6 unchanged sentences
• Reforms to the U.S.
−Removed: healthcare system, including the ACA, continue to impose new requirements upon us and may lower our reimbursements.
−Removed: • The results of recent U.S.
−Removed: Presidential and Congressional elections may create significant changes to regulatory framework, enforcements, and reimbursements.
+Added: healthcare system, including the ACA, continue to impose new requirements upon us and may lower our reimbursements, which could materially impact our business.
+Added: • The recent U.S.
+Added: Presidential and Congressional elections may create significant changes to the regulatory framework, enforcements, and reimbursements.
• We are subject to various government reviews, audits and investigations that could adversely affect our business, including an obligation to refund amounts previously paid to us, potential criminal charges, the imposition of fines, and/or the loss of our right to participate in Medicare and Medicaid programs.
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We face numerous risks related to the continued COVID-19 public health emergency, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.
−Removed: The extent to which the COVID-19 public health emergency will continue impacting our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, federal vaccination program efforts, additional or modified government actions, new information which may emerge concerning the severity of the virus and efficacy of vaccinations, and the actions taken to contain the virus or treat its impact, among others.
+Added: The extent to which the COVID-19 public health emergency will continue impacting our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, federal vaccination program efforts, additional or modified government actions, new information which may emerge concerning the severity of the virus, variant outbreaks and efficacy of vaccinations, and the actions taken to contain the virus or treat its impact, among others.
Some of the risks of COVID-19 are being mitigated as a result of the federal vaccination program, including vaccinations of nursing facility staff and residents, but there remains uncertainty as to when the pandemic will officially end.
4 unchanged sentences
Other factors from the continuation of the COVID-19 pandemic that could have an adverse effect on our business, financial condition, liquidity, results of operations and prospects, include:
−Removed: • potential for increased government regulations and restrictions to combat COVID-19 as a result of the 2020 Presidential and Congressional elections;
+Added: • potential for increased government regulations and restrictions to combat COVID-19;
• significantly reduced occupancy as a result of government-imposed orders;
1 unchanged sentence
• increased costs and staffing requirements related to additional CDC protocols, federal and state workforce protection and related isolation procedures, including obligations to test patients and staff for COVID-19;
−Removed: • limitations on availability of staff due to COVID-19 related illness exposure;
+Added: • limitations on availability of staff due to COVID-19 related illness or exposure;
• disruptions to supply chains which could negatively impact consistent and reliable delivery of personal protective equipment, sanitizing supplies, food, pharmaceuticals, utilities and other goods to our affiliated facilities, resulting in our inability to obtain on reasonable terms, or at all, personal protective equipment, sanitizing supplies, food, pharmaceuticals, utilities and other goods;
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Our revenue could be impacted by federal and state changes to reimbursement and other aspects of Medicare.
−Removed: We derived 30.5% and 26.6% of our service revenue from the Medicare programs for the three months ended March 31, 2021 and 2020, respectively.
+Added: We derived 26.8% and 28.6% of our service revenue from the Medicare programs for the three and six months ended June 30, 2021, respectively, and 30.1% and 28.3% for the three and six months ended June 30, 2020, respectively.
In addition, many other payors may use published Medicare rates as a basis for reimbursements.
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A significant portion of reimbursement for skilled nursing services comes from Medicaid.
−Removed: In fact, Medicaid is our largest source of revenue, accounting for 43.6% and 44.4% of our service revenue for the three months ended March 31, 2021 and 2020, respectively.
+Added: In fact, Medicaid is our largest source of revenue, accounting for 46.3% and 45.0% of our service revenue for the three and six months ended June 30, 2021, respectively, and 45.2% and 44.8% for the three and six months ended June 30, 2020, respectively.
Medicaid is a state-administered program financed by both state funds and matching federal funds.
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As discussed in more detail in Item 2., under Government Regulation , CMS implemented a final rule in October 2019 to replace the existing case-mix classification system, Resource Utilization Groups, Version IV, with a new case-mix classification system, PDPM, that focuses more on the clinical condition of the patient and less on the volume of services provided.
