3 unchanged sentences
Our services are principally provided in-home under agreements with federal, state and local government agencies, managed care organizations, commercial insurers and private individuals.
−Removed: Our consumers are predominantly “dual eligible,”
−Removed: meaning they are eligible to receive both Medicare and Medicaid benefits.
+Added: Our consumers are predominantly “dual eligible,” meaning they are eligible to receive both Medicare and Medicaid benefits.
As of December 31, 2023, we provided services in 22 states through approximately 219 offices.
−Removed: For the years ended December 31, 2022 and 2021, we served approximately 66,000 and 67,000 discrete consumers, respectively.
+Added: For the year ended December 31, 2023, we served approximately 91,000 discrete consumers.
We continue to drive organic growth while also growing through acquisitions, focusing on growth in the states in which we have a presence while adding clinical care services to our offerings.
−Removed: As of December 31, 2022, we provide all three levels of care, personal care, home health and hospice services, in Ohio, Illinois and New Mexico and strategically continue to pursue other markets.
+Added: As of December 31, 2023, we provide all three levels of care, personal care, home health and hospice services, in Ohio, Tennessee, Illinois and New Mexico and strategically continue to pursue other markets.
A summary of our financial results is provided in the table below.
8 unchanged sentences
We coordinate the services provided by our team with those of other healthcare providers and payors, as appropriate.
−Removed: Changes in a consumer’s conditions are evaluated by appropriately trained managers, which may result in a report to the consumer’s case manager at a managed care organization or other payor.
−Removed: By providing care in the preferred setting of the home and by providing opportunities to improve the consumer’s conditions and allow early intervention as indicated, our model also is designed to improve consumer outcomes and satisfaction.
+Added: Changes in a consumer’s conditions are evaluated by appropriately trained managers, which may result in a report to the consumer’s case manager at a managed care organization or other payor.
+Added: By providing care in the preferred setting of the home and by providing opportunities to improve the consumer’s conditions and allow early intervention as indicated, our model also is designed to improve consumer outcomes and satisfaction.
We believe our model provides significant value to managed care organizations.
5 unchanged sentences
These services allow the elderly and other infirm adults who require long-term care and assistance with activities of daily living to maintain their independence at home with their families.
−Removed: Personal care services are a significant component of home and community-based services (“HCBS”), which have grown in significance and demand in recent years and during the COVID-19 pandemic.
−Removed: In particular, the demand for personal care services is growing from managed care delivery models, including Medicaid Long-Term Services and Supports (“LTSS”) programs and Medicare Advantage plans.
+Added: Personal care services are a significant component of home and community-based services (“HCBS”), which have grown in significance and demand in recent years.
+Added: In particular, the demand for personal care services is growing from managed care delivery models, including Medicaid Long-Term Services and Supports (“LTSS”) programs and Medicare Advantage plans.
Managed care plans aim to manage cost, utilization and quality through collaboration of health insurance plans and healthcare providers.
−Removed: We also offer personal
−Removed: care services to private pay consumers.
+Added: We also offer personal care services to private pay consumers.
We expect demand for HCBS to continue to grow due to the aging of the U.S.
1 unchanged sentence
Because our model serves an aging population in a home setting at a lower cost, we believe that we have favorable opportunities for growth.
−Removed: Historically, there were limited barriers to entry in the home-based services industry.
−Removed: As a result, the personal care, home health and hospice service industries developed in a highly fragmented manner, with few large participants and many small ones.
−Removed: Few companies have a significant market share across multiple regions or states.
−Removed: The lack of licensure or certification requirements in some states makes it difficult to estimate the number of home-based services agencies.
−Removed: We expect ongoing consolidation within our industry, driven by the desire of healthcare systems and managed care organizations to narrow their networks of service providers, and also as a result of the industry’s increasingly complex regulatory, operating and technology requirements.
−Removed: We believe we are well positioned to capitalize on a consolidating industry given our reputation in the market, strong payor relationships and integration of technology into our business model.
+Added: The personal care, hospice and home health service industries have developed in a fragmented manner, with many small participants and a few larger participants that have a significant market share across multiple regions or states.
+Added: The historic lack of licensure or certification requirements in some states makes it difficult to estimate the number of home-based services agencies, although these requirements and other barriers to entry are now increasing.
+Added: We expect ongoing consolidation within our industry, driven by the desire of healthcare systems and managed care organizations to narrow their networks of service providers, and also by the industry’s increasingly complex regulatory, operating and technology requirements.
+Added: We believe we are well positioned to capitalize on these trends, given our reputation in the market, strong payor relationships and integration of technology into our business model.
The personal care services industry is subject to increasing regulation.
At the federal level, efforts have focused on improved coordination of regulation across the various types of Medicaid programs through which personal care services are offered.
−Removed: Federally required state mandates include implementing electronic visit verification (“EVV”), which is used to collect home visit data, and obtaining state licenses or registrations.
−Removed: Providers must dedicate substantial resources to ensure continuing compliance with all applicable regulations and significant expenditures may be necessary to offer new services or to expand into new markets.
−Removed: We believe licensing requirements and regulations, including those related to EVV, the increasing focus on improving health outcomes, the rising cost and complexity of operations and technology and pressure on reimbursement rates due to constrained government resources may discourage new providers and may encourage industry consolidation.
−Removed: The Medicare-Medicaid Coordination Office (“MMCO”) was established within the Centers for Medicare & Medicaid Services (“CMS”) to improve services for consumers who are eligible for both Medicare and Medicaid, also known as “dual eligibles,”
−Removed: and improve coordination between the federal government and states to enhance access to quality services to which they are entitled.
+Added: For example, federal standards require states to mandate that providers use an electronic visit verification (“EVV”) system to collect certain data from Medicaid-funded home visits.
+Added: States have flexibility in the model they use to implement the mandate, which means EVV systems, vendors and contracting processes can vary significantly by state.
+Added: States increasingly require providers to register with regulatory authorities or obtain licenses.
+Added: Providers must dedicate substantial resources to ensure continuing compliance with all applicable laws and regulations, and significant expenditures may be necessary to offer new services or to expand into new markets.
+Added: We believe licensing and other operational requirements and regulations, the increasing focus on improving health outcomes, the rising cost and complexity of operations and technology and pressure on reimbursement rates may discourage new providers and may encourage industry consolidation.
+Added: The Medicare-Medicaid Coordination Office (“MMCO”) was established within the Centers for Medicare & Medicaid Services (“CMS”) to improve services for consumers who are eligible for both Medicare and Medicaid, also known as “dual eligibles,” and improve coordination between the federal government and states to enhance access to quality services to which they are entitled.
The MMCO works with state Medicaid agencies, other federal and state agencies, physicians and others, to make available technical assistance and educational tools to improve care coordination between Medicare and Medicaid and to reduce costs and improve beneficiary experience while reducing administrative and regulatory barriers between the programs.
In addition, the MMCO and the CMS Innovation Center are considering or have implemented demonstration projects affecting reimbursement for services provided to dual eligibles.
−Removed: We believe that our personal care program and our technology make us well-suited to partner with managed care organizations to address the needs of the “dual eligible”
−Removed: population, and we believe that our ability to identify changes in our consumers’
−Removed: health and condition before acute intervention is required will lower the overall cost of care.
+Added: We believe that our personal care program and our technology make us well-suited to partner with managed care organizations to address the needs of the “dual eligible” population, and we believe that our ability to identify changes in our consumers’ health and condition before acute intervention is required will lower the overall cost of care.
We believe this approach to care delivery and the integration of our services into the broader healthcare continuum are particularly attractive to managed care organizations and others who are ultimately responsible for the healthcare needs of our consumers and over time will increase our business with them.
1 unchanged sentence
The growth of our revenues is closely correlated with the number of consumers to whom we provide our services.
−Removed: Our continued growth depends on our ability to provide consistently high-quality care, maintain our existing payor relationships, establish relationships with new payors, increase our referral sources and attract and retain caregivers.
+Added: Our continued growth depends on our ability to provide consistent high-quality care, maintain our existing payor relationships, establish relationships with new payors, increase our referral sources and attract and retain caregivers.
Our continued growth is also dependent upon the authorization by state agencies of new consumers to receive our services.
We believe there are several market opportunities for growth as the population ages.
−Removed: Moreover, individuals generally prefer to receive care in their homes, and we believe the COVID-19 pandemic has heightened this preference due to health concerns that may be associated with institutional settings for long-term care, along with concerns about the re-imposition of visitor restrictions that were imposed in many long-term care facilities in response to the pandemic.
+Added: Moreover, individuals generally prefer to receive care in their homes, and we believe the COVID-19 pandemic heightened this preference due to health concerns that may be associated with institutional settings for long-term care, along with concerns about the re-imposition of visitor restrictions that were imposed in many long-term care facilities in response to the pandemic.
Finally, we believe the provision of home-based services is more cost-effective than the provision of similar services in institutional settings for long-term care.
−Removed: We plan to continue our revenue growth and margin improvement and enhance our competitive positioning by executing on the following growth strategies:
+Added: We plan to continue our revenue growth and enhance our competitive positioning by executing on the following growth strategies:
Consistently Provide High-Quality Care
4 unchanged sentences
In certain states, our caregivers are required to complete certified training programs and maintain a state certification.
−Removed: The training assists our caregivers with identifying changes in our consumers’
−Removed: health and condition before acute intervention is required, which we believe lowers the overall cost of care.
+Added: The training assists our caregivers with identifying changes in our consumers’ health and condition before acute intervention is required, which we believe lowers the overall cost of care.
Drive Organic Growth in Existing Markets
3 unchanged sentences
Market to Managed Care Organizations
−Removed: As a large-scale provider of home-based care, we are partnering with managed care organizations, taking advantage of an industry shift from traditional fee-for-service Medicare and Medicaid and toward managed care models, which aim to better coordinate care.
+Added: As a large-scale provider of home-based care, we are partnering with managed care organizations, taking advantage of an industry shift from traditional fee-for-service Medicare and Medicaid and toward managed care models which aim to better coordinate care, among other goals.
We expect this shift to lead to narrower provider networks where we can be competitive by offering a larger, more experienced partner to these organizations, as well as by providing more sophisticated technology, electronic visit records and an outcomes-driven approach to service.
3 unchanged sentences
In addition to our organic growth, we have been growing through acquisitions that have expanded our presence in current markets or facilitated our entry into new markets.
−Removed: We completed two acquisitions in 2022, despite the continuing challenges and disruptions related to the COVID-19 pandemic:
−Removed: JourneyCare Inc.
−Removed: (“JourneyCare”) on February 1, 2022 and Apple Home Healthcare, LTD (“Apple Home”) on October 1, 2022.
+Added: We completed two acquisitions in 2023:
+Added: Coastal Nursecare of Florida, Inc.
+Added: (“CareStaff”) on January 1, 2023 and American Home Care, LLC, a Tennessee limited liability company (“AHC”), and its subsidiaries, Homecare, LLC, a Tennessee limited liability company (“Homecare”), Tennessee Valley Home Care, LLC (d/b/a Tennessee Quality Care – Home Health), a Tennessee limited liability company (“TQC – Home Health”), and Tri-County Home Health and Hospice, LLC (d/b/a Tennessee Quality Care - Hospice), a Tennessee limited liability company (“TQC – Hospice”, and collectively with AHC, Homecare and TQC – Home Health, “Tennessee Quality Care”) on August 1, 2023.
Acquisitions completed in 2023 accounted for $18.8 million in net service revenues for the year ended December 31, 2023.
We also completed two acquisitions in 2022:
−Removed: Armada Skilled Homecare of New Mexico LLC, Armada Hospice of New Mexico LLC and Armada Hospice of Santa Fe LLC (collectively, “Armada”) on August 1, 2021 and Summit Home Health, LLC (“Summit”) on October 1, 2021.
+Added: JourneyCare Inc.
+Added: (“JourneyCare”) on February 1, 2022 and Apple Home Healthcare, LTD (“Apple Home”) on October 1, 2022.
Our active pipeline and strong financial position support additional acquisitions.
16 unchanged sentences
We measure the performance of each segment using a number of different metrics.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ”
−Removed: for information regarding the Company’s segment metrics.
+Added: See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” for information regarding the Company’s segment metrics.
Our payor clients are principally federal, state and local governmental agencies and managed care organizations.
3 unchanged sentences
Most of our services are provided pursuant to agreements with state and local governmental social and aging service agencies.
−Removed: These agreements generally have an initial term of one to two years and may be terminated with 60 days’
+Added: These agreements generally have an initial term of one to two years and may be terminated with 60 days' notice.
They are typically renewed for one to five-year terms, provided that we have complied with licensing, certification and program standards, and other regulatory requirements.
1 unchanged sentence
Managed care organizations are becoming an increasing portion of our personal care segment payor mix as states shift from administering fee-for-service programs to utilizing managed care models.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview ”
−Removed: for our revenue mix by payor type.
+Added: See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview ” for our revenue mix by payor type.
We believe our industry is highly competitive, fragmented and market specific.
Each local market has its own competitive profile and no single competitor has significant market share across all of our markets.
−Removed: Our competition consists of personal care service providers, home health providers, hospice providers, private caregivers, larger publicly held companies, privately held companies, privately held single-site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations, managed care organizations and self-directed care programs.
−Removed: In addition, certain governmental payors contract with other providers for services we offer.
+Added: Our competition consists of personal care service providers, home health providers, hospice providers, private caregivers, publicly held companies, privately held companies, privately held single-site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations, managed care organizations and self-directed care programs.
+Added: In addition, payors, including governmental agencies, contract with other providers for services we offer.
We have experienced, and expect to continue to experience, competition from new entrants into our markets.
Increased competition may result in pricing pressures, loss of or failure to gain market share or loss of consumers or payors, any of which could harm our business.
−Removed: In addition, some of our competitors may have greater financial, technical, political and marketing resources, as well as name recognition with consumers and payors.
+Added: In addition, some of our competitors and/or competitive care models may have greater financial, technical, political and marketing resources, as well as name recognition with consumers and payors.
Sales and Marketing
4 unchanged sentences
We have met with many contracted managed care organizations in markets we serve and believe we are building the relationships necessary to generate continued referrals of new clients.
