-therapy), and no skilled nursing visits. Table 12 shows the number of 30-day periods of care with and without home health aide or social worker visits.

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EP06JY26.036

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(g) Home Health Services Using Telecommunications Technology

As discussed in the CY 2023 final rule (

87 FR 66858

), we began collecting data on the use of telecommunications technology used during a home health period using three G-codes reported on home health claims. Collecting data on services furnished via telecommunications technology on claims allows CMS to analyze the characteristics of patients using services provided remotely. The monitoring illustrates which services are most frequently furnished via telecommunication technology and generally how long remote patient monitoring is utilized.

We began collecting this information from HHAs on a voluntary basis on January 1, 2023, and have required this information to be reported on claims starting on July 1, 2023 (

87 FR 66858

). The three G-codes help identify when home health services are furnished using synchronous telemedicine rendered via a real-time two-way audio and video telecommunications system

(G0320); synchronous telemedicine rendered via telephone or other real-time interactive audio-only telecommunications systems (G0321); and the collection of physiologic data digitally stored and/or transmitted by the patient to the HHA, that is, remote patient monitoring (G0322). We capture the usage and length of remote patient monitoring using the start date of the remote patient monitoring and the number of days of monitoring indicated on the claim. We also looked at the disciplines most often providing remote patient monitoring. We examined the utilization of telecommunications technology devices during a home health period and remote patient monitoring by looking at home health claims that included the three G-codes. Tables 13 and 14 show that the use of telecommunications services and remote patient monitoring reported on CY 2025 home health claims have declined from prior year's monitoring (90 FR 29126 and 29127) and are mainly associated with skilled nursing.

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C. Proposed CY 2027 Payment Adjustments Under the HH PPS

1. Proposed Behavior Adjustments Under the HH PPS

a. Background

As discussed in section II.A.1. of this proposed rule, starting in CY 2020, the Secretary was required by section 1895(b)(2)(B) of the Act to change the unit of payment under the HH PPS from a 60-day episode of care to a 30-day period of care. CMS was also required to make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of payment and the case-mix adjustment factors that eliminated the use of therapy thresholds. In the CY 2019 HH PPS final rule with comment period (83 FR 56455), we finalized three behavior change assumptions which were also described in the CY 2022 and 2023 HH PPS rules (86 FR 35890, 87 FR 37614, and 87 FR 66795 through 66796). In the CY 2020 HH PPS final rule with comment period (84 FR 60519), we included these behavior change assumptions in the calculation of the 30-day budget neutral payment amount for CY 2020, finalizing a negative 4.36 percent behavior change assumption adjustment (“assumed behaviors”). We did not propose any changes for CYs 2021 and 2022 related to the behavior change assumptions finalized in the CY 2019 HH PPS final rule with comment period, or to the negative 4.36 percent behavior change assumption adjustment, finalized in the CY 2020 HH PPS final rule with comment period.

In the CY 2023 HH PPS final rule (87 FR 66796), we stated that we had concluded, based on our annual monitoring at that time, that the three expected behavior changes did in fact occur as a result of the implementation of the PDGM and that other behaviors, such as changes in the provision of therapy and changes in functional impairment levels, had also occurred. We also reminded readers that in the CY 2020 HH PPS final rule with comment period (84 FR 60513), we stated we interpret actual behavior changes to encompass behavior changes that were previously outlined as assumed by CMS, and other behavior changes not identified at the time we established the budget-neutral 30-day payment rate for CY 2020. In the CY 2023 HH PPS final rule (87 FR 66796), we provided supporting evidence that indicated the number of therapy visits declined in CYs 2020 and 2021, as well as a slight decline in therapy visits beginning in CY 2019 after the finalization of the removal of therapy thresholds, but prior to implementation of the PDGM. In section II.B.1. of the CY 2025 HH PPS proposed rule (89 FR 55318), our analysis continued to show the actual 30-day periods are similar overall to the simulated 30-day periods as well as a continued decline in therapy visits, indicating that HHAs changed their behavior to reduce therapy visits. Although the analysis demonstrates evidence of individual behavior changes (for example, in the volume of visits for

LUPAs, therapy sessions, etc.), we use the entirety of the behaviors to calculate estimated aggregate expenditures. The law instructs us to ensure that estimated aggregate expenditures under the PDGM are equal to the estimated aggregate expenditures that otherwise would have been made under the prior system.

Section 4142(a) of the CAA, 2023 required CMS to present, to the extent practicable, a description of the actual behavior changes occurring under the HH PPS from CYs 2020 through 2026. This subsection of the CAA, 2023 also required CMS to provide datasets underlying the simulated 60-day episodes and discuss and provide time for stakeholders to provide input on and ask questions about the payment rate development for CY 2023. CMS complied with these requirements by posting online both the supplemental limited data set (LDS) and descriptive files and the description of actual behavior changes that affected CY 2023 payment rate development. Additionally, on March 29, 2023, CMS conducted a webinar entitled “Medicare Home Health Prospective Payment System (HH PPS) Calendar Year (CY) 2023 Behavior Change Recap, 60-Day Episode Construction Overview, and Payment Rate Development.” The webinar was open to the public and discussed the actual behavior changes that occurred upon implementation of the PDGM; our approach used to construct simulated 60-day episodes using 30-day periods; payment rate development for CY 2023; and information on the supplemental data files containing information on the simulated 60-day episodes and actual 30-day periods used in calculating the permanent adjustment to the payment rate. Materials from the webinar, including the presentation and the CY 2023 descriptive statistics from the supplemental LDS files containing information on the number of simulated 60-day episodes and actual 30-day periods in CY 2021 that were used to construct the permanent adjustment to the payment rate, as well as information such as the number of episodes and periods by case-mix group, case-mix weights, and simulated payments, can be found on the Home Health Patient-Driven Groupings Model web page at

https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health/home-health-patient-driven-groupings-model.

b. Method to Annually Determine the Impact of Differences Between Assumed Behavior Changes and Actual Behavior Changes on Estimated Aggregate Expenditures

In the CY 2023 HH PPS final rule (87 FR 66804), we finalized the methodology to evaluate the impact of the differences between assumed and actual behavior changes on estimated aggregate expenditures. In the CY 2024 HH PPS final rule (88 FR 77687 through 77688), we provided an overview of the methodology with detailed instructions for each step.

Under the prior 153-group system (and the first three years for assessments associated with the PDGM completed prior to CY 2023), HHAs submitted the Outcome and Assessment Information Set (OASIS) instrument version D. However, OMB approved an updated version of the OASIS instrument, OASIS-E under OMB control number 0938-1279,

2

on November 30, 2022, effective January 1, 2023. Therefore, in the CY 2025 HH PPS final rule (89 FR 88364), we finalized two additional methodological assumptions related to mapping and imputation of OASIS-D responses from OASIS-E. We refer readers to the CY 2024 and CY 2025 HH PPS final rules for further information about the methodology.

2

The current expiration date for this information collection request is December 31, 2027.

c. Calculating Permanent and Temporary Payment Adjustments

To adjust the base payment rate based on increases or decreases in estimated aggregate expenditures that result from differences between assumed behavior changes and actual behavior changes for 2020 through 2026, we calculate one or more permanent prospective adjustments by calculating the percent change between the actual 30-day base payment rate and the recalculated 30-day base payment rate. This percent change is converted into an adjustment factor and applied in the annual rate update process.

To account for increases or decreases in estimated aggregate expenditures that result from differences between assumed behavior changes and actual behavior changes from 2020 through 2026, we calculate one or more temporary prospective adjustments by calculating the dollar amount difference between the estimated aggregate expenditures from all 30-day periods using the recalculated 30-day base payment rate, and the aggregate expenditures for all 30-day periods using the actual 30-day base payment rate for each of those years once data is available (87 FR 66804). In other words, when determining the dollar amount of aggregate expenditures in prior years that we must offset in future years, we use the full dataset of actual 30-day periods using both the actual and recalculated 30-day base payment rates to ensure that the utilization and distribution of claims are the same. In accordance with section 1895(b)(3)(D)(iii) of the Act, each temporary adjustment is applied prospectively but, as its name suggests, only with respect to the year for which such temporary increase or decrease is made. Therefore, after we determine the dollar amount we plan to reconcile in a given year, we calculate a temporary adjustment factor to be applied to the base payment rate for that year. The temporary adjustment factor is based on an estimated number of 30-day periods in the next year using historical data trends, and as applicable, controls for any permanent adjustment factor, case-mix weight recalibration neutrality factor, wage index budget neutrality factor, and the home health payment update. The temporary adjustment factor is applied last since the adjustment applies only to the respective year. That is, the temporary adjustment is not permanently fixed into future base payment rates. We refer readers to the CY 2024 HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020 through 2022 claims, the CY 2025 HH PPS final rule (89 FR 88366 through 88369) for analysis of CY 2023 claims, and the CY 2026 HH PPS final rule (90 FR 55365 through 55367) for analysis of CY 2024 claims.

d. CY 2025 Preliminary Claims Results

We stated in the CY 2026 HH PPS final rule (90 FR 55365) that we were exercising our authority expressly delegated under the statute to apply permanent adjustments “at a time and in a manner appropriate” not to apply any permanent adjustment for CY 2026 based on CY 2023 or 2024 data, as these years may contain data with behaviors attributable to factors beyond the implementation of the PDGM and a 30-day unit of payment. However, we also noted we will continue to annually analyze the data through CY 2026 claims, as required by law, to determine if any additional permanent adjustments would need to be made based on the impact of assumed versus actual behavior change on estimated aggregate expenditures resulting from the implementation of the PDGM and the 30-day unit of payment. While the law requires us to continue to evaluate the need for any additional permanent

adjustments in future rulemaking, we reiterate that any additional permanent adjustment(s) would need to be related to actual behavior change resulting only from the implementation of the PDGM and the change in the unit of payment as required by law. Therefore, we will continue to compare estimated aggregate expenditures under the PDGM and the 153-group payment system, using the most recent complete home health claims data available at the time of rulemaking, as required by section 1895(b)(3)(D)(i) of the Act. While the CY 2025 analysis presented in this proposed rule uses the most complete data available at the time, it is considered preliminary and, as more data become available from the latter half of CY 2025, we will update our analysis in the final rule. The CY 2027 HH PPS final rule would use the complete CY 2025 data to determine any permanent and temporary adjustments needed to the CY 2027 payment rate. However, while the claims data and the permanent and temporary adjustments results would be considered complete for CY 2027, any adjustments to future payment rates may be subject to additional considerations such as permanent adjustments taken in previous years.

The claims data used in rulemaking is released in the HH PPS LDS file twice each year, one with the proposed and one with the final rule. Accordingly, the HH PPS LDS file released with this proposed rule includes two files: the actual CY 2025 30-day periods and the CY 2025 simulated 60-day episodes.

We remind readers that a data use agreement (DUA) is required to purchase the CY 2027 proposed HH PPS LDS file using the CMS-R-0235A form under OMB control number 0938-0734. Access would be granted for both the 30-day periods and the simulated 60-day episodes under one DUA. Visit the HH PPS LDS web page for more information.

3

In addition, the proposed CY 2027 Home Health Descriptive Statistics from the LDS Files spreadsheet is available on the HH PPS Regulations and Notices web page,

4

does not require a DUA, and is available at no cost to interested parties. The spreadsheet contains information on the number of simulated 60-day episodes and actual 30-day periods in CY 2025 that were used to determine the adjustments. The spreadsheet also provides information such as the number of episodes and periods by case-mix group, case-mix weights, and simulated payments.

3

https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/home_health_pps_lds.

4

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.

e. Applying the Methodology to CY 2025 Data To Determine the CY 2027 Permanent and Temporary Adjustments

To comply with Section 1895(b)(3)(D)(ii) of the Act, we are required to annually analyze data from CY 2020 through CY 2026 and show the calculations to illustrate how the aggregate expenditures differ from actual and assumed behavior changes. We also continue to analyze differences in aggregate expenditures and calculate what the budget neutral rate would be to understand how the budget neutral rate differs from the actual finalized payment rate for CY 2025. We then determine whether the difference between the budget neutral rate and actual finalized payment rate can be directly attributed to behavior from PDGM implementation as discussed in CY 2026 final rule.

