Selling a Home Health, Hospice, or Home Care Agency in 2026: What You Need to Know

By Cory Mertz, M&AMI, Managing Partner, Mertz Taggart

The home-based care M&A market remains active in 2026 — but it's not uniform. For high-quality agencies with strong financials, clean compliance histories, strong management teams, established referral networks, stable census, and a favorable payer mix, buyer demand is real and premium valuations are still attainable — while multiples have come off their 2021 peak, they remain very strong by historical standards. For agencies that don't check enough of the right boxes, premium valuations are much harder to come by: buyers are interested but disciplined, and the path to a strong outcome may require more work.

What has changed for everyone is the environment around the transaction itself.

A combination of regulatory shifts, intensified fraud enforcement, and operational complexity is making deals harder to structure, take longer to close, and more dependent on experienced guidance to get across the finish line. Understanding these dynamics before going to market is increasingly what separates a smooth process from a difficult one.

This article covers the major factors shaping home-based care transactions right now, what they mean for sellers, and how to navigate them.

Before getting into the specifics, it's worth seeing how much of this is connected. The enrollment moratorium, the renewed bite of the 36-month rule, the enhanced oversight in high-risk states, and the recent enforcement takedowns are not separate events — they are facets of a single, coordinated federal crackdown on fraud in home health and, most acutely, hospice. Read together rather than as isolated hurdles, they explain both why the deal environment has tightened and why going to market well-prepared matters more than it used to.

How Does the CMS Enrollment Moratorium Affect Your Sale?

In May 2026, CMS announced a nationwide moratorium on new Medicare enrollments for home health and hospice providers. The moratorium, effective for an initial six-month period, was implemented as part of a broader effort to combat fraud, waste, and abuse in the Medicare program.

For sellers, the immediate effect is arguably positive. Buyers who previously had the option to build de novo in a target market — rather than acquire — are now effectively forced into the acquisition lane. That increases buyer competition for existing Medicare-certified providers.

What this means for sellers: Your existing Medicare certification has increased strategic value. But expect buyers and their counsel to spend more time on transaction structure and due diligence, so build extra time into your closing timeline.

What Is the 36-Month Rule, and Does It Affect Your Sale?

One of the most frequently misunderstood obstacles in home health and hospice M&A is the 36-month rule. Under CMS regulations, a Medicare-certified home health agency or hospice that was acquired, changed ownership, or was initially enrolled within the prior 36 months may be subject to restrictions on a subsequent change of ownership.

In practical terms, this means that if your agency was acquired, enrolled, or involved in a prior transaction within the last three years, a buyer may not be able to complete a CHOW without triggering additional scrutiny, delays, or — in some cases — the need to re-enroll entirely.

The 36-month rule affects de novo agencies, recently acquired agencies, and providers that have undergone structural changes such as mergers or entity reorganizations. It is not always apparent on the surface. A good advisor will surface this before you go to market. When sellers aren’t prepared, it can create real friction in an otherwise clean deal. There are exceptions — for example, when a parent company undergoes an internal restructuring, or when the agency has filed two consecutive years of full cost reports since its last ownership change — but they are narrow and fact-specific.

What this means for sellers: Know your agency’s Medicare enrollment history and whether the 36-month window applies before you go to market. An experienced advisor will surface this early — before you're in exclusivity with a buyer and the clock is ticking.

How Is the Fraud Crackdown Changing Buyer Diligence?

Home-based care has been under increasing government scrutiny, and that trend has accelerated in 2026. CMS, OIG, and the Department of Justice have all signaled increased enforcement focus on home health and hospice billing practices — including documentation practices and length-of-stay patterns in hospice.

The scrutiny is most acute in hospice. The same fraud concerns that prompted the enrollment moratorium have produced a coordinated crackdown: CMS has imposed heightened screening on hospices that are newly enrolling or changing ownership in the states it considers highest-risk — Arizona, California, Georgia, Nevada, Ohio, and Texas — and is rolling out a public hospice scoring system to flag providers with concerning utilization, quality, or compliance patterns. On the enforcement side, CMS, OIG, and the Department of Justice have suspended payments to hundreds of suspect providers — including roughly 800 hospices and home health agencies in the Los Angeles area — and continue to prosecute the operators behind sham hospice schemes. For hospice owners, that means buyers and their regulatory counsel will scrutinize eligibility documentation, length-of-stay, and live-discharge patterns especially closely, and a clean, well-documented patient record is now a genuine differentiator.

