How does Medicare pick a home health period's payment group in 2027, and how do you check it?
The short answer
Medicare's grouper software picks the payment group for each 30-day home health period and writes it as a five-character HIPPS code built from your claim and OASIS: admission source and timing, clinical group, functional level and comorbidity tier. The 2027 points, cutoffs and comorbidity lists are new. In our read, check both records against the chart monthly.
Open the remittance for a paid Medicare home health period and you'll find a five-character code like 1HB21. That's the HIPPS code, and it names one of the 432 payment groups that PDGM sorts every 30-day period into. Once you can read it, you can check whether the group matches the patient your clinicians saw, then look up its dollar amount in what a 30-day period is worth in 2027.
Reading the code
| Position | What it means | Values |
|---|---|---|
| 1 | Admission source and timing | 1 community early, 2 institutional early, 3 community late, 4 institutional late |
| 2 | Clinical group | A MMTA other, B neuro rehab, C wounds, D complex nursing interventions, E musculoskeletal rehab, F behavioral health, G MMTA surgical aftercare, H MMTA cardiac and circulatory, I MMTA endocrine, J MMTA GI/GU, K MMTA infectious disease, L MMTA respiratory |
| 3 | Functional level | A low, B medium, C high |
| 4 | Comorbidity adjustment | 1 none, 2 low, 3 high |
| 5 | Placeholder | always 1 |
MMTA stands for medication management, teaching and assessment. So 1HB21 is a community, early period in the cardiac and circulatory group, medium function, with the low comorbidity adjustment.
Section 10.1.19 of the Medicare Claims Processing Manual says the code the grouper builds "replaces the provider-submitted HIPPS code on the claim and is used for payment."
Where the grouper gets its facts
Your claim supplies the dates, the diagnoses and any inpatient discharge you report. Your OASIS supplies the function answers. Medicare matches the two on your CMS Certification Number, the patient's Medicare number and the assessment date (occurrence code 50 on the claim). With no matching, accepted OASIS, the claim comes back.
The diagnoses come from the claim, not the OASIS, and they should describe the patient as of the period's From date.
Position 2: the principal diagnosis picks the clinical group
The grouper looks at one code, the principal diagnosis, and maps it to one of the twelve clinical groups. Secondary diagnoses don't move the clinical group.
The principal diagnosis should be the main reason you're in the home. CMS gave its own example: a patient with heart failure who needs teaching, and also a stage 2 pressure ulcer that needs wound care. CMS said the pressure ulcer would likely be the primary reason, because it drives most of the work, and the heart failure goes on the claim as a secondary diagnosis. For the wounds group, the diagnosis has to show a break in the skin that calls for skilled wound care. An infection code alone may not.
CMS also expects the most specific code the record supports. When the chart is missing detail, CMS says finding out why "may involve calling the referring physician," rather than settling for a vaguer code.
Position 3: function, scored in points
The 2027 points, cutoffs and comorbidity lists below come from CMS's CY 2027 home health final rule (CMS-1844-F), which the Federal Register published on November 9, 2026. Claims starting January 1, 2027 run through grouper v08.0.27, which changes only those tables. The version follows the claim's From date, so a period starting December 28, 2026 is grouped on the 2026 tables.
The functional level comes from eight OASIS items: grooming (M1800), dressing upper body (M1810) and lower body (M1820), bathing (M1830), toilet transferring (M1840), transferring (M1850), ambulation (M1860), and risk of hospitalization (M1033). Each answer carries points. The grouper adds them up and compares the total to cutoffs for the period's clinical group.
| OASIS item | Response | 2027 points |
|---|---|---|
| M1800 grooming | 0 or 1 | 0 |
| M1800 grooming | 2 or 3 | 3 |
| M1810 dress upper | 0 or 1 | 0 |
| M1810 dress upper | 2 or 3 | 5 |
| M1820 dress lower | 0 or 1 | 0 |
| M1820 dress lower | 2 | 4 |
| M1820 dress lower | 3 | 11 |
| M1830 bathing | 0 or 1 | 0 |
| M1830 bathing | 2 | 2 |
| M1830 bathing | 3 or 4 | 8 |
| M1830 bathing | 5 or 6 | 16 |
| M1840 toilet transfer | 0 or 1 | 0 |
| M1840 toilet transfer | 2, 3 or 4 | 6 |
| M1850 transferring | 0 | 0 |
| M1850 transferring | 1 | 3 |
| M1850 transferring | 2 to 5 | 5 |
| M1860 ambulation | 0 or 1 | 0 |
| M1860 ambulation | 2 | 4 |
| M1860 ambulation | 3 | 0 |
| M1860 ambulation | 4 to 6 | 19 |
| M1033 hospitalization risk | 3 or fewer items marked | 0 |
| M1033 hospitalization risk | 4 or more | 11 |
On ambulation (M1860), response 3 now earns 0 points, down from 1 in 2026, so it scores below response 2. CMS says the new points reflect actual resource use in its 2025 claims data (Table 6).