Using the methodology finalized in the CY 2023 HH PPS final rule to apply for all the years in which an adjustment is appropriate, we continue to use actual CY 2025 30-day periods to determine what the proposed permanent and temporary payment adjustments should be to offset for such increases or decreases in estimated aggregate expenditures as a result of the impact of differences between assumed behavior changes and actual behavior changes. We provide tables 15 and 16 to illustrate the same information displayed in prior rules to show the permanent adjustment that would need to be applied if the comparison of the aggregate expenditures were a result of behavior change due to the implementation of the PDGM. However, similar to what was finalized in the CY 2026 HH PPS final rule (90 FR 55364 through 55365), we believe any behavior changes reflected in preliminary CY 2025 claims for this CY 2027 proposed rule are not directly attributable to the PDGM but other confounding factors that began in CY 2023 (that is, continued recalibration of case-mix weights, a change to the OASIS-E, and previous reductions to the home health payment rate). The permanent adjustment calculated will be illustrative as part of our analysis of CY 2025 claims; however, we are not proposing to apply a permanent adjustment to the CY 2027 payment rate, as discussed previously. We show table 17 as another illustrative example showing a calculated permanent adjustment, using CY 2025 aggregate expenditures if we were to determine that the behavior changes that occurred could be directly attributed to the implementation of the PDGM.

Using the preliminary CY 2025 dataset, we began with 8,228,904 30-day periods of care and dropped 444,897 30-day periods of care that had a claim occurrence code 50 date after October 31, 2025. We also excluded 847,700 30-day periods of care that had a claim occurrence code 50 date before January 1, 2025, to ensure the 30-day period will not be part of a simulated 60-day episode that began in CY 2026. Applying the additional exclusions and assumptions as described in the finalized methodology (87 FR 66804), an additional 60,233 30-day periods were excluded.

The Company believes the proposed Observer provisions in the amended By-Laws are consistent with the Act because the Observer position will provide a means for individuals who are employed by, or otherwise affiliated with, an Exchange Member but may not be able, or willing, to serve as a Board member for one reason or another, to now be able to serve the Company in an advisory role and provide such valuable expertise and knowledge to help the Company carry out its business.

Using the preliminary dataset for CY 2025 (6,557,369 actual 30-day periods which made up the 3,860,954 simulated 60-day episodes) we determined the estimated aggregate expenditures using the finalized CY 2025 HH PPS payment rate were lower than the actual estimated aggregate expenditures under the PDGM HH PPS. As shown in table 15, aggregate expenditures under the PDGM were higher than if the 153-group payment system were still in place in CY 2025 and therefore, we determined the CY 2025 30-day base payment rate should have been $1,953.60 based on actual behavior changes.

We determined that for CYs 2020 through CY 2022 a total of −9.480 percent permanent adjustment was needed (after accounting for the −3.925 percent applied to the CY 2023 payment rate, the −2.890 percent applied to the CY 2024 payment rate, and the −1.975 percent applied to the CY 2025 payment rate). The CY 2026 permanent adjustment was calculated using the permanent adjustments already applied to CYs 2023, 2024, and 2025 finalized payment rates and to reach the payment rate reduction needed for CYs 2020 through 2022.

In order to determine behavior changes only applicable to CY 2025, we simulated what the CY 2025 base payment rate would have been if the −1.023 percent adjustment that we determined using CY 2024 claims had been implemented and to compare

PDGM claims with 153-group priced claims using 60-day simulated episodes.

To do so, we started with the budget neutral CY 2024 base payment of $1,914.73 generated by CY 2024 simulated 60-day episodes (as published in the CY 2026 HH PPS final rule (90 FR 55366)) and applied the CY 2025 case-mix weights recalibration neutrality factor (1.0039), the CY 2025 wage index budget neutrality factor (0.9988), the CY 2024 labor-related share budget neutrality factor (1.0), and the CY 2025 home health payment update factor (1.027). We determined the CY 2025 base payment rate for assumed behavior would have been $1,971.73.

For the CY 2025 annual permanent adjustment, we calculated the percent change between the two payment rates for only CY 2025. For the CY 2025 annual temporary adjustment we calculated the difference in aggregate expenditures in dollars for all CY 2025 PDGM 30-day claims using the two payment rates. This difference is shown as the retrospective dollar amount we would need to offset payment using one or more temporary adjustments in future years. Our results for the CY 2025 annual (single year) permanent and temporary adjustment calculations using CY 2025 preliminary claims data are shown in table 15.

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As shown in table 15, we illustrate that a permanent prospective adjustment of −0.919 percent to the CY 2027 30-day payment rate (assuming all adjustments from prior years were applied) for CY 2025 would be required to offset for such increases in estimated aggregate expenditures. Again, table 15 is illustrative because we are continuing to limit the calculation of the permanent adjustments to only include data from CYs 2020 through 2022 as finalized in the CY 2026 HH PPS final rule (90 FR 55365 through 55367) and the calculated permanent adjustment does not include implemented permanent adjustments from prior years. We reiterate that any additional permanent adjustment(s) must be determined to be related to actual behavior change resulting only from the implementation of the PDGM and the change in the unit of payment as required by law.

f. CY 2027 Permanent Adjustment and Proposed Temporary Adjustment Calculations

In the preceding section we describe how we analyzed CY 2025 preliminary claims data to determine the effects of actual behavior change on estimated aggregate expenditures. Again, that illustrative analysis included simulations that assumed the full permanent adjustments were already taken. We note that CMS implemented a payment adjustment of −1.975 percent for the CY 2025 payment rate, rather than the −3.95 percent we calculated (89 FR 88373), so the calculations set forth later in this section reflect the remaining adjustments that still needed to be recognized.

Therefore, the calculation in this section includes any of the remaining adjustments not applied in previous years (that is, CYs 2020 through 2024 claims data), as well as the adjustment needed to account for CY 2025 claims. In calculating the full permanent adjustment needed to the CY 2027 30-day payment rate, we compare estimated aggregate expenditures under the PDGM and the prior system. Unlike the annual adjustments described in table 15, we do not assume we made the full adjustment from prior years. This section will also include calculation of a permanent adjustment using the actual CY 2025 payment rate and the budget neutral rate for CY 2025 using the method discussed in the CY 2026 final rule.

As discussed in section II.C.1.d. of this proposed rule, using the preliminary dataset for CY 2025 (6,557,369 actual 30-day periods which made up the 3,860,954 simulated 60-day episodes) we determined the CY 2025 30-day base payment rate should have been $1,953.60 based on actual behavior. We then compared the repriced 30-day base payment rate based

on actual behavior to the CY 2025 30-day base payment rate of $2,057.35 we paid based on assumed behaviors. The percent change, as summarized in table 16, between the actual CY 2025 base payment rate of $2,057.35 (based on assumed behaviors) and the CY 2025 recalculated base payment rate of $1,953.60 (based on actual behaviors) illustrates the total permanent adjustment that would reflect CY 2020 through CY 2025 claims. We conduct this calculation to satisfy the requirements described in section 1895(b)(3)(D)(ii) of the Act to illustrate what the permanent adjustment would be. We consider table 16 illustrative because we are proposing to limit the calculation of the permanent adjustments to only include data from CYs 2020 through 2022 as finalized in the CY 2026 final rule (90 FR 55365 through 55367).

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As shown in table 16, a permanent prospective adjustment of −5.043 percent to the CY 2027 30-day payment rate would be required to offset for such increases in estimated aggregate expenditures. To illustrate this calculation:

EP06JY26.041

As we stated in the CY 2026 HH PPS final rule (90 FR 55357), applying a −1.975 percent (half of the proposed −3.95 percent) permanent adjustment to the CY 2025 30-day payment rate would not adjust the rate fully to account for differences in behavior changes on estimated aggregate expenditures in CYs 2020, 2021, 2022, and 2023. Using CY 2025 claims data, as shown in table 16, a permanent prospective adjustment of −5.043 percent to the CY 2027 30-day payment rate would offset for increases in estimated aggregate expenditures for CYs 2020 through 2025. We note that adjustment factors are multiplied in this payment system, and individual numbers (that is, percentages) cannot be added or subtracted together to determine the final adjustment. Therefore, we cannot determine the illustrative CY 2027 permanent adjustment, which would include estimated aggregate expenditures in CY 2025, by simply subtracting the −1.975 percent applied in CY 2025 and the −1.023 percent applied in CY 2026 from the total permanent adjustment of −5.043 percent as shown in table 16.

Instead, we account for the permanent adjustment applied in prior years when we calculate the CY 2027 permanent adjustment by solving the following equation To illustrate this calculation we used the following approach.

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We note that the −4.062 percent is calculated as a permanent adjustment for CY 2027 illustrating what we would need if we were to offset the difference in aggregate expenditures between CY 2025 claims priced under the PDGM and the 153-group system and adjusting for the permanent adjustments applied in prior years.

We continue to apply the methodology finalized in the CY 2026 HH PPS final rule to determine what the permanent adjustment for CY 2025 claims would be even though we stopped comparing claims priced under PDGM and 153-group after CY 2022 claims for the purposes of applying a permanent adjustment in this proposed rule. As displayed in table 17, we calculate the permanent adjustment for CY 2025 by determining the percent change between the actual CY 2025 30-day payment rate ($2,057.35) and the budget neutral rate for CY 2025

($2,036.29). The budget neutral rate for CY 2025 is the finalized CY 2024 budget neutral rate discussed in CY 2026 final rule ($1,977.43) multiplied by the CY 2025 case-mix weights recalibration neutrality factor (1.0039), the CY 2025 wage index budget neutrality factor (0.9988), and the CY 2025 home health payment update factor (1.027).

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In section II.C.1.d of this proposed rule, we discussed various trends that are part of monitoring changes related to the PDGM using analysis of CY 2025 claims. The data continues to show minimal changes that could be attributed to the PDGM implementation after CY 2022 by a large proportion of home health providers. We also continue to acknowledge the difficulty in attributing any behavior change occurring from CYs 2023 through 2025 directly to the PDGM implementation and its effects on expenditures from the other changes occurring in those years. As discussed in the CY 2026 HH PPS final rule, CMS introduced several policy changes that make isolating the effect of implementing a permanent adjustment, with claims data from CYs 2023 through 2025, for the PDGM difficult. These changes include recalibration of case-mix weights and LUPA visit thresholds finalized in the CY 2023, 2024, 2025, and 2026 final rules; reassignment of certain ICD-10-CM codes related to the PDGM clinical groups and comorbidity groups in the CY 2023 HH PPS final rule; finalized permanent adjustments in the CY 2023, 2024, and 2025 HH PPS final rules; the introduction of OASIS-E in 2023 and finalized mapping of OASIS-E to OASIS-D in the CY 2025 HH PPS final rule for calculating functional points for functional impairment levels during repricing; and the expanded HHVBP Model. For these reasons, we maintain that limiting the application of the permanent adjustment to analysis of data from CYs 2020 through 2022 continues to be the most accurate application of the law. However, as required by law, we will continue to analyze data through CY 2026 claims to determine if any additional permanent adjustments are needed to account for the impact of assumed versus actual behavior change related to the implementation of the PDGM and the change to a 30-day unit of payment on estimated aggregate expenditures. As a result, we propose to not apply a permanent adjustment to the CY 2027 payment rate.

The dollar amount that needs to be collected through the temporary adjustment increased when examining home health claims from CY 2025 because those claims were paid using the actual 30-day payment rate ($2,057.35) instead of the calculated budget neutral payment rate for CY 2025 ($2,036.29). That is, had the payment rate in CY 2025 been $2,036.29, there would not be an increase in what needs to be collected through the temporary adjustment when examining home health claims from CY 2025. Because the 30-day payment rate was not budget neutral until the CY 2026 payment rate with the application of the −1.023 percent permanent adjustment, the temporary adjustment continued to accrue.

