agilon health, inc. (AGL) 2021年年度報告「NYSE」.pdf

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1、TableofContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended December 31,2021orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCH

2、ANGE ACT OF 1934For the transition period from toCommission file number 001-40332agilon health,inc.(Exactnameofregistrantasspecifiedinitscharter)Delaware37-1915147(Stateorotherjurisdictionofincorporationororganization)(I.R.S.EmployerIdentificationNo.)6210 E Hwy 290,Suite 450Austin,Texas78723(ZipCode

3、)(Addressofprincipalexecutiveoffices)Registrantstelephonenumber,includingareacode(562)256-3800SecuritiesregisteredpursuanttoSection12(b)oftheAct:Title of each classTrading symbol(s)Name of each exchange on which registeredCommonstock,$0.01parvalueAGLTheNewYorkStockExchangeIndicatebycheckmarkifthereg

4、istrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesNoIndicatebycheckmarkwhethertheregistrant;(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExcha

5、ngeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule40

6、5ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompanyoranemerginggrowthcompany.Seethe

7、definitionsof“largeacceleratedfiler,”“acceleratedfiler”,“smallerreportingcompany”andemerginggrowthcompanyinRule12b-2oftheExchangeAct.LargeacceleratedfilerAcceleratedfilerNon-acceleratedfilerSmallerreportingcompanyEmerginggrowthcompanyIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthasele

8、ctednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagementsassessmentoftheeffectivenessofitsinternalcontroloverfinancialreportin

9、gunderSection404(b)oftheSarbanes-OxleyAct(15U.S.C.7262(b)bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedbyRule12b-2oftheAct.)YesNoStatetheaggregatemarketvalueofthevotingandnon-votingcommonequityheldbynon-affiliate

10、scomputedbyreferencetothepriceatwhichthecommonequitywaslastsold,ortheaveragebidandaskedpriceofsuchcommonequity,asofthelastbusinessdayoftheregistrantsmostrecentlycompletedsecondfiscalquarter:$6.6billion.AsofFebruary15,2022,therewere401,177,778sharesofcommonstockoutstanding.DOCUMENTS INCORPORATED BY R

11、EFERENCEPortionsofthedefinitiveProxyStatementfortheregistrants2022AnnualMeetingofStockholdershavebeenincorporatedbyreferenceintoPartIIIofthisReport.TableofContentsagilon health,inc.Form10-KFortheFiscalYearEndedDecember31,2021Table of ContentsCautionary Language Regarding Forward-Looking Statements1P

12、art I4Item1.Business4Item1A.RiskFactors23Item1B.UnresolvedStaffComments57Item2.Properties57Item3.LegalProceedings57Item4.MineSafetyDisclosures57Part II57Item5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities57Item6.Reserved58Item7.ManagementsDiscussionan

13、dAnalysisofFinancialConditionandResultsofOperations59Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk79Item8.FinancialStatementsandSupplementaryData80Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure81Item9A.ControlsandProcedures81Item9B.OtherInformation81It

14、em9C.DisclosureRegardingForeignJurisdictionsthatPreventInspections81Part III82Item10.Directors,ExecutiveOfficersandCorporateGovernance82Item11.ExecutiveCompensation82Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters82Item13.CertainRelationshipsandRelatedTrans

15、actions,andDirectorIndependence82Item14.PrincipalAccountingFeesandServices82Part IV83Item15.ExhibitsandFinancialStatementSchedules83Item16.Form10-KSummary85TableofContentsAll references in this report to“agilon,”“we,”“us”or“our”mean agilon health,inc.,together with its consolidated subsidiaries.Unle

16、ss the context suggests otherwise,references to“agilon health,inc.”mean the parent company without its subsidiaries.Cautionary Language Regarding Forward-Looking StatementsStatementsinthisAnnualReportonForm10-K(the“Report”)thatarenothistoricalfactualstatementsare“forward-lookingstatements”withinthem

17、eaningofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”).Someoftheforward-lookingstatementscanbeidentifiedbytheuseofforward-lookingtermssuchas“believes,”“expects,”“may,”“will,”“shall,”“should,”“would,”“could,”“seeks,”“aims,”“proje

18、cts,”“isoptimistic,”“intends,”“plans,”“estimates,”“anticipates”orthenegativeversionsofthesewordsorothercomparableterms.Forward-lookingstatementsinclude,withoutlimitation,allmattersthatarenothistoricalfacts.TheyappearinanumberofplacesthroughoutthisReportandinclude,withoutlimitation,statementsregardin

19、gourintentions,beliefs,assumptionsorcurrentexpectationsconcerning,amongotherthings,ourfinancialposition,resultsofoperations,cashflows,prospects,andgrowthstrategies.Forward-lookingstatementsaresubjecttoknownandunknownrisksanduncertainties,manyofwhichmaybeoutsideourcontrol.Wecautionyouthatforward-look

20、ingstatementsarenotguaranteesoffutureperformanceoroutcomesandthatactualperformanceandoutcomes,including,withoutlimitation,ouractualresultsofoperations,financialconditionandliquidity,andthedevelopmentofthemarketinwhichweoperate,maydiffermateriallyfromthosemadeinorsuggestedbytheforward-lookingstatemen

21、tscontainedinthisReport.Inaddition,evenifourresultsofoperations,financialcondition,andcashflows,andthedevelopmentofthemarketinwhichweoperate,areconsistentwiththeforward-lookingstatementscontainedinthisReport,thoseresultsordevelopmentsmaynotbeindicativeofresultsordevelopmentsinsubsequentperiods.Anumb

22、erofimportantfactors,including,withoutlimitation,therisksanduncertaintiesdiscussedunder“Item1A,RiskFactors”inthisReport,couldcauseactualresultsandoutcomestodiffermateriallyfromthosereflectedintheforward-lookingstatements.Furthermore,newrisksanduncertaintiesemergefromtimetotime,anditisnotpossibleforu

23、stopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatementscontainedinthisReport.Factorsthatcouldcauseactualresultsandoutcomestodifferfromthosereflectedinforward-lookingstatementsinclude,withoutlimitation:ourhistoryofnetlosses,andourabilitytoachieveormaintainprofitabilityin

24、anenvironmentofincreasingexpenses;ourabilitytoidentifyanddevelopsuccessfulnewgeographies,physicianpartnersandhealthplanpayors,ortoexecuteuponourgrowthinitiatives;ourabilitytoexecuteouroperatingstrategiesortoachieveresultsconsistentwithourhistoricalperformance;ourexpectationthatourexpenseswillincreas

25、einthefutureandtheriskthatmedicalexpensesincurredonbehalfofmembersmayexceedtheamountofmedicalrevenueswereceive;ourabilitytosecurecontractswithMedicareAdvantage(“MA”)payorsortosecureMAatfavorablefinancialterms;ourabilitytorecoverstartupcostsincurredduringtheinitialstagesofdevelopmentofourphysicianpar

26、tnerrelationshipsandprograminitiatives;ourabilitytoobtainadditionalcapitalneededtosupportourbusiness;significantreductionsinourmembership;challengesforourphysicianpartnersinthetransitiontoour“TotalCareModel”;inaccuraciesintheestimatesandassumptionsweusetoprojectthesize,revenueormedicalexpenseamounts

27、ofourtargetmarket;thespreadof,andresponseto,thenovelcoronavirus,orCOVID-19,andtheinabilitytopredicttheultimateimpactonus;1TableofContentsinaccuraciesintheestimatesandassumptionsweusetoprojectourmembersriskadjustmentfactors,medicalservicesexpense,incurredbutnotreportedclaims,andearningspursuanttopayo

28、rcontracts;theimpactofrestrictiveorexclusivityclausesinsomeofourcontractswithphysicianpartnersthatmayprohibitusfromestablishingnewrisk-bearingentities(each,an“RBE”)withincertaingeographiesinthefuture;theimpactofrestrictiveorexclusivityclausesinsomeofourcontractswithphysicianpartnersthatmaysubjectust

29、oinvestigationsorlitigation;ourabilitytoretainourmanagementteamandkeyemployeesorattractqualifiedpersonnelinthefuture;ourabilitytorealizethefullvalueofourintangibleassetsandanyimpairmentchargeswehaveormayrecord;adversedeterminationsoftaxmatters;securitybreaches,lossofdataorotherdisruptionstoourdatapl

30、atforms;ourrelianceonthirdpartiesforinternetinfrastructureandbandwidthtooperateourbusinessandprovideservicestoourmembersandphysicianpartners;ourabilitytoprotecttheconfidentialityofourknow-howandotherproprietaryandinternallydevelopedinformationoursubsidiarieslackofperformanceorabilitytofundtheiropera

31、tions,whichcouldrequireustofundsuchlosses;ourdependenceonalimitednumberofkeyhealthplanpayors;thelimitedtermsofourcontractswithhealthplanpayorsandthattheymaynotberenewedupontheirexpiration;ourrelianceonourhealthplanpayorsformembershipattributionandassignment,dataandreportingaccuracy,andclaimspayment;

32、ourdependenceonphysicianpartnersandotherproviderstoeffectivelymanagethequalityandcostofcare,andperformobligationsunderpayorcontracts;difficultiesinobtainingaccurateandcompletediagnosisdata;ourdependenceonphysicianpartnerstoaccurately,timely,andsufficientlydocumenttheirservicesandpotentialFalseClaims

33、Actorotherliabilityifanydiagnosisinformationorencounterdataareinaccurateorincorrect;ourrelianceonthird-partysoftwareanddatatooperateourbusinessandprovideservicestoourmembersandphysicianpartners;theimpactofconsolidationinthehealthcareindustry;reductionsinreimbursementratesormethodologyappliedtoderive

34、reimbursementfrom,ordiscontinuationof,federalgovernmenthealthcareprograms,fromwhichwederivesubstantiallyallofourtotalrevenue;uncertainoradverseeconomicconditions,includingadownturnordecreaseingovernmentexpenditures;theimpactofgovernmentperformancestandardsandbenchmarksonourcompensationandreputation;

35、statutoryorregulatorychanges,administrativerulings,interpretationsofpolicy,anddeterminationsbyintermediariesandgovernmentalfundingrestrictions,andtheirimpactongovernmentfunding,programcoverage,andreimbursements;regulatoryproposalsdirectedatcontainingorloweringthecostofhealthcareandourparticipationin

36、suchproposedmodels;2TableofContentswe,ourphysicianpartnersoraffiliatesbeingsubjecttofederalorstateinvestigations,audits,andenforcementactions;regulatoryinquiriesandcorrectiveactionplansimposedbyourhealthplanpayors;repaymentobligationsarisingoutofpayoraudits;theimpactonourrevenueofCentersforMedicare&

37、MedicaidServices(“CMS”)modifyingthemethodologyusedtodeterminetherevenueassociatedwithMAmembers;negativepublicityregardingthemanagedhealthcareindustry;theextensiveregulationofthehealthcareindustryatthefederal,state,andlocallevels;ourindebtednessandthepotentialthatwemayincuradditionalsubstantialindebt