−Removed: We receive substantially all of our personal care consumers through third-party referrals, including state departments on aging, rehabilitation, mental health and children’s services, county departments of social services, managed care organizations, the Veterans Health Administration and city departments on aging.
+Added: We receive substantially all of our personal care consumers through third-party referrals, including state departments on aging, rehabilitation, mental health and children’s services, county departments of social services, managed care organizations, the Veterans Health Administration and city departments on aging.
Generally, family members of potential consumers are made aware of available in-home or alternative living arrangements through state or local case management systems.
8 unchanged sentences
Depending on the type of service, coverage for services may be predicated on a case manager, physician or nurse determination that the care is necessary or on the development of a plan for care in the home.
−Removed: Medicare is a federal program that provides medical services to persons aged 65 or older and other qualified persons with disabilities or end-stage renal disease.
+Added: Medicare is a federal program that provides certain medical insurance benefits to persons aged 65 or older and other qualified persons.
Each of our hospice and home care agencies must comply with the extensive conditions of participation in the Medicare program in order to continue receiving Medicare reimbursement.
Medicare beneficiaries who have a terminal illness and a life expectancy of six months or less may elect to receive hospice benefits (i.e., palliative services for management of a terminal illness) in lieu of standard Medicare coverage for treatment.
−Removed: Hospice services are paid under the Medicare Hospice Prospective Payment System (“HPPS”), under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit.
+Added: Hospice services are paid under the Medicare Hospice Prospective Payment System (“HPPS”), under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit.
CMS requires hospice providers to submit quality reporting data each year and updates hospice payment rates annually using a market basket index.
5 unchanged sentences
The daily home health payment rate is adjusted for case-mix and area wage levels.
−Removed: CMS uses the Patient-Driven Groupings Model (“PDGM”) as the case-mix classification model to place periods of care into payment categories, classifying patients based on clinical characteristics.
+Added: CMS uses the Patient-Driven Groupings Model (“PDGM”) as the case-mix classification model to place periods of care into payment categories, classifying patients based on clinical characteristics.
An outlier adjustment may be paid for periods of care in which costs exceed a specific threshold amount.
1 unchanged sentence
Home health agencies that do not submit required quality data are subject to a 2 percentage point reduction to the market basket update.
−Removed: In addition, CMS began implementing a nationwide expansion of the Home Health Value-Based Purchasing (“HHVBP”) Model in January 2022.
−Removed: Under the HHVBP Model, home health agencies will receive increases or reductions to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
−Removed: Data collected in each performance year will impact Medicare payments two years later.
−Removed: Calendar year 2023 is the first performance year under the expanded HHVBP Model, which will affect payments in calendar year 2025.
−Removed: Medicare requires home health agencies to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care.
+Added: CMS began implementing a nationwide expansion of the Home Health Value-Based Purchasing (“HHVBP”) Model in 2022.
+Added: Under the HHVBP Model, home health agencies receive increases or reductions to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
+Added: Data collected in each performance year impacts Medicare payments two years later.
+Added: Calendar year 2023 was the first performance year under the expanded HHVBP Model, which will affect payments in calendar year 2025.
+Added: Medicare requires home health agencies to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care.
Failure to submit the NOA within five calendar days from the start of care date will result in a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA is submitted.
17 unchanged sentences
The Illinois Department on Aging coordinates programs and community-based services intended to improve quality of life and preserve the independence of older individuals.
−Removed: The Illinois Department on Aging is funded by Medicaid, Illinois’s Commitment to Human Services Fund, and general revenue funds of the state of Illinois, and also receives funding available under the federal Older Americans Act (“OAA”).
−Removed: The Department on Aging’s Community Care Program (“CCP”) provides adult day services, emergency home response and in-home services, which consist of personal care services, to individuals who are age 60 and over and meet other eligibility requirements.
+Added: The Illinois Department on Aging is funded by Medicaid, Illinois’s Commitment to Human Services Fund, and general revenue funds of the state of Illinois, and also receives funding available under the federal Older Americans Act (“OAA”).
+Added: The Department on Aging’s Community Care Program (“CCP”) provides adult day services, emergency home response, automated medication dispenser services, and in-home services, which consist of personal care services, to individuals who are age 60 and over and meet other eligibility requirements.
Some of these services are provided through Medicaid waivers granted by CMS.
−Removed: Consumers are identified by “care coordinators”
−Removed: contracted independently with the Illinois Department on Aging.
+Added: Consumers are identified by “care coordinators” contracted independently with the Illinois Department on Aging.
Once a consumer has been evaluated and determined to be eligible for a program, an assigned care coordinator refers the consumer to a list of authorized providers, from which the consumer selects the provider.
2 unchanged sentences
Veterans Health Administration
−Removed: The Veterans Health Administration operates the nation’s largest integrated healthcare system, with more than 1,200 healthcare facilities, and provides healthcare benefits, including personal care, hospice and home health services, to eligible military veterans.
+Added: The Veterans Health Administration operates the nation’s largest integrated healthcare system, with more than 1,300 healthcare facilities, and provides healthcare benefits, including personal care, hospice and home health services, to eligible military veterans.
The Veterans Health Administration provides funding to regional and local offices and facilities that support the in-home care needs of eligible aged and disabled veterans.
10 unchanged sentences
We bill our private pay consumers for services rendered weekly, bi-monthly or monthly.
−Removed: Other private payors include workers’
−Removed: compensation programs/insurance, preferred provider organizations and employers.
+Added: Other private payors include workers’ compensation programs/insurance, preferred provider organizations and employers.
Insurance Programs and Costs
−Removed: We maintain workers’
−Removed: compensation, general and professional liability, cyber, automobile, directors’
−Removed: and officers’
−Removed: liability, fiduciary liability and excess liability insurance.
+Added: We maintain workers’ compensation, general and professional liability, cyber, automobile, directors’ and officers’ liability, fiduciary liability and excess liability insurance.
We offer various health insurance plans to eligible full-time and part-time employees.
1 unchanged sentence
However, we cannot be certain that any potential losses or asserted claims will not exceed such insurance coverage and self-insurance reserves.
−Removed: Human Capital
+Added: Human Capital Management
The following is a breakdown of our part- and full-time employees, including the employees in our corporate support center, as of December 31, 2023:
1 unchanged sentence
Corporate support centers
−Removed: Our caregivers, excluding agency staff, provide substantially all of our services and comprise approximately 94.4% of our total workforce.
−Removed: They undergo a criminal background check and are provided with pre-service training and orientation and an evaluation of their skills.
−Removed: In many cases, caregivers are also required to attend ongoing in-service education.
−Removed: In certain states, our caregivers are required to complete certified training programs and maintain a state certification.
−Removed: Approximately 51.4% of our total employees are represented by labor unions.
+Added: At Addus, our people are crucial to our mission.
+Added: Our Addus CARES commitment to human capital excellence inspires a culture that attracts, retains, and engages our employees to serve our important mission, and it is fundamental to our corporate philosophy.
+Added: Workforce Composition:
+Added: Our workforce is a dynamic and diverse assembly of talent.
+Added: At the core of our operations is a dedicated team of 5,528 full-time caregivers, clinical staff, and administrative employees.
+Added: Complementing their efforts are 28,776 part-time caregivers and administrative employees.
+Added: We offer flexibility in the form of adaptable work options, which may not be as readily available in other industries.
+Added: In our most recent annual employee engagement survey, our workforce scored work-life balance at an 80% satisfaction rating.
+Added: Two corporate support centers house a total of 542 administrative and professional employees.
+Added: Approximately 17,859 or 51.3% of our total employees are represented by labor unions.
We maintain strong working relationships with these labor unions.
−Removed: We have numerous collective bargaining agreements with local affiliates of the Service Employees International Union (“SEIU”), which are renegotiated from time to time.
−Removed: We value our employees and believe they are the reason for our success.
−Removed: We strive to provide the following, among other things.
−Removed: Employee Health and Safety
−Removed: Addus continues to prioritize the health and safety of our employees.
−Removed: We recognize the importance of employee health and well-being, which can be assessed by measures such as employee satisfaction, work-related injuries and access to healthcare services.
−Removed: Our benefits strategy is to provide an attractive package for our eligible employees with quality care choices that fit their needs.
−Removed: Along with health insurance, we provide a number of benefits to encourage and support the health and safety of our employees, such as dental and vision insurance, disability and life insurance, a 401(k) plan and an employee assistance program.
−Removed: The COVID-19 pandemic has reinforced for us the importance of keeping our employees and the personnel provided by independent contractors safe and healthy.
−Removed: In response to the pandemic, the Company has taken actions aligned with the Centers for Disease Control and Prevention to protect its workforce so that they can more safely and effectively perform their work.
−Removed: We have recognized the challenges presented by the pandemic and have adjusted our operations to comply with health and safety standards, regulations and guidance provided by the Occupational Safety and Health Administration (“OSHA”), the United States Department of Labor and other regulatory bodies that focus on the safety of employees.
−Removed: Recruiting and Development
−Removed: Employee recruiting and retention remains a top priority each year for Addus, as we are committed to hiring and retaining excellent employees.
−Removed: As the labor market continues to be tight and unemployment has remained at low levels, the competition for new caregivers continues to be significant, which will continue to impact our ability to attract and retain new caregivers.
−Removed: We believe that a strong workplace culture focused on employee engagement enables ongoing learning and promotes the development of individual career growth, necessary to successfully retain and develop diverse talent.
−Removed: Addus recognizes the importance of employee engagement and we have implemented programs focused on new hire experiences and integration, ongoing learning opportunities though the Addus Learning Academy and Addus Institute of Skilled Care Education (“AISCE”), and mentoring through leadership training.
−Removed: The Addus Learning Academy allows employees to access training and resources necessary to build the skills specifically related to their respective positions at Addus.
−Removed: AISCE provides continuing education courses to support licensing and re-certification for our clinical employees.
−Removed: Communication and Recognition
−Removed: We are committed to fostering employee satisfaction and wellness through employee recognition programs, communications and services.
−Removed: We have developed two primary communication tools to distribute information to our branches and administrative employees, the SC Connect and Addus Ink newsletters.
−Removed: Addus Ink is a quarterly newsletter that features local branch content from around the country that is focused on fulfilling our Addus Mission and Values.
−Removed: SC Connect is a biweekly newsletter that features important Company updates, information and resources.
−Removed: We have also implemented the Addus Elite Program, which has three levels of recognition;
−Removed: peer to peer, quarterly recognition and Addus Elite Hall of Fame, designed to celebrate the amazing work our employees do on a daily basis.
−Removed: We believe it is important to acknowledge our colleagues, managers, and direct reports who are living our Addus mission and values every day.
−Removed: Community Outreach
−Removed: We are committed to efforts to make a difference in our communities.
−Removed: Our local investments include providing monetary and personnel contributions to faith based organizations, public housing authorities, public school systems and other non-profit community organizations.
−Removed: For example, we partner with organizations such as The Hope Foundation, which provides resources to families in need of additional help outside of the hospice benefit;
−Removed: the National Minority Health Association, which seeks to mobilize homecare workers to increase vaccination confidence and rates in underserved communities through its Flex for Checks community-based program;
−Removed: and National Association of Area Agencies on Aging, a network of agencies responsible for local planning of home and community based services delivered to older Americans.
−Removed: Additionally, our employees are involved in various local events such as taking part in town parades, holding food drives and providing health and personal protective equipment (“PPE”) to first responders.
+Added: We have numerous collective bargaining agreements with local affiliates of the Service Employees International Union (“SEIU”), which are renegotiated from time to time.
+Added: People Development and Experience:
+Added: We believe in a strong workplace culture focused on people development.
+Added: We have named this initiative “Addus CARES”, which represents our commitment to creating a culture that attracts, retains, and engages people to serve our important mission.We aspire to create a workplace that values and listens to its employees, provides ample opportunities for their skills development, and effectively recognizes their achievements.
+Added: By leveraging our People Development and Experience Department, we aspire to create a workplace that values and listens to its employees, provides ample opportunities for their skills development, and effectively recognizes their achievements throughout the employee life cycle.
+Added: Addus prioritizes a robust listening strategy that allows for regular opportunities for feedback throughout an employee’s tenure.
+Added: People experience surveys serve as a foundation of this strategy.
+Added: In the most recent such survey, company management received an 82% satisfaction rating among all employee respondents, and 80% of our caregiver respondents indicated they would recommend Addus as a great place to work.
+Added: Our dedication to workforce experience is also reflected in the breadth of our training programs and our ongoing commitment to employee development.
+Added: Addus has recently introduced new innovative initiatives such as our Ignite and Emerge employee development programs.
+Added: Ignite equips new leaders with the necessary skills, tools, and resources to lead within our organizational culture and values.
+Added: Emerge cultivates future leaders, strengthening our future with a diverse internal leadership pipeline for potential future promotions.
+Added: Additionally, Addus deploys ongoing learning opportunities throughout the employee life cycle via the Addus Learning Academy and clinical learning management systems.
+Added: The Addus Learning Academy allows employees to access online resources needed to build and enhance the important skills related to their respective roles at Addus and to provide beneficial soft-skills training for personal growth.
+Added: With recent investments in new learning management platforms and additional investments in existing platforms, Addus’ clinical learning management systems provide a growing catalog of continuing learning opportunities for patient-facing employees to improve their clinical skills and promote consistent, quality care.
+Added: We believe it is important to acknowledge our employees and managers who are carrying our mission and values forward every day, and we are committed to fostering employee engagement through effective recognition programs and communications.
+Added: The Addus Elite employee recognition program consists of three levels of employee recognition:
+Added: real-time peer-to-peer, quarterly company-wide, and annual Addus Elite Hall of Fame.
+Added: All three components are designed to recognize and celebrate the work our employees do daily.
+Added: Additionally, we have focused our organizational communication tools to disseminate vital company information more efficiently and effectively through the Addus Resource Center, AddusConnect, and Addus Ink.
+Added: The Addus Resource Center is a company information portal for on-demand company information.
+Added: AddusConnect is a biweekly e-newsletter that succinctly features important company updates, information, and resources.
+Added: Addus Ink is a semi-annual publication that highlights local stories and news from around the country that celebrate our mission and values.
