CMS has proposed new rules that would let it remove providers from Medicare faster and recover more of the money it has already paid them. The changes sit inside the Calendar Year 2027 Home Health Prospective Payment System proposed rule (CMS-1844-P), released July 1, 2026. Despite the “home health” label, CMS says the enrollment provisions would apply to every Medicare provider and supplier type, including skilled nursing facilities, hospices, and home health agencies.
One point is easy to miss and important to get right. These proposals target Medicare enrollment deficiencies, not operational or clinical survey findings. The risk here comes from your enrollment record and the people behind it, and the financial consequence of getting it wrong is a direct hit to revenue and cash flow. Below is what would change, what it means for your money and your acquisition strategy, and what you can do while the rule is still open for public comment.
Key takeaways
- These proposals target Medicare enrollment deficiencies (eligibility, ownership and management disclosures, and program-integrity requirements), not the operational or clinical survey deficiencies cited during a health inspection.
- Revocation ends your ability to bill Medicare. Making revocation retroactive also lets CMS claw back past payments. Lost future billing plus a repayment demand can create a sudden cash shortage.
- Acquisitions are directly affected. A change in majority ownership would force home health agencies, hospices, and DMEPOS suppliers to reenroll as new providers, and a buyer can inherit a target’s enrollment exposure.
- The enrollment provisions apply to all provider and supplier types, not only home health. CMS estimates they would save the program about $82 million a year.
- Nothing is final yet. The rule is a proposal and is open for public comment.
What did CMS propose in the CY 2027 home health rule?
The proposed rule does two separate jobs. First, it updates home health payment rates for 2027. Second, and more consequential for most providers, it revises the rules that govern how CMS denies, revokes, and recovers money from Medicare enrollments.
CMS Administrator Dr. Mehmet Oz described the package as giving the agency stronger tools to protect beneficiaries and taxpayer dollars from fraud, waste, and abuse. For compliant operators, the practical effect is that the margin for an enrollment error gets smaller and far more expensive.
Does the proposed rule apply to skilled nursing facilities?
Yes. Even though these provisions appear in the home health rule, CMS states they would apply to all provider and supplier types. Skilled nursing facilities, hospices, home health agencies, and DMEPOS suppliers are all in scope. That is why skilled care operators should not dismiss this rule as “a home health issue.”
Are these enrollment deficiencies or survey deficiencies?
They are enrollment deficiencies, and the distinction matters. The proposal targets problems with your Medicare enrollment: eligibility, the accuracy of ownership and management disclosures, reportable events, and the standing of your owners and managers. These are separate from the operational and clinical survey deficiencies that state agencies cite during a health inspection.
In practice, that means a facility with a strong survey history can still face revocation if its enrollment record has a problem, or if an owner or managing employee triggers one of the new grounds. The one place a survey enters the picture is procedural. As covered below, a majority ownership change would require reenrollment, and that reenrollment can carry a new survey or accreditation step. That is a condition of reenrolling, not a citation for how you run the building.
What are retroactive revocations and longer clawbacks?
Today, many Medicare enrollment revocations take effect prospectively, meaning 30 days after CMS or its contractor mails the notice. Only a limited set of grounds currently allow CMS to revoke retroactively, back to the date the noncompliance began. The proposal would extend that retroactive treatment to every revocation ground, regardless of the reason.
This distinction is not academic. Retroactive revocation is what lets CMS recover payments made during the period a provider was out of compliance. Widen the grounds that trigger it, and you widen the dollar amount the agency can reach back and recoup. An enrollment issue that once carried a defined, forward-looking cost begins to carry an open-ended, backward-looking one.
What new grounds for removal is CMS adding?
The proposal adds and broadens the reasons CMS can deny or revoke an enrollment. Three stand out:
- Geographic saturation. CMS could revoke a provider or supplier whose enrollment it views as a high fraud-and-abuse risk simply because it operates in a limited geographic area that already has an excessive number of providers or suppliers.
- Owner and manager conduct. CMS could deny or revoke enrollment based on a misdemeanor conviction related to sexual assault or financial misconduct within the past 10 years. It would also extend existing license and program-suspension grounds so they reach a provider’s owners, managing employees, and related organizations, not only the enrolled entity.
- Change of majority ownership. Home health agencies, hospices, and DMEPOS suppliers would have to reenroll as a new provider and undergo a survey or accreditation when they experience certain changes in majority ownership.
How would noncompliance hit revenue and cash flow?
This is the part that turns a compliance question into a financial one. The consequence of an enrollment problem is not a fine you can budget for in advance. It arrives as lost revenue and a cash demand at the same time.
