CMS Issues Far-Reaching Calendar Year 2027 Home Health Proposed Rule

The Centers for Medicare & Medicaid Services (CMS) published a proposed rule (CMS-1844-P) on July 6, 2026, updating the Medicare Home Health Prospective Payment System (HH PPS) for calendar year (CY) 2027. In addition to addressing home health payment updates and policy changes, the rule also includes proposals affecting provider and supplier enrollment, changing requirements and benefits related to durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), as well as imposing new obligations for disclosure of private equity ownership that will impact providers and suppliers well beyond the home health industry.

In addition to highlighting proposed payment and policy changes for home health agencies (HHAs), this Holland & Knight alert focuses on three critical areas of the proposed rule:

• Enrollment Changes. CMS proposes significant expansions to revocation and denial grounds, retroactive effective dates, new moratoria provisions and expanded definitions that will affect all Medicare-enrolled providers and suppliers.
• DMEPOS Changes. The proposal outlines updates to face-to-face encounter requirements, accreditation standards, expansion of the DMEPOS benefit for infusion pumps and new country-of-origin reporting requirements under the DMEPOS Competitive Bidding Program (CBP).
• Private Equity (PE)/Real Estate Investment Trust (REIT) Disclosure. CMS signals its intent to require PE/REIT ownership disclosures on Forms CMS-855B, CMS-855S and CMS-20134, expanding beyond the current skilled nursing facility (SNF)-focused obligations.

Although changes to payment provisions are largely limited to HHAs, many of the enrollment, DMEPOS and ownership transparency proposals would apply broadly across Medicare provider and supplier types. Accordingly, hospitals, physician organizations, DMEPOS suppliers, private equity-backed providers and other Medicare participants should review the proposed rule carefully, even if they do not participate in the Medicare home health benefit.

CMS released a fact sheet and press release accompanying the proposed rule, and comments are due August 31, 2026. Given the breadth of these proposals, affected stakeholders should begin assessing the potential impact on their operations immediately.

Home Health Payment and Policy Proposals

CMS proposes routine, statutorily required updates to home health payment rates for CY 2027, including a 2.1 percent annual market basket minus productivity update and a 0.3 percent increase that reflects the proposed fixed-dollar loss for outlier payments. Based on the proposed policies, CMS estimates that Medicare payments to HHAs in CY 2027 would increase in the aggregate by 2.4 percent, or $420 million, compared to CY 2026. CMS also solicits comments on a home health-specific wage index.

CMS would also:

• recalibrate the Patient-Driven Groupings Model (PDGM) case-mix weights and update the low-utilization payment adjustment thresholds, functional impairment levels and comorbidity adjustment subgroups for CY 2027
• establish a temporary negative 3 percent adjustment to recoup overpayments made from CY 2020 through CY 2025 due to PDGM implementation (the agency estimates overpayments total approximately $4.9 billion)
• seek comments on the provision of palliative care services under the Medicare home health benefit, emphasizing that beneficiaries who meet home health eligibility criteria may receive palliative care services if ordered by an allowed practitioner (CMS plans to add additional palliative care examples of skilled care to the Medicare Benefit Policy Manual following the final rule)
• revise the Home Health Quality Reporting Program, including updated data submission deadlines and shift to calendar-year reporting

Provider and Supplier Enrollment Changes

CMS proposes numerous changes to Medicare enrollment that would substantially expand its enforcement authority and tighten enrollment requirements for all Medicare providers and suppliers. The proposals affect revocation and denial grounds, the reapplication process, moratoria and operational definitions.

New and Expanded Revocation Grounds

CMS proposes expanding its existing authority and adding entirely new bases for revoking a provider's or supplier's Medicare enrollment.