+Added: Employee Welfare
+Added: As part of our commitment to providing high quality care and service to our clients and patients, while also promoting the health and well-being of our employees, Addus takes a multifaceted approach to employee wellness and safety.
+Added: Through strategically designed benefit offerings, Addus provides access to healthcare coverage that balances the medical needs of our workforce with affordability for our diverse employment populations.
+Added: In addition, the company aims to assist in the financial well-being of our workforce through company benefits such as early wage access programs, an employee discount marketplace, and educational resources for employees on financial well-being.
+Added: Addus offers a non-profit employee disaster relief fund program, Addus ACTS, that provides emergency financial grants for employees in need.
+Added: In addition, Addus maintains a structured workplace safety program throughout the employee life cycle that provides job-relevant education, training, and skills focused on both the prevention of workplace injuries and improving awareness of mitigation efforts, should risks materialize on the job.
+Added: Through these comprehensive safety efforts, the Addus safety program enhances our ability to provide consistent and quality client care and service.
+Added: Talent Acquisition
+Added: Talent acquisition is a strategic imperative of the company, and our Addus CARES culture is committed to attracting, retaining, and engaging talent.
+Added: Our commitment to talent acquisition is evident in both our internal mobility efforts and our external recruitment.
+Added: Internally, the company provides a tuition reimbursement program designed to encourage the continued educational pursuit of academic degrees that prepare employees for their next logical internal career progression, or that improve their ability to perform their current role.
+Added: Clinical ladder initiatives focus on clinical certification advancement of existing employees.
+Added: External recruitment has been bolstered by new investments in job search efforts, programmatic job advertising, and new recruitment technologies, most recently with the introduction of a new mobile-optimized Applicant Tracking System.
+Added: Recruitment strategies, including company-wide hiring events, local partnerships with colleges and nursing schools, sponsored clinical rotations, and student scholarships have better positioned the company to attract top talent.
We currently utilize multiple applications to support our various lines of business and locations for patient accounting.
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Each application is hosted by the vendor in a secure data center, which provides multiple redundancies for storage, power, bandwidth and security.
−Removed: In order to comply with current and future state and federal laws and regulations around EVV use, we utilize several different vendors and have built interfaces between the EVV vendor and the patient accounting system utilized in the respective branch location.
−Removed: Our caregivers use a mix of Interactive Voice Response (“IVR”) and mobile applications for EVV.
+Added: In order to comply with federal and state laws and regulations around EVV use, we utilize several different vendors and have built interfaces between the EVV vendor and the patient accounting system utilized in the respective branch location.
+Added: Our caregivers use a mix of Interactive Voice Response (“IVR”) and mobile applications for EVV.
In addition, we use these technologies to record basic information about each visit, record start and end times for a scheduled shift, track mileage reimbursement, send text messages to the caregivers and communicate basic payroll information.
−Removed: We license the Qlik Business Intelligence (“Qlik”) platform to provide historical, current, and forward-looking operational performance analysis.
+Added: We license the Qlik Business Intelligence (“Qlik”) platform to provide historical, current, and forward-looking operational performance analysis.
We currently have our personal care and hospice segments integrated into Qlik.
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This analysis is available in summary and detailed views to accommodate user needs at all levels, from senior management to operators in the field.
−Removed: We utilize the ADP Vantage Suite as our base human resources and payroll processing system and use their services and products to manage our leave of absence processes, benefits, 401(k) and flexible spending account administration, garnishment
−Removed: services, payroll tax filings, ACA compliance and filings, and time and attendance.
−Removed: For financial management, we utilize Oracle’s Planning Budgeting Cloud Service as our solution for budgeting, forecasting, and financial reporting and Oracle Fusion for the general ledger, accounts payable and fixed assets.
+Added: We utilize the ADP Vantage Suite as our base human resources and payroll processing system and use their services and products to manage our leave of absence processes, benefits, 401(k) and flexible spending account administration, garnishment services, payroll tax filings, ACA compliance and filings, and time and attendance.
+Added: For financial management, we utilize Oracle’s Planning Budgeting Cloud Service as our solution for budgeting, forecasting, and financial reporting and Oracle Fusion for the general ledger, accounts payable and fixed assets.
Government Regulation
Our business is subject to extensive federal, state and local regulation.
−Removed: Changes in the laws and regulations, or new interpretations of existing laws and regulations, may have a material impact on the definition of permissible activities, the relative cost of doing business, and the methods and amounts of payment for care by both governmental and other payors.
+Added: Changes in the laws and regulations, or new interpretations of existing laws and regulations, may have a material impact on the scope of services offered (including the definition of permissible activities), the relative cost of doing business, and the methods and amounts of payment for care by both governmental and other payors.
In addition, differences among state laws may impede our ability to expand into certain markets.
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It is difficult to predict the effect of these changes on budgetary allocations for our services.
−Removed: See further discussion at “
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Liquidity and Capital Resources .”
+Added: See further discussion at “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Liquidity and Capital Resources .”
Medicare and Medicaid Participation
To participate in and qualify for reimbursement under Medicare, our home health agencies and hospices must comply with extensive conditions of participation.
−Removed: Likewise, to participate in Medicaid programs, our personal care services, home health agencies and hospices are subject to various requirements imposed by federal and state authorities.
+Added: Likewise, to participate in Medicaid programs, our personal care services, hospices and home health agencies are subject to various requirements imposed by federal and state authorities.
If we were to violate the applicable federal and state regulations governing Medicare or Medicaid participation, we could be excluded from participation in federal and state healthcare programs and be subject to substantial administrative, civil and criminal penalties.
Healthcare Reform
−Removed: The healthcare industry is subject to changing political, regulatory, and economic influences at the federal and state level that may affect our business.
+Added: The healthcare industry is subject to changing political, regulatory, and economic influences at the federal and state level, along with scientific and technological initiatives and innovations that may affect our business.
In recent years, the healthcare industry has undergone significant changes, many of which have been aimed at reducing costs and government spending and increasing access to health insurance.
−Removed: The most prominent of these efforts, the Patient Protection and Affordable Care Act, as amended by the HealthCare and Education Reconciliation Act of 2010 (collectively, the “ACA”), affects how healthcare services are covered, delivered and reimbursed.
−Removed: The ACA increased health insurance coverage through a combination of public program expansion and private sector health insurance reforms.
−Removed: The law has been, and continues to be, subject to legislative and regulatory changes and court challenges.
−Removed: Although the current presidential administration has indicated its intent to protect the ACA, it is possible that there may be continued changes to the ACA, its implementation or interpretation.
+Added: The most prominent of these efforts, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), affects how healthcare services are covered, delivered and reimbursed.
+Added: The ACA increased health insurance coverage through a combination of public program expansion, private sector health insurance requirements and other reforms.
+Added: However, the law has been, and continues to be, subject to legislative and regulatory changes and court challenges.
States continue to explore payment and delivery reform initiatives, including quality of care incentives.
−Removed: Some states use or have applied to use Medicaid waivers granted by CMS to implement the ACA’s Medicaid expansion provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.
−Removed: Some of these program changes may reduce the number of Medicaid enrollees in certain states.
−Removed: For example, Georgia intends to impose work and community engagement requirements under a Medicaid demonstration program that is expected to launch in mid-2023, while the current presidential administration and several courts have rejected similar initiatives in other states, making it difficult to predict the nature and success of potential changes.
+Added: Some states use or have applied to use Medicaid waivers granted by CMS to implement the ACA’s Medicaid expansion provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.
+Added: Some of these program changes may reduce the number of current and/or future Medicaid enrollees in certain states.
+Added: For example, Georgia imposes work and community engagement requirements under a Medicaid demonstration program for new enrollees that launched in mid-2023 with the permission of a federal court, while the current presidential administration and several courts have rejected similar initiatives in other states, making it difficult to predict the nature and success of potential changes.
In addition, enrollment in managed Medicaid plans has increased in recent years, as state governments seek to control the cost of Medicaid programs.
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The CMS Innovation Center tests innovative payment and service delivery systems to reduce Medicare and Medicaid program expenditures while maintaining or enhancing quality.
−Removed: For example, the CMS Innovation Center has supported testing of new models of care for “dual eligibles,”
−Removed: funding of home health providers that offer chronic care management services, and establishment of pilot programs that bundle acute care hospital services with physician services and post-acute care services, which may include home health services for certain patients.
−Removed: In addition, the Improving Medicare Post-Acute Care Transformation Act of 2014 (the “IMPACT Act”) requires HHS, in conjunction with the Medicare Payment Advisory Commission, to work toward a unified post-acute care payment model for post-acute care services.
+Added: For example, the CMS Innovation Center has supported testing of new models of care for “dual eligibles,” funding of home health providers that offer chronic care management services, and establishment of pilot programs that bundle acute care hospital services with physician services and post-acute care services, which may include home health services for certain patients.
+Added: In addition, the Improving Medicare Post-Acute Care Transformation Act of 2014 (the “IMPACT Act”) required HHS, in conjunction with the Medicare Payment Advisory Commission, to consider and propose a unified post-acute care payment model for post-acute care services.
Currently, home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals are reimbursed under four distinct Medicare payment systems.
−Removed: In contrast, a unified post-acute care payment model would pay these post-acute care providers under a single framework according to a patient’s characteristics, rather than the post-acute care setting where the patient receives treatment.
−Removed: As required by the IMPACT Act, CMS and the HHS Office of the
−Removed: Assistant Secretary for Planning and Evaluation issued a report in July 2022, presenting an initial prototype.
−Removed: CMS noted in its report the need for additional analyses and acknowledged that the universal implementation of a unified post-acute care Medicare payment system would require congressional action.
−Removed: The Medicare Payment Advisory Commission is required to submit a proposal by June 2023.
−Removed: It is difficult to predict the nature and success of these and other future financial or delivery system reforms implemented by Congress, HHS, the CMS Innovation Center and other industry participants, but any such changes could have a material impact on our business.
+Added: In contrast, a unified post-acute care payment model would pay these post-acute care providers under a single framework according to a patient’s characteristics, rather than the post-acute care setting where the patient receives treatment.
+Added: As required by the IMPACT Act, CMS and the HHS Office of the Assistant Secretary for Planning and Evaluation issued a report in July 2022 that presented an initial prototype, and MedPAC issued a report in June 2023 evaluating a prototype design.
+Added: Although both CMS and MedPAC determined that designing a unified prospective payment system for post-acute care providers is feasible, MedPAC concluded that implementation would require significant policy changes and considerable agency resources and noted that CMS may consider smaller-scale site-neutral policies to address some of the overlap in patients treated in different settings.
Other recent reform initiatives and proposals at the federal and state levels include those focused on price transparency, which may impact prices and the relationships between providers, patients, and payors.
−Removed: For example, among other consumer protections, the No Surprises Act imposes various requirements on providers and health plans intended to prevent “surprise”
−Removed: medical bills.
−Removed: It requires providers to send an insured patient’s health plan a good faith estimate of expected charges, including billing and diagnostic codes, prior to when the patient is scheduled to receive the item or service.
+Added: For example, among other consumer protections, the No Surprises Act imposes various requirements on providers and health plans intended to prevent “surprise” medical bills.
+Added: It requires providers to send an insured patient’s health plan a good faith estimate of expected charges, including billing and diagnostic codes, prior to when the patient is scheduled to receive the item or service.
HHS is deferring enforcement of the good faith estimate requirement for insured patients until it issues additional regulations.
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Further, Medicare reimbursement is tied to reporting of quality measures.
+Added: In May 2023, CMS published a proposed rule, intended to improve access to services for Medicaid beneficiaries, that includes provisions related to HCBS payments.
+Added: Specifically, in an effort to address workforce shortages, the proposed rule would (if finalized in its proposed form) require that a minimum of 80% of Medicaid payments in a state for home health aide, personal care services and some similar services be spent on compensation to direct care workers, in addition to related payment transparency requirements.
+Added: CMS has proposed allowing states four years to implement changes required by a final rule.
+Added: The ultimate impact of the 80% requirement, if finalized as proposed, could be adverse for periods after implementation, but other aspects of the rule could also benefit our business by improving access to services, depending on the policies ultimately set forth in any final rule.
+Added: The comment period for the proposed rule ended July 1, 2023.
+Added: The Company filed a comment letter on the proposed rule before this deadline, as did many other organizations, states and stakeholders.
+Added: On January 26, 2024, CMS sent a final rule to the Office of Management and Budget (OMB) for review and clearance.
+Added: The contents of the final rule are unknown at this time, and the final rule may be significantly different than the proposed rule.
+Added: OMB review is the last step in the process prior to release of the regulation in the Federal Register.
+Added: The final rule’s timetable on the OMB website projects a release by April 2024.
There is uncertainty regarding the potential impact of health reform efforts at the federal and state levels.
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Some states have implemented or are considering measures such as individual health insurance mandates and public health insurance options.
−Removed: Other industry participants, such as private payers and large employer groups and their affiliates, may also introduce financial or delivery system reforms.
−Removed: Health reform initiatives and proposals from the government or the private sector may impact prices, our relationships with patients, payers or ancillary providers, and our competitive position, among other effects.
+Added: Other industry participants, such as private payors and large employer groups and their affiliates, may also introduce financial or delivery system reforms.
+Added: Health reform initiatives and proposals from the government or the private sector may impact prices, our relationships with patients, payors or ancillary providers, and our competitive position, among other effects.
Permits, Licensure and Certificate of Need
−Removed: Our hospice, home health and personal care services are authorized and/or licensed under various state and county requirements, which cover a variety of topics including standards regarding the provision of medical or care services, clinical records, personnel, infection control and care plans.
+Added: Our hospice, home health and personal care services are authorized and/or licensed in accordance with various state and county requirements, which also address a variety of operational issues including standards for the provision of medical or care services, clinical records, personnel, infection control and care plans.
Additionally, healthcare professionals at our agencies are required to be individually licensed or certified under state law.
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We believe we are currently licensed appropriately as required by the laws of the states in which we operate in all material respects, but additional licensing requirements may be imposed upon us in existing markets or markets that we enter in the future.
−Removed: Some states also require a provider to obtain a certificate of need or permit of approval (“CON”) before establishing, constructing, acquiring or expanding certain health services, operations or facilities or making certain capital expenditures.
