2025 Home-Based Care Sector Faces Uncertainty Amid Policy and Market Shifts

The home-based care industry in 2025 faced significant uncertainty driven by policy shifts, reimbursement changes, and industry consolidation. Providers grappled with challenges related to Medicaid budget cuts, proposed reductions in Medicare home health payment rates, and administrative workforce reductions. UnitedHealth Group's acquisition of Amedisys marked a major consolidation event in the sector, highlighting trends toward vertical integration in healthcare. In New York, the transition to a single fiscal intermediary for the Consumer Directed Personal Assistance Program (CDPAP) encountered legal challenges, delays, and provider exits, notably Addus HomeCare withdrawing due to operational and financial pressures. Providers remaining in the state reported considerable business losses and layoffs amidst ongoing program instability. Medicaid cuts proposed under the One Big Beautiful Bill Act prompted concerns about downstream impacts on home and community-based services. Some providers anticipated minimal disruption, but sizable program closures, such as Providence St. Joseph Health ending its non-medical companionship program, illustrated tangible effects. CMS proposed a 6.4% home health Medicare payment rate cut for 2026, the largest ever suggested, creating industry apprehension over financial sustainability. After an extended government shutdown delayed the final rule, CMS announced a moderated 1.3% cut, yet ongoing reduced payments continue to pressure provider expansion and technology investments. The incoming Trump administration's approach introduced further uncertainty about future Medicare, Medicaid, and Medicare Advantage policies. The administration's immigration policies exacerbated workforce shortages in home-based care, impacting staffing stability. Bayada Home Health Care's 10% layoffs reflected broader sector challenges from reimbursement constraints, prompting leadership changes and signaling caution among peers. Meanwhile, the DOJ approved the UnitedHealth/Amedisys merger with divestiture conditions, facilitating deal closure and presenting acquisition opportunities for other companies. The industry's innovation efforts included UnitedHealthcare's elimination of prior authorization for certain Medicare Advantage home health services, aligning with wider initiatives to reduce administrative barriers. Providers also explored shorter care models bypassing traditional minimum service hours, gaining operational efficiencies while addressing client affordability and caregiver scheduling. Private equity activity persisted, with Peak Rock Capital acquiring BrightStar Care and driving growth via technology investments and expansion strategies. The landscape of home health providers evolving through both strategic consolidations and operational innovations positions the market for continued transformation. Overall, 2025 underscored a home-based care environment marked by regulatory flux, financial pressures, competitive consolidations, and adaptive care delivery models as stakeholders navigate ongoing change in payer/provider dynamics and government program policies.