• Abuse of Billing Privileges: CMS proposes to remove the four specific factors currently listed in Section 424.535(a)(8)(ii)(A)-(D) that it must consider when determining whether a "pattern or practice" of non-compliant claims exists. This change would grant CMS significantly broader discretion to determine what constitutes a pattern or practice warranting revocation without being bound to any enumerated criteria.
• False or Misleading Information: The existing revocation grounds for false or misleading information would be expanded to cover any CMS or Medicare enrollment-related form in addition to the enrollment application itself. This includes Form CMS-588, HHA capitalization documents, opt-out affidavits and any other enrollment-related documentation. Further, the information no longer needs to be certified as "true" for this revocation ground to apply.
• Extension of Revocation: Currently, CMS can revoke a provider's other enrollments if a "triggering" enrollment is revoked. CMS proposes expanding this authority to allow a provider's other enrollments to be revoked if the triggering enrollment is denied, not just revoked. CMS notes that a denial would not automatically lead to the revocation of the provider's current enrollments.
• High-Risk Based on Location: Citing an alarming increase in situations where numerous providers and suppliers – sometimes of the same type – are simultaneously operating within a very small geographic area (e.g., within a multi-block sector, the same complex or building, or the same suite), CMS proposes adding a new revocation reason where it determines that a provider's or supplier's enrollment presents a high risk of fraud, waste or abuse due to their location in a "limited geographic area that has an excessive number of providers and suppliers." This provision could particularly impact providers in densely served urban markets. Although CMS states the proposal is intended to address fraud, waste and abuse, providers operating in densely concentrated markets may wish to evaluate whether the proposal could create unintended enrollment risk.
• Certain Misdemeanor Convictions: CMS proposes adding a denial and revocation ground for situations in which the provider or supplier – or any owner, managing employee or organization, officer or director – has been convicted of a federal or state misdemeanor related to sexual assault or financial misconduct within the past 10 years that CMS deems detrimental to the best interests of the Medicare program and its beneficiaries.
• Change in Majority Ownership (CIMO) Non-Compliance: CMS proposes adding a revocation and denial ground for HHAs, hospices and DMEPOS suppliers that fail to comply with CIMO requirements. CIMO rules stipulate that if a provider undergoes a CIMO within 36 months of its initial enrollment or its most recent CIMO and no exception applies, the provider's enrollment is terminated. The provider under its new majority ownership must enroll as a new provider and undergo a state survey or accreditation.

Retroactive Revocation Effective Dates

In a change CMS estimates would save approximately $82 million annually, the agency proposes making all revocation grounds retroactive. Currently, some revocation grounds take effect only prospectively (i.e., 30 days after the date of the revocation notice). If finalized, all revocations would be effective as of the date of the non-compliant conduct or triggering event. This represents one of the most significant provider enrollment proposals in recent years because it substantially expands CMS' ability to recover Medicare payments after determining that a provider or supplier was noncompliant.

New and Expanded Denial Grounds

In its proposed rule, CMS outlines multiple new and expanded bases for denying enrollment applications.

• Expanded associational denials include:
  • Debt. Currently, enrollment can be denied if an owner has existing debt. CMS proposes expanding this to include managing employees, managing organizations, and individuals or entities with any form of business or financial relationship with the provider.
  • Payment Suspension. CMS proposes a new denial ground when any individual or entity with a business or financial relationship with the provider is currently subject to a Medicare payment suspension.
  • Program Terminations/Suspensions. This denial reason would be expanded to include the provider's owners, managing employees and managing organizations that have been terminated or suspended from other programs. CMS would also include licenses voluntarily surrendered in lieu of further disciplinary action.
• CMS introduces the following new denial grounds:
  • Shared Suite/Office. CMS may deny enrollment if a provider seeks to enroll at the same practice location as a provider whose enrollment was revoked or denied.
  • Hospice Medical Directors and Administrators. CMS proposes a new denial ground for hospices whose medical directors or administrators do not meet specified requirements such as practicing at too great a distance, lacking an active state license or serving as administrator of multiple other hospices.
  • Misuse of Identity. CMS would establish a new denial ground if a prospective provider attempts to enroll under another party's identity.

Temporary Moratoria

CMS notes that, at the time of publication, there are nationwide, temporary moratoria on the enrollment of new HHAs, hospices and DMEPOS medical supply companies. Based on lessons learned during these moratoria, the agency proposes key changes to the temporary moratorium provisions, including:

• a moratorium would take effect on the date the moratorium notice is filed for public inspection in the Federal Register rather than on the date of actual publication, potentially giving providers less notice
• clarification that hospices and DMEPOS suppliers undergoing non-exempt CIMOs must enroll as new providers or suppliers and are therefore subject to any applicable moratorium
• codify that moratoria apply to initial enrollments, CIMOs requiring initial enrollment, reenrollments after bar expirations, reactivation applications and applications from voluntarily terminated providers

