Inside UnitedHealth Group’s Defense Of $3.3B Amedisys Acquisition

Recent developments in the legal battle over the planned $3.3 billion UnitedHealth Group (NYSE: UHG) acquisition of Amedisys (Nasdaq: AMED) have moved the case closer to trial and shed more light on how UnitedHealth and Amedisys are pursuing divestments and defending the transaction.

First, UnitedHealth dropped its motion to dismiss the case, saying that the U.S. Department of Justice (DOJ)–which is suing the block the deal–had produced more detailed information about which counties the government alleges will be particularly harmed by weakened home health competition, should the acquisition be consummated.

Then, UnitedHealth on Feb. 7 filed its response to the DOJ’s complaint. Among other information, the response included more precise information about the number of locations that UnitedHealth and Amedisys are seeking to divest, to “remedy any alleged competitive harm.”

The divestment plans involve a minimum of 121 home health facilities and seven hospice facilities. A planned deal to have VitalCaring acquire Amedisys locations recently collapsed, but “diligence processes are already underway to identify qualified buyers that will be able to operate and grow the divested assets,” UnitedHealth stated in its response to the complaint.

UnitedHealth further asserts that the government’s claims of potential competitive harm are problematic for several reasons, including that the DOJ is “ignoring” the proposed divestments and using “hyper-narrow market definitions.”

“If successful, this lawsuit would deprive patients, nurses, providers, and the overall

healthcare system of these significant benefits,” the response stated. “Worse, it would do so based on flawed economic theory, artificially narrow geographic markets, out-of-context quotations from a handful of documents, and with zero regard for the actual improvements to patient satisfaction and quality of care that would flow from the transaction.”

Next steps in the case will come quickly, with a scheduling conference scheduled to take place Feb. 20.

In this week’s exclusive, members-only HHCN+ Update, I analyze UnitedHealth’s response to the DOJ and offer key takeaways, including:

– The significance of a seemingly minor aspect of UnitedHealth’s argument, related to specialized care programs

– How the case is emblematic of the government’s sometimes fraught pursuit of value-based care and Medicare Advantage (MA) expansion

– What the most profound impact of the case will be

The value-based care conundrum

An important aspect of the argument that UHG is making for the Amedisys acquisition revolves around value-based care and Medicare Advantage.

“Folding Amedisys into UHG’s mission to better coordinate patient care and clinical alignment will also reduce hospital readmissions, saving patients—and the healthcare system—tens of millions of dollars,” the company stated in its response to the DOJ’s complaint.

These goals of more coordinated care and lower costs are major objectives of the federal government itself, as UHG also emphasized in its response:

“Among other benefits, this acquisition will fill gaps in patients’ continuum of care and will provide UHG with an enhanced platform for its initiatives to expand value-based care—a model of care that enjoys broad support across many constituencies, including CMS [Centers for Medicare & Medicaid Services).”

Indeed, CMS is pushing for all Medicare fee-for-service beneficiaries to be enrolled in some form of value-based care arrangement by 2030.

Another mega-trend shaping the health care sector is the expansion of Medicare Advantage, which itself is considered a type of value-based care, given that the program is meant to reward a combination of quality and cost efficiency. Medicare Advantage is expected to accelerate under the Trump administration. Key Trump picks for leadership positions–including Dr. Mehmet Oz as CMS chief–have expressed strong support for Medicare Advantage.

Together, the push for value-based care generally and Medicare Advantage specifically almost certainly are driving consolidation in the health care sector. That’s because health care leaders perceive that scale is important to success in these models.

In summing up the findings of a survey asking health system executives about their motivations in acquiring physician practices, RAND cited the ability to “spread financial risk so that the health system can successfully participate in value-based payment contracts, such as Accountable Care Organizations,” as well as “to have greater leverage in price negotiations with payers.” The executives also spoke about gaining greater control over multiple settings in order to better coordinate care and manage population health.

Certainly, at-home care providers have spoken repeatedly about the need for greater scale in order to be empowered participants in value-based care and Medicare Advantage.

“The thesis for why we want to continue to grow is to be able to get deep penetration within our markets; that makes us a more attractive partner for accountable care organizations (ACOs) and more appealing service provider for payers,” Jeff Wiberg, CEO of Family Resource Home Care, said at HHCN’s Capital + Strategy conference in 2019.

More recently, a growing chorus of providers have spoken about the challenges in negotiating favorable or even reasonable Medicare Advantage rates without the leverage that scale would provide. Enhabit (NYSE: EHAB) made waves by walking away from MA contracts with UHG last year; this move was possible only because Enhabit–which operates more than 250 home health locations and 100 hospice locations–was able to forge two new large national MA contracts and more than 60 other new contracts through its payer innovation strategy.

One significant facet of the UHG case is the fact that the company’s own insurance business, UnitedHealthcare, is the nation’s largest Medicare Advantage provider. The government alleges that the Amedisys acquisition would both give UnitedHealth more bargaining power with third-party insurers and enable the company itself to “command higher reimbursement rates.”