−Removed: Payments under PDPM for FY 2021 are estimated to remain largely unchanged from FY 2020, but there remains risk that CMS may make future adjustments to reimbursement levels as it continues to monitor the impact of PDPM on patient outcomes and budget neutrality.
+Added: Payments under PDPM for fiscal year 2021 are estimated to remain largely unchanged from fiscal year 2020, but there remains risk that CMS may make future adjustments to reimbursement levels as it continues to monitor the impact of PDPM on patient outcomes and budget neutrality.
With the increased focus on therapy utilization under RUGs IV, there is concern as to the accuracy of the parity adjustment and how closely it will reflect the data that will be captured under PDPM where the focus is on the clinical condition of the patient in lieu of resource utilization.
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Additionally, a number of lawsuits have been filed challenging various aspects of the ACA and related regulations with inconsistent outcomes - some expand the ACA while others limit the ACA.
−Removed: The Supreme Court heard oral arguments on November 10, 2020, arising out of a constitutional challenge from the Fifth Circuit, and a decision is not expected until spring 2021.
−Removed: In the event that the ACA is repealed or materially amended, particularly any elements of the ACA that are beneficial to our business or that cause changes in the health insurance industry, including reimbursement and coverage by private, Medicare or Medicaid payers, our business, operating results and financial condition could be harmed.
+Added: In the event that the ACA is repealed or materially amended as a result of future challenges, particularly any elements of the ACA that are beneficial to our business or that cause changes in the health insurance industry, including reimbursement and coverage by private, Medicare or Medicaid payers, our business, operating results and financial condition could be harmed.
Thus, the future impact of the ACA on our business is difficult to predict and its continued uncertain future may negatively impact our business.
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In addition, the efficacy of the ACA is the subject of much debate among members of Congress and the public.
−Removed: On December 14, 2018, the U.S.
−Removed: District Court for the Northern District of Texas held the individual mandate provision, and therefore the entirety of the ACA, unconstitutional.
−Removed: This ruling was appealed to the Fifth Circuit Court of Appeals, which issued its decision on December 18, 2019, partially affirming the district court’s decision, finding the individual mandate to be unconstitutional and remanding the case to the district court for additional analysis on whether the individual mandate provision was severable from the remainder of the ACA.
−Removed: The case was appealed to the U.S.
−Removed: Supreme Court, which heard arguments November 10, 2020, and a decision is expected in spring 2021.
−Removed: Other unrelated cases challenging the ACA or related rules have had inconsistent outcomes - some expand the ACA while others limit the ACA.
+Added: Cases challenging the ACA or related rules have had inconsistent outcomes - some expand the ACA while others limit the ACA.
Thus, the future impact of the ACA on our business is difficult to predict.
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Sustained failure to demonstrate improvement towards meeting all claim filing and documentation requirements could ultimately lead to Medicare decertification.
−Removed: As of March 31, 2021, two of our independent operating subsidiaries had Reviews scheduled, on appeal, or in a dispute resolution process, either pre or post-payment.
−Removed: Subsequently, during April, one facility review was resolved and closed.
+Added: As of June 30, 2021, none of our independent operating subsidiaries had Reviews scheduled, on appeal, or in a dispute resolution process, either pre or post-payment.
We anticipate that these Reviews could increase in frequency in the future.
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• medical necessity of services provided.
−Removed: On May 31, 2018, we received a Civil Investigative Demand (CID) from the DOJ stating that it is investigating the Company to determine whether we have violated the FCA or the Anti-Kickback Statute with respect to the relationships between certain of our skilled nursing facilities and persons who served as medical directors, advisory board participants or other referral sources.
+Added: On May 31, 2018, we received a Civil Investigative Demand (CID) from the DOJ stating that it is investigating our company to determine whether we have violated the FCA or the Anti-Kickback Statute with respect to the relationships between certain of our skilled nursing facilities and persons who served as medical directors, advisory board participants or other referral sources.