Additional Enrollment and Program Integrity Proposals

• Expanded Reapplication Bar. CMS proposes expanding the reapplication bar – which can prohibit a provider from re-enrolling for up to 10 years – to apply to any enrollment denial reason, not merely denials based on false or misleading information. Though CMS acknowledges this authority is discretionary and less serious denials such as failure to pay an application fee might not warrant such a bar, the expansion significantly increases the stakes of any enrollment denial.
• Post-Revocation Claims Submission. CMS proposes shortening the timeframe for revoked providers to submit claims from 60 days after the revocation's effective date to 15 calendar days after the date of the revocation letter.
• Preclusion List Expansion. The Preclusion List would be expanded to include felony convictions of owners, managing employees, managing organizations, directors or officers – regardless of whether they are or were enrolled in Medicare.
• "Operational" Definition. CMS proposes an expanded definition to add specific requirements, including an accessible location, sufficient business hours, the ability to submit valid claims, qualified staff, functional equipment and adequate written policies and records.
• Signage Requirement. CMS proposes expanding the signage requirement to mandate that all providers and suppliers maintain a permanent visible sign and post their hours of operation. Exceptions would apply for those in a shared office space, providers treating patients in their homes and practitioners providing telehealth services.
• "Managing Employee" Definition. CMS would expand the definition to include medical directors, clinical directors, departmental heads, supervising physicians, nursing directors, alternate administrators and all other clinical personnel meeting the definition.
• Affiliations. CMS proposes removing the five-year lookback period and requiring reporting of affiliations regardless of how long ago they occurred or ended. CMS also proposes a new affiliation type to include marketing, business, fulfillment, financial, managerial or beneficiary relationships. The scope would also expand to include owning or managing employees or organizations.

DMEPOS Changes

The proposed rule includes several significant changes affecting DMEPOS suppliers and the associated benefit structure.

Face-to-Face Encounter Clarification for Replacement Items

CMS proposes clarifying that, although an order continues to be required for all DMEPOS replacements, a new face-to-face encounter is not mandatory. A "replacement" is defined as an item identified by the same Healthcare Common Procedure Coding System (HCPCS) code as the original item and that has either 1) been in continuous use by the same beneficiary and reached the end of its reasonable useful lifetime, or 2) been lost, stolen or irreparably damaged. This exception would not apply to items involving a different HCPCS code (e.g., because of a change in a beneficiary's medical condition requiring a different device).

DMEPOS Accreditation Updates

CMS proposes the following changes to accreditation organization (AO) requirements:

• Reporting Timeline. The three-business-day reporting period for AO status changes would be extended to five calendar days.
• Fraud Reporting. AOs would be required to notify CMS of suspected fraud, waste and abuse within three calendar days.
• Conflicts of Interest. AOs must disclose all current conflicts of interest and explain how and when they will be terminated.

DMEPOS Benefit Expansion for Infusion Pumps and Drugs

CMS proposes revising the definition of DMEPOS to implement Section 6222(a) of the Consolidated Appropriations Act of 2026. This would expand the DMEPOS benefit to cover certain external infusion pumps, associated home infusion drugs and related supplies that do not otherwise meet the "appropriate for use in the home" requirement. The expansion would be effective for items furnished on or after April 1, 2027.

To qualify, the following criteria must be met:

• The U.S. Food and Drug Administration-approved prescribing information instructs administration by or under the supervision of an on-site healthcare professional such as a registered nurse, clinical nurse specialist, nurse practitioner, physician assistant or physician.
• A qualified home infusion therapy supplier administers or supervises the drug in a safe and effective manner in the patient's home.
• The prescribing information instructs infusion at least 12 times per year (at least once a month), either intravenously or subcutaneously, or at rates requiring an external infusion pump.

CMS currently expects only one drug (patisiran) to meet these criteria, with estimated net savings to Medicare of approximately $800,000 per year, although additional products could become eligible in the future if they satisfy the statutory criteria.

DMEPOS CBP Country-of-Origin Reporting

DMEPOS CBP contract suppliers are currently required to use Form C to provide product information, including the manufacturer name, model name and model number for the lead item furnished. Under CMS' proposal, country-of-origin fields would be added to Form C and become requirements. Contract suppliers would identify the country of origin based on markings on the lead item and, where exemption from marking applies (such as for a catheter for which no marking would be visible), obtain documentation from the distributor or manufacturer.