38、edness;ourabilitytocompeteinourcompetitiveindustry;andrisksrelatedtootherfactorsdiscussedunder“RiskFactors”inthisAnnualReportonForm10-K.Exceptasrequiredbylaw,wedonotundertake,andherebydisclaim,anyobligationtoupdateanyforward-lookingstatements,whichspeakonlyasofthedateonwhichtheyaremade.3TableofConte

39、ntsPART IITEM 1.BusinessOverviewOurbusinessistransforminghealthcarebyempoweringtheprimarycarephysicians(PCPs)tobetheagentsforchangeinthecommunitiestheyserve.WebelievethatPCPs,withtheirintimatepatient-physicianrelationships,arebestpositionedtodrivemeaningfulchangeinquality,costandpatientexperiencewhe

40、nprovidedwiththerightinfrastructureandpaymentmodel.Throughourcombinationoftheagilonplatform,along-termpartnershipmodelwithexistingphysiciangroupsandagrowingnetworkoflike-mindedphysicians,wearepoisedtorevolutionizehealthcareforseniorsacrosscommunitiesthroughouttheUnitedStates.Ourpurpose-builtmodelpro

41、videsthenecessarycapabilities,capitalandbusinessmodelforexistingphysiciangroupstocreateaMedicare-centric,globallycapitatedlineofbusiness.OurmodeloperatesbyprimarilyformingRBEswithinlocalgeographies,thatenterintoarrangementswithpayorsprovidingformonthlypaymentstomanagethetotalhealthcareneedsofourphys

42、icianpartnersattributedpatients(orglobalcapitationarrangements).TheRBEsalsocontractwithagilontoperformcertainfunctionsandenterintolong-termprofessionalserviceagreementswithoneormoreanchorphysiciangroupspursuanttowhichtheanchorphysiciangroupsreceiveabasecompensationrateandshareinthesavingsfromsuccess

43、fullyimprovingqualityofcareandreducingcosts.Ourcompanywasformedin2016,andweestablishedourinauguralpartnershipwithananchorphysiciangroupin2017.Ourabilitytorapidlybuildscaledpositionsinlocalcommunitieshasallowedustogrowto16anchorphysiciangroupsand17geographiesinfewerthanfiveyears.Ourplatformhasenabled

44、ustogrowourtotalmembershipby42%andrevenueby50%fromDecember31,2020toDecember31,2021.AsofDecember31,2021,thePCPsonourplatformserveapproximately238,000seniormembers,whichincludes186,300MAmembersand51,700Medicarefee-for-service(“FFS”)beneficiariesthroughfivedirectcontractingentities(“DCEs”)throughourpar

45、ticipationintheCMSInnovationCenterDirectContractingModel,whichourPCPsserve.Foradescriptionofoursignificantactivitiesduring2021,see“Item7,ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations2021TransactionOverview”inthisreport.Ourbusinessmodelisdifferentiatedbyitsfocusonexisting

46、community-basedphysiciangroupsandisbuiltaroundthreekeyelements:(1)agilonsplatform;(2)agilonslong-termphysicianpartnershipapproach;and(3)agilonsnetwork.Withourmodel,ourgoalistoremovethebarriersthatpreventcommunity-basedphysiciansfromevolvingtoaTotalCareModel,wherethephysicianisempoweredtomanagehealth

47、outcomesandthetotalhealthcareneedsoftheirattributedMedicarepatients.The agilon Platform:TheagilonplatformisholisticinsupportingtherapidtransitiontoaTotalCareModelwithtechnology,people,processandcapital.Ourpurpose-builtplatformcomprisesanintegratedsetofcapabilitiesdesignedtocontinuouslyimprove.Ourpla

48、tformisdeliveredtoouranchorphysiciangroupsthroughalong-termpartnershipmodeltosupporttheadoptionandsuccessofaMedicare-centric,globallycapitatedlineofbusiness:Health Plan Payor Engagement:Ineachcommunity,weconnectmultiplepayors,patientsandphysiciansaroundasingle,purpose-builtplatformforMApatientswitho

49、nestreamlinedandsimplifiedapproachtoquality,patientexperience,clinicalprogrammanagementandfinancialmanagement.Direct Contracting Model:EnablesourPCPstoexpandourTotalCareModeltopatientsenrolledintraditionalMedicareFFSthroughtheCMSInnovationCenterDirectContractingModel.ThisenablesourPCPstoaligntheheal

50、thcaredeliveryofMAandMedicareFFSpatients,providingthemwithgreateropportunitiestoengagethesepatientsandimprovetheiroverallexperience.Data Integration and Management:Integrationwithhealthplansystems,physicianelectronicmedicalrecord(“EMR”)systems,labs,pharmaciesandotherthird-partyplatformstoorganizedis

51、paratedataintoactionableinsightsforourPCPstoimprovequalityofcare,costandpatientandphysicianexperience.Clinical Programs and Product Development:Combininginsightsfromevidence-basedmedicineandpatient-leveldata,ourmedicalleadershipandlocalphysicianleadersdevelophigh-value,actionableplaybooksforphysicia

52、nstodeliverqualitycare,whichincludeoperationalplans,analyticsandtrackingmetrics.4TableofContentsQuality(Clinical and Experience):Theagilonplatformprovidesactionableconsolidatedinformation,centralizedandlocalresourcesandprocessestoexpandaccess,strengthenthepatient-physicianrelationshipandreducemedica

53、llyunnecessarydriversofhealthcarecosts.Growth:WeenableourpartnerstocreatealocalbrandthatembodiesthevalueoftheTotalCareModelforpatientsaswellasthehistoryandcultureofourphysicianpartners.ThroughthedevelopmentofthislocalbrandandaMedicare-centriceducationapproach,weenableourphysicianpartnerstoactivelyen

54、gagewiththeirpatientswhoarecurrentlyMedicare-eligiblebutarenotcoveredbyanMAplanandtheir60-64yearoldpatientswhowillbecomeMedicare-eligible,toenabletheirpatientstomakeeducatedhealthcarechoices.Theseexistingpatientsrepresentalarge,growinganddurablesourceofpotentialattributedmembergrowth.Performance Man

55、agement Analytics:Ourqualityandcostnetworkdashboardsarecontinuouslyupdatedandusedbyphysiciangroupleaderstofacilitateconstructivedialogueandbestpracticesharingthatbenefitsfromthegrowthofournetwork.Financial Management:Leveragingourdedicatedteamofsubject-matterexperts,andourrobusttechnologiesandcapabi

56、lities,ourplatformoperationalizesthefinanceelementsofarisk-bearingstructure.National Policy:Webelieveweareabletounitethevoicesofourcommunity-basedphysicianleaderstoinformandadvancepolicyinWashington,D.C.agilons Long-term Physician Partner Model:Webuilttheagilonplatformtobedeployedthroughanalignedlon

57、g-termpartnershipmodelwithcommunity-basedphysiciangroupstomovehealthcareclosertothephysician,beoutcome-centricandoptimizethelong-termstickyrelationshipbetweenapatientandtheirexistingphysician.Throughthispartnership,ourphysicianpartnersexistingMApatientpanelsareattributedtoourplatformthroughoursubscr

58、iption-likeper-memberper-month(PMPM)agreementswithpayors.Thecombinationofthesesubscription-likeagreements,thestickypatient-physicianrelationshipandourlong-termpartnershipmodel,whichistypically20yearsinduration,resultsinagrowingandrecurringrevenuestreamandprovidessignificantvisibilityintothenear-term

59、andlong-termfinancialtrajectoryforbothagilonandouranchorphysiciangroups.InJanuaryofeachyear,wetypicallyhavevisibilityintogreaterthan90%ofthatyearsprojectedrevenue.Asearningsaregeneratedatthelocallevelduetoimprovementsinqualityofcareandmanagementofhealthcarecosts,wesharethoseearningswithouranchorphys

60、iciangroups.agilons Network:Enhancingthepowerandgrowthoftheagilonplatformistherapidlyexpandinggroupofleadingcommunity-basedphysicianpartners,functioningasacollaborativegroupthroughtheagilonnetwork.Webelievethepowerofthisnetworkisdemonstratedbyourabilitytoaddnewphysicianpartnersandtoattractadditional

61、PCPstoourphysicianpartners.Theabilitytosharebestpractices,influencethedevelopmentoftheplatform,comparenotesonthetransitiontoaTotalCareModelandlearnfromoneanotherrepresentsavaluableopportunityforphysicianswhointentionallychooseanindependentpathratherthanjoiningahealthsystemorinsuranceprovider.Webelie

62、vethepowerofalike-mindedgroupofcommunity-basedphysicians,manyofwhomareleadersintheircommunity,willenhanceinnovation,growth,qualityofcareandpatientexperience,andultimatelystrengthenthepoweroftheindependentphysicianbusinessmodelinlocalcommunitiesacrossthecountry.The agilon Flywheel Effect:Ourplatform,

63、partnershipandnetworkmodelenableourphysicianpartnerstobethequarterbackforhealthcaredeliveryintheircommunity,andsuccessfullyoperateaMedicare-centric,globallycapitatedlineofbusiness.Thisgeneratesimprovingqualityandcostoutcomes,growingmembershipandincreasingmedicalmarginpermember,whichwesharewithourphy

64、sicianpartnerspursuanttoourlong-termpartnershipmodel.WebelievethiscontinuousimprovementinpatientandphysicianengagementandexperienceleadstomorePCPsjoiningourplatformandultimatelyimprovesthesuccessofeachphysicianpartnerontheplatform.Asourplatformgrows,webelievewewillbeabletoleverageourscaletodriveaddi

65、tionalinvestmentinourgeographiestoacceleratethisflywheelforthebenefitofourphysicianpartnersandtheirpatients.5TableofContentsSummary Risk FactorsOurbusinessissubjecttoanumberofrisks,includingrisksthatmaypreventusfromachievingourbusinessobjectivesormayadverselyaffectourbusiness,financialcondition,cash

66、flows,andresultsofoperationsthatyoushouldconsiderbeforemakingadecisiontoinvestinourcommonstock.Theserisksinclude,butarenotlimitedto,thefollowing:Risks Related to Our Businessourhistoryofnetlossesandtheexpectationthatourexpenseswillincreaseinthefuture;failuretoidentifyanddevelopsuccessfulnewgeographi

67、es,physicianpartnersandpayors,orexecuteuponourgrowthinitiatives;successinexecutingouroperatingstrategiesorachievingresultsconsistentwithourhistoricalperformance;significantreductionsinmembership;challengesforourphysicianpartnersinthetransitiontoaTotalCareModel;inaccuraciesintheestimatesandassumption

68、sweusetoprojectthesize,revenueormedicalexpenseamountsofourtargetgeographies,ourmembersriskadjustmentfactors,medicalservicesexpense,incurredbutnotreportedclaimsandearningspursuanttopayorcontracts;thespreadof,andresponseto,thenovelcoronavirus,orCOVID-19,andtheinabilitytopredicttheultimateimpactonus;Ri

69、sks Related to Our Reliance on Third Partiesdependenceonalimitednumberofkeypayors,includingformembershipattributionandassignment,dataandreportingaccuracyandclaimspayment;dependenceonphysicianpartnersandotherproviderstoeffectivelymanagethequalityandcostofcareandperformobligationsunderpayorcontracts,w