The CID covered the period from October 3, 2013 through 2018 and was limited in scope to ten of our Southern California skilled nursing facilities.
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Department of Justice to promptly respond to the requests for information.
−Removed: However, we cannot predict when the investigation will be resolved, the outcome of the investigation or its potential impact on the Company.
+Added: However, we cannot predict when the investigation will be resolved, the outcome of the investigation or its potential impact on our company.
If we should agree to a settlement of, claims or obligations under federal Medicare statutes, the federal FCA, or similar state and federal statutes and related regulations, our business, financial condition and results of operations and cash flows could be materially and adversely affected, and our stock price could be adversely impacted.
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While we do not believe we are in violation of these prohibitions, we cannot assure you that governmental officials charged with the responsibility for enforcing these prohibitions will not assert that we are violating the provisions of such laws and regulations.
−Removed: The Company is currently aware of another investigation by the DOJ related to allegations some of our California facilities may have violated the FCA or the Anti-Kickback Statute with respect to the relationships between certain of our skilled nursing facilities and persons who served as medical directors, advisory board participants or other referral sources.
−Removed: While our operating entities maintain policies and procedures to promote compliance with the FCA, the Anti-Kickback Statute, and other applicable regulatory requirements, we cannot predict when the investigation will be resolved, the outcome of the investigation or its potential impact on the Company.
+Added: Our company is currently aware of another investigation by the DOJ related to allegations some of our California facilities may have violated the FCA or the Anti-Kickback Statute with respect to the relationships between certain of our skilled nursing facilities and persons who served as medical directors, advisory board participants or other referral sources.
+Added: While our operating entities maintain policies and procedures to promote compliance with the FCA, the Anti-Kickback Statute, and other applicable regulatory requirements, we cannot predict when the investigation will be resolved, the outcome of the investigation or its potential impact on our company.
We are unable to predict the future course of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations related to fraud and abuse, the intensity of federal and state enforcement actions or the extent and size of any potential sanctions, fines or penalties.
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Therefore, our failure to comply with applicable legal and regulatory requirements in any single facility could negatively impact our financial condition and overall of operations results.
−Removed: For example, in 2016, we elected to voluntarily close one operating subsidiary as a result of multiple regulatory deficiencies in order to avoid continued strain on our staff and other resources and to avoid restrictions on our ability to acquire new facilities or expand or operate existing facilities.
−Removed: In addition, from time to time, we have opted to voluntarily stop accepting new patients pending completion of a new state survey, in order to avoid possible denial of payment for new admissions during the deficiency cure period, or simply to avoid straining staff and other resources while retraining staff, upgrading operating systems or making other operational improvements.
+Added: From time to time, we have opted to voluntarily stop accepting new patients pending completion of a new state survey, in order to avoid possible denial of payment for new admissions during the deficiency cure period, or simply to avoid straining staff and other resources while retraining staff, upgrading operating systems or making other operational improvements.
If we elect to voluntary close any operations in the future or to opt to stop accepting new patients pending completion of a state or federal survey, it could negatively impact our financial condition and results of operation.
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There was a combined cap for PT and SLP and a separate cap for OT services that apply subject to certain exceptions.
−Removed: On February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law, which provides for the repeal of all therapy caps retroactively to January 1, 2018.
+Added: On February 9, 2018, the BBA was signed into law, which provides for the repeal of all therapy caps retroactively to January 1, 2018.
The law also reduced the monetary threshold that triggers a manual medical review (MMR), in certain instances (from $3,700 to $3,000).
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In addition, costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems also could disrupt or reduce the efficiency of our operations.
−Removed: A cyber security attack or other incident that bypasses our information systems security could cause a security breach which may lead to a material disruption to our information systems infrastructure or business and may involve a significant loss of business or patient health information.
