How Medicare home health actually operates.

1. A referral enters the agency

Referrals come from hospitals, physician offices, post-acute facilities, community sources and families. The payer is traditional Medicare, administered through a Medicare Administrative Contractor. A beneficiary in a Medicare Advantage plan is paid under that plan’s rules, so the first question at intake is which applies.

Coverage turns on four conditions about the patient, all of which must be true, and the services must come from a Medicare-participating agency (42 CFR 409.42; Medicare Benefit Policy Manual, chapter 7, section 30). The patient is confined to the home. The patient is under the care of a physician or allowed practitioner. Services are furnished under a plan of care that practitioner establishes and periodically reviews. And the patient needs intermittent skilled nursing, physical therapy or speech-language pathology, or has a continuing need for occupational therapy after qualifying through one of the others.

Homebound has a two-part definition in the manual. First, because of illness or injury the patient needs a supportive device, special transportation or another person’s help to leave home, or leaving home is medically contraindicated. Second, there is a normal inability to leave home, and leaving requires a considerable and taxing effort. Absences that are infrequent, short, or for health care do not end homebound status. The manual also says that repeating the phrase “taxing effort” in the chart is not sufficient by itself.

A face-to-face encounter related to the primary reason for home health must have occurred no more than 90 days before the start of care or within 30 days after it (42 CFR 424.22(a)(1)(v)). It may be performed by a physician, nurse practitioner, clinical nurse specialist, physician assistant or, where state law permits, a certified nurse-midwife. The calendar year 2026 final rule broadened the regulation so that one of them may perform the encounter whether or not that person is the one who certifies.

The agency also has to decide whether it can take the patient. Under 42 CFR 484.105(i), added by the calendar year 2025 final rule, published November 7, 2024, an agency must have an acceptance-to-service policy that it applies consistently and reviews at least annually. The policy must address the anticipated needs of the referred patient, the agency’s case load and case mix, its staffing levels, and the skills and competencies of its staff. It must also publish accurate information about the services it offers and their limits. At intake, then, the clinical question, the coverage question and the staffing question are already one question.

2. Admission and start of care

The initial assessment visit must be held within 48 hours of referral, within 48 hours of the patient’s return home, or on the start-of-care date the physician or allowed practitioner orders (42 CFR 484.55). A registered nurse conducts it. When only rehabilitation therapy is ordered, the appropriate therapist may.

The comprehensive assessment must be completed no later than five calendar days after the start of care. It includes a review of every medication the patient is currently using for adverse effects, ineffective therapy, significant side effects and interactions, duplicate therapy and noncompliance.

The assessment incorporates OASIS, the standardized data set. CMS lists OASIS-E2 as the current version, effective April 1, 2026. The agency must transmit it within 30 days of completing the assessment (42 CFR 484.45). Since July 1, 2025, collection and submission are required for patients of any pay source who receive skilled services and are not exempt. OASIS is a clinical record, a quality data source and a payment input at once.

3. The plan of care and certification

Each patient has an individualized written plan of care with content the regulation lists (42 CFR 484.60): all pertinent diagnoses; mental, psychosocial and cognitive status; services, supplies and equipment; the frequency and duration of visits; prognosis and rehabilitation potential; functional limitations and activities permitted; nutrition; all medications and treatments; safety measures; the patient’s risk for emergency department visits and hospital readmission; education; interventions with measurable outcomes and goals; and advance directives. A physician or allowed practitioner establishes, reviews and signs it.

Drugs, services and treatments are given only as ordered. Verbal orders are accepted only by authorized personnel, recorded, signed, dated and timed, and later authenticated by the practitioner. The plan is reviewed and revised no less often than once every 60 days from the start of care, and the practitioner must be alerted promptly to any change in the patient’s condition.