Cutoffs differ by clinical group. For cardiac and circulatory in 2027, 0 to 29 points is low, 30 to 42 is medium, 43 and up is high. For neuro rehab it's 0 to 33, 34 to 50 and 51 and up (Table 7). CMS sets the cutoffs so that about a third of periods in each clinical group nationally land in each level.
An illustration, by our arithmetic from CMS's 2027 tables: a community, early period in the cardiac and circulatory group with no comorbidity. Its start of care answers are grooming 2, upper dressing 2, lower dressing 2, bathing 3, toilet transferring 1, transferring 1, ambulation 2 and three hospitalization risk items. That's 3 + 5 + 4 + 8 + 0 + 3 + 4 + 0 = 27 points: low, code 1HA11, weight 0.9011 (table 11). If the record supports a fourth risk item, the total is 38: medium, code 1HB11, weight 0.9903, about 10% higher.
Position 4: comorbidity from the secondary diagnoses
The fourth character comes only from the secondary diagnoses on the claim, matched against CMS's lists. Heart failure, atrial fibrillation and diabetes with neuropathy are among the 2027 low comorbidity subgroups (Table 8). The high adjustment takes two secondary diagnoses that appear together as a pair on CMS's interaction list (Table 9). A period gets one adjustment at most, however many qualifying codes are on the claim.
When the grouper sends the claim back
A claim with more than one occurrence code 61 or 62 for inpatient discharges comes back. Return code 05 means the principal diagnosis isn't assigned to any clinical group. Return code 03 means a problem with the principal diagnosis code, and a second field, the validity flag, says which. For example, flag 2 means a manifestation code is listed first. Flag 3 means an unspecified code is listed first. Flag 6 or 7 means the principal diagnosis code isn't valid for the claim dates, or is blank.
CMS has said that returning a claim for a more specific code isn't treated as upcoding when the documentation supports the care, and it expects the plan of care to be corrected to match.
Where a period lands in the wrong group
When a period lands lower than the chart supports, you lose money you earned. In our read, that happens when nobody asks about a recent hospital discharge at intake, when a heart failure diagnosis in the referral never reaches the claim, or when an OASIS function answer is scored lower than the visit note describes.
A group set too high leaves you exposed at review, since medical reviewers can change the case-mix group (42 CFR 484.205(e)). Watch for a function answer scored higher than the note supports, a secondary diagnosis on the claim with nothing in the chart showing it affects care, and a principal diagnosis that isn't the reason for the visits.
If you find a mistake after payment, either direction, you can correct the OASIS and adjust the claim, or correct the claim items; a HIPPS change goes in with condition code D2 and a remark.
What to check each month
The checks and their timing are our suggestions; CMS sets the codes, points and tables.
- Count last month's periods by the first character on your remittances. Recheck community periods referred by a hospital or facility, since Medicare's system checks for a qualifying inpatient claim in the 14 days before, and a stay Medicare didn't pay for shows only if your claim reports it.
- Pull a sample of charts by functional level. Read the visit notes against the OASIS answers for the eight scored items, looking for answers the note doesn't support in either direction.
- Log every returned claim. Record the return code, validity flag, the code behind it and the days to fix.
- Check secondary diagnoses on the sample. Compare what the referral and the clinician documented with what reached the claim.
- Rescore a few current patients on the 2027 points. See where the same answers land from January 1.
Enzo is a home health EHR.
Questions agencies are asking
Does an emergency room visit or observation stay make the period institutional?
No. CMS counts both as community admissions, and the same goes for a discharge from an ambulatory surgery center or from hospice.