70、hichcontractsgenerallyprovidethatifthecostofcareexceedsthecorrespondingcapitationrevenuewereceivefrompayorsinrespectofattributedmemberswemayrealizeoperatingdeficits,whicharetypicallynotcapped,andcouldleadtosubstantiallosses;dependenceonphysicianpartnerstoaccurately,timelyandsufficientlydocumenttheir

71、servicesandpotentialFalseClaimsActorotherliabilityifanydiagnosisinformationorencounterdataareinaccurateorincorrect;Risks Related to Our Industry and Government Programsreductionsinreimbursementratesormethodologyappliedtoderivereimbursementfrom,ordiscontinuationof,federalgovernmenthealthcareprograms,

72、fromwhichwedrivesubstantiallyallofourtotalrevenue;statutoryorregulatorychanges,administrativerulings,interpretationsofpolicyanddeterminationsbyintermediariesandgovernmentalfundingrestrictions,andanyimpactongovernmentfunding,programcoverageandreimbursements;theimpactonourrevenueofCMSmodifyingthemetho

73、dologyusedtodeterminetherevenueassociatedwithMAmembers;Legal and Regulatory Risksabilitytocomplywithfederal,stateandlocalregulationsandlawswearesubjectto,ortoadapttochangesinornewregulationsorlaws,includingassuchregulationsandlawsthatrelatetoourphysicianalignmentstrategieswithourphysicianpartnersort

74、hecorporatepracticeofmedicine;ourphysicianpartnerscompliancewithfederalandstatehealthcarefraudandabuselawsandregulations;6TableofContentsRisks Related to Our Indebtednesspotentialtoincursubstantialindebtedness,whichcouldadverselyaffectourfinancialhealthandourabilitytoobtainfinancinginthefuture,react

75、tochangesinourbusinessorsatisfyourobligations;andRisks Related to Our Common StocktheinfluenceofCD&RVectorHoldings,L.P.(the“CD&RInvestor”)andourstatusasa“controlledcompany.”TheserisksarediscussedinmoredetailinItem1Abelow.Reimbursement Model and OrganizationUnderatraditionalFFSreimbursementmodel,phys

76、iciansarepaidafixedamountforservicesprovidedduringapatientvisit,regardlessofapatientsmedicalneedorhealthoutcome.Asaresult,physicianreimbursementissolelyrelatedtothevolumeofpatientvisitsandproceduresperformed,therebyofferinglimitedfinancialincentivetofocusonpreventativecareandcostcontainment.Value-ba

77、sedcaremodelsofferalternativereimbursementmodels,whichtypicallyincentivizephysiciansforimprovingthecostandqualityofhealthcareprovidedforanattributedpatientpopulation.Varioustypesofvalue-basedcarereimbursementmodelsexist,includingcapitation,bundledpayments,orpaymentsforattainmentofimprovedqualitymetr

78、icsormedicalcostefficiency.UnderourTotalCareModel,whichisatypeofvalue-basedcarereimbursementmodel,weareresponsibleformanagingthemedicalcostsassociatedwithourattributedmembers.Thisstructureempowersphysicianstofocusontheimprovementofthequalityofcareprovided,andtoshareinthefinancialsurpluscreatedtothee

79、xtentpremiumsreceivedexceedthecostofmedicalcare.Undersuchastructure,physiciansareincentivizedtoimprovethequalityandefficiencyofcareaswellashealthoutcomesfortheirpatients.Physician and Payor Contractual Relationships Physicians Ourbusinessmodelcombinestheagilonplatform,anetworkoflike-mindedphysicians

80、andalong-termpartnershipmodelinordertoprovidephysiciangroupswiththenecessarycapabilities,capitalandbusinessmodeltocreateaMedicare-centric,globallycapitatedlineofbusiness.WebelievethatfailingtoempowerPCPstodrivemeaningfulchangeinquality,costandpatientexperiencehashistoricallyfosteredwaste,unnecessary

81、variabilityincareandpoorpatientexperienceandhealthoutcomes.Weseektopartnerwithleadingcommunity-basedphysiciangroupsunderaTotalCareModel.Wehaveformedlong-termpartnershipswithdiverseleadingcommunity-basedphysiciangroupsingeographiessuchasColumbus,Austin,Pittsburgh,Michigan,NorthCarolina,HartfordandBuf

82、falo.Byprovidingtechnology,people,processandcapital,weaimtoimprovethequalityandcostofhealthcareanddrivelong-termgrowthwhilecreatingasustainablebusinessmodelforourphysicianpartners.UndertheTotalCareModel,wetypicallyoperatebyformingRBEswithinlocalgeographies.Thesewholly-ownedRBEsenterintorisk-bearing,

83、globalcapitationagreementswithpayors,contractwithagilontoperformcertainfunctionsandenterintolong-termprofessionalserviceagreementswithoneormorepartnerprimarycareormulti-specialtyphysiciangroups.Werefertothesegroupsasour“anchorphysiciangroups.”IndividualMAmemberswhosecareisprovidedbyPCPsemployedoraff

84、iliatedwithouranchorphysiciangroupsareattributedtotheRBE,whichbearsfinancialresponsibilityfortheassociatedmedicalcostsofsuchmembers.Wehaveenteredintolong-termprofessionalservicesagreementswithouranchorphysiciangroups,whichtypicallyhaveacontractualdurationof20years.Inaccordancewithrelevantaccountingg

85、uidance,eachoftheseRBEsisdeterminedtobeavariableinterestentityconsolidatedbyagilon,aswehave:(i)theability,throughthemanagementservicesandgovernancearrangements,todirecttheactivities(excludingclinicaldecisions)thatmostsignificantlyaffecttheRBEseconomicperformance;and(ii)theobligationtoabsorblossesofo

86、rtherighttoreceivebenefitsthatcouldbepotentiallysignificanttotheRBE.7TableofContentsThroughincentivecompensationarrangements,weshareaportionoftheRBEssavingsfromsuccessfullyimprovingthequalityofcareandreducingcostswithouranchorphysiciangroups.Typically,ouranchorphysiciangroupsreceiveaFFSbasecompensat

87、ionrateforservicesrenderedwhichispaiddirectlybyhealthplanpayorstoouranchorphysiciangroupsor,incertainarrangements,paidfromthehealthplanpayortotheapplicableRBE,whopaysthecompensationreceivedtoouranchorphysiciangroups.Incertaincases,ouranchorphysiciangroupsmaybeentitledtoaguaranteedminimumFFSbasecompe

88、nsationratefromtheRBEintheeventthattheFFSbasecompensationratepaidbythehealthplanpayordoesnotmeetthenegotiatedbasecompensationrateasagreedbetweentheRBEandtheanchorphysiciangroup,oriftheFFSbasecompensationratepaidbythehealthplanpayorfallsbelowwhattheanchorphysiciangrouphadreceivedpriortojoiningourplat

89、form.Historically,thebasecompensationratespaiddirectlybythehealthplanpayorstoouranchorphysiciangroupshavemetorexceededapplicableguaranteedminimumFFSbasecompensationrates.ThisbasecompensationisinitiallynegotiatedwiththeRBEforthefirsttenyearsofeachagreement,subjecttoannualincreasesbasedoncurrentmarket

90、ratesandotheragreeduponadjustmentfactors,afterwhichitissubjecttorenegotiation.AlthoughourRBEsarewholly-ownedsubsidiariesofagilon,ouranchorphysiciangroupsparticipateineachRBEsgovernance,withindividualsdesignatedornominatedbytheapplicableanchorphysiciangroupshavingrepresentationoneachRBEsboardofdirect

91、ors.Mostofourcontractswithouranchorphysiciangroupscontainexclusivityorotherprovisionsintendedtopromoteinterconnectednesswithourphysicianpartnersforapplicablelinesofbusinessinordertofacilitatethelongevityandstabilityofthepartnership.Typically,thesecontractsprovideforterminationrightsthataretriggeredu

92、poncertainevents,subjecttoapplicablecureperiods,includingbankruptcyorinsolvencyevents,exclusion,suspensionordebarmentfromstateorfederalgovernmentprogramsandtheoccurrenceofgovernmentactionthatcanbereasonablyexpectedtonegativelyinfluenceourbusiness.Wehavehistoricallyissuedcertainstock-basedinstruments

93、,whichwerefertoas“partnerphysiciangroupequityagreements,”toouranchorphysiciangroupspursuanttowhichtheyareentitledtoreceiveequityoftheirlocalRBEoragilonhealth,respectively,inthefutureonlyupontheoccurrenceofcertaineventsdeemeda“changeofcontrol”oftheRBE,ora“changeofcontrol”ofagilonhealth,ifsucheventocc

94、ursbeforea“changeofcontrol”oftheRBE.Uponourinitialpublicoffering,a“changeofcontrol”eventoccurredfortheagilonhealthrelatedinstrumentsandtherespectivephysiciangroupsreceivedequity.Foradditionaldiscussionrelatedtheagilonhealthrelatedinstruments,see“CriticalAccountingPoliciesStock-BasedCompensation.”Ina

95、ddition,inHawaiiweoperateunderarisk-bearingindependentpracticeassociationmodelthroughwhichwehavebroadlycontractedwithphysiciansacrossthestateandhavedevelopedselectdeeperprimarycarerelationshipswithinthenetwork.PCPsinourHawaiinetworkaretypicallycompensatedonanFFSbasisbasedonapplicableMedicarefeesched

96、ules.Inadditiontoourcontractualarrangementswithourphysicianpartners,wealsomaintainrelationshipswithotherproviderswhocareforourmembers,includinghospitals,specialistsandancillaryproviders.Suchproviderstypicallycontractdirectlywithpayors.Weandourphysicianpartnersmaintaineffectiveworkingrelationshipswit

97、hthemajorityofthehigher-volumeprovidersinourgeographiesinordertoretaininsightintotheprovisionofcaretoourmembersandensurecareisrenderedeffectivelyandinamannerwhichsupportstheachievementofappropriateclinicaloutcomes.Health Plan Payors Weenterintocontractualagreementswithhealthplanpayorsineachofourgeog

98、raphies,underwhichwearefinanciallyresponsibleforourphysicianpartnersprovisionofadefinedspectrumofhealthcareservicestoourmembers,inexchangeforadefinedPMPMfeeforeachofourmembers(whichisalsoreferredtoas“globalcapitation”).Thehealthcareservicesforwhichweareresponsibleundersucharrangementsgenerallyinclud

99、eallhealthcarecostswhichCMSconsidersasPartAandBcosts,includinghospitalizationandfacilitycosts,primaryandspecialtycareprovidercosts,andancillaryservicescost.Incertainofourpayorarrangements,wearealsofinanciallyresponsibleforPartDpharmaceuticalcostsforprescriptionsrenderedtoourmembers.Throughthesepayor

100、agreements,wehelptocreateaccessforourphysicianpartnerstovalue-basedcarereimbursementstructuresthroughourTotalCareModel,whichallowourphysicianpartnerstofocusontheimprovementofthequalityofcareprovidedtotheirpatients,andtoshareinthefinancialsurpluscreatedtotheextentpremiumsreceivedexceedthecostofmedica