+Added: Some states also require a provider to obtain a certificate of need or permit of approval (“CON”) before establishing, constructing, acquiring or expanding certain health services, operations or facilities or making certain capital expenditures.
These requirements are intended to avoid unnecessary duplication of services.
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The laws and regulations governing our operations, including the terms of participation in Medicare, Medicaid and other government programs, impose certain requirements and limitations on our operations, business arrangements and our interactions with providers and consumers.
−Removed: These laws include, but are not limited to, the federal Anti-Kickback Statute, the federal Stark law, the federal False Claims Act (“FCA”), the federal Civil Monetary Penalties Law, other federal and state fraud and abuse, insurance fraud, and fee-splitting laws, which may extend to services reimbursable by any payer, including private insurers.
+Added: These laws include, but are not limited to, the federal Anti-Kickback Statute, the federal Stark Law, the federal False Claims Act (“FCA”), the federal Civil Monetary Penalties Law, other federal and state fraud and abuse, insurance fraud, and fee-splitting laws, which may extend to services reimbursable by any payor, including private insurers.
The fraud and abuse laws and regulations to which we are subject include but are not limited to:
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Courts have interpreted this statute broadly and held that there is a violation of the Anti-Kickback Statute if just one purpose of the remuneration is to generate referrals.
−Removed: The federal physician self-referral law, commonly known as the Stark Law, which prohibits physicians from referring Medicare and Medicaid patients to healthcare entities in which they or any of their immediate family members have ownership interests or other financial arrangements, if these entities provide certain “designated health services”
−Removed: (including home health services) reimbursable by Medicare or Medicaid, unless an exception applies.
+Added: • The federal physician self-referral law, commonly known as the Stark Law, which prohibits physicians from referring Medicare and Medicaid patients to healthcare entities in which they or any of their immediate family members have ownership interests or other financial arrangements, if these entities provide certain “designated health services” (including home health services) reimbursable by Medicare or Medicaid, unless an exception applies.
The Stark Law also prohibits entities that provide designated health services reimbursable by Medicare and Medicaid from billing the Medicare and Medicaid programs for any items or services that result from a prohibited referral and requires the entities to refund amounts received for items or services provided pursuant to the prohibited referral on a timely basis.
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The federal government has taken the position, and some courts have held, that providers who allegedly have violated other statutes, such as the Stark Law, have thereby submitted false claims under the FCA.
−Removed: The FCA may be enforced directly by the federal government or by a whistleblower on the government’s behalf.
−Removed: The federal Civil Monetary Penalties Law, which prohibits, among other conduct, offering remuneration to influence a Medicare or Medicaid beneficiary’s selection of a healthcare provider, contracting with an individual or entity known to be excluded from a federal healthcare program, billing for services not rendered or for medically unnecessary services, misrepresenting actual services rendered in order to obtain higher reimbursement, and the failure to return overpayments in a timely manner.
+Added: The FCA may be enforced directly by the federal government or by a whistleblower on the government’s behalf.
+Added: • The federal Civil Monetary Penalties Law, which prohibits, among other conduct, offering remuneration to influence a Medicare or Medicaid beneficiary’s selection of a healthcare provider, contracting with an individual or entity known to be excluded from a federal healthcare program, billing for services not rendered or for medically unnecessary services, misrepresenting actual services rendered in order to obtain higher reimbursement, and the failure to return overpayments in a timely manner.
• State anti-kickback and self-referral provisions, false claims laws, insurance fraud laws, and fee-splitting laws.
−Removed: The scope and interpretation of these state laws vary, and in some cases apply to items or services reimbursed by any payer, including patients and commercial insurers.
+Added: The scope and interpretation of these state laws vary, and in some cases apply to items or services reimbursed by any payor, including patients and commercial insurers.
For instance, the Illinois Insurance Claims Fraud Prevention Act penalizes the knowing offer or payment of remuneration to induce a person to procure client or patients under a contract of insurance, including commercial insurance plans.
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CMS and state Medicaid agencies contract with third parties to promote the integrity of the Medicaid and Medicare programs through reviews of quality concerns and detections and corrections of improper payments.
−Removed: For example, CMS and state Medicaid agencies contract with recovery audit contractors (“RACs”) on a contingency fee basis to conduct post-payment reviews to detect and correct improper payments in the Medicare and Medicaid programs.
+Added: For example, CMS and state Medicaid agencies contract with recovery audit contractors (“RACs”) on a contingency fee basis to conduct post-payment reviews to detect and correct improper payments in the Medicare and Medicaid programs.
RACs review claims submitted to Medicare for billing compliance, including correct coding and medical necessity.
−Removed: The RAC program’s scope also includes Medicaid claims.
+Added: The RAC program’s scope also includes Medicaid claims.
States may coordinate with Medicaid RACs regarding recoupment of overpayments and refer suspected fraud and abuse to appropriate law enforcement agencies.
−Removed: In addition, CMS engages unified program integrity contractors (“UPICS”) to perform proactive analysis, audits, investigations and other program integrity functions across the Medicare and Medicaid programs, with the goal of identifying and deterring fraud and abuse to avoid improper payments.
+Added: In addition, CMS engages unified program integrity contractors (“UPICS”) to perform proactive analysis, audits, investigations and other program integrity functions across the Medicare and Medicaid programs, with the goal of identifying and deterring fraud and abuse to avoid improper payments.
Working across five geographic jurisdictions, UPICs collaborate with states and coordinate provider investigations across the Medicare and Medicaid programs.
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HIPAA and Other Privacy and Security and Data Exchange Requirements
−Removed: The Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) and its implementing regulations require the use of uniform electronic data transmission standards and code sets for certain healthcare claims and reimbursement payment transactions submitted or received electronically.
−Removed: HIPAA extensively regulates the use, disclosure, confidentiality, availability and integrity of individually identifiable health information, known as “protected health information,”
−Removed: and provides for a number of individual rights with respect to such information.
−Removed: As a “covered entity”
−Removed: subject to HIPAA, we are required to maintain privacy and security policies, train workforce members, maintain physical, administrative, and technical safeguards, enter into confidentiality agreements with vendors that handle protected health information (“business associates”), and permit individuals to access and amend their protected health information.
+Added: The Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) and its implementing regulations require the use of uniform electronic data transmission standards and code sets for certain healthcare claims and reimbursement payment transactions submitted or received electronically.
+Added: HIPAA extensively regulates the use, disclosure, confidentiality, availability and integrity of individually identifiable health information, known as “protected health information,” and provides for a number of individual rights with respect to such information.
+Added: As a “covered entity” subject to HIPAA, we are required to maintain privacy and security policies, train workforce members, maintain physical, administrative, and technical safeguards, enter into confidentiality agreements with vendors that handle protected health information (“business associates”), and permit individuals to access and amend their protected health information.
In addition, we must report any breaches of unsecured protected health information.
HIPAA violations may result in criminal penalties and significant civil penalties.
−Removed: Other federal and state laws and regulations that apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal data, such as the California Consumer Protection Act, which was recently significantly modified by the California Privacy Rights Act, may impose additional or inconsistent obligations and/or result in additional penalties.
+Added: Other federal and state laws and regulations that apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal data, such as the California Consumer Protection Act, which was recently significantly modified by the California Privacy Rights Act, may also impose additional or inconsistent obligations and/or result in additional penalties.
Virginia and certain other states have also passed comprehensive privacy legislation, and several privacy bills have been proposed both at the federal and state level that may result in additional legal requirements that impact our business.
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Healthcare providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information, including prohibitions on information blocking.
+Added: For example, certain healthcare providers and other entities are subject to information blocking restrictions pursuant to the 21st Century Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by HHS as a reasonable and necessary activity.
+Added: Violations may result in penalties or other negative financial impacts.
Environmental, Health and Safety Laws
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Access to Public Filings
−Removed: Through our website, www.addus.com, we make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
+Added: Through our website, www.addus.com, we make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
In addition to our website, the SEC maintains an internet site that contains our reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov .
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Our business and consolidated financial condition, results of operations and cash flows may also be materially adversely affected by factors that are not currently known to us, by factors that we currently consider immaterial or by factors that are not specific to us, such as general economic conditions.
−Removed: You should refer to the explanation of the qualifications and limitations on forward-looking statements under “Special Caution Concerning Forward-Looking Statements.”
−Removed: All forward-looking statements made by us are qualified by the risk factors described below.
−Removed: Risks Related to Economic Conditions and the COVID-19 Pandemic
−Removed: Our financial results have been, and may continue to be, adversely impacted by negative macroeconomic conditions.
−Removed: Economic conditions in the United States continue to be challenging in various respects, and the United States economy continues to experience significant inflationary pressures, elevated interest rates, challenging labor market conditions, and disruptions to supply networks.
−Removed: Taking into account these factors, we have incurred, and may continue to incur, increased competition for new caregivers and skilled healthcare staff, which will continue to impact our ability to attract and retain new employees.
−Removed: Further, the inflationary conditions have resulted in, and may continue to result in, increased operating costs, particularly as the result of increased wages we have paid and may continue to pay our caregivers and other personnel and our ability to attract and retain personnel.
−Removed: Our ability to realize rate increases from government programs and private payors, which represent most of our revenue, might be limited despite inflation.
−Removed: Higher interest rates also raise our financing costs.
−Removed: These factors had an unfavorable impact on our financial results during the year ended December 31, 2022, and may have an unfavorable impact on our financial results in future periods which could be material.
−Removed: Moreover, we anticipate that the federal deficit, the growing magnitude of Medicare and Medicaid expenditures and the aging of the U.S.
−Removed: population will continue to place pressure on government healthcare programs, and it is possible that future deficit reduction legislation will mandate additional Medicare spending reductions.
−Removed: In addition, if economic conditions in the United States significantly deteriorate, any such developments could materially and adversely affect our results of operations, financial position, and/or our cash flows.
−Removed: For example, states could face significant fiscal challenges and revise their revenue forecasts and adjust their budgets, and sales tax collections and income tax receipts could be depressed.
−Removed: Negative macroeconomic conditions could also disrupt financial markets and capital markets and the businesses of financial institutions, potentially causing a slowdown in the decision-making of these institutions.
−Removed: This may affect the timing on which we may obtain any additional funding and there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.
−Removed: The ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic, could adversely impact our business and future results of operations and financial condition.
−Removed: The ongoing COVID-19 pandemic continues to have unpredictable and rapidly shifting impacts on global financial markets, economies, and business practices, which, in turn, could adversely affect our business and future results of operations and financial condition.
−Removed: While the COVID-19 pandemic has not had a material effect on our results of operations and financial condition, the extent of future impact will depend on future developments that cannot be accurately predicted at this time, including the severity and transmission rate of prevalent strains of COVID-19, the extent and effectiveness of containment actions taken, the timing, availability and effectiveness of medical treatments, vaccines and booster shots, and the impact of any mutations of the virus.
−Removed: For example, at times during the COVID-19 pandemic, our home health and hospice providers experienced difficulty in accessing facility-based patients because of concerns about the spread of COVID-19, and may do so again in the future.
−Removed: If there are future surges in COVID-19 cases or the existing COVID-19 pandemic otherwise significantly worsens, our employees that contract COVID-19 could be unable to continue to perform their duties, and we could face litigation if our employees or customers contract COVID-19 while our employees perform their duties.
−Removed: We may also take further actions that alter our business operations as may be required by local, state, or federal authorities or that we determine are in the best interests of our employees and patients.
−Removed: Such measures could negatively affect our sales and marketing efforts, employee retention and recruitment, or patient care, any of which could harm our financial condition and business operations.
−Removed: Further, if general economic conditions deteriorate as a result of future surges in COVID-19 cases or because the existing COVID-19 pandemic otherwise significantly worsens, our results of operations, financial position, and/or our cash flows could be materially and adversely affected, as described in the preceding risk factor.
−Removed: The COVID-19 pandemic could also heighten the risks in certain of the other risk factors described in this Annual Report on Form 10-K.
−Removed: We are unable to predict the ultimate impact of the CARES Act and other stimulus or relief legislation or the effect that such legislation and other governmental responses intended to assist healthcare providers in responding to the COVID-19 pandemic may have on our business, financial condition, results of operations, or cash flows.
−Removed: In response to the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients and to provide financial relief to healthcare providers.
−Removed: Together, the CARES Act, the PPPHCE Act, the CAA and the ARPA authorize over $186 billion in funding to be distributed to healthcare providers through the Provider Relief Fund.
−Removed: These funds are intended to reimburse eligible providers, including public entities and Medicare and/or Medicaid-enrolled providers and suppliers, for healthcare-related expenses or lost revenues attributable to COVID-19.
−Removed: Recipients are not required to repay these funds, provided that they attest to and comply with certain terms and conditions, including not using Provider Relief Fund payments to reimburse expenses or losses that other sources are obligated to reimburse and submitting reports as required by HHS.
−Removed: The Company has received amounts from the Provider Relief Fund and returned any unused funds.
−Removed: It has acquired and may in the future acquire companies that have received funds from the Provider Relief Fund.
−Removed: We believe we have structured our use of these funds in accordance with the terms and conditions.
−Removed: Recipients of Provider Relief Fund payments are subject to reporting and audit requirements.
−Removed: The CARES Act and related legislation also have made other forms of financial assistance available to healthcare providers, including through Medicare and Medicaid payment adjustments.
−Removed: Providers indirectly benefit from a temporary increase in federal funds for state Medicaid expenditures for states that maintain continuous Medicaid enrollment, among other requirements.
−Removed: However, the continuous coverage requirement expires April 1, 2023, and the increase in funding will be phased out through calendar year 2023.
−Removed: Expiration of this requirement likely will lead to Medicaid coverage disruptions and dis-enrollments of current Medicaid enrollees.
−Removed: As another way to offer financial relief to providers, Congress temporarily suspended the Medicare sequestration payment adjustment through March 31, 2022, and reduced the sequestration adjustment from 2% to 1% from April 1 through June 30, 2022, which relates to our home health and hospice business lines.
−Removed: The full 2% reduction resumed on July 1, 2022.
−Removed: These reductions have been extended through the first six months of 2032.
−Removed: The ARPA increased the federal budget deficit in a manner that triggers an additional statutorily mandated sequestration under the Pay-As-You-Go Act of 2010 (“PAYGO Act”).