Certification is a separate act (42 CFR 424.22). The practitioner certifies the coverage conditions and the face-to-face encounter when the plan of care is established or as soon after as possible, and signs and dates the certification. The practitioner’s own medical record, or the record of the facility the patient came from, must be the basis for it. The agency’s documentation can support eligibility only when those records corroborate it and the practitioner has signed and dated it. If the documentation does not demonstrate eligibility, the regulation says payment is not made.

4. Payment starts before the final claim

Since January 1, 2020 the unit of payment has been a national, standardized 30-day amount (42 CFR 484.205), while certification and assessment run on 60-day cycles. Each certification period therefore holds two payment periods. Under the Patient-Driven Groupings Model each 30-day period is placed in one of 432 case-mix groups, the product of five variables.

Each group has a case-mix weight, and the weighted amount is adjusted again by a wage index for the place of service. A principal diagnosis that is not assigned to any clinical group produces no payment code at all, and the claim comes back.

Each group also has a visit threshold for the Low Utilization Payment Adjustment. The regulation sets it at the tenth percentile of visits for that group, with a minimum of two visits (42 CFR 484.230). A period below its threshold is paid the national per-visit amount by discipline in place of the 30-day amount, with an add-on when it is the patient’s only period or the first in a sequence of adjacent periods. Thresholds are recalculated in each annual rule, so the number that matters belongs to a specific group in a specific year.

Two more adjustments apply. A partial payment adjustment prorates the period by days served when an intervening event such as a transfer to another agency begins a new period (42 CFR 484.235). An outlier payment covers part of unusually high imputed cost. For calendar year 2026 the fixed-dollar loss ratio is 0.37 and Medicare pays 80 percent of estimated cost above the outlier threshold, with total outlier payments held to 2.5 percent of estimated payments.

Rates change every calendar year. For calendar year 2026 (final rule CMS-1828-F, issued November 28, 2025), the market basket increase is 3.2 percent, reduced by a 0.8 percentage point productivity adjustment to a 2.4 percent payment update. The same rule applies a permanent behavior adjustment of minus 1.023 percent to the 30-day rate and a temporary adjustment of minus 3.0 percent, both arising from the difference between assumed and actual behavior change under the model. The temporary adjustment applies to 2026 only and is not carried into the starting rate for 2027. CMS estimated a 1.3 percent aggregate decrease in payments compared with 2025.

The operational point is that payment is being decided while care is under way. A missed visit can move a period under its threshold. A late start changes dates that every later deadline counts from. A hospital discharge that nobody recorded changes the admission source.

5. The Notice of Admission

For every admission the agency sends its Medicare contractor a Notice of Admission (42 CFR 484.205(j)). It is submitted once per admission, on type of bill 032A, and it covers every period until discharge. The agency may send it once it has an order for the services required at the initial visit and has made that visit (Medicare Claims Processing Manual, chapter 10).

A timely notice is submitted to and accepted by the contractor within five calendar days after the start of care. When it is late, Medicare does not pay for the days from the start of care to the date of filing. The wage and case-mix adjusted period payment, including any outlier payment, is reduced by one thirtieth for each of those days, and no low-utilization per-visit payments are made for visits that fall inside them. The loss is the provider’s liability and cannot be billed to the patient. Ten late days by that count remove ten thirtieths, a third of the period.

Exceptions exist for disasters that damage the agency’s ability to operate, for CMS or contractor system problems, for a newly certified agency awaiting notification, and for other circumstances found to be beyond the agency’s control. An ordinary clerical delay is a direct loss, and one that is invisible unless someone is counting days.

6. Care is delivered by several disciplines

Skilled nursing, physical therapy, occupational therapy, speech-language pathology, medical social services and home health aide services are delivered under the one plan of care, each at its own ordered frequency. Nursing services are furnished under the supervision of a registered nurse, therapy assistants work under a physical or occupational therapist, and social work assistants under a qualified social worker (42 CFR 484.75). A clinical manager oversees patient care, assignments and coordination (42 CFR 484.105).