For sellers, the direct impact is in the diligence process. Buyers — particularly those backed by private equity or working with healthcare regulatory counsel — are doing more work on billing compliance than they were two or three years ago. Claim-level review, documentation audits, and outside regulatory counsel are now routine on transactions of any meaningful size.

This doesn't mean your agency has a problem. Most well-run providers have nothing to worry about. But it does mean that buyers are spending more time on compliance review, and that any practice that could be perceived as inconsistent with CMS guidance will require explanation and documentation.

What this means for sellers: A billing audit before going to market is no longer optional — it's table stakes. Identifying and resolving compliance questions before a buyer finds them puts you in a far stronger negotiating position. Surprises in diligence are deal killers. This is even more critical in the enhanced-oversight states, where hospice providers face the closest scrutiny.

How Do State Regulations Affect Your Sale?

Beyond federal CMS requirements, state-level regulatory environments vary significantly and are becoming increasingly important in home-based care transactions.

Several states have enacted or are enforcing heightened oversight of home health and hospice providers — California in particular has seen significant regulatory activity affecting transactions in that market. State licensure transfers and Certificate of Need (CON) requirements add layers of complexity that vary by geography.

A growing number of states also require advance notice and regulatory review of a healthcare transaction before it can close — in some states by the attorney general — and these reviews can add months to the timeline, sometimes with the authority to impose conditions on or block a deal outright.

For multi-state providers, the complexity multiplies. A transaction that is straightforward in one state may involve multiple parallel regulatory processes in another.

Indiana is a useful example of how state and federal rules can compound. Under a recent state mandate, home health agencies enrolled in Indiana Medicaid must also be enrolled as Medicare providers to keep receiving Medicaid reimbursement — a requirement effective July 1, 2026, with a final completion deadline of June 30, 2027 for agencies that began the process on time. For agencies that were previously Medicaid-only, enrolling in Medicare starts a fresh 36-month clock — which can make them difficult to sell until that window closes, because a buyer’s change of ownership within 36 months of the new Medicare enrollment would keep the provider agreement from conveying.

What this means for sellers: Know your state-specific regulatory requirements before going to market, and ensure your advisor knows how to navigate state-specific regulatory requirements. State-level issues that surface late in a transaction can cause delays and force renegotiations.

Do 1099 Caregivers Create Risk When Selling?

Home care agencies — particularly those using independent contractors for care delivery — have faced increased scrutiny around worker classification. Federal and state regulators have been active in examining whether caregivers classified as independent contractors should be treated as employees, with significant implications for payroll taxes, benefits obligations, and liability exposure.

Buyers are well aware of this issue and typically conduct labor compliance reviews as part of diligence. Agencies with a high proportion of 1099 workers will face questions about the structure of those arrangements and whether they are defensible under applicable law.

What this means for sellers: If your agency relies on independent contractors, have a clear and documented rationale for that classification. In some cases, transitioning workers to employee status before going to market may be appropriate. Your advisor can help you assess the risk and determine the right approach.

What Does This Mean for Owners Considering a Sale?

None of the above should be read as a reason not to sell. Demand across home health, hospice, and home care remains strong for well-positioned agencies, and even companies that don't check every box are transacting — it just requires more preparation, more patience, and more experienced guidance.

What it does mean is that the path from LOI to close is more complex than it was a few years ago — and that complexity has a cost. Deals that surface compliance issues or regulatory gaps in diligence are more likely to fall apart, take longer to close, or close at a lower price than the owner expected.

The owners who are achieving the best outcomes right now are the ones who understand where they stand before they go to market — clean financials, a billing audit behind them, a clear picture of their Medicare enrollment history and compliance status, no unresolved audits, surveys, or other regulatory issues that could hold up a deal, and an advisor who understands how these issues play out in a transaction.

If you are considering a sale in the next one to three years, the best time to start that preparation is now.

Cory Mertz, M&AMI, is Managing Partner at Mertz Taggart, a sell-side M&A advisory firm specializing in home health, hospice, home care, and behavioral health transactions. Mertz Taggart has closed more than 109 transactions across 35 states since 2014.

To discuss a potential sale confidentially, contact Mertz Taggart at mertztaggart.com.