101、lcare.8TableofContentsTheglobalcapitationfeesweareentitledtoreceivefromourhealthplanpayorcontractsaretypicallybasedonadefinedpercentageofthecorrespondingmonthlypremiumpaymentswhichthepayorreceivesfromCMSformembersattributedtoourPCPsandcoveredundersuchcontracts.Thepremiumpaymentstopayorsarebasedoncou

102、nty-levelbenchmarkratesestablishedbyCMSandpayorsannualbidofamountsnecessarytocoverthecostofastandardMApatient,andareinfluencedbyseveralfactors,including,butnotlimitedto,theapplicableMAplansSTARratingandCMSrisk-adjustmentmodel,whichcompensatespayorsbasedonthehealthstatus(acuity)ofeachindividualpatien

103、tintheprecedingcalendaryear.Foragreementswherewearedelegatedforclaimspayment,weutilizeamountsreceivedundertheapplicableagreementonamonthlybasistopaysuchclaimsformedicalservicesrenderedtoourmembers.Foragreementswherethepayorretainsresponsibilityforpayingclaimsonourbehalf,asisthecasetodayinthemajority

104、ofourpayoragreements,fundingundertheapplicableagreementisutilizedbythepayortopaysuchclaims,andwereceivesurplusdistributionsonamonthlyorquarterlybasis.Inthesearrangements,thepayormaintainstheresponsibilityforenteringintocontractualagreementswithnetworkhospitals,networkspecialtyphysicians,andancillary

105、orotherproviders.Additionally,certainofourcontractswithpayorsincorporateprovisionsinwhichweareeligibletoearnadditionalpaymentsontopofourcapitationpaymentsbasedupontheattainmentofdefinedqualityperformancecriteriacorrelatedtoapplicableSTARratingscriteria.Premiumsreceivedmaybesubjecttofutureadjustment.

106、Wehavedevelopedlocalcontractsacrossmultiplepayors,alongwithnationalformcontractswithcertainkeypayors,whichprovideaconsistencyofnon-financialcontractterms,datasharing,operationalprocessesandgovernancestructuresandsupportportabilityoftheagilonplatform.Wetypicallymaintainvariouscontractswithasinglenati

107、onalpayorinordertoreflectvaryingeconomictermsacrossourgeographies,andtoprovidefordistinctsubsidiaryentitiesofourcompanyandanationalpayoraspartiestothesecontracts.AsofDecember31,2021,wehaverelationshipswith15healthplanpayorsacross17geographies.Payorswithwhichwecontractincludelargenationalhealthplansa

108、swellassmallerlocalandregionalinsurers.WebelieveourabilitytooffermultipleMAplansandproductstoourphysicianpartnersineachgeographycreatessignificantvalueforourphysicianpartnersandthemembersthattheyserve.Membersareabletoselecttheplanandbenefitdesignthatmeetstheirindividualneedswhileourplatformenablesas

109、eamlessexperienceregardlessofplanorproductforallpatientsandphysiciangroups.FortheyearendedDecember31,2021,Humanarepresentedapproximately26%ofourtotalrevenue,andHumana,AetnaandUnitedHealthcarecollectivelyrepresentedapproximately62%ofourtotalrevenue.Theagreementswithourpayorsoutlinetherangeofhealthcar

110、eservicesforwhichwearefinanciallyresponsibleandatrisk,theservicesforwhichwearecontractedtoperformonthepayorsbehalfandthekeyfinancialterms.Ourcontractswithpayorsgenerallyhavetermsofonetothreeyearsandaretypicallyrenewedforone-yearperiodsunlessterminatedinaccordancewiththetermsofsuchagreements.Whenween

111、terintoanewpayorcontract,wearetypicallyrequiredbythepayortocontributerisk-bearingcapitaltothelocaloperatingsubsidiary.Thistypicallytakestheformoflettersofcreditorrestricteddeposits,orthepayormayretainapercentageofthecapitationpaymentsdueundertheapplicablecontract.Risk-bearingcapitalrequiredbypayorsv

112、ariesbypayorandgeography,buttypicallyaveragesbetween1.5-2.0%ofprojectedannualgrossrevenueattributabletothecorrespondingagreement,andrangedfrom$50,000to$10.0millionasofDecember31,2021.Ourpayoragreementsalsotypicallyincorporatevariousterminationrights,whicharenegotiatedbasedonthescopeofthemarket-facin

113、gsolutionsthatthepayorhasadoptedandthedurationofthecontract.Mostofourcontractsincludecureperiodsduringwhichtimewemayattempttoresolveanyissuesthatwouldtriggerapayorsabilitytoterminatethecontract.However,certainofourcontractsarealsoterminableimmediatelyupontheoccurrenceofcertainevents.Forexample,someo

114、fourcontractsmaybeterminatedimmediatelybythepayorifweloseapplicablelicenses,gobankrupt,loseourliabilityinsuranceorreceiveanexclusion,suspensionordebarmentfromstateorfederalgovernmentauthorities.Thecontractswithourpayorsimposeotherobligationsonus.Forexample,wetypicallyagreethatallservicesprovidedunde

115、rourcontractandallemployeesprovidingsuchserviceswillcomplywithsuchpayorspoliciesandprocedures.Wealsotypicallyagreetoindemnifyourpayorsagainstcertainthird-partyclaims.9TableofContentsDirect Contracting Model OnApril1,2021,we,inconjunctionwithsomeofourphysicianpartners,beganparticipatingintheDirectCon

116、tractingModel(currentlyreferredtoastheGlobalandProfessionalDirectContracting(“GPDC”)Model)incertaingeographies,throughfivecurrentlyapprovedDCEswhichencompassmorethan500ofourexistingPCPsandserveover50,000MedicareFFSbeneficiaries.TheDirectContractingModelisavoluntarypaymentmodeloptionaimedatreducingex

117、pendituresandpreservingorenhancingqualityofcareforbeneficiariesintraditionalMedicareFFSestablishedbytheCMSInnovationCenter.UndertheDirectContractingModel,CMScontractsdirectlywitheachoftheDCEspursuanttoparticipationagreements,inwhichsuchDCEselectsrisk-sharingandfeepaymentoptions.Theparticipationagree

118、mentsincludevarioustermsandconditionseachDCEmustcomplywith,includingmeetingcertainoperationalrequirements.EachoftheDCEshasselectedtheGlobalrisk-sharingoption,inwhichtheDCEassumesaccountabilityforthetotalcostofcareoftheFFSbeneficiariesalignedtosuchDCEs.Inaddition,eachofourDCEshasselectedthePrimaryCar

119、eCapitationPayment(the“PCC”)option.TheparticipationagreementsbetweenourDCEsandCMSexpiretwoyearsafterthe“ModelPerformancePeriod”establishedbyCMS,whichlastsfromApril1,2021throughDecember31,2026.TheDCEmayterminateitsparticipationagreementwithCMSatanytimeuponadvancewrittennotice.CMShascertainadditionalt

120、erminationrights,includinginconnectionwiththeterminationoftheDirectContractingModelornon-complianceoftheDCE.Additionally,CMShastherighttoamendaparticipationagreementwithouttheconsentoftheDCEforgoodcause,orasnecessarytocomplywithapplicablefederalorstatelaw,regulatoryrequirements,accreditationstandard

121、sorlicensingguidelinesorrules.Inaddition,theDCEsoperateinpartnershippursuanttoparticipatingmedicalgroupagreementswithoneormoreofourphysicianpartnersincertaingeographies.OurcontractedphysicianpartnersprovideMedicareservicestotheiralignedbeneficiaries,andbillCMSonaFFSbasisforsuchservices.Inturn,inacco

122、rdancewiththePCCoption,CMScompensateseachphysicianpartnerforaportionoftheirbilledservicesbasedontheapplicablerate,andtheremainingportionispaidtoeachDCEonaperMedicarebeneficiarypermonth(“PBPM”)basisbasedonaprospectiveestimateofsuchremainingportionofbilledservices.Infiveyears,CMSwillnolongerpayanyport

123、iontosuchphysicianpartnerbasedonFFScompensationrates,andwilltransitiontocompensatingphysicianpartnersthroughtheirapplicableDCEonaPBPMbasis.EachDCEthenremitspaymentoutofthePBPMpaymentsfromCMStoitscontractedphysicianpartnersonamonthlyorquarterlybasispursuanttotheapplicableparticipatingmedicalgroupagre

124、ement,whichagreementalsoincludesincentivecompensationtiedtotheDCEsnetprofitsreceivedforalignedbeneficiaries.Inaddition,certainparticipatingmedicalgroupagreementsalsoallowtherelevantphysicianpartnertochooseanadjustmenttotheapplicableincentivecompensationtoreceiveaportionofsuchcompensationinequityofag

125、ilon.OurDCEsparticipatingmedicalgroupagreementsprovideformutualindemnificationrights,andhaveaninitialtermthroughDecember31,2026,unlessearlierterminated.OnFebruary24,2022,theCMSInnovationCenterannouncedthatitisredesigningtheGPDCmodelandrenamingittheAccountableCareOrganizationRealizingEquity,Access,an

126、dCommunityHealth(“ACOREACH”).TheCMSInnovationCenterconcurrentlyintroducedaRequestforApplications(“RFA”)foranewcohorttobeginthemodelonJanuary1,2023,anditannouncedthatallcurrentGPDCmodelparticipantsthatmeetACOREACHrequirementswouldbepermittedtocontinueparticipatingintheACOREACHmodelasACOs.TheACOREACHr

127、equirementsoutlinedthusfarinclude:1)Thedevelopmentandimplementationofarobusthealthequityplantoidentifyandbetterserveunderservedcommunities;2)therequirementthatatleast75%controlofeachACOsgoverningbodybeheldbyparticipatingprovidersortheirdesignatedrepresentatives(comparedto25%duringthefirsttwoPerforma

128、nceYearsoftheGPDCmodel);and3)therequirementthattherebeatleasttwobeneficiaryadvocatesonthegoverningboard(atleastoneMedicarebeneficiaryandatleastoneconsumeradvocate),bothofwhommustholdvotingrights.Wedonotanticipatethatthesenewrequirementswillhaveamaterialimpactonagilonscurrentorfutureparticipationinth

129、isprogram,orinhibitourabilitytocontinueandgrowourparticipationinthemodel.Inaddition,TheCMSInnovationCenterannouncedthatACOREACHwouldincludetechnicaladjustmentstothemodelsparameters,includingchangestobenchmarkcalculations.Theoveralleffectofthesechangesisnotyetknown.10TableofContentsMarketing and Dist

130、ributionInaccordancewithMedicaremarketingguidelines,healthplanpayorsareresponsibleformarketingdirectlytopatients.Ourfocusisonoutreachtoexistingcommunity-basedphysiciangroupstojoinourplatform,establishingandmaintainingourlocalbrandingandstrategiestosupporteducationforourMedicare-eligiblemembersineval

131、uatingtheirMedicareoptions.Throughourlong-termpartnershipmodel,wepartnerwithleadingcommunity-basedphysiciangroupsinourexistinggeographiesandaimtoexpandourgeographicreachbypartneringwithcommunity-basedphysiciangroupsinnewgeographies,acrosstheUnitedStates.Ourgrowthstrategyissupportedbyadedicatedbusine