As described previously in this proposed rule, to account for such increases or decreases in estimated aggregate expenditures as a result of the impact of differences between assumed behavior changes and actual behavior changes in any given year from CY 2020 to CY 2026, we calculate the temporary prospective adjustment by calculating the dollar amount difference between the estimated aggregate expenditures from all 30-day periods using the recalculated 30-day base payment rate, and the aggregate expenditures for all 30-day periods using the actual 30-day base payment rate for that year. In other words, when determining the temporary retrospective dollar amount, we used the full dataset of actual 30-day periods using both the actual and recalculated 30-day base payment rates to ensure that the utilization and distribution of claims are the same. We refer readers to the CY 2024 HH PPS final rule (88 FR 77689 through 77694) for analysis of CYs 2020 through 2022 claims, the CY 2026 HH PPS final rule (90 FR 55366 through 55367) for analysis of CY 2023 and 2024 claims, and section II.C.1.d. of this proposed rule for the analysis of CY 2025 claims. Table 18 provides a summary of the temporary adjustment dollar amount for CYs 2020 through 2026.

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Therefore, we exercise our authority under section 1895(b)(3)(D)(iii) of the Act to apply “one or more” temporary adjustments to continue recoupment of the retrospective overpayments for CYs 2020 through 2025. Specifically, we propose to implement a 3.0 percent reduction in CY 2027, that is equivalent to a 0.9700 temporary adjustment factor, to the CY 2027 national, standardized payment rate. Using historical trends, we estimated 7,680,775 30-day periods would occur in CY 2027. Using this estimated utilization, a 3.0 percent reduction to the CY 2027 30-day payment rate would begin to collect approximately $500 million of the total temporary adjustment dollar amount, equating to about 10 percent of the total $4.9 billion shown in table 18. In doing so; however, we would need to account for the remaining temporary adjustment dollar amount for CYs 2020 through 2026, plus any possible adjustments for CY 2027 and 2028, in future years. It is important to note that the estimated $500 million dollar amount anticipated to be collected by the implementation of the temporary adjustment factor is based on an estimate of the number of 30-day periods that would occur in CY 2027. It may not reflect the actual dollar amount to be collected if the actual number of 30-day periods and other utilization trends in CY 2027 differ from what was estimated. In other words, CMS will calculate the actual amount collected from the temporary adjustment in CY 2027 and credit it to the overall cumulative temporary dollar amount.

In accordance with section 1895(b)(3)(D)(iii) of the Act, the temporary adjustment is to be applied on a prospective basis and shall apply only with respect to the year for which such temporary increase or decrease is made. This means we would not include the −3.0 percent temporary adjustment applied for CY 2027 when calculating the CY 2028 base payment rates. However, to continue recoupment of the retrospective overpayments, we may propose additional temporary adjustments in future rulemaking and are not proposing that the −3.0 percent temporary adjustment would be applied each year after CY 2027. Rather, we will continue to analyze the data each year through CY 2026 claims as required by law, and in a time and manner deemed appropriate, we will propose one or more temporary adjustments to account for retrospective overpayments. We also note the $4.9 billion does not account for any monies recouped in CY 2026, as we do not have this dollar amount at the time of this CY 2027 rulemaking. In future rulemaking, we will show the remaining balance, accounting for the previous recoupment amount; however, there will be a lag. We refer readers to section II.E.3.b. for the CY 2027 base payment rates with and without the temporary adjustment.

We solicit comments on the proposals to not apply a permanent adjustment and to apply the −3.0 percent temporary adjustment to the CY 2027 home health base payment rate.

D. Proposed CY 2027 Home Health Low Utilization Payment Adjustment (LUPA) Thresholds, Functional Impairment Levels, Comorbidity Sub-Groups, and Case-Mix Weights

1. Proposed CY 2027 PDGM LUPA Thresholds

Under the HH PPS, LUPAs are paid when a certain numerical minimum visit threshold for a payment group during a 30-day period of care is not met. In the CY 2019 HH PPS final rule with comment period (83 FR 56492), we finalized a policy setting the LUPA thresholds at the 10th percentile of visits or two visits, whichever is higher, for each payment group. This means the LUPA threshold for each 30-day period of care varies depending on the PDGM payment group to which it is assigned. If the LUPA threshold for the payment group is met under the PDGM, the 30-day period of care would be paid the full 30-day period case-mix adjusted payment amount (subject to any partial payment adjustment or outlier adjustments). If a 30-day period of care does not meet the PDGM LUPA visit threshold, then payment would be made using the per-visit payment amounts as described in section II.E.3.c. of this proposed rule. For example, if the LUPA visit threshold is four, and a 30-day period of care has four or more visits,

it is paid the full 30-day period payment amount; if the period of care has three or fewer visits, payment is made using the per-visit payment amounts.

In the CY 2019 HH PPS final rule with comment period (83 FR 56492), we finalized our policy that the LUPA thresholds for each PDGM payment group will be reevaluated every year based on the most current utilization data available at the time of rulemaking. However, as CY 2020 was the first year of the new case-mix adjustment methodology, we stated in the CY 2021 HH PPS final rule (85 FR 70305, 70306) that we would maintain the LUPA thresholds that were finalized and shown in table 18 of the CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2021 payment purposes. We stated that at that time, we did not have sufficient CY 2020 data to reevaluate the LUPA thresholds for CY 2021.

In the CY 2022 HH PPS final rule with comment period (86 FR 62249), we finalized the proposal to recalibrate the PDGM case-mix weights, functional impairment levels, and comorbidity subgroups while maintaining the LUPA thresholds for CY 2022. We stated that because there are several factors that contribute to how the case-mix weight is set for a particular case-mix group (such as the number of visits, length of visits, types of disciplines providing visits, and non-routine supplies) and the case-mix weight is derived by comparing the average resource use for the case-mix group relative to the average resource use across all groups, we believe the COVID-19 public health emergency (PHE) will have impacted utilization within all case-mix groups similarly. Therefore, the impact of any reduction in resource use caused by the PHE on the calculation of the case-mix weight will be minimized since the impact will be accounted for both in the numerator and denominator of the formula used to calculate the case-mix weight. However, in contrast, the LUPA thresholds are based on the number of overall visits in a particular case-mix group (the threshold is the 10th percentile of visits or 2 visits, whichever is greater) instead of a relative value (like what is used to generate the case-mix weight) that will control for the impacts of the COVID-19 PHE. We noted that visit patterns and some of the decrease in overall visits in CY 2020 may not be representative of visit patterns in CY 2022. Therefore, to mitigate any potential future and significant short-term variability in the LUPA thresholds due to the COVID-19 PHE, we finalized the proposal to maintain the LUPA thresholds finalized and displayed in table 18 in the CY 2020 HH PPS final rule with comment period (84 FR 60522) for CY 2022 payment purposes.

For CY 2024, we proposed to update the LUPA thresholds using CY 2022 Medicare home health claims (as of March 17, 2023) linked to OASIS assessment data. We believed that CY 2022 data would be more indicative of visit patterns in CY 2024 rather than continuing to use the LUPA thresholds derived from the CY 2018 pre-PDGM data. Therefore, we finalized a policy to update the LUPA thresholds for CY 2024 using data from CY 2022.

For CY 2027, we are proposing to update the LUPA thresholds using CY 2025 home health claims utilization data (as of March 15, 2026), in accordance with our policy to annually recalibrate the case-mix weights and update the LUPA thresholds, functional impairment levels, and comorbidity subgroups. After reviewing the CY 2025 home health claims utilization data, we determined that LUPA visit patterns in 2025 were similar to visits in 2024 and a total of 18 case-mix groups have a decline in their LUPA threshold of a single visit and two case-mix groups have their LUPA threshold increase by a single visit. The proposed LUPA thresholds for the CY 2027 PDGM payment groups with the corresponding Health Insurance Prospective Payment System (HIPPS) codes and the case-mix weights are listed in table 24.

We are soliciting public comments on the proposed updates to the LUPA thresholds for CY 2027. The proposed LUPA thresholds will be updated based on more complete CY 2025 claims data in the final rule.

2. Proposed CY 2027 Functional Impairment Levels

Under the PDGM, the functional impairment level is determined by responses to certain OASIS items associated with activities of daily living and risk of hospitalization; that is, responses to OASIS items M1800-M1860 and M1033. A home health period of care receives points based on each of the responses associated with these functional OASIS items, which are then converted into a table of points corresponding to increased resource use. The sum of all these points results in a functional impairment score which is used to group home health periods into a functional level with similar resource use. That is, the higher the points, the more the response is associated with increased resource use, or increased impairment. The three functional impairment levels of low, medium, and high were designed so that approximately one-third of home health periods from each clinical group falls within each level. This means home health periods in the low impairment level have responses for the functional OASIS items that are associated with the lowest resource use, on average. Home health periods in the high impairment level have responses for the functional OASIS items that are associated with the highest resource use on average.

For CY 2027, we are proposing to use CY 2025 claims data to update the functional points and functional impairment levels by clinical group. The CY 2018 HH PPS proposed rule (82 FR 35320) and the technical report from December 2016, posted on the Home Health PPS Archive web page, located at

https://www.cms.gov/medicare/home-health-pps/home-health-pps-archive,

provides a more detailed explanation as to the construction of the functional impairment levels using the OASIS items. We are proposing to use the same methodology previously finalized to update the functional impairment levels for CY 2027. The proposed updated OASIS functional points table and the table of functional impairment levels by clinical group for CY 2027 are listed in tables 19 and 20, respectively.

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We are soliciting public comments on the proposed updates to the functional points and the functional impairment levels by clinical group.

3. Proposed CY 2027 Comorbidity Subgroups

Thirty-day periods of care are assigned to a comorbidity adjustment category based on the presence of certain secondary diagnoses reported on home health claims. These diagnoses are based on a home-health specific list of clinically and statistically significant secondary diagnosis subgroups with similar resource use, meaning the diagnoses have at least as high as the median resource use and are reported in more than 0.1 percent of 30-day periods of care. Home health 30-day periods of care can receive a comorbidity

adjustment under the following circumstances:

•

High comorbidity adjustment:

There are two or more secondary diagnoses on the home health-specific comorbidity subgroup interaction list that are associated with higher resource use when both are reported together compared to when they are reported separately. That is, the two diagnoses may interact with one another, resulting in higher resource use.

•

Low comorbidity adjustment:

There is a reported secondary diagnosis on the home health-specific comorbidity subgroup list that is associated with higher resource use.

•

No comorbidity adjustment:

There is no secondary diagnosis or there is a secondary diagnosis that does not meet the criteria for a low or high comorbidity adjustment.

In the CY 2019 HH PPS final rule with comment period (83 FR 56406), we stated that we will continue to examine the relationship of reported comorbidities on resource utilization and make the appropriate payment refinements to help ensure that payment is in alignment with the actual costs of providing care. For CY 2027, we are proposing to use the same methodology used to establish the comorbidity subgroups to update the comorbidity subgroups using CY 2025 home health data with linked OASIS data (as of March 15, 2026).

For CY 2027, we are proposing to update the comorbidity subgroups to include 21 low comorbidity adjustment subgroups and 100 high comorbidity adjustment interaction subgroups. The proposed CY 2027 low comorbidity adjustment subgroups and the high comorbidity adjustment interaction subgroups including those diagnoses within each of these comorbidity adjustments are shown in tables 21 and 22. The proposed CY 2027 low comorbidity adjustment subgroups and the high comorbidity adjustment interaction subgroups including those diagnoses within each of these comorbidity adjustments will also be posted on the HHA Center web page at

https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.

We invite comments on the proposed updates to the low comorbidity adjustment subgroups and the high comorbidity adjustment interactions for CY 2027.