−Removed: As a result, an additional payment reduction of up to 4% was required to take effect in January 2022.
−Removed: However, Congress has delayed implementation of this payment reduction until 2025.
−Removed: Beyond financial assistance, federal and state governments have enacted legislation and established regulations intended to increase access to medical supplies and equipment and ease legal and regulatory burdens on healthcare providers, as well as certain
−Removed: federal income and other tax changes, including the deferral of the employer portion of Social Security payroll taxes.
−Removed: The CARES Act also includes numerous income tax provisions including changes to the net operating loss rules and business interest expense deduction rules.
−Removed: Many of the federal and state measures allowing for flexibility in delivery of care and various financial supports are available only for the duration of the COVID-19 public health emergency.
−Removed: Most states have ended their state-level emergency declarations.
−Removed: The current national public health emergency declared by HHS expires May 11, 2023.
−Removed: The presidential administration has indicated that the public health emergency will not be extended.
−Removed: Termination of the public health emergency may impact our operations and financial results.
−Removed: The COVID-19 pandemic continues to evolve.
−Removed: The federal and state governments may consider additional stimulus and relief efforts, but we are unable to predict whether additional measures will be enacted or their impact.
−Removed: We are unable to assess the extent to which ongoing impacts arising from the COVID-19 pandemic affect our operations or the operations of our competitors, or whether any such impacts will be offset by financial and other types of assistance we may receive under existing or future legislation.
−Removed: Further, there can be no assurance that the terms and conditions of the Provider Relief Fund or other programs will not change or be interpreted in ways that affect funding we have received or may in the future receive, our ability to comply with such terms and conditions or our eligibility to participate.
−Removed: We continue to assess the potential impact of the COVID-19 pandemic and government responses to the pandemic, including the CARES Act and related legislation, on our business, financial condition, results of operations and cash flows.
−Removed: We may be more vulnerable to the effects of a public health emergency than other businesses due to the nature of our consumers and the physical proximity required by our operations.
−Removed: The majority of our consumers and patients are older individuals, many of whom may be more vulnerable than the general public during a pandemic or in a public health emergency due to complex medical conditions or other socioeconomic factors.
−Removed: Our employees may also be at greater risk of contracting contagious diseases due to their increased exposure to vulnerable consumers.
−Removed: Due to the physical proximity required to offer many of our services, our employees could have difficulty attending to our consumers if social distancing policies or quarantines are instituted in response to a public health emergency.
−Removed: In addition, the Company may expand existing internal policies in a manner that may have a similar effect.
−Removed: At times of high COVID-19 prevalence, a significant number of our employees were unable to provide services because of quarantine policies.
−Removed: If another pandemic occurs or if there are future surges in COVID-19 cases or the existing COVID-19 pandemic otherwise significantly worsens, we could again suffer losses to our consumer population or a reduction in the availability of our employees.
−Removed: Accordingly, certain public health emergencies could have a material adverse effect on our financial condition and results of operations.
+Added: You should refer to the explanation of the qualifications and limitations on forward-looking statements under “Special Caution Concerning Forward-Looking Statements.” All forward-looking statements made by us are qualified by the risk factors described below.
Risks Related to our Growth Strategy
Our growth strategy depends on our ability to manage growing and effectively integrating operations and we may not be successful in managing this growth.
−Removed: Our business plan calls for significant growth in business over the next several years through the expansion of our services in existing markets and the establishment of a presence in new markets.
+Added: Our business plan calls for significant growth in business over the next several years through the expansion of our services in existing markets and the potential establishment of a presence in new markets.
This growth has placed and continues to place significant demands on our management team, systems, internal controls and financial and professional resources.
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Previously completed or future acquisitions, or growth initiatives, may be unsuccessful and could expose us to unforeseen liabilities.
−Removed: Our growth strategy includes geographical expansion into new markets and the addition of new services in existing markets through the acquisition of local service providers.
−Removed: These acquisitions involve significant risks and uncertainties, including difficulties assimilating acquired personnel and other corporate cultures into our business, the potential loss of key employees or consumers of acquired providers, regulatory risks, the assumption of liabilities, exposure to unforeseen liabilities of acquired providers, and the diversion of the management team’s attention.
−Removed: In the past, we have made acquisitions that have not performed as expected or that we have been unable to successfully integrate with our existing operations.
+Added: Our growth strategy includes potential geographical expansion into new markets and the addition of new services in existing markets through the acquisition of local service providers.
+Added: These acquisitions involve significant risks and uncertainties, including difficulties assimilating acquired personnel and other corporate cultures into our business, the potential loss of key employees or consumers of acquired providers, regulatory risks, the assumption of liabilities, exposure to unforeseen liabilities of acquired providers, and the diversion of the management team’s attention.
In addition, our due diligence review of acquired businesses may not successfully identify all potential issues.
1 unchanged sentence
The failure to effectively integrate future acquisitions could have a material adverse impact on our operations.
−Removed: We have grown our business through de novo offices and we may in the future selectively open new offices in existing and new states.
+Added: We have grown our business opportunistically through de novo offices and we may in the future selectively open new offices in existing and new states.
De novo offices involve risks, including those relating to licensing, accreditation, and payor program enrollment, hiring new personnel, establishing relationships with referral sources and delays or difficulty in installing our operating and information systems.
2 unchanged sentences
At December 31, 2023 and 2022, we had cash balances of $64.8 million and $80.0 million, respectively, and $126.4 million and $134.9 million, respectively, of outstanding debt on our credit facility.
−Removed: After giving effect to the amount drawn on our credit facility, approximately $8.2 million of outstanding letters of credit at December 31, 2022 and 2021, and borrowing limits based on an advanced multiple of Adjusted EBITDA (as defined in the Credit Agreement), we had $237.2 million and $112.6 million available for borrowing under our credit facility as of December 31, 2022 and 2021, respectively.
+Added: After giving effect to the amount drawn on our credit facility, approximately $8.0 million and $8.2 million of outstanding letters of credit at December 31, 2023 and 2022, respectively, and borrowing limits based on an advanced multiple of Adjusted EBITDA (as defined in the Credit Agreement), we had $335.6 million and $237.2 million available for borrowing under our credit facility as of December 31, 2023 and 2022, respectively.
Since our credit facility provides for borrowings based on a multiple of an Adjusted EBITDA ratio, any declines in our Adjusted EBITDA would result in a decrease in our available borrowings under our credit facility.
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Business Risks
+Added: Our financial results have been, and may continue to be, adversely impacted by negative macroeconomic conditions.
+Added: Economic conditions in the United States continue to be challenging in various respects, and the United States economy continues to experience significant inflationary pressures, elevated interest rates, challenging labor market conditions, potential adverse effects associated with current geopolitical conditions.
+Added: Taking into account these factors, we have incurred, and may continue to incur, increased competition for new caregivers and skilled healthcare staff, which will continue to impact our ability to attract and retain new employees.
+Added: Further, the inflationary conditions have resulted in, and may continue to result in, increased operating costs, particularly as the result of increased wages we have paid and may continue to pay our caregivers and other personnel and our ability to attract and retain personnel.
+Added: Our ability to realize rate increases from government programs and private payors, which represent most of our revenue, might be limited despite inflation.
+Added: Higher interest rates also raise our financing costs.
+Added: These factors had an unfavorable impact on our financial results during the year ended December 31, 2023, and may have an unfavorable impact on our financial results in future periods which could be material.
+Added: Moreover, we anticipate that the federal deficit, the growing magnitude of Medicare and Medicaid expenditures and the aging of the U.S.
+Added: population will continue to place pressure on government healthcare programs, and it is possible that future deficit reduction legislation will mandate additional Medicare spending reductions.
+Added: In addition, if economic conditions in the United States significantly deteriorate, any such developments could materially and adversely affect our results of operations, financial position, and/or our cash flows, even if interest rates fall.
+Added: For example, states could face significant fiscal challenges and revise their revenue forecasts and adjust their budgets, and sales tax collections and income tax receipts could be depressed.
+Added: Negative macroeconomic conditions could also disrupt financial markets and capital markets and the businesses of financial institutions, potentially causing a slowdown in the decision-making of these institutions.
+Added: This may affect the timing on which we may obtain any additional funding and there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.
Timing differences in reimbursement may cause liquidity problems.
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These delays may result from such factors as changes by payors to data submission requirements, requests by fiscal intermediaries for additional data or documentation, other Medicare or Medicaid issues, or information system problems.
−Removed: Further, many of the states in which we operate are operating with budget deficits for the 2022 fiscal year and fiscal year 2023 state budgets could be impacted as economic conditions in the United States continue to be challenging in various respects.
+Added: Further, many of the states in which we operate are operating with budget deficits for the 2023 fiscal year and fiscal year 2024 state budgets could be impacted to the extent economic conditions in the United States are challenging in 2024.
Various states may in the future delay reimbursement, which would adversely affect our liquidity.
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We are and have been subject to routine and periodic surveys, audits and investigations by various governmental agencies.
−Removed: In addition to surveys to determine compliance with the conditions of participation, CMS has engaged a number of contractors (including Medicare Administrative Contractors (“MACs”), RACs and UPICs) to conduct audits and investigations to evaluate billing practices and identify overpayments.
−Removed: These audits and investigations can result in recoupments by Medicare and other payors of amounts previously paid to us.
−Removed: In addition to audits by CMS contractors, individual states are implementing similar integrity programs using Medicaid RACs.
−Removed: We are unable to predict what additional government regulations, if any, affecting our business may be enacted in the future, how existing or future laws and regulations might be interpreted or whether we will be able to comply with such laws and regulations either in the markets in which we presently conduct, or wish to commence, business.
−Removed: If we fail to comply with applicable laws, regulations or programs, depending on the nature of the findings, our business, our financial position and our results of operations could be negatively impacted.
−Removed: In certain states, payment of claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements.
−Removed: The program is limited to home health agencies in Illinois, Ohio, North Carolina, Florida and Texas.
+Added: In addition to surveys to determine compliance with the conditions of participation, CMS has engaged a number of contractors (including Medicare Administrative Contractors (“MACs”), RACs and UPICs) to conduct audits and investigations to evaluate billing practices and identify overpayments.
+Added: In addition, individual states have similar integrity programs, including Medicaid RAC Programs.
+Added: In certain states, payment of home health claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements.
+Added: The program is currently limited to home health agencies in in certain states, including Illinois, Ohio, Oklahoma, North Carolina, Florida and Texas.
Providers in these states may initially select from the following claims review and approval processes:
1 unchanged sentence
Home health agencies that maintain high compliance levels will be eligible for additional, less burdensome options.
−Removed: We are currently unable to predict what impact, if any, this program may have on our results of operations or financial position.
Private third-party payors may also conduct audits and investigations, and we also perform internal audits and monitoring.
+Added: These audits and investigations can result and have resulted in recoupments by Medicare, state programs and other payors of amounts previously paid to us if we fail to comply with applicable laws or program requirements.
+Added: Depending on the nature of the conduct found in such audits and investigations and whether the underlying conduct could be considered systemic, the resolution of these audits and investigations could have a material, adverse effect on our financial position, results of operations and liquidity.
+Added: Private third-party payors may also conduct audits and investigations, and we also perform internal audits and monitoring.
Depending on the nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the resolution of these audits could have a material, adverse effect on our financial position, results of operations and liquidity.
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Failure to renew a significant payor agreement or group of related payor agreements may materially impact our revenue.
−Removed: Each of our agreements is generally in effect for a specific term, but they are also generally terminable with 60 days’
+Added: Each of our agreements is generally in effect for a specific term, but they are also generally terminable with 60 days' notice.
Our ability to renew or retain our agreements depends on our quality of service and reputation, as well as other factors over which we have little or no control, such as state appropriations and changes in provider eligibility requirements.
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Our success in receiving referrals, obtaining new agreements and renewing our existing agreements depends upon maintaining our reputation as a quality service provider among governmental authorities, physicians, hospitals, discharge planning departments, case managers, nursing homes, rehabilitation centers, advocacy groups, consumers and their families, other referral sources and the public.
−Removed: In July 2022, CMS released its first HCBS Quality Measure Set, which is intended to promote more common and consistent use of nationally standardized quality measures within and across state HCBS programs.
+Added: The HCBS Quality Measure Set, published by CMS, is intended to promote more common and consistent use of nationally standardized quality measures within and across state HCBS programs.
Use of these HCBS measures by states, managed care organizations and other entities involved in HCBS is voluntary.
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For example, the state agencies that contract for our services require us to comply with various laws and regulations affecting the services we provide.
−Removed: We have a compliance officer who monitors and reports on our compliance efforts.
+Added: We have a compliance department, headed by our chief compliance officer, that monitors and reports on our compliance efforts.
The laws and regulations governing our operations are subject to change.
−Removed: The implementation of these changes may require us to increase our efforts to remain compliant, may reduce the authorizations for services to be provided, and may result in certain consumers no longer being eligible for our services, any of which may result in lower revenues and increased costs, reducing our operating performance and profitability.
−Removed: If we continue to serve our consumers without addressing changes in laws and regulations, we are at risk for non-compliance with program requirements and potential penalties.
+Added: The implementation of these changes may require us to modify our operations or increase our efforts to remain compliant, may reduce the authorizations for services to be provided, and may result in certain consumers no longer being eligible for our services, any of which may result in lower revenues and increased costs, reducing our operating performance and profitability.
+Added: If we continue to serve our consumers without addressing changes in laws and regulations, we are at risk for non-compliance with program requirements and potential penalties, which may be significant.
Our hospice operations are subject to annual Medicare caps.
3 unchanged sentences
The aggregate cap limits the amount of Medicare reimbursement a hospice may receive, based on the number of Medicare patients served.
−Removed: If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare for the excess amount.
+Added: If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare for the excess amount.
If payments received under any of our hospice provider numbers exceed these caps, we may be required to reimburse Medicare such excess amounts, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
3 unchanged sentences
However, changes in government healthcare programs may decrease the reimbursement we receive or limit access to, or utilization of, our services.
−Removed: As federal healthcare expenditures continue to increase and as some state governments navigate budgetary pressures, federal and state governments have made, and may continue to make, significant changes to the Medicare and Medicaid programs and reimbursement received for services rendered to beneficiaries of such programs.