CMS states that this collection of information would "allow beneficiaries and interested parties to have access to the information on the country from which the DMEPOS item originated, if interested." Key proposals include the following:

• Information would be posted on the Medicare Supplier Directory for public access.
• Contract suppliers would report twice a year (in January and July).
• Suppliers would identify the country of origin based on product markings or manufacturer or distributor documentation.

When updates to the form are made, there will be 60-day and 30-day Federal Register notices. CMS states the updates will be proposed closer to the implementation of Round 2028 bidding.

Despite the fact that CMS seeks to address concerns that the CBP may shift business from American manufacturers to foreign manufacturers, the proposed rule does not explain how the collected country-of-origin information will be used or whether it will inform future policy or enforcement actions. Moreover, because contract suppliers often furnish multiple products within a single product category but are only required to report the country of origin for the lead item, the resulting data may not provide a complete or representative picture of sourcing across competitively bid items.

Although CMS frames the proposal as increasing transparency for beneficiaries, it also aligns with broader administration efforts to promote domestic manufacturing and improve supply chain visibility for critical medical products. CMS is not proposing to use country-of-origin information in evaluating bids or awarding contracts, but public reporting could increase market pressure regarding sourcing decisions.

PE/REIT Disclosure

CMS previously required SNFs to report detailed ownership information, including whether any disclosed organizations are private equity companies or REITs. Form CMS-855A currently requires this disclosure for institutional providers. CMS now announces its intent to revise the following enrollment applications to require identification of private equity companies and REITs:

• Form CMS-855B (Clinics/Group Practices and Certain Other Suppliers)
• Form CMS-855S (DMEPOS Suppliers)
• Form CMS-20134 (Medicare Diabetes Prevention Program Suppliers)

CMS cites a May 2025 AMA Journal of Ethics article and a 2023 systematic review finding private equity ownership in healthcare is associated with increased short-term mortality, reduced staffing levels and prioritization of profit maximization over patient care. CMS characterizes this as a "Medicare-wide issue" extending beyond SNFs to physician practices and other healthcare sectors.

Importantly, the form revisions would not involve regulatory changes. Instead, CMS intends to accomplish this through information collection requests submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act. This approach means there would be no formal notice-and-comment rulemaking for the form changes themselves, and implementation could proceed relatively quickly once OMB approval is obtained.

Entities with PE/REIT ownership structures – including physician practices, group practices, DMEPOS suppliers and diabetes prevention program suppliers – should be prepared for enhanced disclosure obligations. This provision signals CMS' increasing focus on ownership transparency and may foreshadow future oversight or program integrity initiatives involving private equity-backed healthcare organizations.

Conclusion

This proposed rule is far-reaching in scope. There are multiple proposals limited to HHAs, including a 2.4 percent payment update, as well as PDGM recalibration, a temporary negative 3 percent adjustment to recoup an estimated $4.9 billion in overpayments, guidance on palliative care services and updates to the Home Health Quality Reporting Program. The rule also includes numerous provisions that would affect hospitals, physicians and DMEPOS suppliers.

The enrollment proposals represent the most sweeping changes included in a payment rule in recent years. CMS seeks to expand revocation and denial grounds, including establishing new grounds for providers and suppliers based on geographic fraud risk, misdemeanor convictions and change-in-majority-ownership noncompliance, while also proposing to make all revocations retroactive. The expanded association-based enrollment denials, coupled with the broadened documentation and compliance requirements, give CMS greater enforcement discretion. All Medicare-enrolled providers and suppliers should carefully evaluate these proposals and their potential implications.

DMEPOS suppliers should assess the impact of several proposals – including the clarification that replacement items do not require a new face-to-face encounter – updated accreditation organization reporting and conflict-of-interest requirements, and the DME benefit expansion covering certain external infusion pumps, home infusion drugs and related supplies effective April 1, 2027. For CBP contract suppliers, preparation to collect and report country-of-origin information on Form C should begin as soon as possible.

Finally, entities with PE/REIT ownership structures – including physician practices, DMEPOS suppliers and diabetes prevention program suppliers – should prepare for enhanced disclosure requirements.

Given the breadth of these proposals, all stakeholders are encouraged to submit comments on these proposals by August 31, 2026.

For additional information or questions, please reach out to the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.