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4. Proposed CY 2027 PDGM Case-Mix Weights

As finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56502), the PDGM places patients into meaningful payment categories based on patient and other characteristics, such as timing, admission source, clinical grouping using the reported principal diagnosis, functional impairment level, and comorbid conditions. The PDGM case-mix methodology results in 432 unique case-mix groups called home health resource groups (HHRGs). We also finalized a policy in the CY 2019 HH PPS final rule with comment period (83 FR 56515) to annually recalibrate the PDGM case-mix weights using a fixed effects model with the most recent and complete utilization data available at the time of annual rulemaking. Annual recalibration of the PDGM case-mix weights ensures that the case-mix weights reflect, as accurately as possible, current home health resource use and changes in utilization patterns. To generate the proposed recalibrated CY 2027 case-mix weights, we used CY 2025 home health claims data with linked OASIS data (as of March 15, 2026). These data are the most current and complete data available at the time of rulemaking. We believe that recalibrating the case-mix weights using data from CY 2025 would be reflective of PDGM utilization and patient resource use for CY 2027. The proposed recalibrated case-mix weights will be updated in the final rule based on more complete CY 2025 claims data.

The claims data provide visit-level data and data on whether non-routine supplies (NRS) were provided during the period and the total charges of NRS. We determine the case-mix weight for each of the 432 different PDGM payment groups by regressing resource use on a series of indicator variables for each of the categories using a fixed effects model as described in the following steps:

Step 1:

Estimate a regression model to assign a functional impairment level to each 30-day period. The regression model estimates the relationship between a 30-day period's resource use and the functional status and risk of hospitalization items included in the PDGM, which are obtained from certain OASIS items. We refer readers to table 19 for further information on the OASIS items used for the functional impairment level under the PDGM. We measure resource use with the cost-per-minute + NRS approach that uses information from 2023 home health cost reports. We use 2023 home health cost report data because it is the most complete cost report data available at the time of rulemaking. Other variables in the regression model include the 30-day period's admission source, clinical group, and 30-day period timing. We also include home health agency level fixed effects in the regression model. After estimating the regression model using 30-day periods, we divide the coefficients that correspond to the functional status and risk of hospitalization items by 10 and round to the nearest whole number. Those rounded numbers are used to compute a functional score for each 30-day period by summing together the rounded numbers for the functional status and risk of hospitalization items that are applicable to each 30-day period. Next, each 30-day period is assigned to a functional impairment level (low, medium, or high) depending on the 30-day period's total functional score. Each clinical group has a separate set of functional thresholds used to assign 30-day periods into a low, medium or high functional impairment level. We set those thresholds so that we assign roughly a third of 30-day periods within each clinical group to each functional impairment level (low, medium, or high).

Step 2:

A second regression model estimates the relationship between a 30-day period's resource use and indicator variables for the presence of any of the comorbidities and comorbidity interactions that were originally examined for inclusion in the PDGM. Like the first regression model, this model also includes home health agency level fixed effects and includes control variables for each 30-day period's admission source, clinical group, timing, and functional impairment level. After we estimate the model, we assign comorbidities to the low comorbidity adjustment if any comorbidities have a coefficient that is statistically significant (p-value of 0.05 or less) and which have a coefficient that is larger than the 50th percentile of positive and statistically significant comorbidity coefficients. If two comorbidities in the model and their interaction term have coefficients that sum together to exceed $150 and the interaction term is statistically significant (p-value of 0.05 or less), we assign the two comorbidities together to the high comorbidity adjustment.

Step 3:

After Step 2, each 30-day period is assigned to a clinical group, admission source category, episode timing category, functional impairment level, and comorbidity adjustment category. For each combination of those variables (which represent the 432 different payment groups that comprise

the PDGM), we then calculate the 10th percentile of visits across all 30-day periods within a particular payment group. If a 30-day period's number of visits is less than the 10th percentile for their payment group, the 30-day period is classified as a Low Utilization Payment Adjustment (LUPA). If a payment group has a 10th percentile of visits that is less than two, we set the LUPA threshold for that payment group to be equal to two. That means if a 30-day period has one visit, it is classified as a LUPA and if it has two or more visits, it is not classified as a LUPA.

Step 4:

Take all non-LUPA 30-day periods and regress resource use on the 30-day period's clinical group, admission source category, episode timing category, functional impairment level, and comorbidity adjustment category. The regression includes fixed effects at the level of the home health agency. After we estimate the model, the model coefficients are used to predict each 30-day period's resource use. To create the case-mix weight for each 30-day period, the predicted resource use is divided by the overall resource use of the 30-day periods used to estimate the regression.

The case-mix weight is then used to adjust the base payment rate to determine each 30-day period's payment. Table 23 shows the coefficients of the payment regression used to generate the weights, and the coefficients divided by average resource use.

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The proposed case-mix weights for CY 2027 are listed in table 24 and will also be posted on the HHA Center web page at

https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center

upon display of this proposed rule.

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Changes to the PDGM case-mix weights are implemented in a budget neutral manner by multiplying the CY 2027 national standardized 30-day

period payment rate by a case-mix budget neutrality factor. Typically, the case-mix weight recalibration neutrality factor is also calculated using the most recent, complete home health claims data available. For CY 2027, we would continue the practice of using the most recent complete home health claims data at the time of rulemaking, which is currently CY 2025 data. The case-mix budget neutrality factor is calculated as the ratio of 30-day base payment rates such that total payments when the CY 2027 PDGM case-mix weights (developed using CY 2025 home health claims data) are applied to CY 2025 utilization (claims) data are equal to total payments when CY 2026 PDGM case-mix weights (developed using CY 2024 home health claims data) are applied to CY 2025 utilization data. This produces a case-mix budget neutrality factor for CY 2027 of 1.0045.

We invite public comments on the CY 2027 proposed case-mix weights and proposed case-mix weight budget neutrality factor.

E. Proposed CY 2027 Home Health Payment Rate Updates

1. Proposed CY 2027 Home Health Market Basket Update for HHAs

Section 1895(b)(3)(B) of the Act requires that the standard prospective payment amounts for home health be increased by a factor equal to the applicable home health market basket update for those HHAs that submit quality data as required by the Secretary. In the CY 2024 HH PPS final rule (88 FR 77726), we finalized a rebasing of the home health market basket to reflect 2021 cost report data. We also finalized a policy for CY 2024 and subsequent years that the labor-related share is 74.9 percent, and the non-labor-related share is 25.1 percent. A detailed description of how we rebased the home health market basket and labor-related share is available in the CY 2024 HH PPS final rule (88 FR 77726 through 77742).

In the CY 2015 HH PPS final rule (79 FR 38384), we finalized our methodology for calculating and applying the productivity adjustment. As we explained in that rule, section 1895(b)(3)(B)(vi) of the Act, requires that, in CY 2015 (and in subsequent calendar years, except CY 2018 (under section 411(c) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 16, 2015)), the market basket percentage under the HH PPS as described in section 1895(b)(3)(B) of the Act be annually adjusted by changes in economy-wide productivity. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year moving average of change in annual economy-wide private nonfarm business multifactor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The Bureau of Labor Statistics (BLS) publishes the official measures of productivity for the United States economy. The productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is published by BLS as private nonfarm business total factor productivity (TFP) (previously referred to as multifactor productivity).

5

We refer readers to

https://www.bls.gov/productivity

for the BLS historical published TFP data. A complete description of IHS Global Inc.'s (IGI) TFP projection methodology is available on the CMS website at

https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information.

5

https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm.

The proposed home health update percentage for CY 2027 is based on the estimated home health market basket percentage increase, specified at section 1895(b)(3)(B)(iii) of the Act of 3.1 percent (based on IHS Global Inc.'s first quarter 2026 forecast with historical data through fourth quarter 2025). The estimated CY 2027 proposed home health market basket percentage increase of 3.1 percent would then be reduced by a productivity adjustment, in accordance with section 1895(b)(3)(B)(vi) of the Act. Based on IGI's first quarter 2026 forecast, the proposed productivity adjustment is currently estimated to be 1.0 percentage point for CY 2027. Therefore, the proposed productivity-adjusted CY 2027 home health market basket update is 2.1 percent (3.1 percent market basket percentage increase, reduced by a 1.0 percentage point productivity adjustment). Furthermore, we are proposing that if more recent data become available (for example, a more recent estimate of the market basket percentage increase and/or productivity adjustment), we would use such data, if appropriate, to determine the CY 2027 market basket percentage increase and productivity adjustment in the final rule.

Section 1895(b)(3)(B)(v) of the Act requires that the home health percentage update be decreased by 2 percentage points for those HHAs that do not submit quality data as required by the Secretary. For HHAs that do not submit the required quality data for CY 2027, the proposed home health payment update percentage is 0.1 percent (2.1 percent minus 2 percentage points).

We invite public comments on the proposed CY 2027 home health market basket percentage increase and productivity adjustment.

2. Proposed CY 2027 Home Health Wage Index

a. Background

Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the Secretary to provide appropriate adjustments to the proportion of the payment amount under the HH PPS that account for area wage differences, using adjustment factors that reflect the relative level of wages and wage-related costs applicable to the furnishing of home health services. Since the inception of the HH PPS, we have used inpatient hospital wage data in developing a wage index to be applied to home health payments. We are proposing to continue this practice for CY 2027, as it is our belief that, in the absence of home health-specific wage data that accounts for area differences, using inpatient hospital wage data, including any changes made by the Office of Management and Budget (OMB) to Metropolitan Statistical Area (MSA) definitions, is appropriate and reasonable for the HH PPS.

In general, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which superseded the August 15, 2017, OMB Bulletin No. 17-01. On September 14, 2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10, 2018, OMB Bulletin No. 18-03. These bulletins established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. A copy of OMB Bulletin No. 18-04 may be obtained at

https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.

In the CY 2021 HH PPS final rule (85 FR 70298), we finalized our proposal to adopt the revised OMB delineations with a 5 percent cap on wage index decreases in CY 2021.

On July 21, 2023, OMB issued Bulletin No. 23-01, which updates and supersedes OMB Bulletin No. 20-01, issued on March 6, 2020. OMB Bulletin No. 23-01 establishes revised delineations for the MSAs, Micropolitan Statistical Areas, Combined Statistical Areas, and Metropolitan Divisions, collectively referred to as Core Based Statistical Areas (CBSAs). A copy of OMB Bulletin No. 23-01 is available online at

https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.

According to OMB, the delineations from OMB Bulletin 23-01 reflect the 2020 Standards for Delineating Core Based Statistical Areas (CBSAs) (the “2020 Standards”), which appeared in the

Federal Register

(86 FR 37770 through 37778) on July 16, 2021, and application of those standards to Census Bureau population and journey-to-work data (for example, 2020 Decennial Census, American Community Survey, and Census Population Estimates Program data). The OMB “2020 Standards” define a “Metropolitan Statistical Area” as being associated with at least one Urban Area that has a population of at least 50,000 and a “Micropolitan Statistical Area” as being associated with at least one Urban Area that has a population of at least 10,000, but less than 50,000 (86 FR 37778).

In the CY 2025 HH PPS final rule (89 FR 88354), we finalized our proposal to adopt the revised OMB delineations from OMB Bulletin 23-01 with a 5 percent cap on wage index decreases at the CBSA level as well as at the county level. In that final rule we stated that we believe it is important for the HH PPS wage index to use the latest OMB delineations available in order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. We also stated that we believe using the most current OMB delineations will increase the integrity of the HH PPS wage index by creating a more accurate representation of geographic variation in wage levels. In conjunction with our implementation of the revised labor market delineations beginning in CY 2025, and consistent with the treatment of Micropolitan Statistical Areas under the Inpatient Prospective Payment System (IPPS), we also finalized continuing to treat Micropolitan Statistical Areas as “rural” and including Micropolitan Statistical Areas in the calculation of each state's statewide rural wage index. Therefore, the HH PPS statewide rural wage index is determined using IPPS hospital data from hospitals located in Micropolitan Statistical Areas and the HH PPS wage index for each CBSA is determined using IPPS hospital data from hospitals located in Metropolitan Statistical Areas.

b. Five Percent Cap on Wage Index Decreases

In the CY 2023 HH PPS final rule (87 FR 66851 through 66853), we finalized a policy that the CY HH PPS wage index will include a permanent 5 percent cap on wage index decreases for CY 2023 and each subsequent year. Specifically, we finalized, for CY 2023 and subsequent years, the application of a permanent 5 percent cap on any decrease to a geographic area's wage index from its wage index in the prior year, regardless of the circumstances causing the decline. That is, we finalized a policy requiring that a geographic area's wage index for CY 2023 will not be less than 95 percent of its final wage index for CY 2022, regardless of whether the geographic area is part of an updated CBSA, and that for subsequent years, a geographic area's wage index will not be less than 95 percent of its wage index calculated in the prior CY.

