What Ohio's Medicaid Crackdown Means for Demand, and Exit Planning

Jun 15

Written By Jake Knopfler

What Ohio's Medicaid Crackdown Means for Home Care Valuations, Buyer Demand, and Exit Planning

By Jake Knopfler

For years, healthcare operators have worried about government scrutiny.

Audits.

Recoupments.

Documentation requests.

Enrollment freezes.

Payment suspensions.

The assumption has often been that increased oversight is inherently bad for the home care industry.

Last week, Ohio provided a reminder that the reality may be far more nuanced.

The Ohio Department of Medicaid suspended payments to 49 home health providers whose billing patterns triggered fraud concerns, while state officials identified dozens of additional providers for review. At the same time, Governor Mike DeWine's administration has pushed for enhanced electronic visit verification (EVV), GPS tracking requirements, expanded provider monitoring, and a six-month moratorium on new Medicaid home health and hospice enrollments. (Ohio Department of Medicaid: https://medicaid.ohio.gov)

Many operators immediately viewed these developments as negative.

I don't.

In fact, for compliant providers, these developments may ultimately support stronger valuations, increase barriers to entry, and create a more attractive acquisition environment over the long run.

The story here is not that home care is becoming less valuable.

The story is that access to home care remains essential, while regulators are becoming less tolerant of bad actors.

That distinction matters.

The End of the "Pay-and-Chase" Era

Historically, government payers often operated under what many industry participants call a "pay-and-chase" model.

Claims were paid.

Providers operated.

Audits occurred later.

Improper payments were pursued years afterward.

Ohio appears to be moving aggressively away from that framework.

According to the Ohio Department of Medicaid, the state has secured 444 Medicaid fraud indictments, 481 convictions, and approximately $78.4 million in recovered taxpayer funds since the beginning of 2023. (Ohio Department of Medicaid: https://medicaid.ohio.gov)

Those are significant numbers.

More importantly, they signal where enforcement is heading.

States are increasingly investing in:

Predictive billing analytics
Data monitoring
EVV compliance
GPS verification
Enrollment restrictions
Pre-payment reviews
Real-time fraud detection

This isn't just an Ohio story.

It's becoming a national story.

CMS Is Quietly Sending A Message

Many agency owners focused on Ohio's actions.

The bigger story may actually be what CMS is signaling.

In its recent Home Health and Hospice Moratorium FAQ, CMS explicitly encouraged states to consider implementing Medicaid-based moratoriums where appropriate.

"CMS encourages each state to, as appropriate, implement a HHA and hospice provider moratorium tailored to the specifics of their beneficiary population." (CMS Moratorium FAQ: https://www.cms.gov/files/document/hh-hospice-moratorium-faqs.pdf)

That sentence deserves attention.

When CMS begins encouraging states to restrict provider growth in markets experiencing fraud concerns, regulators across the country pay attention.

Ohio appears to be among the first states responding aggressively.

It likely won't be the last.

The Part Most Operators Are Missing

Many owners hear the word "moratorium" and assume value destruction.

From an M&A perspective, that assumption is often backwards.

The reality is simple.

When entry becomes more difficult, existing operators frequently become more valuable.

Healthcare has demonstrated this repeatedly.

Certificate-of-Need states.

Behavioral health licensing restrictions.

Medicaid enrollment caps.

Personal care licensing limitations.

Every time barriers to entry increase, existing licensed providers become harder to replicate.

If a buyer cannot simply enter a market and build a competing platform tomorrow, existing agencies become more strategically important.

Scarcity creates value.

This does not mean every agency suddenly becomes worth more.

Far from it.

However, compliant agencies with established operations, strong payer relationships, and documented infrastructure may become increasingly attractive as new entrants face additional hurdles.

Put differently:

A moratorium does not stop home care.

A moratorium stops easy entry into home care.

Those are very different things.

Home Care Demand Is Not Going Anywhere

One of the reasons I remain bullish on the sector is that the demand drivers remain unchanged.

According to AARP research, approximately 77% of adults age 50 and older want to remain in their homes and communities as they age. (AARP: https://www.aarp.org/research/topics/community/info-2021/home-community-preferences.html)

Consumer preferences remain clear.

At the same time, healthcare systems continue searching for lower-cost alternatives to institutional care.

