Are Medicare Cuts Coming? What It Means for Home Health in 2027

Searches for "Medicare cuts" are up this fall. Three different things are getting mixed together. A proposed payment rule. A long-standing 2 percent across-the-board cut. And a possible extra cut from a budget rule.

I'm an occupational therapist, and I've worked in home health. Everything below is as of October 11, 2026.

Below, a rule means a federal regulation or statute. Guidance means a CMS or OMB document. Anything else is my own reading, and I'll say so. This article is about Medicare home health. Medicaid is a separate program with its own rules, and I don't cover it here.

The Short Version

1. The 2027 Home Health Proposed Rule

On July 6, 2026, CMS published the proposed Calendar Year 2027 home health payment rule (Federal Register document 2026-13602, 91 FR 41216, file code CMS-1844-P). Comments closed August 31, 2026.

The rule's own estimate of the total effect: "The net transfer impact related to the changes in payments under the HH PPS for CY 2027 is estimated to be $420 million (2.4 percent) above the current projected CY 2026 baseline of $17.575 billion". That is a proposed increase in total payments, spread unevenly across agencies.

The rule also proposes a "-3.0 percent temporary adjustment" to the 2027 base rate. CMS is recouping what it calls retrospective overpayments. The 2026 rate already carries a 3.0 percent temporary adjustment, so this one does not lower the total compared with 2026. The rule says: "The aggregate impact of the proposed temporary adjustment reflected in the seventh column equals zero percent because both the CY 2026 and CY 2027 payment rates would include a 3.0 percent temporary adjustment." The 2.4 percent is the 2.1 percent payment update plus 0.3 percent from an updated outlier threshold. The full arithmetic is in our guide to the CY 2027 proposed rule. One line from the rule matters for the "cuts" question, though:

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.

So CMS says it may propose more such adjustments later. It has not proposed any for 2028 in this rule.

2. The 2 Percent Medicare Sequester

This one is real, and it is not new. It is an automatic cut that comes from federal budget law, not from this payment rule.

OMB's FY 2027 sequestration report, dated April 3, 2026, says: "The sequestration percentages for non-exempt direct spending are: 2.0% for Medicare and certain other health programs". It adds: "Under current law, these sequestration percentages will be applied in each fiscal year through 2031." For 2032, Medicare's percentage is still 2 percent. For 2033, "the sequestration percentage for Medicare is 2 percent only through the first 5 months before setting to zero for the remainder of 2033."

The statute behind it is 2 U.S.C. 901a(6). Paragraph (6)(A) says the Medicare reduction "shall not be more than 2 percent for a fiscal year." OMB's report says the Consolidated Appropriations Act, 2026 (Public Law 119-75) extended Medicare's sequestration through the first 5 months of 2033.

How it reaches an agency: CMS's 2013 guidance on how the first sequester worked says the cut applies to claims "after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments." That guidance is from 2013 and covers Medicare fee-for-service claims in general, not home health by name. I did not find a 2026 CMS page restating it for home health. My reading: for an agency, the 2 percent comes off the Medicare payment on top of whatever the final rule sets.

3. The Possible Extra Cut: Statutory PAYGO

This is the one behind the "big beautiful bill Medicare cuts" searches, so I'll go slowly.

Statutory PAYGO is a separate budget rule. The Congressional Research Service describes it this way: "If the net effect of all PAYGO legislation is an increase in the deficit, the President must issue a sequestration order that automatically implements across-the-board cuts to nonexempt direct spending programs". For Medicare, the PAYGO statute caps any such cut. 2 U.S.C. 935(a)(1) says that if the across-the-board rate "exceeds 4 percent, the Medicare programs described in section 906(d) of this title shall be reduced by 4 percent".

The 2025 reconciliation law is Public Law 119-21. CRS calls it the One Big Beautiful Bill Act of 2025. OMB's April 2026 letter calls it the "Working Families Tax Cuts Act (Public Law 119-21)". Same law, two names. CRS reports that CBO and the Joint Committee on Taxation staff produced two estimates, using different baselines, that differ in sign: an increase of $3.4 trillion over 2025 to 2034 in one, a decrease of $366 billion in the other.

What happened next, in the order the documents say it:

1. On November 12, 2025, Public Law 119-37 became law. Section 8001(d) says: "Effective on the date of the adjournment of the first session of the 119th Congress, and for the purposes of the annual report issued pursuant to section 5 of the Statutory Pay-As-You-Go Act of 2010 (2 U.S.C. 934) after such adjournment and for determining whether a sequestration order is necessary under such section, the balances on the PAYGO scorecards established pursuant to paragraphs (4) and (5) of section 4(d) of such Act shall be zero."
2. CRS, in a document updated February 12, 2026, says: "In November 2025, P.L. 119-37 was enacted with a provision that set both PAYGO scorecards to zero."
3. OMB's FY 2027 budget chapter on the budget process says the balance on each scorecard "was set to zero for all years" by Public Law 119-37. Its conclusion: "Consequently, no PAYGO sequestration was required in 2025."