−Removed: If a cyber security attack or other unauthorized attempt to access our systems or facilities were to be successful, it could result in the theft, destructions, loss, misappropriation or release of confidential information or intellectual property, and could cause operational or business delays that may materially impact our ability to provide various healthcare services.
−Removed: Any successful cyber security attack or other unauthorized attempt to access our systems or facilities also could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payors or other third parties and could subject us to a number of adverse consequences, the vast majority of which are not insurable, including but not limited to disruptions in our operations, regulatory and other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the SEC, Federal Trade Commission, Office of Civil Rights, the OIG or state attorneys general), fines, private litigation with those affected by the data breach, loss of customers, disputes with payors and increased operating expense, which either individually or in the aggregate could have a material adverse effect on our business, financial position, results of operations and liquidity.
+Added: A cyber attack or other incident that bypasses our information systems security could cause a security breach which may lead to a material disruption to our information systems infrastructure or business and may involve a significant loss of business or patient health information.
+Added: If a cyber attack or other unauthorized attempt to access our systems or facilities were to be successful, it could result in the theft, destructions, loss, misappropriation or release of confidential information or intellectual property, and could cause operational or business delays that may materially impact our ability to provide various healthcare services.
+Added: Any successful cyber attack or other unauthorized attempt to access our systems or facilities also could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payors or other third parties and could subject us to a number of adverse consequences, the vast majority of which are not insurable, including but not limited to disruptions in our operations, regulatory and other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the SEC, Federal Trade Commission, Office of Civil Rights, the OIG or state attorneys general), fines, private litigation with those affected by the data breach, loss of customers, disputes with payors and increased operating expense, which either individually or in the aggregate could have a material adverse effect on our business, financial position, results of operations and liquidity.
We may not be fully reimbursed for all services for which each facility bills through consolidated billing, which could adversely affect our revenue, financial condition and results of operations.
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Additionally, OIG reports published in 2010 and 2015 show the OIG’s concerns related to the billing practices of skilled nursing facilities based on Medicare Part A claims and financial incentives for facilities to bill for higher levels of therapies, even when not needed by patients.
−Removed: Also, in its fiscal year 2014 work plan, and again in 2017, OIG specifically stated that it will continue to study and report on questionable Part A and Part B billing practices amongst skilled nursing facilities.
+Added: In its fiscal year 2014 work plan, and again in 2017, OIG specifically stated that it will continue to study and report on questionable Part A and Part B billing practices amongst skilled nursing facilities.
+Added: Recently, in its 2021 work plan, OIG stated it will evaluate whether payments to SNFs under PDPM complied with Medicare requirements.
Our business model, like those of some other for-profit operators, is based in part on seeking out higher-acuity patients whom we believe are generally more profitable, and over time our overall patient mix has consistently shifted to higher-acuity and higher-resource utilization patients in most facilities we operate.
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Our ability to acquire or construct new facilities or expand or provide new services at existing facilities would be adversely affected if we are unable to obtain the necessary approvals, if there are changes in the standards applicable to those approvals, or if we experience delays and increased expenses associated with obtaining those approvals.
−Removed: We may not be able to obtain licensure, certificate of need approval, Medicaid certification, Attorney General approval or other necessary approvals for future expansion projects.
+Added: We may not be able to obtain licensure, certificate of need approval, Medicaid certification, state Attorney General approval or other necessary approvals for future expansion projects.
Conversely, the elimination or reduction of state regulations that limit the construction, expansion or renovation of new or existing facilities could result in increased competition to us or result in overbuilding of facilities in some of our markets.
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We also may be subject to employee-related claims such as wrongful discharge, discrimination or violation of equal employment law.
−Removed: While we are insured for these types of claims, we could experience damages that are not covered by our insurance policies or that exceed our insurance limits, and we may be required to pay such damages directly, which would negatively impact our cash flow from operations.
+Added: While we are insured for these types of claims, we could be subject to damages that are not covered by our insurance policies or that exceed our insurance limits, and we may be required to pay such damages directly, which would negatively impact our cash flow from operations.
