A managing director at financial services company Raymond James is questioning whether the recently proposed 6.4% payment decrease for home health services could scuttle UnitedHealth's interest in acquiring Amedisys.
The proposed payment decrease, released last week by the Centers for Medicare and Medicaid Services, represents roughly a $50 million headwind for Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in 2026, said John W. Ransom, managing director, director of Healthcare Research for Raymond James.
"Is the home health rate update of (6.4)% a death knell for the UNH deal?" Ransom wrote.
"We expect the final CMS rule to get better than the proposed rule, as it usually does, but this would mark the fifth straight year of tough rate updates from CMS and by far the deepest cut yet," Ransom said.
"We wonder if this could mean the AMED/UNH deal is off given it has faced a two-year legal battle with the Department of Justice, and the deal is currently set to go to mediation in August," Ransom said. "... We wonder if UNH would be willing to walk away given their current situation and to avoid more heartache with regulators."
UnitedHealth Group did not respond to a request for comment.
WHY THIS MATTERS
Amedisys, headquartered in Baton Rouge, Louisiana, is one of the nation's largest providers of home nursing and hospice services. It has more than 500 locations in 39 states. Payment comes largely from Medicare.
On June 30, CMS proposed the 6.4% decrease compared to 2025 based partly on statutory requirements. Comments are currently being accepted for the proposal under the Home Health Prospective Payment System Proposed Rule.
A 5% payment cut is to recoup retrospective overpayments from 2020 through 2024, according to Seeking Alpha.
The 6.4% cut equates to about $1.1 billion, the report said.
The deal is worth an estimated $3.3 billion, but it has run aground of completion due to opposition by the Department of Justice.
THE LARGER TREND
In November 2024, the DOJ sued UnitedHealth Group and Amedisys over their planned merger due to anticompetitive concerns.
It would result in UnitedHealth's control of 30% or more of the home health or hospice services in eight states, according to the lawsuit.
Email the writer: SMorse@himss.org