Ohio Medicaid recently noted that home and community-based care programs saved taxpayers more than $600 million in 2024 compared to institutional alternatives. The state further stated that home health care costs approximately half as much as nursing facility placement. (Ohio Department of Medicaid: https://medicaid.ohio.gov)

That economic reality is difficult to ignore.

Governments need home care.

Managed care organizations need home care.

Hospitals need home care.

Families want home care.

The goal is not to eliminate home care.

The goal is to eliminate fraud within home care.

Those are entirely different objectives.

Compliance Is Becoming Part Of Enterprise Value

Perhaps the most important takeaway for agency owners is how buyers evaluate risk today.

Ten years ago, many acquisitions focused heavily on:

Census
Revenue
EBITDA
Referral relationships

Those factors still matter.

But buyers have become much more sophisticated.

Today's healthcare investors increasingly review:

EVV utilization
Documentation accuracy
Audit history
Billing controls
Clinical oversight
GPS compliance
Internal reporting systems
Quality assurance procedures

The question is no longer simply:

"What are earnings?"

The question has become:

"Can those earnings survive scrutiny?"

That distinction is becoming increasingly important.

As Jake Knopfler of Acquire Care often tells healthcare owners considering a future transaction, value is rarely created during a sale process.

More often, value is unlocked through preparation, positioning, and demonstrating operational discipline before going to market.

The agencies that can confidently answer buyer diligence questions are frequently the agencies that attract the strongest buyer interest.

Why Sophisticated Buyers May Actually Like This Trend

Many operators assume increased regulation scares buyers.

Experienced healthcare buyers generally understand regulation.

They operate in it every day.

What buyers dislike is uncertainty.

They dislike:

Weak controls
Poor documentation
Compliance gaps
Regulatory exposure
Revenue that may not survive audits

Ironically, stronger enforcement can help separate high-quality operators from weaker competitors.

As that separation occurs, compliant providers often gain strategic advantages.

Referral sources become more selective.

Managed care organizations become more selective.

Hospital systems become more selective.

Acquirers become more selective.

The result can be increased demand for operators that have invested in compliance and infrastructure.

The Future Of Home Care M&A

I believe many people are drawing the wrong conclusion from Ohio.

The takeaway should not be:

"Home care is under attack."

The takeaway should be:

"Home care is becoming harder to enter and harder to operate poorly."

Those are very different headlines.

As barriers to entry increase, existing providers may benefit from greater scarcity.

As compliance expectations increase, disciplined operators may become more attractive.

As regulatory scrutiny increases, preparation becomes more important.

This is why acquisition preparation should begin long before a transaction.

Owners should be evaluating:

EVV compliance
Documentation quality
Billing practices
Financial reporting
Clinical oversight
Internal controls
Audit readiness

The strongest transactions are rarely built overnight.

They are built years before the business goes to market.

One Buyer Is No Buyer

In healthcare M&A, competition drives outcomes.

One of the principles we frequently discuss with healthcare owners is simple:

One buyer is no buyer.

As markets become more regulated and buyers become more selective, broad buyer outreach becomes increasingly important.

The agencies that generate strong acquisition outcomes are often the agencies that combine:

Strong financial performance
Clean compliance history
Attractive market positioning
Competitive buyer processes

Regulatory complexity does not eliminate buyer demand.

In many cases, it concentrates demand toward the highest-quality operators.

Final Thoughts

The Ohio Medicaid story is not a warning about the future of home care.

It is a preview of the future of compliance.

More oversight is coming.

More data monitoring is coming.

More verification requirements are coming.

More diligence is coming.

But so are the demographic tailwinds.

So are the cost advantages.

So is consumer demand.

And potentially, so are higher barriers to entry.

For agency owners, the lesson is straightforward.

Do not focus solely on the crackdown.

Focus on what the crackdown rewards.

Strong documentation.

Strong compliance.

Strong operations.

Strong preparation.

The agencies that embrace those fundamentals may discover that increasing regulatory scrutiny does not reduce value at all.

It may ultimately reinforce it.

And if enrollment moratoriums continue to expand, buyers may find themselves in a position where they cannot simply walk into a market tomorrow and open a competing agency.

When that happens, compliant, established providers become increasingly difficult to replace.

And in healthcare M&A, scarcity has always mattered.