Required regulatory approvals could delay or prohibit transfers of our healthcare operations, which could result in periods in which we are unable to receive reimbursement for such properties.
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Changes in the acuity level of patients we attract, as well as our payor mix among Medicaid, Medicare, private payors and managed care companies, significantly affect our profitability because we generally receive higher reimbursement rates for high acuity patients and because the payors reimburse us at different rates.
−Removed: For the three months ended March 31, 2021 and 2020, 74.1% and 71.0% of our revenue was provided by government payors that reimburse us at predetermined rates.
+Added: For the three and six months ended June 30, 2021, 73.1% and 73.6% of our service revenue was provided by government payors that reimburse us at predetermined rates, respectively.
If our labor or other operating costs increase, we will be unable to recover such increased costs from government payors.
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Other claims and suits, including class actions, continue to be filed against us and other companies in our industry.
−Removed: For example, there has been an increase in the number of wage and hour class action claims filed in several of the jurisdictions where we are present.
+Added: For example, there has been a general increase in the number of wage and hour class action claims filed in several of the jurisdictions where we are present.
Allegations typically include claimed failures to permit or properly compensate for meal and rest periods, or failure to pay for time worked.
−Removed: If there were a significant increase in the number of these claims or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could have a material adverse effect to our business, financial condition, results of operations and cash flows.
+Added: If there were a significant increase in the number of these claims against us or an increase in amounts owing should plaintiffs be successful in their prosecution of these claims, this could have a material adverse effect to our business, financial condition, results of operations and cash flows.
In addition, we contract with a variety of landlords, lenders, vendors, suppliers, consultants and other individuals and businesses.
1 unchanged sentence
If the other party to one or more of our contracts were to allege that we have violated the contract terms, we could be subject to civil liabilities which could have a material adverse effect on our financial condition and results of operations.
−Removed: Were litigation to be instituted against one or more of our subsidiaries, a successful plaintiff might attempt to hold us or another subsidiary liable for the alleged wrongdoing of the subsidiary principally targeted by the litigation.
+Added: If litigation is instituted against one or more of our subsidiaries, a successful plaintiff might attempt to hold us or another subsidiary liable for the alleged wrongdoing of the subsidiary principally targeted by the litigation.
If a court in such litigation decided to disregard the corporate form, the resulting judgment could increase our liability and adversely affect our financial condition and results of operations.
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In the future, we anticipate the rate at which we may acquire facilities will continue to fluctuate, which may affect our revenue.
−Removed: We have also historically acquired a few facilities, either because they were included in larger, indivisible groups of facilities or under other circumstances, which were or have proven to be non-strategic or less desirable, and we may consider disposing of such facilities or exchanging them for facilities which are more desirable.
−Removed: To the extent we dispose of such a facility without simultaneously acquiring a facility in exchange, our revenue might decrease.
+Added: We have also historically acquired a few facilities, which were or have proven to be non-strategic or less desirable, and we may consider disposing of such facilities or exchanging them for facilities which are more desirable, either because they were included in larger, indivisible groups of facilities or under other circumstances.
+Added: To the extent we dispose of such a facility without simultaneously acquiring a facility in exchange, our revenue may decrease.
We may not be able to successfully integrate acquired facilities and businesses into our operations, and we may not achieve the benefits we expect from any of our facility acquisitions.
6 unchanged sentences
If we are unable to accomplish any of these objectives at the operating subsidiaries we acquire, we will not realize the anticipated benefits and we may experience lower than anticipated profits, or even losses.
−Removed: During the three months ended March 31, 2021, we expanded our operations through long-term leases, with the addition of four stand-alone skilled nursing operations.
+Added: During the six months ended June 30, 2021, we expanded our operations through long-term leases and a real estate purchase, with the addition of twelve stand-alone skilled nursing operations.
This growth has placed and will continue to place significant demands on our current management resources.