132、ssdevelopmentteamthatworkscloselywithphysiciangroups,seniormanagementandkeystakeholderstoidentifypotentialphysiciangroupstopartnerwithandintegrateontoourplatformandintoournetwork.Additionally,webelieveournetworkoflike-mindedphysicianpartnersalsoattractsnewphysicianstojoin,asaccesstocross-marketknow-

133、howandbestpracticesencouragessuccessinaTotalCareModel.OurenterprisemarketingteamdevelopsbrandingstrategiesandidentitiesinourgeographiesandsupportsthedevelopmentofcommunicationandbrandingmaterialstosupportthelocalgrowthofourphysicianpartnersandtheirMedicarepatientpopulation.Thisbeginswithourentryinto

134、anewgeography.WecreatealocalbrandthatembodiesthevalueoftheTotalCareModelforpatientsaswellasthehistoryandcultureofourphysicianpartner.Eachgeographyhasitsowncustomizedbrand,whichincludes“SeniorCareAdvantage”aspartofthenamingconventiontohelpreinforcethevalueofournationalnetworktopayors,policymakersando

135、therindustryconstituents.Toempowerpatientstomakeinformeddecisionsabouttheircoverageoptions,educationalopportunitiesandmaterialsareofferedthroughouttheyear,includingeducationalphysicianpresentations,monthly“Medicare101”sessionsacrosseverygeography,on-lineresources,in-officematerialsthatexplainthediff

136、erencebetweentraditionalMedicareandMA,andpatientcommunicationsthathighlightMedicareelectioncoveragewindows.CompetitionThehealthcareindustryishighlycompetitiveandfragmented.Wecurrentlyfacecompetitionineveryaspectofourbusiness,includinginofferingafavorablereimbursementstructureforexistingphysicianpart

137、nersandattractinghealthplanpayorsandphysicianpartnerswhoarenotcontractedwithus,fromarangeofcompaniesthatprovidecareunderavarietyofmodelsthatcouldattractpatients,providersandpayors.OurprimarycompetitorsincludeChenMed,OakStreetHealth,OptumandVillageMD,inadditiontonumerouslocalprovidernetworks,hospital

138、sandhealthsystems.Moreover,large,well-financedpayorshaveinsomecasesdevelopedtheirownmanagedservicestoolsandmayprovidetheseservicestotheirphysiciansandpatientsatdiscountedprices,ormayseektoexpandtheirrelationshipswithadditionalcompetingphysiciansorphysiciannetworks.Otherorganizationsmayalsoseektoappl

139、yspecializedservicesorprograms,includingprovidingdataanalyticsordisease-basedprograms,designedtoenablephysiciansorpayorstooperatesuccessfullyundervalue-basedcarearrangements.AlthoughsomeofourcompetitorsutilizeelementsofourMAmulti-payor,globallycapitatedriskmodeldeployedwithcommunity-basedphysiciangr

140、oups,includingincertainofthegeographiesweserve,wedonotbelieveanyofourcompetitorsofferamodelthatcapturesallelementsoftheagilonmodel.Ourcompetitorstypicallyvarybygeography,andwemayalsoencountercompetitioninthefuturefromothernewentrants.Ourgrowthstrategyandourbusinesscouldbeadverselyaffectedifwearenota

141、bletocontinuetoaccessexistinggeographies,successfullyexpandintonewgeographiesormaintainorestablishnewrelationshipswithpayorsandphysicianpartners.Theprincipalcompetitivefactorsinourbusinessincludethenatureandcaliberofrelationshipswithphysicians;patienthealthcarequality,outcomesandcost;thestrengthofre

142、lationshipswithpayors;thequalityofthephysicianexperience;localgeographyleadershipposition;andthestrengthoftheunderlyingeconomicmodel.Webelieveourfirst-of-its-kindplatform,partnershipandnetworkmodelenablesustocompetefavorably.11TableofContentsIntellectual PropertyWerelyonacombinationoftrademarklawsin

143、theU.S.aswellasconfidentialityproceduresandcontractualprovisionstoprotectourtradesecrets,includingproprietarytechnology,databasesandourbrand.Wehaveregistered“agilon”andourlogoastrademarksintheU.S.WealsohavefiledothertrademarkapplicationsthataremeaningfultoourbusinessintheU.S.acrossvariousstatesandlo

144、caljurisdictions,includingfortheuseofthelocalbrandcreatedwithineachofourgeographies,andwillpursueadditionaltrademarkregistrationstotheextentwebelieveitwouldbebeneficialandcost-effective.Wearetheregisteredholderofavarietyofdomainnamesthatinclude“agilon”andsimilarvariations.Wehavedevelopedproprietaryt

145、echnologyandprocessesthatsupportouroperationalprogramsandclinicalinsights,includingour“CORE”technologyplatformandHCCManagerriskadjustmentsoftwareapplication,bothofwhichareproprietarysystemsthataidintheaggregationandanalysisofthird-partydatawecollect.Ourinternallydevelopedtechnologyiscontinuouslyrefi

146、nedtosupporttheneedsofourplatformandpartners.AlthoughwedonotcurrentlyholdapatentforCOREorHCCManager,wecontinuallyassessthemostappropriatemethodsofprotectingourintellectualpropertyandmaydecidetopursueavailableprotectionsinthefuture.Wemaintainourintellectualpropertyandconfidentialbusinessinformationin

147、anumberofways.Forinstance,wehaveapolicyofrequiringallemployeesandconsultantstoexecuteconfidentialityagreementsuponthecommencementofanemploymentorconsultingrelationshipwithus.Ouremployeeagreementsalsorequirerelevantemployeestoassigntousallrightstoanyinventionsmadeorconceivedduringtheiremploymentwithu

148、sinaccordancewithapplicablelaw.Inaddition,wehaveapolicyofrequiringindividualsandentitieswithwhichwediscusspotentialbusinessrelationshipstosignnon-disclosureagreements.Lastly,ouragreementswithcustomersincludeconfidentialityandnon-disclosureprovisions.Wemaybeunabletoobtain,maintainandenforceourintelle

149、ctualpropertyrights,andassertionsbythirdpartiesthatweviolatetheirintellectualpropertyrightscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Human CapitalOverview Peoplejoinagilonbecauseofourvision:Totransformthefutureofhealthcareincommunitiesacrossthecountrybyemp

150、oweringexceptionalpatient-physicianrelationships.Togetherwithouremployeesandphysicianpartners,wehavedefinedourcompanyvaluesandcommitmentstoguideoureverydayactionsinexecutingourmission:PartnershipandCollaboration:WeareOneTeam.Wecollaboratedeeply.Weembracediversity.Togetherwithourphysicianpartners,wee

151、mpowerthecarethatourfamiliesandfriendsdeserve.Innovation:Werapidlyadapttoourchangingworldandembracethecreativityofourphysicianpartnersandeachother.QualityandServiceExcellence:Wevalueresults,notactivity.Weserveotherswithpassionandhumility.ContinuousImprovement:Weareagileandmovefast.Weactivelyseekouta

152、ndsharefeedback.Welearnandimproveeveryday.Expertise:Wearecurious.Weaspiretobeexpertsandshareourknowledge.AccountabilityandIntegrity:Wecelebrateoursuccesses.Wetakeownershipineverythingwedo.Ourhumancapitaleffortsaresupportedbyourdedicatedhumanresourcesteam.Thisteamsupportsthebusinessinidentifyingandre

153、cruitingtoptalent,supportingtheonboardingandorientationofnewhiresthroughacomprehensivenewemployeeorientation,amanagerstoolkitandresourcestosupportonboarding,goalsetting,andin-yearmanagement,aswellasacomprehensivesemi-annualreviewprocessthattiestoourcompanyvaluesandsupportscontinuouslearningandimprov

154、ement.Oureffortstopromoteapositiveemployeeexperienceandbuild12TableofContentsculturearefurthersupportedandenhancedbylocalandnationalin-personandvirtualevents,includingtownhalls,in-officecelebrations,employeeactivitycommitteesandmost-valuable-playerawards,meanttochampionouremployeesandcreateasenseofc

155、ommunity.Weconductannualemployeeengagementsurveystosolicitfeedbackandhelpguideannualplanningoneffortsandinitiativestosupportourteammembers.Wehavealsodevelopedataskforcethatseekstodrivefocusedandtargeteddiversityandinclusionefforts,includingemployeefocusgroupsandparticipationupanddowntheorganizationt

156、oensureallvoicesareheard.Total RewardsWerecognizehowvitalouremployeesaretooursuccessandstrivetooffercomprehensiveandcompetitivecompensationandbenefitstomeetthevaryingneedsofourcolleaguesandtheirfamilies.Thebenefitsandprogramsincludeannualandlong-termincentives,a401(k)plan,healthandwelfareinsurancebe

157、nefits,paidtimeoff,flexibleworkschedules,andfamilyleave,amongmanyothers,dependingoneligibility.Diversity,Equity&Inclusion(“DE&I)Webelieveagreatworkplacefostersanenvironmentwhereallemployeescanthriveandgrow,andwheredifferencesarebothencouragedandcelebrated.Weaimtoattract,develop,retainandsupportadive

158、rseworkforcethatreflectsthemanymembers,physicianpartners,andcommunitiesweserve.UnderourDE&ITaskforce,wecollaboratewithouremployeestodevelopandpromoteaninternaldiversity,equityandinclusionstrategythataimstofosteracultureofinclusion.OurDE&Iprogramsincludedevelopmentprogramsforhigh-potentialfemaleleade

159、rs(expandingopportunitytoallunder-representedgroups),anunconsciousbiascurriculum,andDE&Itrainingforourworkforce.Training and DevelopmentWeprioritizeandinvestincreatingopportunitiestohelpemployeesgrowandbuildtheircareersthroughamultitudeoftraininganddevelopmentprograms.Ourtraininganddevelopmentprogra

160、mpromotestheimportanceofcomplianceacrossourbusiness.OuremployeesdemonstratethiscommitmentthroughourannualCodeofConducttraining.Wealsoprovidetraininganddevelopmenttoallemployees,focusingoncareerdevelopment,andprofessionaldevelopment,includingonlinecoursesdesignedtostrengthentechnicalandhard-skillsand

161、enhanceleadershipdevelopment.Wesupportcareercoaching,mentorshipandacceleratedleadershipdevelopmentprogramstoensuremobilityandadvancementforouremployees.Ouremployeesarealsoencouragedtoparticipateinmentoringprogramswithpeopleofvariousbackgroundsandcultures.Weviewmentoringasanessentialdevelopmenttoolfo

162、rsharingskillsandknowledgesowecanallsucceed.Ourcommitmenttomentoringfeedsthesuccessfulfutureofourcompany.Health&SafetyThehealth,safety,andwellnessofouremployeesarevitaltooursuccess.Wehaveastrongcommitmenttoprovidingasafeworkingenvironment.FromtheoutsetoftheCOVID-19pandemic,wetookacomprehensiveapproa