Previously this methodology was applied to all counties that make up a CBSA or statewide rural area. However, in the CY 2025 HH PPS final rule (89 FR 88418 through 88421), because of the adoption of the revised OMB delineations from OMB Bulletin 23-01, we finalized a policy applying this methodology to individual counties. Specifically, we finalized a policy applying the 5 percent cap to counties that moved from a CBSA or statewide rural area with a higher wage index value into a new CBSA or statewide rural area with a lower wage index value, so that the county's CY 2025 wage index would not be less than 95 percent of the county's CY 2024 wage index value under the old delineation despite moving into a new delineation with a lower wage index.

Due to the way that we proposed calculating the 5 percent cap for counties that experienced an OMB designation change, some CBSAs and statewide rural areas could have had more than one wage index value. Specifically, some counties that changed OMB designations had a wage index value that was different than the wage index value assigned to the other constituent counties that made up that CBSA or statewide rural area that they moved into after the application of the 5 percent cap. However, for home health claims processing, each CBSA or statewide rural area can have only one wage index value assigned to that CBSA or statewide rural area. Therefore, we finalized a policy, beginning in CY 2025, that counties that have a different wage index value than the CBSA or rural area into which they are designated after the application of the 5 percent cap will use a wage index transition code. These special codes are five digits in length and begin with “50” and the remaining digits are unique for that code. The 50XXX wage index transition codes are used only in specific counties; counties located in CBSAs and rural areas that do not correspond to a different transition wage index value will still use the CBSA number.

We also finalized a policy applying the 5 percent cap to these specific counties that correspond to a different wage index value due to a delineation change until the county's new wage index is more than 95 percent of the wage index from the previous calendar year. In order to capture the correct wage index value, an HHA will continue to use the assigned 50XXX transition code on home health claims for services in these counties until the county's wage index value calculated for that calendar year using the new OMB delineations is not less than 95 percent of the county's capped wage index from the previous calendar year.

For CY 2027, the 5 percent cap on wage index decreases will continue to be calculated at the county level as well as the CBSA and statewide rural area level. While some counties that required a transition code for CY 2025 and CY 2026 will continue to use the same transition code for CY 2027, other counties that required a transition code in CY 2025 and CY 2026 will no longer require a transition code in CY 2027. The counties that will no longer require a transition code beginning in CY 2027 have a CY 2027 wage index value in the CBSA or rural area that the county was redesignated into that is higher than 95 percent of the county's CY 2026 wage index. Therefore, these counties will use the CBSA or rural county code of the area into which they were redesignated based on OMB Bulletin No. 23-01.

The complete list of counties and corresponding transition codes can be found as a separate tab in the calendar year's wage index file located on the CMS website at

https://www.cms.gov/medicare/payment/prospective-payment-systems/home-health-pps/home-health-pps-wage-index.

c. Proposed CY 2027 HH PPS Wage Index

The appropriate wage index value is applied to the labor portion of the HH PPS rates based on the site of service for the beneficiary (defined in section

1861(m) of the Act as the beneficiary's place of residence). For CY 2027, we are proposing to base the HH PPS wage index on the FY 2027 hospital pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2022, and before October 1, 2023 (FY 2023 cost report data). The proposed CY 2027 HH PPS wage index would not take into account any geographic reclassification of hospitals, including those in accordance with sections 1886(d)(8)(B) or 1886(d)(10) of the Act but would include the 5 percent cap on wage index decreases as discussed previously.

There exist some geographic areas where there are no hospitals, and thus, no hospital wage data on which to base the calculation of the HH PPS wage index. To address those geographic areas in which there are no inpatient hospitals, and thus, no hospital wage data on which to base the calculation of the CY 2027 HH PPS wage index, we are proposing to continue to use the same methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to address those geographic areas in which there are no inpatient hospitals.

For urban areas without inpatient hospitals, we use the average wage index of all urban areas within the State as a reasonable proxy for the wage index for that CBSA. For CY 2027, the only urban area without inpatient hospital wage data is Hinesville, GA (CBSA 25980). Using the average wage index of all urban areas in Georgia as a proxy, we are proposing the CY 2027 wage index value for Hinesville, GA, would be 0.8797.

For rural areas that do not have inpatient hospitals, we use the average wage index from all contiguous Core Based Statistical Areas (CBSAs) as a reasonable proxy. The term “contiguous” means sharing a border (72 FR 49859). In the CY 2025 HH PPS final rule (89 FR 88422), we finalized a policy that rural North Dakota would become a rural area without a hospital from which hospital wage data can be derived. Therefore, in order to calculate the wage index for rural area 99935, North Dakota, we finalized using as a proxy, the average pre-floor, pre-reclassified hospital wage data from the contiguous CBSAs: CBSA 13900-Bismark, ND, CBSA 22020-Fargo, ND-MN, CBSA 24220-Grand Forks, ND-MN, and CBSA 33500, Minot, ND. Using this methodology, we are proposing that the CY 2027 HH PPS wage index for rural North Dakota would be 0.8210.

Previously, the only rural area without a hospital from which hospital wage data could be derived was rural Puerto Rico. However, for rural Puerto Rico, we did not apply this methodology due to the distinct economic circumstances that exist there (for example, due to the proximity of almost all of Puerto Rico's various urban and non-urban areas to one another, this methodology would produce a wage index for rural Puerto Rico that is higher than that in half of its urban areas). Instead, we used the most recent wage index previously available for that area, which was 0.4047. Beginning in CY 2025, due to the adoption of the revised OMB delineations, there is now a hospital in rural Puerto Rico from which hospital wage data can be derived. Therefore, we finalized a policy that the wage index for rural Puerto Rico would now be based on the hospital wage data for the area instead of the previously available wage index of 0.4047.

The unadjusted CY 2027 proposed wage index for rural Puerto Rico is 0.2577. However, because 0.2577 is more than a 5 percent decline in the CY 2026 wage index, we are proposing that the CY 2027 5 percent cap adjusted wage index for rural Puerto Rico be set equal to 95 percent of the CY 2026 wage index of 0.3653, which would result in a proposed wage index value of 0.3470.

Additionally, due to the adoption of the revised OMB delineations in the CY 2025 HH PPS final rule, Delaware, which was previously an all-urban state, now has one rural area with a hospital from which hospital wage data can be derived. As such, we are proposing that the CY 2026 wage index for rural Delaware would be 0.9590.

Finally, the Northern Mariana Islands and American Samoa are rural areas with no hospital data from which a wage index can be calculated. In the CY 2026 HH PPS Wage Index and Rate Update final rule (90 FR 55405), using our established methodology for rural areas with no hospitals, we finalized that for CY 2026 and subsequent years, HHAs that provide services in the Northern Mariana Islands and American Samoa would use CBSA 99965 (Guam) and receive the wage index assigned to CBSA 99965 (Guam) of 0.9611. While we appreciate that the islands of the Pacific Rim are not actually contiguous, we believe that same principle applies here, and that Guam is a reasonable proxy for American Samoa and the Northern Mariana Islands. We believe that CBSA 99965 (Guam) represents a reasonable proxy because the islands are located within the Pacific Rim and share a common status as United States Territories.

The proposed HH PPS wage index file applicable for CY 2027 (January 1, 2027, through December 31, 2027) is available on the CMS website at

https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/home-health-agency-center.

3. Proposed CY 2027 Home Health Payment Update

a. Background

The HH PPS has been in effect since October 1, 2000. As set forth in the July 3, 2000, HH PPS final rule (65 FR 41128), the base unit of payment under the HH PPS was a national, standardized 60-day episode payment rate. As finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56406), and as described in the CY 2020 HH PPS final rule with comment period (84 FR 60478), the unit of home health payment changed from a 60-day episode to a 30-day period effective for those 30-day periods beginning on or after January 1, 2020.

As set forth in § 484.220, we adjust the national, standardized prospective payment rates by a case-mix relative weight and a wage index value based on the site of service for the beneficiary. To provide appropriate adjustments to the proportion of the payment amount under the HH PPS to account for area wage differences, we apply the appropriate wage index value to the labor portion of the HH PPS rates. In the CY 2024 HH PPS final rule (88 FR 77676), we finalized the rebasing of the home health market basket to reflect 2021 Medicare cost report data. We also finalized a policy that, for CY 2024 and subsequent years, the labor-related share is 74.9 percent, and the non-labor-related share is 25.1 percent. The following are the steps we take to compute the case-mix and wage-adjusted 30-day period payment amount for CY 2027:

• Multiply the national, standardized 30-day period rate by the patient's applicable case-mix weight.

• Divide the case-mix adjusted amount into a labor (74.9 percent) and a non-labor portion (25.1 percent).

• Multiply the labor portion by the applicable wage index based on the site of service of the beneficiary.

• Add the wage-adjusted portion to the non-labor portion, yielding the case-mix and wage adjusted 30-day period payment amount, subject to any additional applicable adjustments.

We provide annual updates of the HH PPS rate in accordance with section 1895(b)(3)(B) of the Act. Section 484.225 sets forth the specific annual percentage update methodology. In accordance with section 1895(b)(3)(B)(v) of the Act and § 484.225(i), for an HHA that does not submit home health quality data, as specified by the Secretary, the

unadjusted national prospective 30-day period rate is equal to the rate for the previous calendar year increased by the applicable home health payment update percentage, minus two percentage points. Any reduction of the percentage change will apply only to the calendar year involved and will not be considered in computing the prospective payment amount for a subsequent calendar year.

The final claim that the HHA submits for payment determines the total payment amount for the period and whether we make an applicable adjustment to the 30-day case-mix and wage-adjusted payment amount. The end date of the 30-day period, as reported on the claim, determines which calendar year rates Medicare would use to pay the claim.

We may adjust a 30-day case-mix and wage-adjusted payment based on the information submitted on the claim to reflect the following:

• A LUPA is provided on a per-visit basis as set forth in §§ 484.205(d)(1) and 484.230.

• A partial payment adjustment as set forth in §§ 484.205(d)(2) and 484.235.

• An outlier payment as set forth in §§ 484.205(d)(3) and 484.240.

b. Proposed CY 2027 National, Standardized 30-Day Period Payment Amount

Section 1895(b)(3)(A)(i) of the Act requires that the standard prospective payment rate and other applicable amounts be standardized in a manner that eliminates the effects of variations in relative case-mix and area wage adjustments among different home health agencies in a budget-neutral manner. To determine the CY 2027 national, standardized 30-day period payment rate, we would continue our practice of using the most recent, complete utilization data at the time of rulemaking; that is, we are using CY 2025 claims data for CY 2027 payment rate updates.

As discussed in section II.C.1. of the CY 2026 HH PPS final rule (90 FR 55406), we finalized the implementation of a temporary 3.0 percent reduction to the CY 2026 base payment rate that was equivalent to a final temporary adjustment factor of 0.97000. Per section 1895(b)(3)(D)(iii) of the Act, a temporary adjustment is to be applied for the applicable year and not included when computing a payment rate for a subsequent year. In other words, the temporary adjustment factor for CY 2026 will not be included in the starting payment rate for CY 2027. Therefore, we calculated the CY 2026 national, standardized 30-day period payment with and without the temporary adjustment factor.

To calculate the CY 2027 national, standardized 30-day period payment amount, we begin with the actual CY 2026 national standardized 30-day period payment amount (with the temporary adjustment factor included) and apply an adjustment factor of 1.03093 (which is equal to 1 divided by the CY 2026 temporary adjustment factor of 0.97000) to remove the temporary adjustment factor as shown in table 25.