Revocation ends your ability to bill Medicare. For a skilled nursing facility, home health agency, or hospice where Medicare represents a large share of collections, that alone can put the operation underwater quickly. Retroactive revocation then adds a second blow. CMS can reach back and recover payments it already made for services you have already delivered and already spent the cash on. That becomes a repayment demand for revenue you no longer have.
Losing future billing while repaying past collections is a cash-flow event, not just a citation. Organizations that run on thin operating margins can move from stable to a serious cash shortage in a matter of weeks. That is why the exposure belongs in your financial planning now, quantified as a contingency, rather than treated as a remote compliance risk.
What do these changes mean for acquisitions?
Acquisitions carry specific and heightened risk under this proposal, and buyers and sellers should treat it as a pricing issue, not a footnote.
If you acquire a home health agency, hospice, or DMEPOS supplier, a change in majority ownership would require the business to reenroll as a new provider and clear a survey or accreditation step. That can interrupt Medicare billing during the transition and open a revenue gap in the first weeks after close, exactly when a deal is most sensitive to cash.
The larger risk is inherited exposure. An enrollment deficiency, or an owner or manager issue that predates your purchase, could become your problem after close, including retroactive clawback of payments the target collected before you owned it. Diligence therefore has to reach the target’s enrollment record and the history of its owners and managing employees, not only its financial statements and survey results. A target that looks clean on operations can still carry enrollment exposure that transfers to you.
Practically, that means building the reenrollment timeline and a cash cushion for the billing gap into the deal model, and adding enrollment and ownership diligence to every healthcare transaction in these segments.
What does the home health payment update include?
For home health agencies specifically, the payment picture is mixed. CMS proposed an aggregate increase of about 2.4%, or $420 million. It also proposed a temporary 3.0% reduction to the 2027 rate tied to recouping Patient-Driven Groupings Model overpayments from 2020 through 2025. Industry groups have already flagged that temporary cut as pulling reimbursement away from the real cost of delivering care. The net effect on any single agency depends on its case mix, so treat the aggregate figure as a starting point for your own modeling rather than the answer.
What should providers do now?
The rule is a proposal, open for public comment before CMS can finalize anything. That makes now the useful window to prepare rather than react:
- Verify your enrollment record. Confirm that ownership disclosures, managing-employee information, and reportable events on your Medicare enrollment forms are accurate and current.
- Size your revenue and cash exposure. Identify which revocation grounds could plausibly apply, then estimate the lost billing and the retroactive recovery you would face if one did.
- Add enrollment diligence to every deal. For home health, hospice, and DMEPOS transactions, treat a majority ownership change as a reenrollment event, review the target’s enrollment and ownership history, and price the billing gap into the model.
- Weigh in. If the payment adjustment or the enrollment provisions would hit your organization hard, the comment period is your chance to say so, directly or through your industry association.
Frequently asked questions
When was the CY 2027 home health proposed rule released?
CMS released the proposed rule, CMS-1844-P, on July 1, 2026.
Is CMS-1844-P final?
No. It is a proposed rule and is open for public comment. Provisions can change before it is finalized.
Do these changes relate to survey or clinical deficiencies?
No. They target Medicare enrollment deficiencies, such as eligibility, ownership and management disclosures, and program-integrity requirements. A survey only re-enters the picture procedurally, as part of reenrolling after a change in majority ownership.
What happens to revenue and cash flow if an enrollment is revoked?
Revocation ends Medicare billing, and retroactive revocation lets CMS recover past payments. The combination of lost future revenue and a repayment demand can create a sudden cash shortage.
How do the changes affect acquisitions?
A change in majority ownership would require home health agencies, hospices, and DMEPOS suppliers to reenroll as new providers, which can interrupt billing after close. Buyers can also inherit a target’s enrollment exposure, including retroactive clawback.
Who is affected by the enrollment changes?
CMS states the enrollment provisions apply to all Medicare provider and supplier types, including skilled nursing facilities, hospices, home health agencies, and DMEPOS suppliers.
How Pease Bell can help
Pease Bell’s healthcare team works with skilled nursing, home health, hospice, and behavioral health providers on reimbursement, compliance, and transaction planning, and we maintain one of the largest skilled care client bases of any CPA firm. Whether you need to quantify your revenue and cash exposure under this proposal or fold enrollment diligence into an acquisition, reach out to our healthcare practice.
This article discusses a proposed federal rule and is provided for general information, not as legal, tax, or reimbursement advice. Provisions may change before the rule is finalized.