163、chtomanagingoccupationalhealthandsafetychallengespresentedbythepandemic,includingimplementingfacialcoveringrequirementsforourworkplaces,providingsickleave,andimplementingadditionalprotocolsinaccordancewithapplicableOccupationalSafetyandHealthAdministration(“OSHA”)requirementsandguidanceandCentersfor

164、DiseaseControlandPrevention(“CDC”)guidelinesforworkplaces.In2020,wequicklyandeffectivelytransitionedasignificantsubsetofouremployeestoafullyremoteworkenvironmentinanefforttomitigatethespreadofCOVID-19.Todate,ouremployeeshavecontinuedtosupportourpartnerswiththehighestlevelofservicefromtheirhomeoffice

165、swithoutadisruptioninourbusinessoperations.Wehavetakenthisopportunitytomaintainafullyremoteworkenvironmentforthevastmajorityofouremployeesaspartofourculture.AsofDecember31,2021,agilonanditssubsidiarieshad648employees,ofwhom646werefull-timeandtwowerepart-time.Noneofouremployeesisamemberofalaborunion,

166、andwehavenotexperiencedaworkstoppage.Ouremployeesdonotincludeourphysicianpartners,whomwedonotdirectlyemploy.Webelieveweenjoyagoodworkingrelationshipwithouremployees.13TableofContentsHealthcare and Other Applicable Regulatory MattersThehealthcareindustryishighlyregulatedunderbothstateandfederallawsan

167、dregulations.Ouroperationsandrelationshipswithhealthcareplansandprovidersaresubjecttoextensiveandincreasingregulationbynumerousfederal,state,andlocalgovernmentagenciesincludingtheOfficeofInspectorGeneral(“OIG”),theDepartmentofJustice(“DOJ”),theCMS,theOfficeofCivilRights,andvariousstateauthorities.Co

168、rporate Practice of Medicine Somestatesinwhichweoperatehavelawsprohibitingthecorporatepracticeofmedicine;suchlawsgenerallyprohibitbusinessentitieswithnon-physicianowners,suchasagilonandcertainofitssubsidiaries,frompracticingmedicine.Statesthathavecorporatepracticeofmedicinelawslimitthepracticeofmedi

169、cinetolicensedindividualsorprofessionalorganizationscomprisinglicensedindividuals;therefore,non-medicalprofessionalentitiesareprohibitedfromemployingorcontractingwithphysicians(unlesstheentitysatisfiesalimitedexception),exercisingcontrolovermedicaldecisions,orengagingincertainarrangementswithotherph

170、ysicians,suchasfee-splitting.Theselawsvarywidelyfromstatetostate.Aviolationofthecorporatepracticeofmedicineprohibitionconstitutestheunlawfulpracticeofmedicine,whichisapublicoffensepunishablebyfinesorcriminalpenalties.Inaddition,anyphysicianwhoparticipatesinaschemethatviolatesthestatescorporatepracti

171、ceofmedicineprohibitionmaybesubjecttodisciplinaryactionorpotentialforfeitureofrevenuesfrompayorsforservicesrendered,ormaybepunishedforaidingandabettinganon-medicalprofessionalentityintheunlawfulpracticeofmedicine.WetypicallyoperatebyformingRBEswhichcontractwithpayorsontheonehandandprovideprofessiona

172、lservicesthroughcontractualrelationshipswithPCPsontheotherhand.Whilewebelievethatourpracticesareinsubstantialcompliancewiththecorporatepracticeofmedicinelawstowhichwearesubject,ifastatedeterminesthatwearenotincompliancethatmayresultinamaterialadverseeffectonourbusiness,resultsofoperationsorfinancial

173、condition.See“RiskFactorsLegalandRegulatoryRisksLawsregulatingthecorporatepracticeofmedicinecouldrestrictthemannerinwhichwearepermittedtoconductourbusiness,andthefailuretocomplywithsuchlaws,oranychangestosuchlawsorregulationsorsimilarlawsorregulationscouldsubjectustopenaltiesandrestructuring,orhavea

174、materialadverseeffectonourconsolidationoftheaccountsofourmajority-ownedsubsidiaries.”Fee-Splitting Prohibitions Thelawsofsomestatesprohibitphysiciansfromsplittingwithanyone,otherthanproviderswhoarepartofthesamegrouppractice,anyprofessionalfee,commission,rebateorotherformofcompensationforanyservicesn

175、otactuallyandpersonallyrendered.Fee-splittinglawsandtheirinterpretationsvaryfromstatetostateandareenforcedbystatecourtsandregulatoryauthoritiesthathavebroaddiscretionintheirenforcement.Courtsinsomestateshaveinterpretedfee-splittingstatutesasprohibitingallpercentageofgrossrevenueandpercentageofnetpro

176、fitfeearrangements,despitetheperformanceoflegitimateservices.Inaddition,courtshaverefusedtoenforcecontractsfoundtoviolatestatefee-splittingprohibitions.Further,fee-splittingarrangementscouldimplicateotherlawsapplicabletoourbusiness,suchasanti-kickbackandcorporatepracticeofmedicinelawsandregulations.

177、Whilewebelieveweareinsubstantialcompliancewithfee-splittinglawsinthestatesinwhichweoperate,ifwearefoundtobenon-compliant,penaltiesforviolatingfee-splittingstatutesorregulationsmayincludemedicallicenserevocation,suspension,probationorotherdisciplinaryactionagainstouraffiliatedproviders.False Claims A

178、cts Wearesubjecttonumerousfederalandstatelawsthatprohibitthepresentationoffalseinformation,orthefailuretodiscloseinformation,inconnectionwiththesubmissionandpaymentofmedicalclaimsforreimbursement.Thefederalcivilandcriminalfalseclaimslawsandcivilmonetarypenaltieslaws,suchasthefederalFalseClaimsAct,31

179、U.S.C.37293733,imposecivilliabilityonindividualsorentitiesthatsubmitfalseorfraudulentclaimsforpaymenttothefederalgovernment.TheFalseClaimsActprovides,inpart,thatthefederalgovernmentmaybringalawsuitagainstanypersonwhomitbelieveshasknowinglyorrecklessly:presented,orcausedtobepresented,afalseorfraudule

180、ntclaimforpaymentorapprovaltothefederalgovernment;made,usedorcausedtobemadeorusedafalsestatementorafalserecordtogetaclaimforpaymentapproved,includingafalseorfraudulentclaim;concealed,orknowinglyandimproperlyavoidedordecreased,anobligationtopayortransmitmoneyor14TableofContentspropertytothefederalgov

181、ernment;orconspiredtocommitanyoftheforegoing.Thegovernmentmaydeementitiestohave“caused”thesubmissionoffalseorfraudulentclaimsby,forexample,providinginaccuratebillingorcodinginformation,billingforservicesnotrendered,billingservicesatahigherpaymentratethanappropriateandbillingforcarethatisnotconsidere

182、dmedicallynecessary.ThefederalgovernmenthasusedtheFalseClaimsActtoprosecuteawidevarietyofallegedfalseclaimsandfraudallegedlyperpetratedagainstMedicareandstatehealthcareprograms.Thefederalgovernment,includingasaresultofthepassageoftheACA,andanumberofcourtshavetakenthepositionthatclaimspresentedinviol

183、ationofcertainotherstatutes,includingthefederalAnti-KickbackStatute(“AKS”)orthefederalphysicianreferrallaw,42U.S.C.1395nn(the“StarkLaw”),canalsobeconsideredaviolationoftheFalseClaimsAct.Somegovernmenthealthcareprograms,including,butnotlimitedto,theMAprogram,usearisk-adjustmentmodelthatadjustspremium

184、spaidtocontractedpayorstoreflectthespecificcharacteristicsofeachenrolledmember(includingdemographics,governmentprogrameligibilityandhealthstatus).Manypayorsandgovernmenthealthcareprogramshavesetforthspecificdocumentationrulesthatmustbefollowedincompliantlyselectingallowablecodes.Werelyonphysicianpar

185、tnerstofollowtheCMSdocumentationrulesandcodetheirclaimsubmissionswithaccurateandsubstantiallydocumenteddiagnoses,whichwesendtothepayors,someofwhom,inturn,submitthedatatogovernmenthealthcareagenciesincludingCMS.Inrecentyears,theDOJhasbroughtanumberofinvestigationsandactionsunderthefederalFalseClaimsA

186、ctagainstbothpayorsandprovidersforallegedupcodingorimpropercodingofdiagnosiscodingundertherisk-adjustmentmethodology.Further,amendmentstothefederalFalseClaimsActandSocialSecurityActimposeseverepenaltiesfortheknowingandimproperretentionofoverpaymentscollectedfromgovernmentpayors.Anumberofstateshaveen

187、actedlawsthataresimilartothefederalFalseClaimsAct.UnderSection6031oftheDeficitReductionActof2005,asamended,ifastateenactsafalseclaimsactthatisatleastasstringentasthefederalstatuteandthatalsomeetscertainotherrequirements,thestatewillbeeligibletoreceiveagreatershareofanymonetaryrecoveryobtainedpursuan

188、ttocertainactionsbroughtunderthestatesfalseclaimsact.Asaresult,morestatesareexpectedtoenactlawsthataresimilartothefederalFalseClaimsActinthefuturealongwithacorrespondingincreaseinstatefalseclaimsenforcementefforts.Violationsoffederalandstatefraudandabuselawsmaybepunishablebycriminaland/orcivilsancti

189、ons,includingsignificantpenalties,fines,disgorgement,additionalreportingrequirementsandoversightunderacorporateintegrityagreementorsimilaragreementtoresolveallegationsofnoncompliancewiththeselaws,and/orexclusionorsuspensionfromfederalhealthcareprograms,suchasMedicare,anddebarmentfromcontractingwitht

190、heU.S.government.PenaltiesforFalseClaimsActviolationsincludefinesrangingfrom$12,537to$25,076foreachfalseclaim,plusuptothreetimestheamountofdamagessustainedbythegovernment.InadditiontotheprovisionsoftheFalseClaimsAct,whichprovideforcivilenforcement,thefederalgovernmentalsocanuseseveralcriminalstatute

191、stoprosecutepersonswhoareallegedtohavesubmittedfalseorfraudulentclaimstothegovernmentforpayments.Additionally,privatepartiesmayinitiatequi tamwhistleblowerlawsuitsagainstanypersonorentityundertheFalseClaimsActinthenameofthefederalgovernment,aswellasunderthefalseclaimslawsofseveralstates,andmaysharei

192、ntheproceedsofasuccessfulsuit.Generally,federalandstategovernmentshavemadeinvestigatingandprosecutinghealthcarefraudandabuseapriority.Federal and State Anti-Kickback Statutes TheAKS,setforthinSection1128BoftheSocialSecurityAct,prohibitstheknowingandwillfuloffer,payment,solicitationorreceiptofanyform

193、ofremunerationinreturnfor,ortoinduce,(i)thereferralofapersonforitemsorservicesreimbursableunderfederalhealthcareprograms,(ii)thefurnishingorarrangingforthefurnishingofitemsorservicesreimbursableunderfederalhealthcareprogramsor(iii)thepurchase,leaseororderorarrangingorrecommendingpurchasing,leasingor