Aides work from written patient care instructions prepared by a registered nurse or other appropriate skilled professional. When the patient is also receiving skilled care, that professional must complete a supervisory assessment of the aide’s services no less often than every 14 days. Each aide must also be observed on site at least annually. When the patient receives only aide services, a registered nurse must visit in person every 60 days, and observe each aide semi-annually (42 CFR 484.80). Every aide needs at least 12 hours of in-service training in each 12-month period.

Medicare describes covered skilled nursing and aide services as part-time or intermittent, in most cases up to 8 hours a day combined and 28 hours a week. The patient pays nothing for covered home health services.

Every visit carries the same chain: patient, discipline, order, clinician, schedule, documentation, review, billable line.

7. Assessment and quality do not stop at admission

The comprehensive assessment is updated in the last five days of every 60 days from the start of care, within 48 hours of the patient’s return home from a hospital admission of 24 hours or more, and at discharge (42 CFR 484.55). OASIS is collected at those points and at transfer.

The same data feed four programs. The Home Health Quality Reporting Program requires OASIS data, the patient-experience survey and standardized patient assessment data (42 CFR 484.245). The submission threshold is 90 percent of required OASIS records. An agency that misses the requirements has its annual payment update reduced by two percentage points, which for calendar year 2026 turns a 2.4 percent update into 0.4 percent.

The patient-experience survey, HHCAHPS, is administered through approved independent survey vendors. An agency with fewer than 60 eligible patients must submit its patient count each year to be exempt. Under the calendar year 2026 final rule a revised survey began with the April 2026 sample month.

CMS publishes two star ratings on Care Compare, updated quarterly. The Quality of Patient Care rating draws on seven measures, among them timely initiation of care, improvement in ambulation and bathing, and potentially preventable hospitalization. The Patient Survey rating comes from HHCAHPS.

The expanded Home Health Value-Based Purchasing Model began nationwide on January 1, 2022 with a pre-implementation year; 2023 was the first performance year and 2025 the first payment year. Agencies are placed in a larger-volume or smaller-volume national cohort and scored on three categories of measures: OASIS-based, claims-based and HHCAHPS survey-based. Performance in one year adjusts payment in a later year, by as much as 5 percent up or down, applied to the final claim payment amount. The calendar year 2026 final rule removed three survey-based measures and added OASIS-based measures for bathing and dressing and a claims-based measure of Medicare spending per beneficiary in post-acute care.

8. Billing

1. Eligibility check
2. Notice of Admission accepted
3. Assessment accepted in the quality system
4. Diagnosis coding
5. Plan and orders signed
6. Visits complete for the period
7. Institutional claim
8. Medicare regroups
9. Remittance
10. Review, denial or adjustment

One claim is filed for each 30-day period, at the end of the period or after discharge, whichever is earlier. The agency may not submit the claim until all services for the period have been provided and the physician has signed the plan of care and any subsequent verbal order. An unsigned order holds the money for the whole period.

The claim is an institutional claim, sent as the electronic 837 institutional transaction or keyed through direct data entry to the Medicare Administrative Contractor, on type of bill 0329. It carries exactly one line with revenue code 0023 holding the HIPPS code, the five-character code that represents the payment group, with zero charges. Medicare’s grouper recalculates the code from the claim and the OASIS data and replaces what the agency sent where they differ.

Every visit is its own line: revenue code 042x for physical therapy, 043x for occupational therapy, 044x for speech-language pathology, 055x for skilled nursing, 056x for medical social services and 057x for home health aide. Each line carries the date of service, a discipline-specific G-code and units that count 15-minute increments of the visit. A claim with no visit charges is returned.

The claim must match an assessment. The agency reports occurrence code 50 with the assessment completion date, and Medicare looks for that assessment in the federal quality system, iQIES. Submission of OASIS is a condition of payment, so a claim with no matching assessment is returned.

