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Last week got off to a rough start for one of the biggest home-based care providers in the country. Bayada Home Health Care announced layoffs among 10% of its headquarters staff — this translates to about 100 jobs, focused on its operational and administrative support team.
When a company as large as Bayada enacts layoffs, individuals outside the organization often lack insight into why these cuts were made. This wasn’t the case for Bayada.
In fact, Bayada was transparent about how the current reimbursement environment contributed to what CEO David Baiada described as “one of the hardest decisions” the company has ever made.
“While Bayada is stable, strong and growing, we operate in a challenging environment where the costs of providing care are growing faster than the ability of governments and insurance companies to pay for that care,” the company said in a statement shared with Home Health Care News. “This requires us to be more efficient and intentional in how we work, so we can continue serving our clients now and well into the future.”
Given how closely we have been following updates at Bayada over the years, it wasn’t a surprise to see the company publicly comment on the current reimbursement landscape.
What’s more, Bayada is far from the first home-based care company to point out how the challenges created by the current environment impact business.
In this week’s exclusive members-only HHCN+ Update, I examine the various payer landscapes home-based care providers are experiencing, and how this could lead to more layoffs across the industry and other consequences. I also offer some takeaways, including:
– Home-based care providers are battling on multiple fronts with regard to reimbursement
– The lack of healthy reimbursement often forces providers to sacrifice staffing resources, and in turn, leads to reduced access to care.
Home-based care payer environment, and Bayada’s approach
The reimbursement landscape Bayada is battling requires attention on multiple fronts.
Over the years, my colleagues and I at HHCN have regularly reported on one of the most notable of these fronts: drastic cuts to Medicare fee-for-service rates.
Last year, U.S. Centers for Medicare & Medicaid Services (CMS) implemented a home health final payment rule that included an aggregate 0.5% increase, but that also included a reduction in the rate to account for budget neutrality provisions in the transition to the Patient Driven Groupings Model (PDGM). This marked the third consecutive year that CMS included permanent cuts to home health payments.
At the time, I reached out to several home health leaders to gather their reactions to what they view as consistent payment cuts from CMS.
“While the average annual payment rate cuts for CY 2025 are lower than anticipated, home health care providers will unfortunately still see access-limiting reimbursement levels compared to previous years,” Dan Savitt, CEO and president of VNS Health, previously told me. “This is especially concerning given the urgent need to invest in and nurture a committed clinical workforce in today’s highly competitive post-pandemic landscape. By CMS’ own account, access to home health care has declined by more than 20% nationally over the last four years. In low-income urban and rural ‘home health deserts,’ where there is already a concerning lack of services, the situation is far worse.”
Steven Landers, CEO of the National Alliance for Care at Home, emphasized the flaw in the budget neutrality methodology.
“The 2025 final version of Medicare home health payment rates continues the ongoing and predictable rate reductions impacting patient access to home health since the beginning of the new payment model in 2020,” he previously told me. “The decline is due to a fatally flawed budget neutrality methodology that CMS employed to arrive at the rate adjustments, and the risk to homebound patients is compounded by the expansion of Medicare Advantage and associated financial and administrative barriers to care. We need help from Congress to end this assault on the Medicare home health benefit.”
In the past, the Alliance, then known as the National Association for Home Care & Hospice (NAHC), took aim at the Medicare home health payment calculations, going as far as to sue the U.S. Department of Health and Human Services (HHS). The lawsuit was first filed in 2023, and focused on the home health PDGM budget neutrality adjustment. The organization re-filed the lawsuit the following year.
The lawsuit is just one of the ways I’ve seen providers and industry advocates fight back against CMS cuts. Here’s another — Chico, California-based Butte Home Health and Hospice started a “Stop the Home Health Cuts Campaign.” This campaign exemplifies some of the ways providers are directly addressing the issue.
As I pointed out in my initial coverage of the layoffs, Bayada has emerged as one of the companies on the frontline of advocacy efforts over the years.