194、orderingofanyitemorservicereimbursableunderfederalhealthcareprograms.ThecoreofaviolationoftheAKSisan“inducement”toreferpatientsforservicesoritemsthatarereimbursedunderafederalhealthcareprogram,suchasMedicare,Medicaid,orTricare(whichcoversmilitarypersonnel).TheACAamendedtheAKStomakeitclearthataperson

195、neednothaveactualknowledgeofthestatute,orspecificintenttoviolatethestatute,asapredicateforaviolation.Courtcaseshaveresultedintheinterpretationthataviolationmayoccurwhereevenonepurposeoftheremunerationistoinduceorrewardreferrals,andtheOIG,whichhastheauthoritytoimposeadministrativesanctionsforviolatio

196、nofthestatute,hasadoptedasimilarstandard.15TableofContentsTherearecertainAKS“safeharbors”which,iftherespectiverequirementsaremet,wouldaffordprotectionfromtheAKS.FailuretomeetallrequirementsofanAKSsafeharbordoesnotnecessarilymeanthearrangementviolatestheAKS,butitmaybesubjecttoscrutinybylegalauthoriti

197、es,inlightofthepartiesintentandarrangements.Inotherwords,ifanarrangementdoesnotfitwithinasafeharbor,itdoesnotnecessarilymeanthatthearrangementisper seillegalonlythatitisnotshieldedfromregulatoryscrutiny.ThefederalAKSprovidescriminalpenaltiesforindividualsorentitiesthatknowinglyandwillfullysolicitorr

198、eceiveanyremuneration.AviolationoftheAKSispunishablebyimprisonmentofuptotenyears,finesofupto$100,000peroffense,orboth.Violationcanalsogiverisetofederalhealthcareprogramexclusion,liabilityundertheFalseClaimsActandcivilpenalties,whichmayincludemonetarypenaltiesofupto$100,000peroffense,repaymentsofupto

199、threetimesthetotalpaymentsbetweenthepartiestothearrangementandsuspensionfromfutureparticipationinMedicareandMedicaid.WehaveendeavoredtostructureourbusinessarrangementstofitwithinapplicablefederalAKSsafeharborsandtootherwiseoperateinmaterialcompliancewiththeAKS.FederalcourtsintheU.S.,forinstance,have

200、recognizedthatareferringpartysprovisionoflegitimateservicestoareferralrecipientmaynotconstituteprohibitedremunerationforAKSpurposeswhenthereferralrecipientpaysfairmarketvalueinreturnforwhatitreceives.Manyofourarrangementsarestructuredtoprovideforcompensationthatisfairmarketvalueforservicesactuallyre

201、nderedandinamannerthatdoesnotreflectthevolumeorvalueofreferralsgeneratedbetweentheparties.Instructuringourrelationshipswithproviders,includingourphysicianpartners,andotherhealthcareentities,wearecarefultotrytoensurewhereverpossiblethatweareincompliancewithalloftheregulatoryrequirementsofsuchsafeharb

202、orsandexceptions.Inparticular,akeymanagedcaresafeharborundertheAKSuponwhichweregularlyrelyallowsforpaymentstoprovidersfor“healthcareservicesanditems,”butdoesnotallowincentivepaymentsformarketingortoencouragememberenrollment.Wethereforecarefullyanalyzeallpaymentstructurestoensurethattheyconstitute“se

203、rvicesanditems”thatfallwithinthissafeharbororareotherwiseincompliancewiththeAKS.Additionally,somestateshaveenactedstatutesandregulationssimilartotheAKS,butwhichmaybeapplicableregardlessofthepayorsourceforthepatient.Thesestatelawsmaycontainexceptionsandsafeharborsthataredifferentfromand/ormorelimited

204、thanthoseoffederallawandthatmayvaryfromstatetostate.TohelpacceleratetheU.S.healthcaresystemstransitionfromanFFStoavalue-basedsystem,theU.S.DepartmentofHealthandHumanServices(“HHS”)launchedthe“RegulatorySprinttoCoordinatedCare”initiative(“RegulatorySprint”)in2018,whichaimstochangethemannerinwhichtheh

205、ealthcareregulatoryframeworkhastraditionallybeenappliedtostakeholderarrangements.InconnectionwiththeRegulatorySprint,theOIGissuedfinalrulesamendingtheAKSbyaddingnewsafeharborsandmodifyingexistingsafeharborsthatprotectcertainpaymentpracticesandbusinessarrangementsfromsanctionsundertheAKSinordertoremo

206、vepotentialbarrierstomoreeffectivecoordinationandmanagementofpatientcareanddeliveryofvalue-basedcare.Amongotherchanges,thenewregulationscontainsafeharborsforvalue-basedarrangementscenteringaroundvalue-basedenterprises,whichareenterprisescomposedofparticipantscollaboratingtoachieveoneormorevalue-base

207、dpurposes,includingcoordinatingandmanagingthecareofatargetpatientpopulationandcoordinatingandmanagingthecareofatargetpopulation.Thesenewfinalrulesprovideadditionalprotectionstoourpaymentmodelswithproviders.WehavealsoendeavoredtostructureourparticipationintheDirectContractingModeltocomplywithwaiverso

208、ftheAKSissuedbytheSecretaryofHHS.Theconditionsofsuchwaiversaretoensurethatprotectedarrangements:(i)areconsistentwiththequality,carecoordination,andcost-reductiongoalsoftheDirectContractingModel,(ii)aresubjecttosafeguardsdesignedtomitigatetheriskoffraudandabuse;and(iii)canbereadilymonitoredandaudited

209、.Stark Law TheStarkLawgenerallyprohibitsaphysicianfromreferringMedicareandMedicaidpatientstoanentityprovidingdesignatedhealthservices(“DHS”)ifsuchphysician,oramemberofthephysiciansimmediatefamily,hasafinancialrelationshipwiththeentity,unlessaspecificexceptionapplies.DHSisdefinedtomeananyofthefollowi

210、ngenumerateditemsorservices:clinicallaboratoryservices;physicaltherapyservices;occupationaltherapyservices;radiologyservices,includingmagneticresonanceimaging,computerizedaxialtomographyscansandultrasoundservices;radiationtherapyservicesandsupplies;durablemedicalequipmentandsupplies;parenteralandent

211、eralnutrients,equipmentandsupplies;prosthetics,orthoticsandprostheticdevicesandsupplies;homehealthservices;outpatientprescriptiondrugs;inpatientandoutpatienthospitalservices;andoutpatientspeech-languagepathologyservices.ThetypesoffinancialarrangementsbetweenthereferringphysicianandanentityprovidingD

212、HS16TableofContentsthattriggertheStarkLawarebroad,includingdirectandindirectownershipandinvestmentinterests,andcompensationarrangements.TheStarkLawalsoprohibitsanyentityprovidingDHSandreceivingaprohibitedreferralfrompresenting,orcausingtobepresented,aclaimorbillingfortheservicesarisingoutoftheprohib

213、itedreferral.Similarly,theStarkLawprohibitsanentityfrom“furnishing”aDHStoanotherentityinwhichithasafinancialrelationshipwhenthatentitybillsfortheservice.TheStarkLawalsoprohibitsself-referralswithinanorganizationbyitsownphysicians,althoughbroadexceptionsexistthatcoveremployedphysiciansandthosereferri

214、ngDHSthatareancillarytothephysicianspracticetothephysiciangroup.Theprohibitionappliesregardlessofthereasonsforthefinancialrelationshipandthereferral;intenttoinducereferralsisnotrequired.LikethefederalAKS,thefederalStarkLawcontainsstatutoryandregulatoryexceptionsintendedtoprotectcertaintypesoftransac

215、tionsandarrangements.IftheStarkLawisimplicated,thefinancialrelationshipmustfullysatisfyaStarkLawexception;ifanexceptionisnotsatisfied,thenthepartiestothearrangementcouldbesubjecttosanctions.SanctionsforviolationoftheStarkLawincludedenialofpaymentforclaimsforservicesprovidedinviolationoftheprohibitio

216、n,refundsofamountscollectedinviolationoftheprohibition,acivilpenaltyofupto$15,000foreachservicearisingoutoftheprohibitedreferral,acivilpenaltyofupto$100,000againstpartiesthatenterintoaschemetocircumventtheStarkLawprohibition,civilassessmentofuptothreetimestheamountclaimed,andpotentialexclusionfromth

217、efederalhealthcareprograms,includingMedicareandMedicaid.Amountscollectedonclaimsrelatedtoprohibitedreferralsmustbereportedandrefundedgenerallywithinsixty(60)daysafterthedateonwhichtheoverpaymentwasidentified.Furthermore,StarkLawviolationsandfailuretoreturnoverpaymentsinatimelymannercanformthebasisfo

218、rFalseClaimsActliability,asfurtherdiscussedherein.Additionally,severalstateshaveenactedphysicianself-referrallaws.Notably,compensationpursuanttoarisk-sharingarrangementbetweenamanagedcareorganizationoranindependentpracticeassociationandaphysician(eitherdirectlyorindirectlythroughacontractor)forservi

219、cesprovidedtoenrolleesofahealthplan(anMAplan,forexample)doesnotconstituteafinancialarrangementforStarkpurposes.Further,physicianincentiveplans(“PIPs”)areallowableprovidedthat(i)thecompensationisnotdeterminedinanymanner(withhold,capitation,bonus,orotherwise)thattakesintoaccount,directlyorindirectly,v

220、olumeorvalueofreferralsand(ii)thePIPdoesnotinducethereductionofmedicallynecessarycaretoindividualpatientsanddoesnotplacethephysicianatsubstantialfinancialriskforservicesnotprovidedbythephysician.AspartoftheRegulatorySprint,CMSalsoissuedasweepingsetofregulationsthatintroducesignificantnewvalue-basedt

221、erminologyandexceptionstotheStarkLaw.CMShasimplementednewexceptionsforcertainremunerationexchangedbetweenoramongeligibleparticipantsinvalue-basedarrangements.Theseexceptionsandtheirvariousrequirementsapplybasedonthelevelofriskassumedbythearrangementsparticipants.Thesenewregulationspurporttoeasetheco

222、mplianceburdenforhealthcareprovidersacrosstheindustrywhilemaintainingstrongsafeguardstoprotectpatientsandprogramsfromfraudandabuse.TheseorotherchangesmaychangetheparametersoftheStarkLawexceptionsthatwerelyuponandimpactourbusiness,resultsofoperationsandfinancialcondition.Section 1876 of the Social Se

223、curity Act Section1876oftheSocialSecurityActprohibitsMAplansandtheirdownstreamentitiesfromenteringintocompensationarrangementswithphysiciansthatmaydirectlyorindirectlyhaveaneffectofreducingorlimitingservicestoindividualmembers.Wehavesoughttostructureourcompensationarrangementswithphysicianstoensurec

224、ompliancewiththisrequirement.Health Care Fraud Statute TheHealthCareFraudStatute,18U.S.C.1347,prohibitsanypersonfromknowinglyandwillfullyexecuting,orattemptingtoexecute,aschemetodefraudanyhealthcarebenefitprogram,whichcanbeeitheragovernmentorprivatepayorplan.Violationofthisstatute,evenintheabsenceof

