Medicare decides a cost-saving strategy costs too much

After pushing more medical care out of hospitals and into patients’ homes, the federal government wants to pay less for home healthcare.

Impending changes in Medicare’s home health payment system would dramatically alter how agencies are reimbursed for services, cutting payments by 8 percent. Lower rates would squeeze profit margins in what has been a reasonably lucrative business. Companies that can’t make acceptable returns as profitability shrinks will likely get out, leaving patients with fewer choices. Those that remain will look to get bigger, triggering consolidation and putting more pressure on smaller players.

Some local hospital networks, such as Amita Health, aim to grow under the new system. Others are walking away.