EP06JY26.068

We apply a case-mix weights recalibration budget neutrality factor, a wage index budget neutrality factor, the home health payment update percentage, and a temporary adjustment factor to update the CY 2027 payment rate. As discussed previously, to ensure the changes to the PDGM case-mix weights are implemented in a budget neutral manner, we apply a case-mix weight budget neutrality factor to the CY 2027 national, standardized 30-day period payment rate. The proposed case-mix weight budget neutrality factor for CY 2027 is 1.0045.

Additionally, we apply a wage index budget neutrality factor to ensure that wage index updates and revisions are implemented in a budget neutral manner. To calculate the wage index budget neutrality factor, we first determine the payment rate needed for non-LUPA 30-day periods using the CY 2027 wage index (with the 5 percent cap) so those total payments are equivalent to the total payments for non-LUPA 30-day periods using the CY 2026 wage index (with the 5 percent cap) and the CY 2026 national standardized 30-day period payment rate adjusted by the case-mix weights recalibration neutrality factor. Then, by dividing the payment rate for non-LUPA 30-day periods using the CY 2027 wage index with the 5 percent cap on wage index decreases) by the payment rate for non-LUPA 30-day periods using the CY 2026 wage index (with the 5 percent cap on wage index decreases), we obtain a wage index budget neutrality factor of 1.0009. We then apply the wage index budget neutrality factor of 1.0009 to the 30-day period payment rate.

Next, we update the 30-day period payment rate by the proposed CY 2027 home health payment update percentage of 2.1 percent. As discussed in section II.C.1. of this proposed rule, we are also proposing to apply the temporary 3.0 percent reduction to the CY 2027 base payment rate. The proposed temporary adjustment factor is 0.97000. As discussed previously, per section 1895(b)(3)(D)(iii) of the Act, the temporary adjustment is to be applied for the applicable year and not included when computing a payment rate for a subsequent year. In other words, the temporary adjustment factor for CY 2027 should not be included in the starting payment rate for CY 2028. Therefore, we have calculated the CY

2027 national, standardized 30-day period payment with and without the temporary adjustment factor. The CY 2027 national standardized 30-day period payment rate without a temporary adjustment is only for illustrative purposes. The actual CY 2027 national standardized 30-day period payment rate includes the proposed temporary adjustment and is calculated in table 26.

EP06JY26.069

The proposed CY 2027 national standardized 30-day period payment rate for an HHA that does not submit the required quality data would be updated by 0.1 percent (the proposed CY 2027 home health payment update percentage of 2.1 percent minus 2 percentage points) and is shown in table 27.

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c. Proposed CY 2027 National Per-Visit Rates for 30-day Periods of Care

The national per-visit rates are used to pay LUPAs and are also used to compute imputed costs in outlier calculations. The per-visit rates are paid by type of visit or home health discipline. The six home health disciplines are as follows:

• Home health aide (HH aide).

• Medical Social Services (MSS).

• Occupational therapy (OT).

• Physical therapy (PT).

• Skilled nursing (SN).

• Speech-language pathology (SLP).

To calculate the proposed CY 2027 national per-visit rates, we start with the CY 2026 national per-visit rates. Then we apply a wage index budget neutrality factor to ensure budget neutrality for LUPA per-visit payments. We calculate the wage index budget neutrality factor by simulating total payments for LUPA 30-day periods of care using the CY 2027 wage index with the 5 percent cap on wage index decreases and comparing it to simulated total payments for LUPA 30-day periods of care using the CY 2026 wage index with the 5 percent cap. By dividing the total payments for LUPA 30-day periods of care using the CY 2027 wage index by the total payments for LUPA 30-day periods of care using the CY 2026 wage index, we obtain a wage index budget neutrality factor of 0.9997. As a reminder, the wage index budget neutrality factors for the national, standardized 30-day period amount and the national LUPA per-visit rates are not equal because they are calculated differently. The wage index budget neutrality factor for the LUPA per-visit payments is calculated by simulating total payments for LUPA 30-day periods while the 30-day period

budget neutrality factor is calculated by simulating payments for non-LUPA 30-day periods.

The LUPA per-visit rates are not calculated using case-mix weights. Therefore, no case-mix weight budget neutrality factor is needed to ensure budget neutrality for LUPA payments. Additionally, we are not applying the permanent adjustment or the temporary adjustment to the LUPA per-visit payment rates but only to the case-mix adjusted 30-day payment rate. Lastly, the per-visit rates for each discipline are updated by the proposed CY 2027 home health payment update percentage of 2.1 percent. The national per-visit rates are adjusted by the wage index based on the site of service of the beneficiary. The per-visit payments for LUPAs are separate from the LUPA add-on payment amount, which is paid for periods that occur as the only period or initial period in a sequence of adjacent periods. The proposed CY 2027 national per-visit rates for HHAs that submit the required quality data are updated by the proposed CY 2027 home health payment update percentage of 2.1 percent and are shown in table 28.

EP06JY26.071

The CY 2027 per-visit payment rates for HHAs that do not submit the required quality data would be updated by 0.1 percent, which is the proposed CY 2027 home health payment update percentage of 2.1 percent minus 2 percentage points and are shown in table 29.

EP06JY26.072

We are soliciting comments on the proposed CY 2027 30-day home health payment rates and the per-visit payment rates.

d. LUPA Add-On Factors

Prior to the implementation of the 30-day unit of payment, LUPA episodes were eligible for a LUPA add-on payment if the episode of care was the first or only episode in a sequence of adjacent episodes. As described in the CY 2008 HH PPS final rule, the average visit lengths in these initial LUPAs are 16 to 18 percent higher than the average

visit lengths in initial non-LUPA episodes (72 FR 49848). LUPA episodes that occur as the only episode or as an initial episode in a sequence of adjacent episodes are adjusted by applying an additional amount to the LUPA payment before adjusting for area wage differences.

In the CY 2014 HH PPS final rule (78 FR 72305), we changed the methodology for calculating the LUPA add-on amount, whereby we finalized the approach of multiplying the per-visit payment amount for the first skilled nursing (SN), physical therapy (PT), or speech language pathology (SLP) visit in LUPA episodes that occur as the only episode or an initial episode in a sequence of adjacent episodes by 1 + the proportional increase in minutes for an initial visit over non-initial visits. Specifically, we updated the analysis using 100 percent of LUPA episodes and a 20 percent sample of non-LUPA first episodes from CY 2012 claims data. At that time, we finalized add-on factors: 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP. In the CY 2019 HH PPS final rule with comment period (83 FR 56440), in addition to finalizing a 30-day unit of payment, we finalized our policy of continuing to multiply the per-visit payment amount for the first SN, PT, or SLP visit in LUPA periods that occur as the only period of care or the initial 30-day period of care in a sequence of adjacent 30-day periods of care by the appropriate add-on factor (using the already established LUPA add-on factors of 1.8451 for SN, 1.6700 for PT, and 1.6266 for SLP) to determine the LUPA add-on payment amount for 30-day periods of care under the PDGM.

In the CY 2025 HH PPS final rule (89 FR 88426 through 88427), in an effort to enhance the accuracy and relevance of LUPA add-on factors to reflect current healthcare practices and costs, we finalized updates to the LUPA add-on factors for PT, SN, and SLP, which had not been revised since the CY 2014 HH PPS final rule (using CY 2012 claims data). We finalized using the same methodology to establish the LUPA add-on amount as used for CY 2014, using updated claims data.

Specifically, in CY 2025, we updated the LUPA add-on factors by using 100 percent of LUPA periods and a 100 percent sample of non-LUPA first periods from CY 2023 claims data (as of September 11, 2024). Our analysis found that the average excess of minutes for the first visit in LUPA periods that were the only period or an initial LUPA in a sequence of adjacent periods are 29.91 minutes for the first visit if SN, 28.08 minutes for the first visit if PT, and 31.57 minutes for the first visit if SLP. The average minutes for all non-first visits in non-LUPA episodes are 41.54 minutes for SN, 45.11 minutes for PT, and 47.15 minutes for SLP. To determine the LUPA add-on factors for each discipline, we calculated the ratio of the average excess minutes for the first visits in LUPA claims to the average minutes for all non-first visits in non-LUPA claims. We then added one to these ratios to obtain the final add on factors. Therefore, beginning in CY 2025 the final LUPA add on factors for SN, PT, and SLP are 1.7200 for SN; 1.6225 for PT; and 1.6696 for SLP.

Additionally, as outlined in the CY 2025 HH PPS proposed rule (89 FR 55378), in order to implement Division CC, section 115, of the Consolidation Appropriations Act (CAA), 2021, CMS finalized changes to the regulations at §  484.55(a)(2) and (b)(3) that allowed occupational therapists to conduct initial and comprehensive assessments for all Medicare beneficiaries under the home health benefit when the plan of care does not initially include skilled nursing care, but included OT, as well as either PT or SLP (86 FR 62351). This change necessitated the establishment of a LUPA add-on factor for calculating the LUPA add-on payment amount for the first skilled OT visit in LUPA periods that occur as the only period of care or the initial 30-day period of care in a sequence of adjacent 30-day periods of care. However, at the time of the implementation, we stated in the CY 2022 HH PPS final rule (86 FR 62289), there was not sufficient data regarding the average excess minutes for the first visit in LUPA periods when the initial and comprehensive assessments are conducted by occupational therapists. Therefore, we finalized a policy using the PT LUPA add-on factor as a proxy. We also stated in the CY 2022 final rule that we will use the PT LUPA add-on factor as a proxy until we have CY 2022 data to establish a more accurate OT add-on factor for the LUPA add-on payment amounts (86 FR 62289). Ultimately, we refrained from using CY 2022 data (and instead utilized the PT LUPA add-on factor as a proxy for the OT LUPA add-on factor), as we marked the first year that occupational therapists were permitted to conduct the initial assessment. We wanted to extend our analysis to ensure we had sufficient data to reflect OT time spent conducting initial assessments to establish a discrete OT LUPA add-on factor (86 FR 62240).

In the CY 2025 HH PPS final rule (89 FR 88427), we finalized discontinuing the use of the PT LUPA add-on factor as a proxy and established a definitive LUPA add-on factor for OT. We used the same methodology used to establish the LUPA add-on amount for CY 2014, as described previously for the SN, PT, and SLP add-on factors. Specifically, we updated the analysis using 100 percent of LUPA periods and a 100 percent sample of non-LUPA first periods from CY 2023 claims data. Using updated analysis (as of September 11, 2024), we found that the average excess of minutes for the first OT visit in LUPA periods that were the only period or an initial LUPA in a sequence of adjacent periods is 33.28 minutes for the first visit. The average number of minutes for all non-first visits in non-LUPA periods is 45.98 minutes for OT. To determine the LUPA add-on factor for OT to account for the excess minutes during the first visit in a LUPA period, we finalized calculating the ratio of the average excess minutes for the first visits in LUPA claims to the average minutes for all non-first visits in non-LUPA claims. We then added one to this ratio to obtain the final add on factor of 1.7238 for OT. Therefore, the OT LUPA factor of 1.7238 is used when occupational therapy is the first skilled visit in a LUPA period that occurs as the only period or an initial period in a sequence of adjacent periods.

EP06JY26.073

4. Payments for High-Cost Outliers Under the HH PPS

a. Background

Section 1895(b)(5) of the Act allows for the provision of an addition or adjustment to the home health payment amount otherwise made in the case of outliers because of unusual variations in the type or amount of medically necessary care. Under the HH PPS and the previous unit of payment (that is, 60-day episodes), outlier payments were made for 60-day episodes whose estimated costs exceed a threshold amount for each HHRG. The episode's estimated cost was established as the sum of the national wage-adjusted per-visit payment amounts delivered during the episode. The outlier threshold for each case-mix group or PEP adjustment is defined as the 60-day episode payment or PEP adjustment for that group plus a fixed-dollar loss (FDL) amount. For the purposes of the HH PPS, the FDL amount is calculated by multiplying the home health FDL ratio by a case's wage-adjusted national, standardized 60-day episode payment rate, which yields an FDL dollar amount for the case. The outlier threshold amount is the sum of the wage and case-mix adjusted PPS episode amount and wage-adjusted FDL amount. The outlier payment is defined as a proportion of the wage-adjusted estimated cost that surpasses the wage-adjusted threshold. The proportion of additional costs over the outlier threshold amount paid as outlier payments is referred to as the loss-sharing ratio.

