Medicare pays home health agencies a base rate of roughly $1,875 per 30-day period of care, though the actual amount varies widely depending on the patient’s condition, functional ability, location, and where they were admitted from. Payments are calculated through a system called the Patient-Driven Groupings Model (PDGM), which sorts each 30-day care period into one of 432 possible payment categories. The final number an agency receives for any given patient can land well above or below that base figure.
How the 30-Day Payment Model Works
Before 2020, Medicare paid home health agencies in 60-day chunks. The current system, PDGM, splits care into 30-day periods and adjusts payment based on five factors specific to each patient. Every 30-day period gets sorted into a payment group based on these characteristics:
- Admission source: Whether the patient came from the community (living at home) or from an institutional setting like a hospital or skilled nursing facility.
- Timing: Whether this is the first 30-day period (“early”) or a subsequent one (“late”) in a sequence of care. Early periods generally pay more because patients tend to need more intensive services at the start.
- Clinical grouping: The patient’s primary reason for needing home health, sorted into one of 12 categories. These range from musculoskeletal rehabilitation and stroke recovery to wound care, behavioral health, and several medication management subcategories covering cardiac, respiratory, endocrine, and other conditions.
- Functional impairment: How much difficulty the patient has with everyday activities, rated as low, medium, or high.
- Comorbidity adjustment: Whether the patient has additional diagnoses that make care more complex, classified as none, low, or high.
A patient admitted from a hospital after hip replacement surgery, with high functional impairment and a secondary diagnosis that qualifies for a comorbidity bump, will generate a significantly larger payment than a community-dwelling patient in a late period with low impairment and no comorbidities. The combination of all five factors (2 × 2 × 12 × 3 × 3) produces those 432 distinct payment groups.
The National Standardized Base Rate
For calendar year 2025, CMS updated the national standardized 30-day payment rate with a 2.7 percent increase. Agencies that fail to submit required quality data get hit with a 2-percentage-point penalty, dropping their update to just 0.7 percent. On top of the annual update, CMS has also finalized a permanent downward adjustment of about 2 percent (specifically, a factor of 0.98025). This correction exists because aggregate spending under PDGM turned out to be higher than what the old payment system would have produced. In 2023, CMS calculated that the base rate should have been $1,875.46 to keep spending in line with pre-PDGM levels.
The base rate is a starting point, not a final payment. Once a patient is classified into one of the 432 groups, a case-mix weight is applied that can push the actual payment considerably higher or lower.
Geographic Wage Adjustments
Medicare doesn’t pay the same amount everywhere. About 76.1 percent of the base payment rate is considered “labor-related” and gets multiplied by a local wage index. This means agencies in high-cost metro areas like San Francisco or New York receive substantially more per 30-day period than agencies in lower-cost rural areas. The remaining 23.9 percent of the rate stays fixed regardless of location.
For a simplified example: if the case-mix adjusted payment for a particular patient would be $2,400 before geographic adjustment, the labor portion ($1,826) gets multiplied by the local wage index. In an area with a wage index of 1.2, that labor portion becomes $2,191, bringing the total payment to about $2,765. In an area with a wage index of 0.85, the same patient generates roughly $2,126.
When Agencies Get Paid Less: Low-Utilization Periods
If an agency provides fewer visits than expected during a 30-day period, Medicare switches from the full period payment to a per-visit rate. This is called a Low Utilization Payment Adjustment, or LUPA. Each of the 432 payment groups has its own visit threshold, set at the 10th percentile of visits for that group, with a minimum of 2 visits. If the threshold for a particular group is four visits and the agency only provides three, the period gets paid at per-visit rates for each discipline (nursing, physical therapy, etc.) rather than the full 30-day amount.
This matters a great deal financially. Per-visit payments are typically much lower than the full period rate. Agencies monitor their LUPA rates closely because a high percentage of LUPA periods can significantly reduce revenue.
Extra Payment for High-Cost Patients
On the other end of the spectrum, Medicare provides outlier payments when a patient’s care costs far exceed what the standard payment covers. These additional payments kick in when the estimated cost of care surpasses a fixed-loss threshold set by CMS. Once that threshold is crossed, Medicare pays a percentage of the excess costs. The outlier system is designed to protect agencies from absorbing catastrophic losses on patients who need unusually intensive services, while still keeping the agency responsible for a share of those costs.
Quality Performance Bonuses and Penalties
Medicare’s Home Health Value-Based Purchasing program ties a portion of payment to how well an agency performs on quality measures. Agencies are scored on metrics like patient improvement, hospitalization rates, and patient satisfaction. Based on their scores, payments can be adjusted upward or downward. During the original model’s rollout, adjustments started at plus or minus 3 percent and scaled up to plus or minus 8 percent. A high-performing agency treating the exact same patient as a low-performing one can earn noticeably more for that care period.
What This Means in Practical Dollar Terms
Putting it all together, the actual payment an agency receives for a single 30-day period can range from a few hundred dollars (a LUPA period with just one or two visits) to several thousand dollars for a complex patient admitted from a hospital with high functional needs, significant comorbidities, and a favorable wage index. Most typical 30-day periods fall somewhere in the $1,500 to $3,500 range after all adjustments, though outlier cases can push higher.
Agencies don’t get to bill for each individual nurse visit or therapy session the way a doctor’s office bills per appointment. The 30-day period payment is meant to cover all allowable home health services during that window, including skilled nursing, physical therapy, occupational therapy, speech therapy, medical social work, and home health aide visits. If the agency can deliver effective care efficiently, the margin is better. If a patient needs more visits than anticipated, the agency absorbs that cost unless the case qualifies for an outlier payment.
Care sequences continue in 30-day increments as long as the patient remains eligible. Once there’s a gap of 60 days or more between periods, any new care starts fresh as an “early” period in a new sequence, which resets the higher early-period payment rate.