This article is part of the HHCN+ membership
In 2025, Medicare-certified home health providers faced dramatic uncertainty. The Centers for Medicare and Medicaid Services (CMS) proposed the largest reduction in Medicare home health payment rates in history, sparking backlash from providers, workers, and patients, and the end result was a final tax rate cut that would significantly reduce the pain.
While home health care providers are recovering from the anxiety-inducing 2025, they face an even more complex picture in 2026. The industry will have to contend with new types of forced payment models as additional job cuts are expected in 2025 after several high-profile rounds. Key pieces of legislation will also determine the success or failure of the home health care industry, particularly as it relates to the home hospital market and fee-for-service provider trends.
In 2026, healthcare providers who future-proof their service lines and withstand pressures on quality of care will have the opportunity to usher in the next era of home health care and be at the center of the home-based transition of care.
Interested in last year's predictions? Refresh your predictions for 2025 here.
A year of layoffs
In the home health sector, the typical workforce story revolves around healthcare providers struggling to recruit and retain workers. But last year, layoffs gained attention.
In June, Bayada Home Healthcare, a leading home health care company, laid off 10% of its head office staff due to the difficult repayment environment. Dispatch Health, a leader in home health care, scaled back operations in 10 markets in September, laying off employees in the process.
Other providers have had to take similar steps.
“While we can leverage technology to increase our workforce by 10x, the reality is that we had to lay off employees, just as many other home health (companies) have had to do,” Healthview CEO Steven Gonzalez previously told HHCN.
In 2026, providers have several opportunities to alleviate some of the pressures that led to layoffs in 2025, particularly through the use of efficiency-improving technologies. However, as Medicare home health costs continue to fall and the workforce continues to struggle, providers will increasingly need to minimize their pool of employees to reduce costs. Major providers making headlines for layoffs in 2025 are just the first crack in the ice that is about to crack.
Resisting “encityization”
Home health care providers are looking to transform their operations with a focus on efficiency, and are often turning to new AI tools. Technology is no longer an option. These changes are necessary for the industry to survive and continue to move the home to the center of the healthcare ecosystem.
But healthcare providers in 2026 will need to leverage AI while ensuring patients receive a high-quality, personal experience. Otherwise, you risk falling into the trap of “encitization.” This term refers to a reduction in quality within a digital platform. Consider the proliferation of AI content on Facebook, drowning out posts from users' actual friends.
Home health care providers in 2026 will need to prioritize AI tools instead of relying too much on automation and making the employee and patient experience feel soulless. As carriers move from a focus on back-office AI technology to one that is more worker- and patient-focused, strong AI quality control becomes paramount. As many healthcare provider executives have noted, AI (or any type of technology) should ideally enable more meaningful human connections between caregivers and patients. AI glitches and inappropriate use cases of AI can be inevitable growing pains as the technology becomes more prevalent and evolves, but smart providers will limit these negative impacts.
That means early technology adopters will spend 2026 pursuing cutting-edge technology, and companies looking to maintain or improve worker and patient retention will need to ride the wave of technology-first innovation with an old-fashioned tactic: the human touch.
Focus on becoming a TEAM player
In 2026, many home health care providers will have to grapple with new mandatory payment models, and even those not involved in this model will be paying close attention.
The Centers for Medicare and Medicaid Services' (CMS) Mandatory Bundled Transformation Episode Accountability Model (TEAM) will go into effect on January 1, 2026, and with its broad scope and clear push to move more patients into more affordable care settings, it is poised to propel the home health industry further into the world of alternative payment models.
Additionally, TEAM has significant differences from other mandatory payment models. It's about comparing providers against each other within a wide geographic area.
“Other bundled payment models have been historical provider pricing models, which means they just had to get over their past selves,” Brian Fuller, managing director of ATI Advisory's value-based care design and delivery practice, previously told HHCN. “This is a regional target price model, which means it has to be better than where you live.”