As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 70399), section 3131(b)(1) of the Affordable Care Act amended section 1895(b)(3)(C) of the Act to require that the Secretary reduce the HH PPS payment rates such that aggregate HH PPS payments were reduced by 5 percent. In addition, section 3131(b)(2) of the Affordable Care Act amended section 1895(b)(5) of the Act by redesignating the existing language as section 1895(b)(5)(A) of the Act and revised the language to state that the total amount of the additional payments or payment adjustments for outlier episodes could not exceed 2.5 percent of the estimated total HH PPS payments for that year. Section 3131(b)(2)(C) of the Affordable Care Act also added section 1895(b)(5)(B) of the Act, which capped outlier payments as a percent of total payments for each HHA for each year at 10 percent.

As such, beginning in CY 2011, we reduced payment rates by 5 percent and targeted up to 2.5 percent of total estimated HH PPS payments to be paid as outliers. To do so, we first returned the 2.5 percent held for the target CY 2010 outlier pool to the national, standardized 60-day episode rates, the national per visit rates, the LUPA add-on payment amount, and the NRS conversion factor for CY 2010. We then reduced the rates by 5 percent as required by section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of the Affordable Care Act. For CY 2011 and subsequent calendar years we targeted up to 2.5 percent of estimated total payments to be paid as outlier payments, and apply a 10-percent agency-level outlier cap.

In the CY 2017 HH PPS proposed and final rules (81 FR 43737 through 43742 and 81 FR 76702), we described our concerns regarding patterns observed in home health outlier episodes. Specifically, we noted the methodology for calculating home health outlier payments may have created a financial incentive for providers to increase the number of visits during an episode of care in order to surpass the outlier threshold and simultaneously created a disincentive for providers to treat medically complex beneficiaries who require fewer but longer visits. Given these concerns, in the CY 2017 HH PPS final rule (81 FR 76702), we finalized changes to the methodology used to calculate outlier payments, using a cost-per-unit approach rather than a cost-per-visit approach. This change in methodology allows for more accurate payment for outlier episodes, accounting for both the number of visits during an episode of care and the length of the visits provided. Using this approach, we now convert the national per-visit rates into per 15-minute unit rates. These per 15-minute unit rates are used to calculate the estimated cost of an episode to determine whether the claim would receive an outlier payment and the amount of payment for an episode of care. In conjunction with our finalized policy to change to a cost-per-unit approach to estimate episode costs and determine whether an outlier episode should receive outlier payments, in the CY 2017 HH PPS final rule we also finalized the implementation of a cap on the amount of time per day that would be counted toward the estimation of an episode's costs for outlier calculation purposes (81 FR 76725). Specifically, we limit the amount of time per day (summed across the six disciplines of care) to 8 hours (32 units) per day when estimating the cost of an episode for outlier calculation purposes.

In the CY 2017 HH PPS final rule (81 FR 76724), we stated that we did not plan to re-estimate the average minutes per visit by discipline every year. Additionally, the per unit rates used to estimate an episode's cost were updated by the home health update percentage each year, meaning we would start with the national per visit amounts for the same calendar year when calculating the cost-per-unit used to determine the cost of an episode of care (81 FR 76727). We would continue to monitor the visit length by discipline as more recent data becomes available and may propose updating the rates as needed in the future.

In the CY 2019 HH PPS final rule with comment period (83 FR 56521), we finalized a policy to maintain the current methodology for payment of high-cost outliers upon implementation of PDGM beginning in CY 2020 and calculated payment for high-cost outliers based upon 30-day period of care. Upon implementation of the PDGM and 30-day unit of payment, we finalized the FDL ratio of 0.56 for 30-day periods of care in CY 2020.

In the CY 2021 HH PPS final rule (85 FR 70322), given that CY 2020 was the first year of the PDGM and the change to a 30-day unit of payment, we finalized maintaining the same FDL ratio of 0.56 in CY 2021 as we did not have sufficient CY 2020 data at the time of CY 2021 rulemaking to propose a change to the FDL ratio for CY 2021. In the CY 2022 HH PPS final rule with comment period (86 FR 62292), we estimated that outlier payments would be approximately 1.8 percent of total HH PPS payments in CY 2022 if we maintained an FDL of 0.56. Therefore, in order to pay up to, but no more than, 2.5 percent of total payments as outlier payments we finalized an FDL of 0.40 for CY 2022. In the CY 2023 HH PPS final rule (87 FR 66875), using CY 2021 claims utilization data, we finalized an FDL of 0.35 in order to pay up to, but no more than, 2.5 percent of the total payment as outlier payments in CY 2023. In the CY 2024 HH PPS final rule (88 FR 77749), using CY 2022 claims utilization data, we finalized an FDL of 0.27 for CY 2024. In the CY 2025 HH PPS final rule (89 FR 88354), using CY 2023 claims data (as of July 11, 2024) we finalized an FDL ratio of 0.35 for CY 2025. In the CY 2026 HH PPS final rule (90 FR 55411), using CY 2024 claims data (as of July 11, 2025) we finalized an FDL ratio of 0.37 for CY 2026.

b. Proposed FDL Ratio for CY 2027

For a given level of outlier payments, there is a trade-off between the values selected for the FDL ratio and the loss-sharing ratio. A high FDL ratio reduces the number of periods that can receive outlier payments but makes it possible to select a higher loss-sharing ratio, and

therefore, increase outlier payments for qualifying outlier periods. Alternatively, a lower FDL ratio means that more periods can qualify for outlier payments, but outlier payments per period must be lower.

The FDL ratio and the loss-sharing ratio are selected so that the estimated total outlier payments do not exceed the 2.5 percent aggregate level (as required by section 1895(b)(5)(A) of the Act). We use a value of 0.80 for the loss-sharing ratio, which we believe preserves incentives for agencies to attempt to provide care efficiently for outlier cases. With a loss-sharing ratio of 0.80, Medicare pays 80 percent of the additional estimated costs that exceed the outlier threshold amount.

Using CY 2025 claims data (as of March 12, 2026) and given the statutory requirement that total outlier payments do not exceed 2.5 percent of the total payments estimated to be made under the HH PPS, we are proposing an FDL ratio of 0.29 for CY 2027. We also propose to update the FDL ratio in the final rule based on more complete CY 2025 claims data.

F. Palliative Care Services as Home Health Services

CMS is seeking to advance its broader goal of promoting access to and utilization of palliative care services, with a particular focus on expanding opportunities for beneficiaries to receive these services under the Medicare home health benefit. As part of this effort, CMS included a Request for Information (RFI) in the FY 2027 Hospice Wage Index and Payment Rate Update proposed rule (91 FR 17359) to solicit public input on potential policy, operational, and payment approaches to strengthen and enhance the delivery of palliative care services outside of the hospice benefit. We were especially interested in hearing more about how Medicare practitioners and post-acute care providers furnish community-based palliative care, well as opportunities for improvement. We stated we believe that, as palliative care is a method of care delivery that is provided throughout the continuum of illness, it can be furnished under various Medicare benefits. We also stated that the home is an ideal environment for individuals to receive palliative care services, as remaining in the home during a serious illness may help alleviate psychological and mental distress and allow for more intimate caregiving to be provided by family members. As such, we believe the Medicare home health benefit can be an important step in the care continuum when a patient needs palliative care, either during episodes of serious illness or near end of life, before choosing hospice care.

In accordance with § 409.42(c), to qualify for Medicare coverage of home health services, a beneficiary must need skilled services as set out at § 409.32. Section 409.32(a) states that “[t]o be considered a skilled service, the service must be so inherently complex that it can be safely and effectively performed only by, or under the supervision of, professional or technical personnel.” Under the home health benefit, a beneficiary's unique condition and individual needs should be considered in deciding whether skilled nursing care is reasonable and necessary, without regard to whether the illness or injury is acute, chronic, terminal, or expected to extend over a long period of time. There are no expectations that life-prolonging therapies will be avoided or that the patient must be considered terminally ill, and the restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities. Further, as discussed in chapter seven of the Medicare Benefit Policy Manual (BPM),

6

it is an allowed practitioner, as defined at

§ 484.2,

who is familiar with the patient who determines whether a skilled service is reasonable and necessary based on the patient's individual care needs and goals, and accepted standards of medical and nursing practice. Therefore, if the beneficiary meets the qualifications for coverage of services as set out at § 409.42, he or she could receive palliative care services under the home health benefit, if ordered by an allowed practitioner.

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https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf.

Often skilled services are determined to be reasonable and necessary when a patient has multiple medications and comorbidities, with resultant functional impairments, that leave them homebound with a need for skilled observation of the patient's condition and medication management. A discussion on palliative care delivery in the home emphasizes the importance of home-based care for patients with multiple morbidities and limited mobility.

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The structure of the PDGM allows, in general, for palliative care services to be most appropriately grouped into the medication, management, teaching, and assessment (MMTA) clinical group. As discussed in the CY 2019 HH PPS proposed rule (83 FR 32402), health teaching; guidance and counseling; case management, treatments and procedures; and surveillance are integral to the care of most home health patients. Palliative care is defined at § 418.3 to mean “patient and family-centered care that optimizes quality of life by anticipating, preventing, and treating suffering. Palliative care throughout the continuum of illness involves addressing physical, intellectual, emotional, social, and spiritual needs and to facilitate patient autonomy, access to information, and choice.” We believe that this definition encompasses all the services provided under the Medicare home health benefit. Additionally, these important interventions are often the primary reason for home health services. Section 1861(m) of the Act requires the 30-day period to include all covered home health services: skilled nursing; home health aide; physical therapy; speech-language pathology; occupational therapy; medical social services, and medical supplies. Skilled nursing services can address advanced symptom management, including specialized care to manage pain, nausea and vomiting, depression and anxiety, and respiratory distress. This may also include medication management to monitor therapeutic and adverse effects and review and adjust medications in coordination with allowed practitioners. Medical social services can help address advance care planning needs (including discussion on transition to hospice) as well as offer referrals for social and emotional support for families and caregivers. Physical therapists (PTs), occupational therapists (OTs), and speech language pathologists (SLPs) enhance patient quality of life, comfort, and dignity by maximizing functional independence and managing symptoms. PTs focus on mobility, pain management, and safe transfers, while OTs specialize in adapting activities of daily living (ADLs) and environments to maintain independence for as long as possible. SLPs support safe eating and drinking and help facilitate

communication and decision making for those patients with deficits.

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National Academies of Sciences, Engineering, and Medicine; Health and Medicine Division; Board on Health Sciences Policy; Board on Health Care Services; Roundtable on Quality Care for People with Serious Illness. Models and Strategies to Integrate Palliative Care Principles into Care for People with Serious Illness: Proceedings of a Workshop. Washington (DC): National Academies Press (US); 2017 Oct 24. Proceedings of a Workshop. Available from:

https://www.ncbi.nlm.nih.gov/books/NBK538355/.

Like other skilled services, comprehensive home health clinical notes are expected to substantiate the need for palliative care necessitating medication management, teaching, and assessment through documentation of the patient's achievement of care needs and goals as outlined in the plan of care. Accordingly, chapter seven of the BPM includes an example of a patient with malignant melanoma who is terminally ill and requires skilled observation, assessment, teaching, and treatment, and who has not elected hospice care. This example explains that the documentation should describe the goal of the skilled nursing intervention, and at each visit the services provided should support that goal. The skilled nursing care that the patient requires would be covered, notwithstanding that the condition is terminal, because the documentation and description must support that the needed services required the skills of a nurse. A palliative care plan for this type of patient would likely include medication and symptom management, including expected treatment responses for pain, anxiety, constipation, nausea, or dyspnea; education and caregiver training on managing symptoms at home; assessing social risk factors including caregiver burden and emotional and psychosocial distress; and skilled therapy for non-pharmacologic pain management strategies and interventions to maximize functional status and independence.