−Removed: For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit, resulting in a uniform 2% reduction across all Medicare programs beginning in 2013.
−Removed: The CARES Act and related legislation temporarily suspended these reductions through March 31, 2022, and reduced the sequestration adjustments from 2% to 1% from April 1 through June 30, 2022.
−Removed: The full 2% reduction resumed on July 1, 2022.
−Removed: The Budget Control Act of 2011 sequestration has been extended through 2032.
−Removed: As a result of the ARPA, an additional Medicare payment reduction of up to 4% was required to take effect in January 2022, although Congress has delayed implementation of this reduction until 2025.
+Added: As federal healthcare expenditures continue to increase and as many state governments navigate budgetary pressures, federal and state governments have made, and may continue to make, significant changes to the Medicare and Medicaid programs and reimbursement received for services rendered to beneficiaries of such programs.
+Added: For example, the Budget Control Act of 2011 (“BCA”) requires automatic spending reductions to reduce the federal deficit, resulting in a uniform reduction across all Medicare programs of 2% per fiscal year that extends through the first seven months of 2032.
+Added: As a result of the American Rescue Plan Act of 2021 (“ARPA”), an additional Medicare payment reduction of up to 4% was required to take effect in January 2022, although Congress has delayed implementation of this reduction until 2025.
It is difficult to predict whether, when, or what other deficit reduction initiatives may be proposed by Congress, but future legislation may include additional Medicare spending reductions.
−Removed: The Medicaid program, which is jointly funded by the federal and state governments, is often a state’s largest program.
+Added: The Medicaid program, which is jointly funded by the federal and state governments, is often a state’s largest program.
Governmental agencies generally condition their agreements upon a sufficient budgetary appropriation.
−Removed: Almost all of the states in which we operate have experienced periodic financial pressures and budgetary shortfalls due to challenging economic conditions, including as a result of the COVID-19 pandemic, and the rising costs of healthcare.
+Added: Almost all of the states in which we operate have experienced periodic financial pressures and budgetary shortfalls due to challenging economic conditions and the rising costs of healthcare, among other factors.
Reductions to federal support for state Medicaid or other programs could also result in budgetary shortfalls.
As a result, many states have made, are considering or may consider making changes in their Medicaid or other state and local medical and social programs, including enacting legislation designed to reduce Medicaid expenditures.
−Removed: Changes that may occur at the federal or state level to contain costs include:
+Added: Changes that may occur at the federal or state level to contain costs include, for example:
• limiting increases in, or decreasing, reimbursement rates;
4 unchanged sentences
• slowing payments to providers;
−Removed: increasing utilization of self-directed care alternatives or “all inclusive”
+Added: • increasing utilization of self-directed care alternatives or “all inclusive” programs;
• shifting beneficiaries to managed care organizations;
1 unchanged sentence
Certain of these measures have been implemented by, or are proposed in, states in which we operate.
−Removed: For example, we provide support services as a fiscal intermediary to the New York Consumer Directed Personal Assistance Program (“CDPAP”), a self-directed care alternative program that allows eligible individuals who need help with activities of daily living or skilled nursing services to choose their caregivers.
−Removed: In 2019, New York initiated a new Request For Offer (“RFO”) process to competitively procure CDPAP fiscal intermediaries.
+Added: For example, we provide support services as a fiscal intermediary to the New York Consumer Directed Personal Assistance Program (“CDPAP”), a self-directed care alternative program that allows eligible individuals who need help with activities of daily living or skilled nursing services to choose their caregivers.
+Added: In 2019, New York initiated a new Request For Offer (“RFO”) process to competitively procure CDPAP fiscal intermediaries.
The Company was not selected in the initial RFO process.
We submitted a formal protest in response to the selection process, which was filed and accepted in March 2021.
−Removed: In April 2022, the New York legislature passed its fiscal year 2023 state budget, which amended the Fiscal Intermediary RFO process to authorize all fiscal intermediaries that submitted an RFO application and served at least 200 clients in New York City or 50 clients in other counties between January 1, 2020, and March 31, 2020, but that were not initially awarded a contract, to contract with the New York State Department of Health (“NYSDOH”).
+Added: In April 2022, the New York legislature passed its fiscal year 2023 state budget, which amended the Fiscal Intermediary RFO process to authorize all fiscal intermediaries that submitted an RFO application and served at least 200 clients in New York City or 50 clients in other counties between January 1, 2020, and March 31, 2020, but that were not initially awarded a contract, to contract with the New York State Department of Health (“NYSDOH”).
These fiscal intermediaries are permitted to continue operating in all counties contained in their RFO application, provided they submitted an attestation and supporting information to the NYSDOH no later than November 29, 2022.
−Removed: The Company submitted an attestation on November 22, 2022.
−Removed: For the fiscal intermediaries whose attestation and supporting information meet all requirements, the NYSDOH will issue award letters on the contract award date, which is anticipated to be April 1, 2023.
−Removed: Any fiscal intermediary that does not receive an award letter must cease fiscal intermediary operations.
−Removed: The Company continues to assess the future of its participation in this program.
−Removed: Given the current profitability of the program, the Company has suspended materially all of its new fee-for-service patient admissions through County Social Service Departments in the CDPAP program.
−Removed: The Company recognized approximately $39.2 million and $3.0 million in net service revenue and operating income, respectively, from the program for the year ended December 31, 2022.
+Added: The Company submitted an attestation on November 22, 2022, which allowed the Company to continue its CDPAP fiscal intermediary operations.
+Added: However, the Company decided at that time to suspend materially all of its new fee-for-service patient admissions in the CDPAP through County Social Service Departments.
+Added: On June 6, 2023, the NYSDOH notified the Company that it had received a contract award.
+Added: Under this contract, the Company is providing services to all current payors and has resumed new fee-for-service patient admissions through County Social Service Departments in the CDPAP.
+Added: The CDPAP continues to be targeted for changes by New York governmental authorities, however.
+Added: For example, the governor’s most recent update on the state budget contained proposals that could adversely affect the Company’s ability to participate in the CDPAP.
+Added: These proposals may not be adopted in their current form, or at all.
+Added: The Company recognized approximately $40.7 million and $3.5 million in net service revenue and operating income, respectively, from the CDPAP for the year ended December 31, 2023.
In 2023, we derived approximately 44.5% of our net service revenues from services provided in Illinois, 17.0% of our net service revenues in New Mexico and 8.7% of our net service revenues in New York.
−Removed: Because a substantial portion of our business is concentrated in these states, any significant reduction in expenditures that pay for our services or other significant changes in these states may have a disproportionately negative impact on our future operating results.
−Removed: We cannot predict whether states material to our operating results will timely pass budgets in subsequent years or experience changes or other challenges that negatively impact our ability to be reimbursed for our services in a timely manner.
−Removed: The ACA made significant changes to Medicare and Medicaid policy and funding, among other broad changes across the healthcare industry, promoting a shift toward value-based care, including implementation of alternative payment models.
−Removed: The ACA also resulted in expanded Medicaid eligibility in many states and the establishment of various demonstration projects and Medicaid programs under which states may apply to test new or existing approaches to payment and delivery of Medicaid benefits.
−Removed: Future health reform efforts or additional significant changes to the ACA could impact both federal and state programs.
+Added: Because a substantial portion of our business is concentrated in these states, any significant reduction in state expenditures that pay for our services or other significant changes in these states may have a disproportionately negative impact on our future operating results.
+Added: We cannot predict whether states material to our operating results will experience changes or other challenges that negatively impact our ability to be reimbursed for our services in a timely manner.
+Added: Changes in the volume of uninsured patients could adversely affect our cash flows and results of operations.
+Added: In recent years, federal and state legislatures have considered or passed various proposals impacting the size of the uninsured population.
+Added: For example, Medicaid enrollment increased as a result of COVID-19 relief legislation that authorized a temporary increase in federal funds for certain Medicaid expenditures in states that maintained continuous Medicaid enrollment, among other requirements.
+Added: The end of the continuous enrollment condition in 2023, including the resumption of redeterminations for Medicaid enrollees, has resulted in significant coverage disruptions and dis-enrollments of enrollees, and Medicaid enrollment is generally expected to decline through fiscal year 2024 (which ends June 30, 2024, in most states).
+Added: While we believe the population targeted by our model will be less affected than other Medicaid enrollees, there is uncertainty regarding how enrollment will ultimately change as unwinding continues and states return to normal eligibility and enrollment operations.
+Added: Congress, CMS and state authorities may implement changes to reimbursement for or coverage of items and services that affect our business and operations.
+Added: For example, from time to time, CMS revises the reimbursement systems used to reimburse healthcare providers, including through changes to the home health and hospice reimbursement systems, which may result in reduced Medicare and/or Medicaid payments.
+Added: The shift toward value-based care continues, including through the implementation of alternative payment models and various demonstration projects.
+Added: Some states have obtained CMS approval to test new or existing approaches to payment and delivery of Medicaid benefits.
+Added: Payment policies for different types of providers and for various items and services continue to evolve, and future health reform efforts could impact both federal and state programs.
If changes in Medicare, Medicaid or other state and local medical and social programs result in a reduction in available funds for the services we offer, a reduction in the number of beneficiaries eligible for our services or a reduction in the number of hours or amount of services that beneficiaries eligible for our services may receive, then our revenues and profitability could be negatively impacted.
Our profitability depends principally on the levels of government-mandated payment rates and our ability to manage the cost of providing services.
−Removed: In some cases, commercial insurance companies and other private payors rely on government payment systems to determine payment rates.
+Added: In some cases, commercial insurance companies and other private payors rely on government payment systems to determine payment rates and policies.
As a result, changes to government healthcare programs that reduce Medicare, Medicaid or other payments may negatively impact payments from private payors, as well.
−Removed: Any reduction in reimbursements or imposition of copayments that dissuade the use of our services, or any reduction in reimbursement from private payors, could also materially adversely affect our profitability.
+Added: Any reduction in reimbursements from governmental or private payors or policies that negatively affect utilization of our services, such as the imposition of copayments or prior authorization requirements, could also materially adversely affect our profitability.
Federal and state regulation may impair our ability to consummate acquisitions or open new agencies.
−Removed: Federal laws or regulations may adversely impact our ability to acquire home health agencies or open new start-up home health agencies.
−Removed: For example, a Medicare regulation known as the “36 Month Rule”
−Removed: prohibits buyers of Medicare-certified home health agencies from assuming the Medicare billing privileges of an acquired agency if the acquired agency either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition, subject to certain exceptions.
−Removed: Instead, the buyer must enroll the acquired home health agencies as new providers with Medicare.
−Removed: The 36 Month Rule can increase competition for acquisition targets that are not subject to the rule and may cause significant Medicare billing delays for the purchases of home health agencies that are subject to the rule.
−Removed: In addition, effective January 1, 2023, home health agencies undergoing changes of ownership are considered a “high-risk”
−Removed: provider type, subjecting provider enrollment applications to increased scrutiny, which may result in delays in processing.
+Added: Federal and state laws and regulations may adversely impact our ability to acquire or open new start-up agencies, and the change of ownership processes for Medicare, Medicaid and other payors can be complex.
+Added: For example, a Medicare regulation known as the “36 Month Rule” restricts buyers from assuming Medicare billing privileges of Medicare-certified home health agencies and, effective January 1, 2024, hospices.
+Added: The 36 Month Rule applies if the acquired home health agency or hospice either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition, subject to certain exceptions.
+Added: Instead, the buyer must enroll as a new provider with Medicare.
+Added: The 36 Month Rule can increase competition for acquisition targets that are not subject to the rule and may cause significant Medicare billing delays for the purchases of home health agencies and hospices that are subject to the rule.
+Added: Home health agencies and (effective January 1, 2024) hospices undergoing changes of ownership are considered a “high-risk” provider type, subjecting provider enrollment applications to increased scrutiny, which may result in delays in processing.
Further, in the past, CMS has limited enrollment of new home health agencies.
If another moratorium is imposed on enrollment of new providers in a geographic area we desire to service, our ability to expand operations may be impacted.
−Removed: Our ability to expand operations in a state will depend on our ability to obtain a state license to operate, and where required, CON approval.
+Added: Our ability to expand operations in a state will also depend, where required, on our ability to obtain a state license to operate and, in some cases, CON approval.
States may limit the number of licenses they issue.
−Removed: The failure to obtain any required CON or license could impair our ability to operate or expand our business.
+Added: In addition, some states require disclosures by healthcare entities to state attorneys general or other designated entities in advance of sales or other transactions.
+Added: The failure to obtain any required CON or license or other required approvals could impair our ability to operate or expand our business.
+Added: The increasingly challenging regulatory environment may negatively impact our ability to acquire healthcare businesses if they are found to have material unresolved compliance issues.
+Added: Resolving any such issues and completing applicable review or approval processes could significantly delay or prevent us from acquiring other businesses and increase our acquisition costs.
The implementation of alternative payment models and the transition of Medicaid and Medicare beneficiaries to managed care organizations may limit our market share and could adversely affect our revenues.
Many government and commercial payors are transitioning providers to alternative payment models that are designed to promote cost-efficiency, quality and coordination of care.
−Removed: For example, accountable care organizations (“ACOs”) incentivize hospitals, physician groups, and other providers to organize and coordinate patient care while reducing unnecessary costs.
+Added: For example, accountable care organizations (“ACOs”) incentivize hospitals, physician groups, and other providers to organize and coordinate patient care while reducing unnecessary costs.
Several states have implemented, or plan to implement, accountable care models for their Medicaid populations.
If we are not included in these programs, or if ACOs establish programs that overlap with our services, we are at risk for losing market share and for a loss of our current business.
+Added: Further, if we fail to effectively provide or coordinate the efficient delivery of quality services, our reputation may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, which could cause our revenues to decline.
We may be similarly impacted by increased enrollment of Medicare and Medicaid beneficiaries in managed care plans, which is part of the general shift away from traditional fee-for-service models.
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Insurers may choose to offer supplemental benefits, including in-home support services, and impose higher plan costs on beneficiaries.
−Removed: Nearly half of Medicare beneficiaries are enrolled in a Medicare Advantage plan, a figure that continues to grow.