In 2026, providers involved in the broader model of 743 participating hospitals will be required to participate in these regional competitions. To clearly communicate their value to their colleagues, healthcare providers must focus on analytics and compelling pitches to hospitals to articulate their value, and now more than ever, they must leverage the right systems and processes for meaningful and coordinated collaboration with hospital partners.
The end of pure play provider
In 2025, the home health care industry rallied around the unique threat of the largest reduction in Medicare home health payment rates ever proposed.
Providers are rushing to plan for the worst-case scenario while prioritizing advocacy. Some companies were considering downsizing their home health services to focus on other service areas.
“If this 9% reduction rule really goes forward, we could decide to go in a different direction and become one of the agencies that completely withdraws from skilled home health care,” Jonathan Freese, CEO of Empath Health, previously told Home Health Care News. “Skilled home health is already an operating loss for many agencies. That's one of the options we're considering, and potentially we could become one of the skilled agencies repurposing home health and focusing on our core business of end-of-life care and frail seniors.”
Although the final rule included much more modest rate cuts than originally proposed, it still reduced Medicare payments and made a compelling case for providers to focus or expand on areas of business with less frequent rate cuts.
Additionally, the fear felt by healthcare providers in 2025 will not be easily forgotten, as they will look to services such as hospice care to manage reimbursement risk through diversification.
Home hospital atrophy begins
Home health services are widely recognized as a promising way to reduce healthcare costs while seeing patients in their preferred environment, and that promise is driving notable innovation and investment. But the promise of hospital-at-home has yet to be fully realized, with regulatory impasses forcing the model into a standby mode. The Acute Hospital Home Care Waiver Program has been kept on life support through a series of short-term extensions, making investments in this area risky.
Lawmakers have the opportunity to pass the Hospital Inpatient Services Modernization Act, which would extend the waiver program for five years, but time is running out. The program is currently scheduled to expire on January 30th, along with other telehealth measures.
But given the long history of short-term extensions, even historic bipartisan support for home health services may not be enough for the waiver program to garner attention from lawmakers to get the bill across the finish line by the deadline.
And the industry is already seeing the impact of exemption uncertainty. Inbound Health, a home health care support platform that raised more than $50 million in investment funding, shut down in late November, citing regulatory uncertainty.
The fact that such a well-funded operation has been unable to identify a path forward shows how urgently this part of the home care market needs greater certainty and security. Since that is unlikely to happen in 2026, the home hospital sector is likely to atrophy. While some well-capitalized companies will continue to perform well, innovation will stall, growth will slow or reverse, and the future of home health care will reach its potential further away.
obstruct vertical visibility
One of the biggest news stories of 2025 was the completion of the long-disputed UnitedHealth Group (NYSE: UNH) and Amedisys deal. This acquisition exemplifies a long-standing trend of increasing vertical integration in the industry, which is set to change in 2026.
When President Donald Trump took office, there was widespread belief that the UnitedHealth deal would allow for further large-scale consolidation in the home health sector while antitrust enforcement was more relaxed. But while the UnitedHealth deal crossed the finish line, it's unlikely to happen until 2026. So-called paid providers are finding themselves under increasing political pressure, public skepticism and media criticism.
A bill proposed in September, the Surplus Profit Act, would prohibit insurance companies from buying Medicare home health providers. If passed, the bill would prevent companies like UnitedHealth from buying up health care providers that are reimbursed through Medicare Parts B and C.
“Separating UnitedHealth's insurance and physician businesses is a step toward building something better where all Americans get the care they deserve at a price they can afford,” said Rep. Pat Ryan (New York), one of the bill's sponsors.
This is not the first time lawmakers have sought vertical integration. Big pay providers have come under fire for leveraging providers to drive up the price of care and circumvent federal regulations, prompting calls for the Department of Health and Human Services (HHS) Office of Inspector General (OIG) to evaluate the cost impact of vertical integration and pay providers' ability to circumvent the requirements.
Rather than the year of rapid vertical expansion expected during the Trump era, the home health care industry expects 2026 to be a year of contraction, especially if Democrats gain power in Congress in the midterm elections. Vertical integration will not stop, but it will slow down.