We plan on adding additional palliative care examples of skilled care to the BPM following the publication of the CY 2027 HH PPS final rule to support our goal of encouraging community-based palliative care services, particularly under the Medicare home health benefit. We solicit comments on any concerns or suggestions regarding reaching this goal.

G. Request for Information on the Construction of a Home Health Specific Wage Index

For CY 2027, we are proposing to continue to use the concurrent pre-floor, pre-reclassified IPPS hospital wage index as the basis for the HH PPS wage index. We continue to believe that this is the best available Medicare data to estimate costs per day, in accordance with our longstanding wage index policy at §  412.424(a)(2). The purpose of this comment solicitation is to gain information from the public regarding the appropriateness of alternative data sources consistent with our statutory authority and regulatory requirements. We note that other payment systems have explored and are exploring alternative wage index methodologies under their specific programmatic and statutory circumstances. For example, CMS finalized changes to the ESRD PPS wage index using Bureau of Labor Statistics (BLS) occupation-level wage data in the CY 2025 ESRD PPS final rule (89 FR 89116). While this approach was developed under the specific programmatic and statutory circumstances of the ESRD PPS and may not be directly transferable to the HH PPS, CMS is interested in exploring whether similar methodologies using publicly available wage data could be used to better reflect the geographic variation in labor costs for HHAs. In addition, we note that we are also considering the potential use of alternative data sources in other payment systems, including with respect to hospices (91 FR 17361 through 17363), the Inpatient Rehabilitation Facilities PPS (91 FR 17206 and 17207), and the Skilled Nursing Facilities PPS (91 FR 17692).

Furthermore, in its 2023 Report to the Congress,

8

MedPAC discussed various conceptual approaches to Medicare wage indexes, including the use of county-level wage data from BLS with an occupational mix to construct wage indexes that are more specific to the payment setting. MedPAC has previously written about using all-employer, occupation-level wage data to establish different weights for setting-specific occupational labor mixes as one approach to geographic adjustments.

8

https://www.medpac.gov/document/chapter-9-reforming-medicares-wage-index-systems-june-2023-report/.

We are soliciting comments on whether we should consider using alternative data sources to construct an HHA specific wage index for potential use in future years. CMS seeks feedback to understand the potential advantages and limitations of using alternative data sources, such as BLS data and home health Medicare cost reports, as well as other methodologies that stakeholders believe could appropriately reflect the geographic variation in labor costs for HHAs. We also seek feedback on the unique considerations applicable to HHAs that should inform how CMS considers the potential use of alternative data sources.

III. Home Health Quality Reporting Program (HH QRP)

A. Background and Statutory Authority

The HH QRP is authorized by section 1895(b)(3)(B)(v) of the Act. Section 1895(b)(3)(B)(v)(II) of the Act requires that, for 2007 and subsequent years, each home health agency (HHA) submit to the Secretary in a form and manner, and at a time, specified by the Secretary, such data that the Secretary determines are appropriate for the measurement of health care quality. To the extent that an HHA does not submit data in accordance with this clause, the Secretary shall reduce the home health market basket percentage increase applicable to the HHA for such year by 2 percentage points pursuant to section 1895(b)(3)(B)(v)(I) of the Act. As provided at section 1895(b)(3)(B)(vi) of the Act, depending on the market basket percentage increase applicable for a particular year, as further reduced by the productivity adjustment (except in 2018 and 2020) described in section 1886(b)(3)(B)(xi)(II) of the Act, the reduction of that increase by 2 percentage points for failure to comply with the requirements of the HH QRP may result in the home health market basket percentage increase being less than 0.0 percent for a year, and may result in payment rates under the HH PPS for a year being less than payment rates for the preceding year. Section 1890A of the Act requires that the Secretary establish and follow a pre-rulemaking process, in coordination with the consensus-based entity (CBE) with a contract under section 1890 of the Act, to solicit input from certain groups regarding the selection of quality and efficiency measures for the HH QRP. The HH QRP regulations can be found at 42 CFR 484.245 and 484.250.

B. Summary of the Provisions of This Proposed Rule

In accordance with the statutory authority at section 1895(b)(3)(B)(v) of the Act, we are proposing the following policies in this proposed rule:

First, we summarize potential initiatives to improve alignment between the HH QRP and expanded HHVBP Model. We also propose to revise the HH QRP data submission deadlines beginning with the CY 2027 HH QRP. In addition, we are proposing to revise the HH QRP OASIS and HHCAHPs annual payment update (APU) reporting timeframe to report a calendar year of data (January 1 through December 31). We propose some revisions to regulatory text in support of rule proposals and to improve digital transfer of information during the reconsiderations process. Finally, we are soliciting public comments on one Request for Information (RFI) on future measure concepts for the HH QRP.

For a detailed discussion of the considerations we historically use for measure selection for the HH QRP

quality, resource use, and other measures, we refer readers to the CY 2016 HH PPS final rule (80 FR 68695 through 68696). In the CY 2019 HH PPS final rule with comment period (83 FR 56548 through 56550), we finalized the factors we consider for removing previously adopted HH QRP measures.

C. Quality Measures Currently Adopted for the CY 2026 HH QRP

The HH QRP currently includes 18 measures for the CY 2027 program year. As finalized in the CY 2026 HH PPS final rule, the HH QRP currently uses thirteen OASIS-based measures, four claims-based measures, and a HHCAHPS Survey-based composite measure (see table 31).

D. Opportunities for Potential Alignment Between the HH QRP and the Expanded HHVBP Model

CMS has identified substantial opportunities to better align the HH QRP and the expanded HHVBP Model. While the HH QRP and expanded HHVBP Model share similar goals and measures, differences in measure sets, reporting periods, and performance assessment processes may create unnecessary complexity and administrative burden for HHAs. For example, misalignment between HH QRP APU reporting periods and the expanded HHVBP Model's annual performance period may contribute to confusion. Greater alignment would support more consistent evaluation of HHA quality performance and advance CMS quality priorities. Greater alignment is also consistent with CMS's priority of reducing provider burden and creating efficiencies across CMS programs. Opportunities for potential alignment between the HH QRP and expanded HHVBP Model include the following:

• Increasing alignment in expanded HHVBP Model and HH QRP Quality of Patient Care (QoPC) Star Ratings measure sets.

• Aligning HH QRP and expanded HHVBP Model measure reporting periods.

• Aligning HH QRP APU and expanded HHVBP Model annual payment reporting periods.

• Aligning expanded HHVBP Model Interim Performance and HH QRP QoPC Star Rating Reports.

• Aligning timeframe of appeals/suppression review processes for the expanded HHVBP Model and HH QRP.

• Updating scoring methodology to incorporate HH QRP APU penalties in expanded HHVBP Model payment adjustments and factoring HH QRP Quality Assessments Only (QAO) values into QoPC Star Ratings scoring.

We are not seeking comments on this list of opportunities for potential alignment between the HH QRP and expanded HHVBP Model and is providing this list for general awareness of potential areas of alignment that are being considered.

We convened a Technical Expert Panel (TEP) meeting addressing HH QRP and expanded HHVBP Model alignment in December 2025. Please see the 2025 TEP Summary Report for more information (

www.cms.gov/priorities/innovation/files/hhvbp-tep-summary-report.pdf

).

Table 31 reflects current and expected usage of measures for both the expanded HHVBP Model and the HH QRP.

EP06JY26.074

E. Form, Manner, and Timing of Data Submission Under the HH QRP

1. Proposal To Revise HH QRP Data Submission Deadlines Beginning With the CY 2027 HH QRP

a. Background

Section 1899B(f)(1) of the Act also requires the Secretary to provide confidential feedback reports to PAC providers on the performance of such PAC providers for quality, resource use, and other measures required under sections 1899B(c)(1) and (d)(1) of the Act beginning 1 year after the applicable specified application date. Further, section 1899B(g) of the Act requires the Secretary to establish procedures for making available to the public information regarding the performance of individual PAC providers for quality, resource use, and other measures required under sections 1899B(c)(1) and (d)(1) of the Act beginning not later than 2 years after the applicable specified application date. The procedures must ensure, including through a process consistent with the process applied under section 1886(b)(3)(B)(viii)(VII) of the Act for similar purposes, that each PAC provider has the opportunity to review and submit corrections to the data and information that are to be made public for the PAC provider prior to such data being made public.

Although assessment data submission, quarterly performance reports, and public reporting are required by statute, timing of data submission under the HH QRP was not initially specified. Thus, in the CY 2017 HHS PPS final rule (81 FR 76784) we finalized our proposal to comply with the requirements of section 1899B(g) of the Act, that HHAs would have approximately 4.5 months after the reporting quarter to correct any errors of their assessment-based data to calculate the measures. During the time of data submission for a given quarterly reporting period and up until the quarterly submission deadline, HHAs could review and perform corrections to errors in the assessment data used to calculate the measures.

Public reporting of data collected under our quality reporting programs, such as the HH QRP, is designed to provide consumers and their families with the most current information to empower them to make quality-informed decisions about where to receive their care. We have identified that the time between when data on measures is submitted to us and when those data are publicly reported (approximately nine months) may be too long to provide the most accurate and up to date information for the public.

We have received feedback from the provider community and TEPs that the aged data used in publicly reported quality measures diminishes their value to consumers. Furthermore, we have heard from HHAs that the HH QRP measure results they receive prior to public reporting are less useful for their quality improvement efforts due to the aged data and the delay in when they receive these reports.

Currently, the largest contributing factor to the 9-month lag between the end of the data collection period and when measures are publicly reported is the 4.5-month timeframe for data submission. Reducing the data submission timeframe from 4.5 months to the 15th day of the second month after the end of the calendar quarter could reduce this lag by up to 3 months, resulting in more timely public reporting of data for consumers and increasing the value of publicly reported data. Additionally, this timeframe provides HHAs with more recent data in support of their quality improvement activities.

In the CY 2026 HH PPS proposed rule, we included a request for information (RFI) on reducing the OASIS assessment data submission deadline from 4.5 months to 45 days (90 FR 29182). We refer readers to the CY 2026 HH PPS final rule (90 FR 55429 and 55430) for a full summary of the public comments received.

b. Proposal To Revise the HH QRP Assessment Data Submission Deadline

Beginning with the CY 2027 HH QRP, we are proposing that HHAs be required to complete their data submissions and make corrections to their OASIS assessment data where necessary no later than the 15th day of the second month after the end of the calendar quarter. However, if the 15th day of the second month falls on a Friday, weekend, or Federal holiday, the date is delayed until 11:59 p.m. EST on the next business day. We are proposing that HHAs would follow the deadlines presented in Table 32 for the CY 2027 HH QRP. We are also proposing that similar calendar year data submission deadlines would apply to future years' payment determinations.

EP06JY26.075

We believe that requiring HHAs to submit OASIS assessment data by the 15th day of the second month after the end of the calendar quarter is reasonable. We conducted an analysis on the potential impact of reducing the timeframe by determining how many assessments are currently being submitted by this deadline, which is approximately within 45 days of the end of the quarter. Using 2024 data, we identified that 99.27 percent of all OASIS assessments were submitted to CMS within a 45-day timeframe. Of the remaining 0.63 percent submitted beyond 45 days, 0.24 percent were submitted after the current 4.5-month data submission deadline and would not be further impacted by a change in the data submission deadline. Therefore, only 0.49 percent of OASIS assessments would be impacted by changing the data submission deadline from 4.5 months to require data submission by the 15th day of the second month after the end of the calendar quarter.

We invite comment on this proposal to require that HHAs complete their data submissions and make corrections to their OASIS assessment data where necessary no later than the 15th day of

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