This article is part of the HHCN+ membership
Last week we got off to a rough start with one of the largest home care providers in the country. Bayada Home Health has announced layoffs among 10% of its headquarters staff. This leads to employment of around 100 people focused on operations and management support teams.
When companies as much as Bayada enact layoffs, individuals outside the organization often lack insight into why these cuts were made. This was not the case with Bayada.
In fact, Bayada was transparent about how the current refund environment contributed to what CEO David Baiada described as “one of the most difficult decisions” the company has ever made.
“Bayada is stable, strong and growing, but we operate in a challenging environment where the costs of providing care are growing faster than governments and insurers are able to pay for it,” the company said in a statement shared with Home Health News. “This requires us to be more efficient and intentional about how we work, so we can continue to serve our clients right now.”
Given how closely we have followed updates in Bayada over the years, it was no surprise that the company publicly commented on the current status of the refund.
Moreover, Bayada is far from the first home care company to point out how current environmental challenges impact business.
This week's exclusive member-only HHCN+ update examines the different payer landscapes experienced by home care providers. This could lead to more layoffs for the industry as a whole and other outcomes. We also offer several takeaways, including:
– Home-based care providers are fighting on multiple fronts regarding refunds
– There are no sound reimbursements, so often the providers force them to sacrifice staffing resources, resulting in reduced access to care.
Home-based care payer environment, and Bayada's approach
The refund landscape Bayada is fighting for must be paid attention in multiple ways.
Over the years, my colleagues and I have regularly reported on one of the most notable aspects of HHCN: the dramatic reduction in Medicare fees.
Last year, the Centers for Medicare and Medicaid Services (CMS) in the US implemented the Home Health Final Payment Rules, which includes a total increase of 0.5%, but also included rate cuts in light of budget neutrality provisions in the transition to a patient-driven group model (PDGM). This marked the third year in a row when CMS includes permanent cuts in home health payments.
At the time, I contacted several home health instructors to gather reactions to what I saw as consistent payment cuts from CMS.
“While the average annual payment rate reduction in CY 2025 is lower than expected, home health providers will unfortunately continue to see the level of reimbursement for access restrictions compared to the previous year,” said Dan Savitt, CEO and President of VNS Health, previously. “This is especially concerning given the urgent need to invest and nurture a dedicated clinical workforce in today's highly competitive post-pandemic landscape. CMS's own account has reduced access by more than 20% nationwide over the past four years.
Steven Landers, CEO of the National Alliance for Care At Home, highlighted the flaws in the budget neutrality methodology.
“The 2025 final version of Medicare's home health payment rates has continued to provide continuous and predictable rate reductions that will affect patient access since the launch of the new payment model in 2020,” he said previously. “The decline is due to the fatally flawed budget neutrality methodology CMS adopted to reach rate adjustments, and risk to in-home patients is exacerbated by the expansion of financial and management barrier care associated with Medicare advantages.
In the past, the alliance, then known as the National Association of Home Care and Hospice (NAHC), has been targeting Medicare's home hygiene payment calculations to sue the US Department of Health and Human Services (HHS). The lawsuit was first filed in 2023 and focused on home-based PDGM budget neutrality adjustments. The organization rejoined the lawsuit the following year.
This lawsuit is just one of the ways I have seen providers and industry supporters fight CMS cuts. Chico, California-based Butte's Home Health and Hospice has launched a “Home Disability Stop Campaign.” This campaign illustrates some of the ways providers are dealing with this issue directly.
As noted in the initial layoff report, Bayada has emerged as one of the companies that have been at the forefront of advocacy efforts for many years.
“Our schedule has always been go-go,” said David Totaro, Chief Executive Officer of Bayada, in an episode of HHCN's Disrupt Podcast. “There's no stopping, it's not advocacy. Consistency is really important. One thing we've learned over the last six to nine months is that our role as providers is to turn our role from discussions about costs and cuts to a narrative of why or how these reductions affect the lives of our legislator conventions.”
Totaro said he and his team have been defending the hill since the release of the home payment rules in 2023. Despite these efforts, the company still felt the need to reduce operational costs by reducing HQ employment. Other companies also feel the need to increase efficiency and reduce costs. For example, Enhabit Inc. (NYSE:EHAB) discussed using technology to reduce costs in its first quarter revenue calls.
Providers struggle with Medicare reimbursement rates, but many are not that good on Medicare Advantage (MA) plans. Historically, MA has provided low prices to providers.
Providers are critical of these low prices, and some are even happy to move away from disadvantaged contracts. However, the increased penetration makes MAs more difficult for providers to avoid completely.
Approximately 33 million Medicare beneficiaries who registered with the MA plan last year. According to KFF data, this is more than half the Medicare population. Additionally, the Congressional Budget Office predicts that the number of Medicare beneficiaries registered on the MA plan will skyrocket to 64% by 2034.
As MA becomes more inevitable, lower rates lead to lower provider margins. In other words, it is ultimately unsustainable.
And then there's the Medicaid situation, which adds to the complexity. On the one hand, there is some positive news on the Medicaid side. Addus HomeCare Corporation (NASDAQ: ADUS) announced last week that it expects a $35 million increase in revenue due to rising reimbursement rates in Illinois and Texas.
But Medicaid is also facing the threat of massive cuts on the “big, beautiful bill” now in the hands of Capitol Hill. If states see a decline in federal Medicaid dollars as a result of this law, reimbursement rates for various types of providers, including home care providers, are at risk.
Possibility of future layoffs
Given the reimbursement challenges facing providers, it's not a bold prediction to say that more layoffs could come in the industry. However, the fact that Bayada has just announced a layoff for this round has announced that it will take it in several ways as a particularly ominous indication of what will come.
That's because Bayada is a large, diversified company that offers home healthcare, personal care, personal mandatory nursing, pediatric care, hospice, habilitation, applied behavior analysis (ABA) and autism therapy. On the one hand, diversification can create risks related to complexity, and large companies like Baiada can layoff healthy business decisions given that companies can extract large amounts of resources to compensate for staff loss. On the other hand, such diversification can create insulation from the risk of mitigating the economy of certain parts of the business without saying goodbye to a large number of employees.
The fact that Bayada has made progress with these layoffs suggests that it could be another indication of a wide range of current reimbursement challenges, including the various payer types, care levels and regions.
In other words, if layoffs are the right move for Bayada, I wouldn't be surprised if other companies with less scope and diversity may find themselves facing tougher decisions on how to respond to current challenges. Certainly, layoffs may be on the table for them, but there could be a decrease in location, a pivot to a different business line, or even a closure at the table.
These are the very results of what industry advocates and providers are warning us about. It's not welcome to see them happen, but when lawmakers, policymakers, payers and other stakeholders see the outcome of interest rate cuts, they are ultimately taking action to address these multifaceted challenges and preserve access to home care.
Given what Totaro said about the “go-go” approach to organizational advocacy, Bayada is undoubtedly sharing its story with relevant stakeholders across the government and the US healthcare system.
I think it's wise for other providers and supporters to point out layoffs for Baiada in their advocacy efforts as well, and it's wise for them to be transparent about how their current payment situation is affecting their business. As Totaro pointed out, “the discussion of costs and reductions” did not move the needle. As the cuts actually go through, the story must be more about the strengthening of human victims.
It's not a happy story, and headlines about layoffs are hard to write in Home Health News. But as long as we can make a positive difference with this kind of information in the world and in front of the right people, I hope that other providers will be willing to share bad news with us and the public in the coming months, if necessary.