“Our schedule has always been go-go-go,” David Totaro, chief government affairs officer at Bayada, said on an episode of HHCN’s Disrupt podcast. “There is no stop and go with advocacy. Consistency is what really matters. One of the things that we’ve learned over the last six to nine months is that our role as providers is to change the narrative from a discussion about cost and cuts to a narrative about why or how these cuts are going to impact the lives of our legislators’ constituents.”
Totaro noted that he and his team had been advocating on the Hill since the home health payment rule was released in 2023. Despite these efforts, the company clearly still felt the need to trim operational costs with its HQ job cuts. Other companies are also feeling the need to increase efficiencies and cut costs. For example, Enhabit Inc. (NYSE: EHAB) discussed using technology to cut costs in its Q1 earnings call.
While providers are struggling with Medicare reimbursement rates, many aren’t fairer better with Medicare Advantage (MA) plans. Historically, MA has offered providers lower rates.
Providers have been critical of these low rates, and some have even been willing to walk away from unfavorable contracts. However, due to increased penetration, MA is becoming more difficult for providers to completely avoid.
Last year, almost 33 million Medicare beneficiaries enrolled in an MA plan. This is more than half of the Medicare population, according to KFF data. Plus, the Congressional Budget Office predicts that the number of Medicare beneficiaries enrolled in MA plans will spike to 64% by 2034.
As MA becomes more inescapable, lower rates translate to lower margins for providers which is, ultimately, unsustainable.
And then there’s the situation with Medicaid, which adds further complexity. On the one hand, there’s some positive news on the Medicaid front. Addus HomeCare Corporation (Nasdaq: ADUS) announced last week that it expects a $35 million revenue boost thanks to reimbursement rate increases in Illinois and Texas.
However, Medicaid is also facing threats of massive cuts in the “big, beautiful bill” that is currently in the hands of Capitol Hill lawmakers. Should states see a drop in federal Medicaid dollars as a result of this legislation, reimbursement rates for various types of providers – including home care providers – would be in jeopardy.
The potential for future layoffs
It’s not a bold prediction to say that further layoffs could be coming in the industry, given the reimbursement challenges confronting providers. But the fact that Bayada has just announced this round of layoffs I take in some ways as an especially ominous sign of what’s to come.
That’s because Bayada is a large and diversified company, offering home health, personal care, private duty nursing, pediatric care, hospice, habilitation and applied behavior analysis (ABA) and autism therapy. On the one hand, diversification can create complexity-related risks, and it’s possible that a large company like Bayada might find layoffs a sound business decision, given the large amount of resources that the enterprise can draw from in order to compensate for the loss of headcount. On the other hand, such diversification also might create some insulation from risks and the ability to weather downturns in certain parts of the business without needing to part ways with a large number of employees.
The fact that Bayada moved forward with these layoffs suggests not just how serious the issues are but could be another sign of the wide reach of current reimbursement challenges, involving various payer types, care levels and geographies.
In other words, if layoffs were the right move for Bayada, I wouldn’t be surprised if other companies that have less reach and diversification might find themselves facing even tougher decisions about how to respond to current challenges. Certainly, layoffs might be on the table for them, but a reduction in locations, a pivot to different business lines, or even closure could be on the table.
These are the very outcomes that industry advocates and providers have been warning about. Seeing them come to fruition is not welcome, but the hope is that as lawmakers, policymakers, payers and other stakeholders see the consequences of rate reductions, they finally take action to address these multifaceted challenges and preserve access to at-home care.
Given what Totaro said about the organization’s “go-go-go” approach to advocacy, Bayada is sure to share its story with the relevant stakeholders in government and across the U.S. health care system.
I think it would be wise for other providers and advocates to point to the Bayada layoffs as well, in their own advocacy efforts, and also to be transparent about how the current payment landscape is affecting their own businesses. As Totaro noted, a “discussion about cost and cuts” did not move the needle; now that the cuts are actually coming to pass, the story has to become more about the human toll being exacted.
It’s not a happy story, and headlines about layoffs are tough for us to write on Home Health Care News. But to the extent that getting this type of information out in the world – and in front of the right people – can make a positive difference, I hope that other providers will be willing to share bad news, as necessary, with us and the public in the months to come.
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