−Removed: While hospice services are currently reimbursed as a traditional fee-for-service program under Medicare Part A, hospice services may eventually be offered under Medicare Advantage plans, which could result in reduced reimbursement, limited utilization, and increased competition for managed care contracts.
+Added: Approximately half of Medicare beneficiaries are enrolled in a Medicare Advantage plan, a figure that continues to grow.
+Added: While hospice services are currently reimbursed as a traditional fee-for-service program under Medicare Part A, CMS is testing the inclusion of the Part A hospice benefit with the Medicare Advantage benefits package.
+Added: Under the Hospice Benefit Component of the Value-Based Insurance Design Model, Medicare Advantage plans are financially responsible for all traditional Medicare services, including hospice care.
+Added: If hospice services are offered more widely under Medicare Advantage plans, the change could result in reduced reimbursement, limited utilization, and increased competition for managed care contracts.
Enrollment in managed Medicaid plans is also growing, as states are increasingly relying on managed care organizations to deliver Medicaid program services as a strategy to control costs and manage resources.
−Removed: We may experience increased competition for
−Removed: managed care contracts due to state regulation and limitations.
+Added: We may experience increased competition for managed care contracts due to state regulation and limitations.
For instance, New York law limits the number of home care providers with which a managed Medicaid long-term care plan can contract.
3 unchanged sentences
Difficulties with operational processes may negatively affect our revenue growth rates, cash flow and profitability for services provided.
−Removed: Other alternative payment models may be presented by the government and commercial payors to control costs that subject our Company to financial risk.
+Added: Other alternative payment models may be presented by the government and commercial payors that subject our Company to financial risk.
+Added: It is difficult to predict the nature and success of any such models.
We cannot predict at this time what effect alternative payment models may have on our Company.
Our industry is highly competitive, fragmented and market-specific.
−Removed: The healthcare and long-term care industries are highly competitive among service providers.
−Removed: We compete with personal care service providers, hospice providers, home health providers, private caregivers, larger publicly held companies, privately held companies, privately held single-site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations and self-directed care programs.
−Removed: Some of our competitors may have greater financial, technical, political and marketing resources, name recognition or a larger number of consumers and payors than we do.
−Removed: In addition, some of these organizations offer more services than we do in the markets in which we operate.
+Added: The healthcare and long-term care industries are highly competitive among service providers and care models.
+Added: We compete with personal care service providers, hospice providers, home health providers, private caregivers, publicly held companies, privately held companies, privately held single-site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations and self-directed care programs.
+Added: Some of these providers and competitive care models may have greater financial, technical, political and marketing resources, name recognition or a larger number of consumers and payors than we do.
+Added: In addition, some of our competitors offer more services than we do in the markets in which we operate.
These competitive advantages may limit our ability to attract and retain referrals in local markets and to increase our overall market share.
13 unchanged sentences
Trends toward price transparency and value-based purchasing may have an impact on our competitive position, ability to obtain and maintain favorable contract terms, and consumer volumes.
−Removed: For example, starting January 1, 2023, health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered items and services.
+Added: For example, health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered items and services.
HHS also requires health insurers to publish online the charges negotiated with providers for healthcare services.
12 unchanged sentences
• qualifications and training of personnel;
−Removed: confidentiality, maintenance, data breach, identity theft, security, access and exchange of health-related and personal information and medical records, and interoperability and refraining from information blocking;
+Added: • confidentiality, maintenance, interoperability, data breach, identity theft, security, access and exchange of medical records and other health-related and personal information including information blocking, data breach, ransomware, identify theft and online tracking of personal information;
• environmental protection, health and safety;
6 unchanged sentences
• debt collection and communications with consumers.
−Removed: These laws include, but are not limited to the federal Anti-Kickback Statute, the federal Stark law, the federal FCA, the federal Civil Monetary Penalties Law, other federal and state fraud and abuse, insurance fraud, and fee-splitting laws, which may extend to services reimbursable by any payer, including private insurers, the No Surprises Act, and federal and state laws governing the security and privacy of health information.
+Added: These laws include, but are not limited to the federal Anti-Kickback Statute, the federal Stark Law, the federal FCA, the federal Civil Monetary Penalties Law, other federal and state fraud and abuse, insurance fraud, and fee-splitting laws, which may extend to services reimbursable by any payor, including private insurers, the No Surprises Act, and federal and state laws governing the security and privacy of health information.
We currently have contractual relationships with current and potential referral sources and recipients, including hospitals and health systems, skilled nursing facilities and certain physicians who provide medical director and clinical services to our Company.
8 unchanged sentences
Federal and state government agencies have heightened and coordinated civil and criminal enforcement efforts throughout the healthcare industry.
−Removed: We may face audits or investigations by government agencies or third parties, including certain of our contractual relationships.
−Removed: An adverse outcome under any such audit or investigation, a determination that we have violated applicable laws and regulations, or a public announcement that we are being investigated for possible violations could result in liability, result in adverse publicity, require us to change our operations to implement plans of correction for alleged deficiencies, and other negative consequences that could adversely affect our business, financial condition, or results of operations.
+Added: We may face audits or investigations by government agencies or third parties, including under certain of our contractual relationships.
+Added: An adverse outcome under any such audit or investigation, a determination that we have violated applicable laws and regulations, or a public announcement that we are being investigated for possible violations could result in liability, result in adverse publicity, require us to change our operations to implement plans of correction for alleged deficiencies, and result in other negative consequences that could adversely affect our business, financial condition, or results of operations.
We are subject to federal, state and local laws and regulations that govern our employment practices, including minimum wage, living wage, and paid time-off requirements.
3 unchanged sentences
Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, changes in federal, state or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits or the lengthening of periods for which unemployment benefits are available.
−Removed: Since our personal care operations are concentrated in Illinois, New Mexico and New York, we are particularly sensitive to changes in laws and regulations in these states.
+Added: Each of our subsidiaries that employ an average of at least 50 full-time employees in a calendar year are required to offer a minimum level of health coverage for 95% of our full-time employees in 2023 or be subject to an annual penalty, for example.
+Added: Since our personal care operations are concentrated in Illinois, New Mexico and New York, we are also particularly sensitive to changes in laws and regulations in these states.
Additionally, the current presidential administration has signaled its support for increases in minimum wage.
We may not be able to offset any increased costs and expenses.
−Removed: Furthermore, any failure to comply with these laws, including even a seemingly minor infraction, can result in significant penalties which could harm our reputation and have a material adverse effect on our
−Removed: The COVID-19 pandemic has increased some of these risks, with certain states modifying occupational health and safety guidelines in a manner that increases scrutiny and complexity of operations with respect to appropriate training and use in the workplace of PPE and the possibility of corresponding regulatory audit activity with respect to the adequacy of our practices and procedures.
−Removed: The COVID-19 pandemic has also resulted in states modifying standards associated with payment amounts and required justifications to qualify for sick leave and unemployment benefits.
+Added: Furthermore, any failure to comply with these laws, including even a seemingly minor infraction, can result in significant penalties which could harm our reputation and have a material adverse effect on our business.
+Added: The COVID-19 pandemic increased some of these risks, with certain states modifying occupational health and safety guidelines in a manner that increases scrutiny and complexity of operations with respect to appropriate training and use in the workplace of PPE and the possibility of corresponding regulatory audit activity with respect to the adequacy of our practices and procedures.
+Added: The COVID-19 pandemic also resulted in states modifying standards associated with payment amounts and required justifications to qualify for sick leave and unemployment benefits.
These modifications may result in increased operational costs to us, which may adversely impact our financial performance.
1 unchanged sentence
If we inadvertently hire or contract with an excluded person, or if any of our current employees or contractors becomes an excluded person in the future without our knowledge, we may be subject to substantial civil penalties, including civil monetary penalties, an assessment of up to three times the amount claimed and exclusion from the program.
−Removed: Each of our subsidiaries that employ an average of at least 50 full-time employees in a calendar year are required to offer a minimum level of health coverage for 95% of our full-time employees in 2021 or be subject to an annual penalty.
Our business may be adversely impacted by healthcare reform efforts.
2 unchanged sentences
The most prominent of these legislative reform efforts, the ACA affects how healthcare services are covered, delivered, and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.
−Removed: The ACA has been, and continues to be, subject to legislative and regulatory changes and court challenges.
−Removed: Although the current presidential administration has indicated that it generally intends to protect and strengthen the ACA, it is possible that changes by Congress or government agencies could eliminate or alter provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise negatively impacting our business.
−Removed: In addition, CMS administrators may make changes to Medicaid payment models or grant various flexibilities to states in the administration of state Medicaid programs, including by expanding the scope of waivers under which states may implement Medicaid expansion provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.
+Added: However, the ACA has been, and continues to be, subject to legislative and regulatory changes and court challenges.
+Added: It is possible that changes by Congress or government agencies could eliminate or alter provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise negatively impacting our business.
+Added: In addition, CMS administrators may make changes to Medicaid payment models or impose new limitations on the use of Medicaid funds.
+Added: For example, in May 2023, CMS published a proposed rule that, if finalized in its current form, would require that a minimum of 80% of Medicaid payments in a state for home health aide, personal care services and some similar services be spent on compensation to direct care workers, in addition to related payment transparency requirements.
+Added: If adopted, this requirement could negatively impact our business and financial performance by, among other things, increasing our labor costs.
+Added: Likewise, CMS administrators may grant various flexibilities to states in the administration of state Medicaid programs, including by modifying the scope of waivers under which states may implement Medicaid expansion provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.
Some of these program changes may reduce the number of Medicaid enrollees in certain states.
2 unchanged sentences
Medicare reimbursement is tied to reporting of quality measures.
−Removed: In addition, among other consumer protections, the No Surprises Act imposes various requirements on providers and health plans that are intended to prevent “surprise”
−Removed: medical bills.
−Removed: The law generally requires providers to send an insured patient’s health plan a good faith estimate of expected charges, including billing and diagnostic codes, prior to when the patient is scheduled to receive the item or service.
+Added: In addition, among other consumer protections, the No Surprises Act imposes various requirements on providers and health plans that are intended to prevent “surprise” medical bills.
+Added: The law generally requires providers to send an insured patient’s health plan a good faith estimate of expected charges, including billing and diagnostic codes, prior to when the patient is scheduled to receive the item or service.
There is uncertainty regarding whether, when and what other health reform measures will be adopted through governmental avenues and/or the private sector, the timing and implementation of any such efforts, and the impact of those efforts on providers as well as other healthcare industry participants.
−Removed: Some members of Congress have proposed expanding government-funded coverage, including proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or to establish a single payor system (such reforms are often referred to as “Medicare for All”), and some states have implemented or proposed public health insurance options.
+Added: Some members of Congress have proposed expanding government-funded coverage, including proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or to establish a single payor system (such reforms are often referred to as “Medicare for All”), and some states have implemented or proposed public health insurance options.
We are unable to predict the nature and success of current and future healthcare reform initiatives, any of which may have an adverse effect on our business, financial condition, and operating results.
5 unchanged sentences
In addition, CMS publishes home health and hospice quality measure data online, through its Care Compare website, to allow consumers and others to search and compare data for Medicare-certified providers.
−Removed: Alongside this quality and public reporting effort, CMS began implementing a nationwide expansion of the HHVBP Model in January 2022.
−Removed: Under the model, home health agencies will receive increases or decreases to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
−Removed: Data collected in each performance year will impact Medicare payments two years later.
−Removed: Calendar year 2023 is the first performance year under the expanded HHVBP Model, which will affect payments in calendar year 2025.
+Added: Alongside this quality and public reporting effort, home health agencies receive, under the HHVBP Model, increases or decreases to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers.
+Added: Data collected in each performance year impacts Medicare payments two years later.
In the future, CMS may establish new value-based purchasing programs affecting a broader range of providers, some of which may be mandatory.
10 unchanged sentences
Our operations subject us to risk of litigation.
−Removed: Operating in the personal care services industry exposes us to an inherent risk of wrongful death, personal injury, professional malpractice and other potential claims or litigation brought by our consumers and employees.
−Removed: From time to time, we are subject to claims alleging that we did not properly treat or care for a consumer that we failed to follow internal or external procedures that resulted in death or harm to a consumer or that our employees mistreated our consumers, resulting in death or harm.
+Added: Operating in the healthcare and personal care services industries exposes us to an inherent risk of wrongful death, personal injury, professional malpractice and other potential claims or litigation brought by our consumers and employees.
+Added: From time to time, we are subject to claims alleging that we did not properly treat or care for a consumer, that we failed to follow internal or external procedures, resulting in death or harm to a consumer, or that our employees mistreated our consumers, resulting in death or harm.
We are also subject to claims arising out of accidents involving vehicle collisions brought by consumers whom we are transporting, from employees driving to or from home visits or other affected individuals.
−Removed: We may also be subject to lawsuits from patients, employees and others exposed to COVID-19 at our facilities or in connection with the services provided by our workforce in client residences and third party facilities.
+Added: We may also be subject to lawsuits from patients, employees and others exposed to contagious diseases in connection with the services provided by our workforce in client residences and third party facilities.
+Added: Some of the actions brought against us may seek large sums of money as damages and involve significant defense costs.
Our professional and general liability insurance may not cover all claims against us.
−Removed: In addition, regulatory agencies may initiate administrative proceedings alleging violations of statutes and regulations arising from our services and seek to impose monetary penalties on us.
+Added: In addition, regulatory agencies have previously brought and may in the future initiate administrative proceedings alleging violations of statutes and regulations arising from our services and seek to impose monetary penalties on us.
We could be required to pay substantial amounts to respond to regulatory investigations or, if we do not prevail, damages or penalties arising from these legal proceedings.
We also are subject to potential lawsuits under the federal FCA or other federal and state whistleblower statutes designed to combat fraud and abuse in our industry.
−Removed: These and other similar lawsuits can involve significant monetary awards or penalties that may not be covered by our insurance.
+Added: These and other similar lawsuits can involve significant defense costs, as well as significant monetary awards or penalties that may not be covered by our insurance.
If our third-party insurance coverage and self-insurance coverage reserves are not adequate to cover these claims, it could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Even if we are successful in our defense, civil lawsuits or regulatory proceedings could distract us from running our business or irreparably damage our reputation.