Review programs sit on top of this. The Review Choice Demonstration operates in Illinois, Ohio, Texas, North Carolina, Florida and Oklahoma, and was extended for five years from June 1, 2024. Agencies there choose between pre-claim review and postpayment review, and one that reaches a 90 percent affirmation or approval rate can move to lighter options. Everywhere, contractors run Targeted Probe and Educate: 20 to 40 claims per round, one-on-one education, and up to three rounds before referral to CMS. The common errors CMS lists are the ones already described here: a missing practitioner signature, encounter notes that do not support eligibility, documentation that does not establish medical necessity, and missing or incomplete certifications or recertifications.

9. Compliance is continuous

To participate in Medicare an agency must meet the Conditions of Participation at 42 CFR Part 484. Beyond the rules already described, they require a quality assessment and performance improvement program that uses measures derived from OASIS, focuses on high-risk, high-volume or problem-prone areas, runs improvement projects each year and answers to the governing body (484.65). They require an agency-wide infection prevention and control program (484.70), and an emergency plan based on an all-hazards risk assessment, reviewed at least every two years and exercised at least annually (484.102).

Clinical records must be legible, complete, authenticated, dated and timed, retained for five years after discharge unless state law requires longer (484.110).

Compliance is checked by survey. Each agency must have a standard survey not later than 36 months after the last one. A change of ownership or management, or a significant number of complaints, can bring one sooner (42 CFR 488.730). A standard-level deficiency is noncompliance with one or more of the standards that make up a condition. A condition-level deficiency is noncompliance with the condition itself, and the regulation calls a condition-level finding on a standard survey substandard care. For condition-level deficiencies the available sanctions are civil money penalties, suspension of payment for all new admissions, temporary management, a directed plan of correction and directed in-service training, alongside termination of the provider agreement (42 CFR 488.820).

An agency may take the other pathway, which is voluntary: accreditation by a national accrediting organization that CMS has approved, in which case CMS considers it to have met the Medicare conditions. Either way, almost every standard is a timing rule or an evidence rule about work the agency does anyway.

10. Recertification, discharge and the cycle continuing

When care is still needed after 60 days, the practitioner recertifies eligibility, the assessment is updated in the last five days, the plan is revised, and two more payment periods begin.

The agency may transfer or discharge a patient only for the reasons the regulation allows (42 CFR 484.50), among them that it can no longer meet the patient’s needs, that payment has ceased, that goals have been achieved, or that the patient asks to leave. It must send the receiving practitioner or facility the necessary medical information, goals of care and treatment preferences (42 CFR 484.58). The discharge summary is due within five business days.

Then the last period is billed, the remittance is posted, any review request is answered, and the record is retained. After a discharge is reported to Medicare, a later return to service needs a new Notice of Admission. The unit that matters is the whole admission, and in the quality and value programs, the whole year.

What software has to do

The work divides into six engines. In Medicare home health each has a defined job, and each depends on records the others create.

Rules as dated data

Much of this page is true for a named year. The payment update, the behavior adjustments, case-mix weights, visit thresholds, the OASIS version and the value-based purchasing measure set each change on a published cycle, and a claim is priced by the dates on it. Software that holds each of these as a dated, sourced rule can treat a new year as a data update and still judge an older record by the rule that applied to it.

One operating chain

A patient, an order, a clinician, a visit, the evidence created, the obligation being satisfied and the money earned are not unrelated records. They are different views of the same operational event.

Medicare home health makes that plain because the program itself ties them together: an assessment sets payment, a signature releases a claim, a supervision visit is survey evidence, and a staffing gap becomes a late start. The same chain of referral, order, credentialed clinician, visit, reviewed documentation and bill runs through home infusion nursing, private duty, hospice and VA community care. Medicare adds its own assessment, certification, payment model and conditions on top of that shared foundation.

All service lines →   Payer and program models →   Continuous compliance →   From referral to revenue →   Clinical demand meets workforce supply →