91 unchanged sentences
Because we lease the majority of our affiliated facilities, we are subject to risks associated with leased real property, including risks relating to lease termination, lease extensions and special charges, any of which could adversely affect our business, financial position or results of operations.
−Removed: As of March 31, 2021, we leased 168 of our 232 affiliated facilities.
+Added: As of June 30, 2021, we leased 175 of our 240 affiliated facilities.
Most of our leases are triple-net leases, which means that, in addition to rent, we are required to pay for the costs related to the property (including property taxes, insurance, and maintenance and repair costs).
4 unchanged sentences
Failure to generate sufficient cash flow to cover required payments or meet operating covenants under our long-term debt, mortgages and long-term operating leases could result in defaults under such agreements and cross-defaults under other debt, mortgage or operating lease arrangements, which could harm our operating subsidiaries and cause us to lose facilities or experience foreclosures.
−Removed: We maintain a revolving credit facility under the Third Amended and Restated Credit Agreement, dated as of October 1, 2019, between the Company and a lending consortium arranged by Truist Financial Corporation (Truist) (formerly known as SunTrust Bank, Inc.) with a revolving line of credit of up to $350.0 million in aggregate principal amount (the Credit Facility).
−Removed: As of March 31, 2021, we have no outstanding debt under our Credit Facility.
+Added: We maintain a revolving credit facility under the Third Amended and Restated Credit Agreement, dated as of October 1, 2019, between our company and a lending consortium arranged by Truist Financial Corporation (Truist) (formerly known as SunTrust Bank, Inc.) with a revolving line of credit of up to $350.0 million in aggregate principal amount (the Credit Facility).
+Added: As of June 30, 2021, we have no outstanding debt under our Credit Facility.
Nineteen of our subsidiaries have mortgage loans insured with Department of Housing and Urban Development (HUD) for an aggregate amount of $112.9 million, which subjects these subsidiaries to HUD oversight and periodic inspections.
The terms of the mortgage loans range from 25- to 35-years.
−Removed: We also have one outstanding promissory note of approximately $3.7 million as of March 31, 2021.
−Removed: The term of the note is 12 years.
+Added: We also have two outstanding promissory notes of approximately $3.7 million as of June 30, 2021.
+Added: The term of the notes are 10 months and 12 years.
Because these mortgage loans are insured with HUD, our borrower subsidiaries under these loans are subject to HUD oversight and periodic inspections.
−Removed: In addition, we had $1.7 billion of future operating lease obligations as of March 31, 2021.
+Added: In addition, we had $1.8 billion of future operating lease obligations as of June 30, 2021.
We intend to continue financing our operating subsidiaries through mortgage financing, long-term operating leases and other types of financing, including borrowings under our lines of credit and future credit facilities we may obtain.
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Occupancy levels at skilled nursing facilities are likely to remain vulnerable to the effects of COVID-19 even after the pandemic is over.
−Removed: Facilities experiencing decreases in move-in rates in the first quarter of 2021 cite resident or family member concerns as the basis for such decreases.
+Added: Facilities experiencing decreases in move-in rates in the second quarter of 2021 cite resident or family member concerns as the basis for such decreases.
These and other similar concerns may continue to impact our ability to attract new residents and our ability to retain existing residents.
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These risks could negatively affect our business, financial condition or results of operations.
−Removed: The separation of Pennant continues to involve a number of additional risks, including, among other things, the potential that management’s and our employees’ attention will be significantly diverted by the provision of transitional services or that we may incur other operational challenges or difficulties as a result of the separation.
+Added: The separation of Pennant continues to involve a number of additional risks, including, among other things, the potential that management’s and our employees’ attention will be significantly diverted by the provision of skilled services or that we may incur other operational challenges or difficulties as a result of the separation.
Certain of the agreements described above provide for the performance of services by each company for the benefit of the other for a period of time.
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THE ENSIGN GROUP, INC.
−Removed: April 29, 2021 BY:
+Added: July 28, 2021 BY:
/s/ SUZANNE D.
1 unchanged sentence
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.