Two agencies deliver the same 30-day period, to the same kind of patient, with the same clinical staff mix. One is paid meaningfully more than the other because of where it operates. That adjustment is the wage index, and almost nobody in home health looks at where it comes from.
It comes from hospitals.
What Home Health Is Actually Paid On
In the CY 2027 proposed rule, CMS states its proposal plainly: "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."
Unpack that phrase, because each part of it matters.
IPPS hospital wage index. IPPS is the Inpatient Prospective Payment System — the way Medicare pays acute care hospitals. The wage index built for that system measures what hospitals pay their workers in each labor market area.
Pre-floor, pre-reclassified. The hospital version of the index gets adjusted after the fact: rural floors, geographic reclassifications where a hospital argues it competes in a neighbouring market. Home health uses the version from before those adjustments are applied.
As the basis for the HH PPS wage index. Home health does not have a wage index of its own. It borrows the hospital one.
So the geographic adjustment on your 30-day period is derived from hospital payroll — nursing salaries in an inpatient setting, hospital support staff, hospital benefits structures. Your own labor costs are not in it. Neither are anyone else's in home health.
Why That Is Worth Questioning
Home health labor does not look like hospital labor. The staffing mix is different — heavy on nurses and therapists, with an aide workforce that has no real hospital equivalent. The competitive market for those clinicians is different. And a substantial share of a home health agency's cost is windshield time, which no hospital index has ever had reason to measure.
Borrowing an index is a reasonable engineering decision when you have no better data. It is a harder one to defend indefinitely, and CMS has now opened the question.
What CMS Is Asking
Section II.G of the proposed rule is a Request for Information on the construction of a home health specific wage index.
An RFI is not a proposal. CMS is not changing the wage index for CY 2027 — it explicitly proposes continuing the current approach. What an RFI does is collect input that shapes what gets proposed in future years. Every significant change to home health payment started as a question like this one.
CMS points to prior thinking on the problem. In its 2023 Report to the Congress, MedPAC discussed 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."
Two ideas are doing the work in that sentence.
County-level data from the Bureau of Labor Statistics rather than hospital-reported cost data. BLS surveys wages across all employers in an area, not just hospitals, and reports at county granularity rather than by labor market area.
Occupational mix. Weighting the index by the occupations a setting actually employs. A home health agency's mix of nurses, therapists and aides is not a hospital's mix, and an index that accounted for that would produce different numbers.
What Nobody Can Tell You Yet
Whether a home-health-specific wage index would raise or lower your rate is unknowable right now, and you should be sceptical of anyone who claims otherwise. There is no proposed methodology to model. There is a question, two conceptual approaches referenced from a MedPAC report, and an open comment period.
What is knowable is that the geographic adjustment is a large lever. It applies to the labor portion of every 30-day period you bill. A methodology change would move money between regions, and the agencies that get a say in the design are the ones that respond while it is still a question.
How to Respond
Comments on the CY 2027 proposed rule close at 5 p.m. Eastern on 31 August 2026, under docket CMS-1844-P. The RFI is part of that rule, so a comment on the wage index goes in through the same process as a comment on the payment rate.
If your agency responds, the useful material is the thing only you have: what you actually pay clinicians in your market, how that compares to the hospitals whose payroll currently sets your adjustment, and what share of your labor cost is drive time that no index captures. CMS receives plenty of comments objecting to outcomes. It receives far fewer containing operational data from the setting being paid.
The Bottom Line
Nothing about the wage index changes in CY 2027. CMS proposes continuing exactly what it has been doing, which is deriving home health's geographic adjustment from a hospital index that contains no home health labor.
The reason to pay attention is that CMS has asked whether that should continue. Questions in a proposed rule are where the next several years of payment policy get shaped, and the comment window is nine days from publication of this piece.
Sources: Calendar Year 2027 Home Health Prospective Payment System Rate Update proposed rule, CMS-1844-P, section II.G, published 6 July 2026. Comments close 31 August 2026. MedPAC, Report to the Congress, 2023 — conceptual approaches to Medicare wage indexes.