Concerns about the overall scale of UHG and the influence that the company wields over nearly every dimension of U.S. health care extend well beyond the Amedisys deal, and are at the center of other DOJ investigations. But UHG is hardly the only conglomerate to pursue vertical integration in a bid for greater control over various components of the health care system. The business strategy seems to make more sense year upon year, as the federal government has enacted policies and pushed providers and payers to pursue goals that have required scale and driven consolidation. Now, through various efforts–including the lawsuit against Amedisys deal–the feds are intervening to prevent this quest for scale and integration from creating what some regulators and enforcers see as monopolist organizations.

This is a conundrum that is perhaps inevitable in value-based care models and Medicare Advantage. After all, MA is a private-public program that has to balance the public good with the exigencies of profit-driven, private sector businesses; the government might have no choice but to both feed the MA beast and try to keep it under control.

This means that a line has to be drawn between sought-after integration across the health care sector and unlawful consolidation of providers, payers and other entities. Drawing that line is difficult and will not be accomplished through this single home health lawsuit, but to the extent that the outcome–whatever it is–contributes to defining that line, that will be the case’s most significant legacy.

Specialized care and the future of home health

Another sentence that caught my eye in UHG’s response to the DOJ concerned specialized care programs:

“Combining LHC’s and Amedisys’s services will also allow the company’s agencies to broaden the types of care they offer, as each of the merging parties has separately developed specialized clinical programs that the other does not currently offer—including programs focused on diabetes, chronic obstructive pulmonary disease, congestive heart failure, and Alzheimer’s and dementia.”

Implicit in this statement is the fact that such specialized programs are needed, and increasingly so, as the acuity level of home health patients has been on the rise. About a year ago, Bayada Home Health Care President Michael Johnson shared findings from an analysis of four years of payment data, which showed an increase in patients needing neuro rehab, cardiac care and complex behavioral health.

Bayada is hardly the only provider observing this trend, which is tied in part to the expansion of value-based care and MA; with payment models incentivizing shorter high-cost hospital and skilled nursing facility stays, there is a push to discharge patients to the home setting more rapidly and with more complex conditions. But there are other trends at play here as well, including the evolution of technology that enables more sophisticated care to be delivered in the home.

Providing specialized care for complex diagnoses requires not just particular technology but other resources. Just two weeks ago, we reported on Amedisys’ specialized care programs, which among other components include “a disease-specific emergency medical record (EMR) pathway, patient self-care guides, informational placards, success logs and educational resources for clinicians,” according to Barbara Andazola, vice president of clinical practice, strategy and programs at Amedisys.

Furthermore, with reimbursement rates putting pressure on home health providers’ bottom lines, recruiting, paying and supporting clinicians with specialized skills also is a daunting challenge, and one that demands investment.

“Each clinician must complete mandatory learning and relevant skills validation both upon hiring and annually thereafter,” Andazola told HHCN. “Our disease-specific program materials are reviewed and updated as needed by our corporate clinical multidisciplinary team at least once a year and whenever advancements in care or standards are published. We provide supplemental training for clinicians and patients when updates are necessary. This typically involves live training sessions and skills validation for clinicians, which may include partnerships with product manufacturers or service providers.”

Perhaps rising acuity in home health favors the UHG-Amedisys deal, which would arguably create a combined company that will offer a wider array of specialized services, with more resources to ensure high-quality care to complex patients. On the other hand, the DOJ already seems to be arguing that UHG and Amedisys currently have the resources to offer specialized care programs, and they should remain separate and compete for complex patients.

What’s clear is the stakes are high with regard to patient wellbeing if home health providers lack the skills or resources to provide more complex care going forward, especially with the pressure that home health providers are under from reimbursement policy and MA rates. Consider this disturbing comment that a home health provider submitted to CMS, during the 2025 payment rule comment period:

In our agency, we recently had to refer a patient who was sent to us to another agency due to the patient’s insurance. The patient developed a pressure wound and the nurse who was sent to treat the patient was not properly trained in wound care. Over the next few weeks, the patient reported that the wound was increasing in severity and he was concerned that the nurse did not seem to know what she was doing. He requested that she get some additional help. The nurse brought her supervisor to observe the wound care provided and ask if it was proper or adequate. The supervisor instructed her that the only thing she could do correctly at that point was call an ambulance for the patient. The patient had developed gangrene in the wound and was transported to a hospital. A few weeks later, the patient’s leg was amputated just below the knee.

This incident appears to highlight how patients are suffering due to both the insurance landscape and home health providers’ struggle to keep pace with rising acuity. The same commenter noted that the “incidence of home health admissions that include wound care” are on the rise.

Regardless of how the legal battle plays out, I do hope that the parties involved in the Amedisys case recognize and take into account the changing nature of the patients served by home health companies, and the implications that these changes hold for what level of scale and sophistication is appropriate and even necessary for providers to achieve.