CMS states that Version 07.2.26 contains no logic or interface changes.
However, CMS has updated tables that impact grouping logic and HIPPS code assignments to accommodate the October 1, 2026 diagnosis code changes.
These updates include:
• Addition of new diagnosis codes with corresponding clinical group and comorbidity assignments
• Deletion of diagnosis codes, where applicable
• Modification of diagnosis code descriptions, where applicable
• Changes to diagnoses classified as unacceptable principal diagnoses
• Changes involving unspecified diagnosis codes
• Changes involving Code First diagnosis requirements
These changes are important because the diagnosis codes used on a home health claim can influence PDGM classification.
The Centers for Medicare & Medicaid Services (CMS) has released Version 07.2.26 of the Home Health Prospective Payment System (HH PPS) Grouper Software for claims beginning October 1, 2026.
The release coincides with the FY 2027 ICD-10-CM diagnosis code updates, which also become effective October 1, 2026.
For home health agencies, these updates deserve attention across clinical, coding, quality assurance, billing, and administrative teams because diagnosis coding is an important component of the Patient-Driven Groupings Model (PDGM).
PDGM classifies home health periods of care using patient characteristics rather than relying on therapy utilization thresholds.
The payment methodology considers several factors when determining the appropriate payment group for a 30-day period of care.
Diagnosis coding plays an important role in that process.
The principal diagnosis is used in determining the applicable clinical grouping, while qualifying secondary diagnoses can contribute to comorbidity adjustments.
As a result, changes to ICD-10-CM codes and Grouper assignments can have downstream effects on PDGM grouping and HIPPS code assignment.
PDGM classifies home health periods of care using patient characteristics rather than relying on therapy utilization thresholds.
The payment methodology considers several factors when determining the appropriate payment group for a 30-day period of care.
Diagnosis coding plays an important role in that process.
The principal diagnosis is used in determining the applicable clinical grouping, while qualifying secondary diagnoses can contribute to comorbidity adjustments.
As a result, changes to ICD-10-CM codes and Grouper assignments can have downstream effects on PDGM grouping and HIPPS code assignment.
Before October 1, home health organizations should consider reviewing several areas of their operations.
1. ICD-10-CM Code Updates
Coding and clinical teams should familiarize themselves with new, deleted, and revised diagnosis codes that may be relevant to their patient population.
2. Principal Diagnosis Selection
Review diagnoses that may have changed status as acceptable or unacceptable principal diagnoses for PDGM grouping.
A clinically valid ICD-10-CM diagnosis does not necessarily mean that the diagnosis can serve as a valid principal diagnosis for home health PDGM grouping.
3. Unspecified Diagnoses
CMS specifically identifies changes involving unspecified diagnosis codes in the October Grouper update.
Agencies should continue to ensure that documentation supports the highest appropriate level of coding specificity.
4. Code First Requirements
Changes involving Code First diagnoses should be incorporated into coding review processes.
Correct sequencing remains important for accurate claims and appropriate grouping.
5. Comorbidity Assignments
New diagnosis codes may receive clinical group and/or comorbidity assignments.
Coding teams should understand how secondary diagnoses documented for the patient may affect PDGM comorbidity adjustment when applicable.
6. EMR and Billing System Readiness
Agencies should confirm that their technology vendors are incorporating the updated ICD-10-CM code set and October 2026 HH PPS Grouper.
Systems relying on outdated diagnosis tables or Grouper versions could potentially create workflow, validation, grouping, or billing issues after the effective date.
An ICD-10-CM update can touch multiple parts of a home health agency.
CLINICAL TEAMS need documentation that supports accurate diagnosis selection.
CODERS need current ICD-10-CM codes, sequencing rules, and PDGM grouping information.
QA TEAMS need to identify documentation and coding inconsistencies before billing.
BILLING TEAMS need accurate diagnosis and HIPPS information to support clean claims.
ADMINISTRATORS need confidence that their EMR and billing technology are keeping pace with Medicare changes.
That is why preparation should involve the entire revenue cycle—not just the coding department.
Finale Health is reviewing the October 2026 HH PPS Grouper and FY 2027 ICD-10-CM updates to ensure our platform continues to support the evolving needs of Medicare-certified home health agencies.
Our approach connects the clinical and financial workflows of the agency—from intake, diagnosis management, OASIS and clinical documentation through PDGM grouping, HIPPS calculation, billing, claims, and payment workflows.
As Medicare requirements change, our goal remains the same:
Help home health agencies spend less time managing disconnected systems and more time managing patient care and their business.
October 1 will arrive quickly.
Home health agencies should use the weeks ahead to review the new diagnosis codes, educate appropriate staff, evaluate current patients and coding workflows, and confirm that their technology systems will be ready for the transition.
Preparation before the effective date can help reduce coding issues, billing delays, and avoidable claim problems after implementation.
Stay informed. Stay compliant. Stay ready.
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