Home care giant Amedisys is temporarily pumping the brakes on home health acquisitions as a result of the Centers for Medicare & Medicaid Services’ proposed 7.69% Medicare payment cut to home health providers. Company executives said during an earnings call with analysts Thursday they are slowing mergers and acquisitions activity in the segment until they have a “better line of sight” regarding the proposed rule.

“The proposed cuts to the home health industry are unsound and we are working on a comment letter to thoroughly outline our position about the assumptions, our experience with the first two years of PDGM and the impact from the ongoing pandemic,” Amedisys President and CEO Chris Gerard said on the call.  

Gerard also took aim at CMS’s plans to claw back $2 billion in Medicare overpayments in 2020 and 2021, saying the plan is based on flawed methodology.

“In fact, we believe there has been no overpayment at all,” Gerard continued. “As we have in the past, we are prepared to engage with CMS alongside our colleagues in the home health industry.”

Gerard applauded legislation announced earlier this week in the U.S Senate that would delay the Centers for Medicare & Medicaid Services from implementing the proposed cut until 2026. Following the earnings call, the House introduced a similar bill

Amedisys’ about-face on M&A activity is a departure from its aggressive pursuit of home care assets over the past year. In April, the company closed on the acquisition of home health service provider Evolution Health. In February, it announced the acquisition of home health assets from AssistedCare Home Health and RH Home Care Services.  

The proposed home health rule is another setback for Amedisys and an industry still trying to buck ongoing headwinds from the COVID-19 pandemic and new challenges from inflation. On Wednesday, Amedisys reported a disappointing second quarter. While the company beat Wall Street forecasts, its revenues declined $6.3 million in the second three months of the year compared to the same period last year. As a result, the company  lowered earnings guidance for the remainder of the year.

While hospice admissions grew approximately 6% in the quarter, home health admissions were flat. Gerard partly attributed the sluggishness in home health to increased telehealth visits. He believes physicians are less likely to prescribe home health to patients through telemedicine than through face-to-face encounters.

“There is value in listening to someone’s lungs when they come in for an exam,” Gerard explained. “If that is not happening and you’re just doing a video conference, there are opportunities for things to be missed and conditions to worsen over time.”