The Service Line

Medicare’s freeze on new hospice and home health agencies will run another six months, and for the first time an existing agency can open new locations under it. The Centers for Medicare and Medicaid Services (CMS) announced the extension November 12, a day before the original freeze was due to lapse. It still blocks initial Medicare enrollment applications and certain majority-ownership changes nationwide, CMS says, so operators cannot cross state lines to get around it. The change from May is that currently enrolled hospices and home health agencies may now add practice locations under their existing enrollment. Trade outlets differ on the effective date, November 12 or 13, and CHAP, the accrediting body, reports the new term runs through May 12, 2027. CMS offered no new denial or suspension totals in the release; its Administrator, Dr. Mehmet Oz, said fraud persists and the work is not finished. For an incumbent, the branch opening is real room to grow while competitors cannot enter. For a would-be buyer, a clean enrollment is now scarcer for six more months, which supports asset prices. Confidence: High that the freeze was extended and that location additions are now allowed; Medium on the exact dates and on how far the location exception reaches, because sources describe it differently and we have not yet read the Federal Register text. Sources: CMS extension press release, CHAP summary of the extension (supplement), Home Health Care News (supplement).

Reimbursement: the final 2027 home health rule keeps the 3.0 percent temporary cut and adds a 2.1 percent update

The CY2027 home health final rule (CMS-1844-F), released November 4 and published in the Federal Register November 9, nets an estimated 2.4 percent, or $415 million, more in Medicare payments to agencies than in 2026. That is a 2.1 percent payment update ($365 million) plus about 0.3 percent ($50 million) from a lower outlier threshold, with the fixed dollar loss ratio set at 0.29. It also finalizes a temporary minus 3.0 percent adjustment to the 30-day base rate to keep recouping what CMS calls overpayments from 2020 through 2025, and adds no new permanent adjustment. CMS says gradual temporary adjustments may reduce the need for a large cut later, so do not treat 2027 as the last one. It answers the first question operators ask us: the rate fight did not end, but it did not escalate. On $10 million of Medicare revenue, the 3.0 percent adjustment is about $300,000, offset by the update. Rates take effect with the 2027 calendar year. Confidence: High on the figures, which are from CMS’s fact sheet; Medium on the timing of future temporary cuts, which CMS did not commit to. Sources: CMS CY2027 Home Health final rule fact sheet, Federal Register public inspection copy of the final rule.

Enforcement: CMS says a two-day California site-visit sweep revoked 145 providers tied to $703 million in payments

In its extension release, CMS said site visit teams spent two days in October inspecting California home health agencies and hospices and produced 145 revocations of providers tied to more than $703 million in Medicare and Medicaid payments. The same final rule gives CMS new tools: every revocation can now reach back to the date of the noncompliance, so payments made since then can be recovered, and a hospice or agency must re-enroll as a new provider after certain majority-ownership changes. New grounds also cover clusters of providers in a small area and medical directors or administrators who oversee several hospices or too far away to do the job. CMS estimates the enrollment changes save about $82 million a year. The practical read: the exposure is now retroactive, so an ownership change or a thin administrator structure that was survivable in 2026 can become a clawback in 2027. Confidence: High that CMS made these statements; Medium on how often the new grounds will be used, since CMS says it will weigh each case’s facts. Sources: CMS extension press release, CMS press release on the home health final rule’s integrity changes.

Who’s Buying: Addus pays about $275 million for AccentCare’s personal care business, roughly one times revenue

Addus HomeCare, a personal care, hospice and home health company, said in its November 3 third-quarter release that it signed a definitive agreement September 14 to buy AccentCare’s personal care operations outside New York for about $275 million, subject to purchase price adjustments. The business has roughly $280 million of annualized revenue, which Addus says expands its revenue base by nearly 19 percent, and the key states named are Texas, Illinois, California and Arizona. By our arithmetic that is about 0.98 times revenue; the release gives no earnings multiple and no closing date. Addus had $617.8 million available on its revolving credit line, so it can fund the deal without new equity. This is a personal care purchase, the Medicaid-funded side, so it is a read on that valuation, not on hospice. Confidence: High on price and revenue, from the company’s SEC exhibit; Low on any earnings multiple, which is not disclosed. Source: Addus HomeCare third quarter 2026 results release, SEC Form 8-K exhibit.

Clinical Policy: the final rule says the home health benefit already covers palliative care, and shortens the assessment deadline to 45 days

CMS used the final rule to confirm that skilled palliative care, including pain and symptom management, can be covered under the existing Medicare home health benefit when a patient meets the usual criteria. It created no new benefit or payment code, said eligibility turns on care needs and not a diagnosis, and kept it distinct from hospice; examples will come in later guidance. Separately, the deadline to submit the Outcome and Assessment Information Set (OASIS) patient assessment drops from 135 days to 45, which CMS says cuts the public reporting lag by up to three months and which about 98 percent of agencies already meet. For an agency, the palliative clarification is a referral conversation with oncology and heart failure programs. The 45-day deadline is a back-office staffing check. Confidence: High on the policy text as CMS summarizes it; Medium on how contractors will review palliative claims until guidance issues. Source: CMS press release on the home health final rule, CMS CY2027 Home Health final rule fact sheet.

The Operator Metric: Addus hospice census grew 4.3 percent organically while admissions were flat and the average stay ran 108.8 days

In the third quarter, Addus’s hospice average daily census was 4,037 against 3,889 a year earlier, with organic growth of 4.3 percent. Admissions barely moved, 3,344 against 3,326, and average discharge length of stay rose to 108.8 days from 89.6. Revenue per patient day was $190.36. So the growth came from longer stays, not more patients, and long stays are the measure the aggregate cap and CMS’s fraud screens both watch. The number to track is your own admissions growth next to your average length of stay, by provider number; if census is rising only because stays lengthen, expect questions. Confidence: High on the figures, from the company’s SEC exhibit; Medium on our reading that stay length drove growth, which is arithmetic from the reported figures and not a company statement. Source: Addus HomeCare third quarter 2026 results release, SEC Form 8-K exhibit.