+Added: Even if we are successful in our defense, lawsuits or regulatory proceedings could distract us from running our business or irreparably damage our reputation.
Our insurance liability coverage may not be sufficient for our business needs.
11 unchanged sentences
Information systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, human acts and natural disasters.
−Removed: To the extent providers fail to support the software or systems, or if we lose our licenses, our operations could be negatively affected.
+Added: The number of administrative employees working remotely has increased substantially in recent years, increasing our dependence on systems that facilitate remote access, and we may experience increased risks as a result.
+Added: To the extent providers fail to support the software or systems we use, or if we lose our software licenses, our operations could be negatively affected.
Our business also depends on a comprehensive payroll and human resources system for basic payroll functions and reporting, payroll tax reporting, managing wage assignments and garnishments.
1 unchanged sentence
To the extent that ADP fails to support the software or systems, or any of the related support services provided by them, our internal operations could be negatively affected.
−Removed: Our business also supports the use of EVV to collect visit submission information through our delivery of home care services.
+Added: Our business supports the use of EVV to electronically collect visit information when our caregivers and providers deliver home care services.
Our solution uses a combination of IVR and GPS enabled smartphones to capture time in and time out, mileage and travel time, as well as the completed care plan tasks.
−Removed: We license this software through CellTrak along with partnering with states who utilize other software.
−Removed: We rely on these providers to provide continual maintenance, enhancements, as well as security of any protected data.
+Added: We license this software through CellTrak and partner with states that utilize other software.
+Added: We rely on these vendors to provide continual maintenance and enhancements, as well as security of any protected data.
To the extent that our EVV vendors fail to support these processes, our internal operations could be negatively affected.
−Removed: Under the 21 st Century Cures Act, as amended, states must require the use of EVV for all Medicaid-funded personal care services and home health services, by deadlines of January 1, 2020, and January 1, 2023, respectively.
−Removed: States that failed to meet these deadlines may be subject to incremental reductions in federal funding, absent approval of a good faith exemption.
−Removed: If any states in which we operate fail to properly implement EVV and lose an amount of their funding, or if those states adopt standards for EVV that are not compatible with our operations, our internal operations could be negatively affected.
+Added: Under the 21st Century Cures Act, states must require the use of EVV for all Medicaid-funded personal care services and home health services that require an in-home visit by a provider.
+Added: States that failed to meet the deadlines for implementation may be subject to incremental reductions in federal funding, absent approval of a good faith exemption.
+Added: If any states in which we operate fail to properly and timely implement EVV and lose an amount of their funding, or if those states adopt standards for EVV that are not compatible with our operations, our internal operations could be negatively affected.
Further, to the extent that the EVV solutions that we use are determined to be noncompliant with federal or state EVV requirements, we could be subject to penalties.
−Removed: The COVID-19 pandemic also has led to a substantial increase in administrative employees working remotely and, consequently, accessing our system remotely.
+Added: The COVID-19 pandemic also led to a substantial increase in administrative employees working remotely and, consequently, accessing our system remotely.
As a result, we are more dependent on our systems that facilitate remote access and potentially could experience increased risks.
7 unchanged sentences
The occurrence of any system failure could result in interruptions, delays, the loss or corruption of data and cessations or interruptions in the availability of systems, all of which could have a material, adverse effect on our financial position and results of operations and harm our business reputation.
−Removed: A cyber-attack or security breach could cause a loss of confidential consumer data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, common law and other legal theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business.
+Added: A cyber-attack or security breach could cause a loss of confidential consumer data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, common law and other legal theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, adversely impact our financial results, and otherwise be disruptive to our business.
We rely extensively on computer systems to manage clinical and financial data, to communicate with our consumers, payors, vendors and other third parties, and to summarize and analyze our operating results.
2 unchanged sentences
In addition, various states, including California, Colorado, Illinois, Nevada, New York, Massachusetts and Virginia have enacted, and other states are expected to enact, laws and regulations concerning privacy, data protection and information security.
−Removed: To the extent we are subject to such legislation, the potential effects of new legislation are often far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
+Added: To the extent we are subject to such legislation, including as a result of any creation, use or deployment of artificial intelligence, we may be required to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
These laws often provide for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation.
4 unchanged sentences
The information systems of third parties are also subject to various risks, and a breach or attack affecting any of these third parties could harm our business.
−Removed: Furthermore, because the techniques
−Removed: used in cyber-attacks change frequently, they may not be immediately recognized, and we may experience or be affected by security or data breaches that remain undetected for an extended time.
+Added: Furthermore, because the techniques used in cyber-attacks change frequently, they may not be immediately recognized, and we may experience or be affected by security or data breaches that remain undetected for an extended time.
+Added: The current cyber threat environment presents increased risk for all companies, including companies in our industry.
+Added: We are regularly the target of attempted cybersecurity and other threats that could have a security impact, and we expect to continue to experience an increase in cybersecurity threats in the future.
In spite of our policies, procedures and other security measures used to protect our computer systems and data, occasionally, we have experienced breaches that have required us to notify affected consumers and the government, and we have worked with consumers and the government to resolve such issues.
While these past breaches have not had a significant adverse impact on our business or results of operations, there can be no assurance that we will not be subject to additional and/or more severe cyber-attacks or security breaches in the future.
−Removed: If we or any of our third-party service providers or certain other third-parties are subject to cyber-attacks or experience security or data breaches in the future, this could result in harm to consumers, loss of protected patient medical data or other information subject to privacy laws, disruption to our information technology systems and/or business, reputational harm.
−Removed: Subject us to litigation and governmental enforcement actions (including under HIPAA and other applicable laws), which could result in fines, settlement agreements, corrective action plans, and of which could have a material adverse effect on our business, financial position and results of operations.
−Removed: Further, some of the losses associated with cybersecurity and data breach risks may not be sufficient to cover all losses or the types of claims that may arise.
+Added: If we or any of our third-party service providers or certain other third-parties are subject to cyber-attacks or experience security or data breaches in the future, this could result in harm to consumers, loss, misappropriation, corruption, or unauthorized access of protected patient medical data or other information subject to privacy laws, disruption to our information technology systems and/or business, reputational harm.
+Added: We may also be subject us to litigation and governmental enforcement actions (including under HIPAA and other applicable laws) as a result of cyber-attacks or security or data breaches, which could result in fines, settlement agreements, corrective action plans, and of which could have a material adverse effect on our business, financial position and results of operations.
+Added: Some state laws provide a private right of action for data breaches, which may increase data breach litigation.
+Added: Further, our insurance coverage intended to address cybersecurity and data breach risks may not be sufficient to cover all losses or the types of claims that may arise.
Human Capital Risks
6 unchanged sentences
Moreover, the increased staffing challenges have resulted in, and may continue to result in, increased labor cost to satisfy our staffing requirements.
−Removed: In addition, labor shortages could be further exacerbated by COVID-19 vaccination requirements.
We may not be able to offset higher labor costs by increasing the rates we charge for our services.
29 unchanged sentences
The acceleration of any such indebtedness will result in an event of default under all of our other long-term indebtedness.
−Removed: The potential cessation or modification of LIBOR may increase our interest expense or otherwise adversely affect us.
−Removed: A substantial portion of our indebtedness under the credit facility bears interest at variable interest rates that use the London Inter-Bank Offered Rate (“LIBOR”) as a reference rate.
−Removed: On July 27, 2017, the United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intends to phase out LIBOR as a reference rate.
−Removed: The FCA ceased publication of U.S.
−Removed: dollar LIBOR on December 31, 2021 in the case of one week and two month U.S.
−Removed: Dollar LIBOR tenors and intends to phase out LIBOR for all other U.S.
−Removed: Dollar tenors immediately after June 30, 2023.
−Removed: The Credit Agreement contains hardwired fallback language that contemplates a transition from LIBOR, specifically identifies the Secured Overnight Financing Rate (“SOFR”) as the replacement reference rate and details the mechanism for transition at LIBOR cessation, which is anticipated to occur on June 30, 2023.
−Removed: The transition to SOFR is not expected to have a material impact on the Company’s results of operations or liquidity.
General Risks
9 unchanged sentences
The impact of these or other factors beyond our control could have an adverse effect on our business, financial position and results of operations.
+Added: The emergence and effects related to a potential future pandemic, epidemic, or outbreak of infectious disease could adversely impact our business and future results of operations and financial condition.
+Added: As a provider of healthcare and personal care services, we have been and continue to be affected by the health and economic effects of COVID-19.
+Added: COVID-19 continues to evolve, and we may not be able to predict or effectively respond to future developments and any such developments could materially affect our business, results of operations, financial position, and cash flows.
+Added: The extent of any ongoing and future impact will depend on, among other factors, the duration and severity of any severe or widespread outbreaks of COVID-19;
+Added: the availability, acceptance and effectiveness of medical treatments and vaccines;
+Added: the impact of any mutations of the virus;
+Added: and the impact of COVID-19 and related government actions on the healthcare industry and broader economy.
+Added: Moreover, in response to the COVID-19 pandemic, the federal government authorized financial relief for eligible healthcare providers through the Provider Relief Fund.
+Added: Although recipients are not required to repay funding received, provided that they attest to and comply with certain terms and conditions, changes to interpretations of guidance on the underlying terms and conditions may result in derecognition of amounts previously received.
+Added: We received amounts from the Provider Relief Fund and returned any unused funds.
+Added: We have also acquired and may in the future acquire companies that received funds from the Provider Relief Fund.
+Added: We believe we have structured our use of these funds in accordance with the terms and conditions.
+Added: However, we may be subject to or incur costs from related government actions including payment recoupment, audits and inquiries by governmental authorities, and criminal, civil or administrative penalties.
+Added: In addition, if a future pandemic, epidemic, or outbreak of an infectious disease or other public health crisis were to affect our markets, our business could be adversely affected.
+Added: Any such crisis could diminish public trust in healthcare providers, particularly those that are treating or have treated patients affected by contagious diseases.
+Added: Patient volumes may decline or volumes of uninsured and underinsured patients may increase, depending on the economic circumstances surrounding the pandemic, epidemic or outbreak.
+Added: Further, a pandemic, epidemic or outbreak could adversely impact our business by causing a temporary shutdown or difficulty accessing patients, particularly facility-based patients, by causing disruption or delays in supply chains for materials and products, or by causing staffing shortages.
+Added: Although we have contingency plans in place, including infection control plans, the potential impact of, as well as the public’s response and governmental responses to, any such future pandemic, epidemic or outbreak of infectious disease with respect to our markets is difficult to predict and could adversely impact our business and future results of operations and financial condition.
+Added: We may be more vulnerable to the effects of a public health emergency than other businesses due to the nature of our consumers and the physical proximity required by our operations.
+Added: The majority of our consumers and patients are older individuals, many of whom may be more vulnerable than the general public during a pandemic or in a public health emergency due to complex medical conditions or socioeconomic factors.
+Added: Our employees may also be at greater risk of contracting contagious diseases due to their increased exposure to vulnerable consumers.
+Added: Due to the physical proximity required to offer many of our services, our employees could have difficulty attending to our consumers if social distancing policies or quarantines are instituted in response to a public health emergency.
+Added: In addition, the Company may expand existing internal policies in a manner that may have a similar effect.
+Added: If another pandemic occurs, we could again suffer losses to our consumer population or a reduction in the availability of our employees.
+Added: Further, we could face litigation if our employees or customers contract contagious diseases while our employees perform their duties.
+Added: Accordingly, certain public health emergencies could have a material adverse effect on our financial condition and results of operations.
UNRESOLVE D STAFF COMMENTS
+Added: CYBERSECURITY
+Added: Risk Management and Strategy
+Added: We recognize that cybersecurity threats pose a risk to our business.
+Added: As part of the Company’s overall risk management systems and processes, we employ a risk management framework designed with the goals of identifying, assessing and managing material risks from cybersecurity threats.
+Added: Key aspects of this risk management framework include, but are not limited to:
+Added: • Maintaining a cybersecurity incident response plan, coordinated by the Company’s IT department and Chief Information Security Officer, which includes controls and procedures for identifying, reporting and responding to cybersecurity incidents;
+Added: • Partnering with outside cybersecurity vendors periodically to gain an independent view of our cybersecurity and information security program;
+Added: • Providing our employees with regular training on cybersecurity and the protection of our information systems;
+Added: • Maintaining and testing a business continuity and disaster recovery program;
+Added: • Database activity monitoring, encryption, secure file transfer protocols and application firewalls;
+Added: • Maintaining insurance coverage intended to address cybersecurity and data breach risks.
+Added: We have also implemented processes to help identify, assess and manage cybersecurity risks associated with our use of third-party service providers.
+Added: We do not believe that risks from cybersecurity threats of which we are currently aware, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
+Added: For additional information, see “A cyber-attack or security breach could cause a loss of confidential consumer data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, common law and other legal theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, adversely impact our financial results, and otherwise be disruptive to our business.” included in Part I, Item 1A of this Form 10-K.
+Added: Our cybersecurity risk management program is integrated into our overall risk management system and processes.
+Added: Together with the Board’s standing committees, the Company’s Board of Directors is responsible for ensuring that material risks, including material cybersecurity risks, are identified and managed appropriately.
+Added: The Board receives updates at least bi-annually from our Chief Information Officer concerning our information security and cyber risk strategy, cyber defense initiatives, cyber event preparedness and cybersecurity risk assessments.
+Added: The Chief Information Officer has extensive IT and program management experience and works closely with our Chief Information Security Officer, who oversees our cybersecurity program on a day-to-day basis.
+Added: The Chief Information Security Officer has extensive cybersecurity experience, including more than 15 years working in senior IT infrastructure and IT security roles in the healthcare sector (seven of which years were spent as the Chief Information Security Officer).
+Added: Our cybersecurity incident response plan provides that the Chief Information Security Officer will work with our IT Department and the impacted segment of our business to investigate and respond to any identified incident (including by escalating the incident to the Company’s senior management and the Board depending on the nature and scope).
We do not own any real property.
2 unchanged sentences
We sublease approximately 21,000 and 37,400 square feet of our office space in Downers Grove and Frisco, respectively, to third parties.
−Removed: Of that 53,000 square feet of our Frisco office space, we subleased approximately 37,400 square feet in November 2022.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.