So the answer to "was it triggered, waived or deferred" is that Congress zeroed the scorecards, and OMB says no PAYGO sequestration was required. That is a statement about the first session of the 119th Congress.

What I could not establish

I found no document dated 2026 that says a PAYGO Medicare cut is scheduled. OMB says the balances were set to zero "for all years," so the 2025 law's costs are no longer on the scorecards. A future PAYGO cut would need new legislation that adds to them and is not exempted. Congress's second session is still running, and OMB's next PAYGO report comes after it ends. I don't know what, if anything, Congress will enact before then. Treat "no PAYGO cut" as true today and watch for the next OMB PAYGO report.

4. What It Means If Your Parent Gets Home Health

Short answer: nothing changes at the front door. Medicare.gov says: "You pay nothing for covered home health services. After you meet the Part B deductible, you pay 20% of the Medicare-approved amount for Medicare-covered medical equipment." The regulation for that equipment exception, 42 CFR 409.50(a), says the coinsurance for durable medical equipment is "20 percent of the customary (insofar as reasonable) charge." More on this in what patients pay under Original Medicare.

An agency payment cut is not a patient bill. Medicare pays the agency. The 2013 sequester guidance says: "Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare's payment to beneficiaries for unassigned claims is subject to the 2 percent reduction."

If your parent is in a Medicare Advantage plan, most plans may not charge more for in-network home health than Original Medicare does. A plan that chose the lowest yearly out-of-pocket limit may charge up to 20 percent coinsurance or an equivalent copay (42 CFR 422.100(j)). I walk through the rules in Medicare Advantage and home health prior authorization, and the fall decision in Medicare open enrollment and home health.

My suggestion: if an agency says a payment change means your parent will owe something for a covered visit, ask them to show you where your parent's coverage says so.

5. What It Means for an Agency

Briefly, because the proposed-rule guide covers the detail:

• The proposal is net positive in total, but your own number depends on your region, size and case mix, and on how much of your revenue is case-mix adjusted 30-day payments.
• The 2 percent sequester is a separate reduction on top. It does not go away if the final rule is generous.
• CMS says more temporary adjustments may come in future years. Plan for that, not only for 2027.

What Changes on Rule Day

When CMS publishes the final rule, this article's "proposed" language gets replaced. Here is what to check.

Our Home Health Rule Tracker lists each CMS home health rule as the Federal Register publishes it, with comment deadlines and posted comment counts, and sorts out rules that are awaiting a final. I'll update this article after the final rule comes out.

Frequently asked questions

Will Medicare cut home health in 2027?

As of October 11, 2026, the only 2027 home health payment change on the table is a proposed rule, and it would raise total payments to agencies by an estimated 2.4 percent, not cut them. The final rule has not been published. Separately, a 2 percent Medicare sequester already applies to what Medicare pays providers, and current law keeps it going well past 2027.

Did the One Big Beautiful Bill trigger a 4 percent Medicare cut?

Not as of OMB's April 2026 budget document. It says 2025 legislation put costs on the PAYGO scorecards, but a November 2025 law set the scorecard balances to zero, so no PAYGO sequestration was required. I found no 2026 OMB or CRS source saying a PAYGO Medicare cut is scheduled.

Will my parent have to pay more for home health if Medicare cuts payments?

Not for covered home health visits under Original Medicare. Medicare.gov says you pay nothing for covered home health services. A cut to what Medicare pays an agency is not a bill to the patient. Medical equipment is the exception: after the Part B deductible, 20 percent of the Medicare-approved amount.

When will the final 2027 home health rule come out?

CMS has not published it as of October 11, 2026. I expect late October or November, but I found no announced date. The proposed rates are for January 1 to December 31, 2027. Check the Federal Register or our Rule Tracker.

Sources

• Federal Register, CY 2027 Home Health PPS proposed rule, 91 FR 41216 (July 6, 2026), document 2026-13602
• OMB, Report to the Congress on the BBEDCA 251A Sequestration for Fiscal Year 2027 (April 3, 2026)
• OMB, Analytical Perspectives FY 2027, Budget Process chapter (April 2026)
• CRS Insight IN12564, Statutory PAYGO and Budget Reconciliation Legislation (updated February 12, 2026)
• Public Law 119-37 (H.R. 5371), November 12, 2025, section 8001
• 2 U.S.C. 901a, Mandatory spending sequestration (Cornell LII)
• 2 U.S.C. 935, PAYGO sequestration and Medicare (Cornell LII)
• CMS Medicare Learning Network, March 8, 2013 (sequestration claims guidance)
• Medicare.gov, Home health services
• 42 CFR 409.50, Coinsurance for durable medical equipment (Cornell LII)