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Continued uncertainty over Medicare’s final home health rule could tie up deals in the segment for months, according to Enhabit Home Health & Hospice executives.

Legislation delaying a $635 million behavioral health cut in 2023 is now before Congress and garnering wide bipartisan support, Enhabit CEO Barbara Jacobsmeyer told investors  Monday during a Bank of America Home Care Conference.

There is significant support “to at least get a one-year pause,” Jacobsmeyer said.

But whether Congress delays the reduction or not, both Jacobsmeyer and CFO Crissy Carlisle conceded the current sense of the unknown could make it difficult for buyers and sellers to come to terms on deals.

“The challenge here is going to be getting the seller and the buyer to agree on a price — for the seller to acknowledge there is uncertainty regarding Medicare reimbursement and coming to a price that the buyer and seller can support,” Carlisle explained. 

Carlisle estimated the lack of clarity over the home health rule could stymie home health deals for months. That assessment runs counter to what some companies have been predicting. Last month, Pennant Group President John Gochnour told analysts during an earnings call that mergers and acquisitions activity in home health would likely take off in 2023. 

In October, the Centers for Medicare & Medicaid Services announced the final home health rule for 2023, which phases in half of the 7.85% behavioral cut, but also increases Medicare payments by a total of 0.7% next year. CMS had originally proposed a 4.2% payment cut. 

Although Enhabit completed the acquisition last week of Southwest Florida Home Care in Ft. Meyers, the executives said they are now primarily focused on hospice, as opposed to home health acquisitions. Uncertainty over reimbursement rates for home health is part of the reason. However, beyond reasons having to do with the home health rate cut, both Jacobsmeyer and Carlisle said the company also wants to expand Enhabit’s footprint into hospice, which currently comprises only 20% of its portfolio. Still, Carlisle said Enhabit is being very calculated about the hospice deals it pursues.

“We want to make sure we are being strategic about those opportunities and putting hospice where we already have existing home health operations,” Carlisle said.