225、actualknowledgeoforspecificintenttoviolatethestatute,maybechargedasafelonyoffenseandmayresultinfines,imprisonmentorboth.TheHealthCareFalseStatementStatute,18U.S.C.1035,prohibits,inanymatterinvolvingafederalhealthcareprogram,anyonefromknowinglyandwillfullyfalsifying,concealingorcoveringup,byanytrick,

226、schemeordevice,amaterialfact,ormakinganymateriallyfalse,fictitious,orfraudulentstatementorrepresentation,ormakingorusinganymateriallyfalsewritingordocumentknowingthatitcontainsamateriallyfalseorfraudulentstatement.Aviolationofthisstatutemaybechargedasafelonyoffenseandmayresultinfines,imprisonment,or

227、both.17TableofContentsCivil Monetary Penalties Statute TheCivilMonetaryPenaltiesLaw(“CMPL”),42U.S.C.1320a-7a,authorizestheimpositionofcivilmonetarypenalties,assessments,andexclusionsagainstanindividualorentitybasedonavarietyofprohibitedconduct,including,butnotlimitedto:(i)presenting,orcausingtobepre

228、sented,claimsforpaymenttoMedicare,Medicaid,orotherthird-partypayorsthattheindividualorentityknowsorshouldknowareforanitemorservicethatwasnotprovidedasclaimedorisfalseorfraudulent;(ii)offeringremunerationtoafederalhealthcareprogrambeneficiarythattheindividualorentityknowsorshouldknowislikelytoinfluen

229、cethebeneficiarytoorderorreceivehealthcareitemsorservicesfromaparticularprovider;(iii)arrangingcontractswithanentityorindividualexcludedfromparticipationinafederalhealthcareprogram;(iv)violatingthefederalAKS;(v)making,using,orcausingtobemadeorused,afalserecordorstatementmaterialtoafalseorfraudulentc

230、laimforpaymentforitemsandservicesfurnishedunderafederalhealthcareprogram;(vi)making,using,orcausingtobemadeanyfalsestatement,omission,ormisrepresentationofamaterialfactinanyapplication,bid,orcontracttoparticipateorenrollasaproviderofservicesorasupplierunderafederalhealthcareprogram;and(vii)failingto

231、reportandreturnanoverpaymentowedtothefederalgovernment.WecouldbeexposedtoawiderangeofallegationstowhichthefederalCMPLwouldapply.Weperformmonthlychecksonouremployees,affiliatedprovidersandcertainaffiliatesandvendorsusinggovernmentdatabasestoconfirmthattheseindividualshavenotbeenexcludedfromfederalpro

232、grams.However,shouldanindividualbecomeexcludedandwefailtodetectit,afederalagencycouldrequireustorefundamountsattributabletoallclaimsorservicesperformedorsufficientlylinkedtoanexcludedindividual.Thus,wecannotforeclosethepossibilitythatwewillfaceallegationssubjecttotheCMPLwiththepotentialforamateriala

233、dverseimpactonourbusiness,resultsofoperationsandfinancialcondition.SubstantialcivilmonetarypenaltiesmaybeimposedunderthefederalCivilMonetaryPenaltyStatuteandmayvary,dependingontheunderlyingviolation.Inaddition,anassessmentofnotmorethanthree(3)timesthetotalamountclaimedforeachitemorservicemayalsoappl

234、y,andaviolatormaybesubjecttoexclusionfromfederalandstatehealthcareprograms.Federal and State Insurance and Managed Care Laws Regulationofdownstreamrisk-sharingarrangements,including,butnotlimitedto,globalriskandothervalue-basedarrangements,variessignificantlyfromstatetostate.Somestatesrequiredownstr

235、eamentitiesandRBEstoobtainaninsurancelicense,acertificateofauthority,oranequivalentauthorization,inordertoparticipateindownstreamrisk-sharingarrangementswithpayors.Insomestates,statutes,regulationsand/orformalguidanceexplicitlyaddresswhetherandinwhatmannerthestateregulatesthetransferofriskbyapayorto

236、adownstreamentity.However,themajorityofstatesdonotexplicitlyaddresstheissue,andinsuchstates,regulatorsmaynonethelessinterpretstatutesandregulationstoregulatesuchactivity.Ifdownstreamrisk-sharingarrangementsarenotregulateddirectlyinaparticularstate,thestateregulatoryagencymaynonethelessrequireoversig

237、htbythelicensedpayorasthepartytosuchadownstreamrisk-sharingarrangement.Suchoversightisaccomplishedviacontractandmayincludetheimpositionofreserverequirements,aswellasreportingobligations.Further,stateregulatorystancesregardingdownstreamrisk-sharingarrangementscanchangerapidlyandcodifiedprovisionsmayn

238、otkeeppacewithevolvingrisk-sharingmechanisms.Healthcare Reform InMarch2010,thePatientProtectionandAffordableCareAct(the“ACA”)andtheaccompanyingHealthCareandEducationAffordabilityReconciliationAct,collectivelyreferredtoastheACA,wereenacted.TheACAincludesavarietyofhealthcarereformprovisionsandrequirem

239、ents,whichcontinuetobeimplementedandsubstantiallychangedthewayhealthcareisfinancedbybothgovernmentalandprivateinsurers.However,asaresultoftheelectionofformerPresidentTrump,theRepublicancontroloftheSenate,andtheformerRepublicancontroloftheHouse,severalchangeshavebeenmadetotheprovisionsoftheACAsince20

240、10,includingreducedfunding.Lookingforward,thefutureoftheACAanditsunderlyingprogramsaresubjecttocontinuingandsubstantialuncertainty,makinglong-termbusinessplanningexceedinglydifficult.However,itisexpectedthataBidenadministrationwillworktostrengthenthelawandbuilduponit.Inlinewiththisexpectation,onSept

241、ember17,2021,theU.S.DepartmentofHealthandHumanServicesandtheTreasuryDepartmentissuedafinalruletobolsteraccesstomarketplacecoverageandreverseseveralTrump-eraregulatorychangesundertheACA,includingreversingregulationsthatlimitedthedurationoftheannualopenenrollmentperiod,aswellasaddingnewpolicies,includ

242、ingamonthlyspecialenrollmentperiodforlow-incomeindividuals.18TableofContentsTheprioradministrationandCongresswereseekinglegislativeandregulatorychangestohealthcarelawsandregulations,includingrepealandreplacementofcertainprovisionsoftheACA.Todate,CongressionaleffortstocompletelyrepealandreplacetheACA

243、havebeenunsuccessful.However,theindividualmandatewasrepealedbyCongressaspartoftheTaxCutsandJobsActthatwassignedintolawonDecember22,2017.InDecember2018,inacasebroughtbythestateofTexasandnineteenotherstates,afederaljudgeinTexasstruckdowntheACAbasedonhisdeterminationthattheACAsindividualmandateisuncons

244、titutionaland,sincethatmandatecannotbeseparatedfromtherestoftheACA,thejudgeruledthattherestoftheACAisalsounconstitutional.ThedecisionwasappealedtotheUnitedStatesSupremeCourt,whichruledonJune17,2021thattheplaintiffstatesdidnothavestandingtochallengethelawsindividualmandate.TheUnitedStatesSupremeCourt

245、,however,didnotdecideonthemainissueinthecase;whethertheentiretyoftheACAwasrenderedunconstitutionalwhenCongresseliminatedthepenaltyforfailingtoobtainhealthinsurance.BecauseofthecontinueduncertaintyabouttheimplementationoftheACA,includingthetimingofandpotentialforfurtherlegalchallenges,repealoramendme

246、ntofthatlegislationandthefutureofthehealthinsuranceexchanges,wecannotquantifyorpredictwithanycertaintythelikelyimpactoftheACAonourbusiness,financialcondition,operatingresultsandprospects.Additionally,theCMSInnovationCentercontinuestotestanarrayofalternativepaymentmodels,includingtheDirectContracting

247、ModeltoallowDCEstonegotiatedirectlywiththegovernmenttomanagetraditionalMedicarebeneficiariesandshareinthesavingsandlossesgeneratedfrommanagingsuchbeneficiaries.StateregulationofDCEswilllikelybevariable.Forexample,certainstatesmayrequireDCEstoobtainspecificlicensuretoparticipateintheDirectContracting

248、ModelandassumeriskdirectlyfromCMS.Therelikelywillcontinuetoberegulatoryproposalsdirectedatcontainingorloweringthecostofhealthcare.Further,CMSalsoroutinelyadjuststheriskadjustmentfactorwhichiscentraltopaymentundertheMAprogram.Themonetary“coefficient”valuesassociatedwithdiseasesthatwemanageinourpopula

249、tionaresubjecttochangebyCMS.Suchchangescouldhaveamaterialadverseeffectonourfinancialcondition.Federal and State Privacy and Security Requirements Wearesubjecttovariousfederal,stateandlocallawsandrulesregardingtheuse,securityanddisclosureofprotectedhealthinformation(“PHI”),personallyidentifiableinfor

250、mation,de-identifieddataandothercategoriesofconfidentialorlegallyprotecteddatathatourbusinessesmayhandle.Suchlawsandrulesinclude,withoutlimitation,theHealthInsurancePortabilityandAccountabilityActof1996(“HIPAA”),theFederalTradeCommissionAct,15U.S.C.45(“FTCAct”)andstateprivacyandsecuritylaws.Privacya

251、ndsecuritylawsandregulationsoftenchangeduetoneworamendedlegislation,regulationsoradministrativeinterpretation.Wearehighlydependentoninformationtechnologynetworksandsystems,includingtheinternet,tosecurelyprocess,transmitandstorethisinformation.Wealsoutilizethird-partyserviceprovidersforimportantaspec

252、tsofthecollection,storageandtransmissionofsuchsensitiveinformation.CongressenactedHIPAA,inpart,tocombathealthcarefraudandtoprotecttheprivacyandsecurityofpatientsindividuallyidentifiablehealthcareinformation.Amongotherthings,HIPAArequireshealthcareprovidersandtheirbusinessassociatestomaintainthepriva

253、cyandsecurityofindividuallyidentifiablePHI.TheHIPAASecurityRulerequiresbothcoveredentitiesandbusinessassociatestodevelopandmaintainpoliciesandprocedureswithrespecttoPHI,includingadherencetoHIPAAssecuritystandardsthroughtheimplementationofadministrative,physicalandtechnicalsafeguardstoprotectPHI.Addi

254、tionally,thePrivacyRulecontainsrequirementswithrespecttotheuseanddisclosureofindividualsPHI,includingaprohibitiononacoveredentityorbusinessassociateusingordisclosinganindividualsPHIunlesstheuseordisclosureisauthorizedbytheindividualorisspecificallyrequiredorpermittedunderthePrivacyRule.TheHealthInfo

255、rmationTechnologyforEconomicandClinicalHealthof2009(“HITECH”)dramaticallyexpanded,amongotherthings,(1)thescopeofHIPAAtonowapplydirectlyto“businessassociates,”orindependentcontractorswhoreceiveorobtainPHIinconnectionwithprovidingaservicetoacoveredentityoranotherbusinessassociate,(2)substantivesecurit

256、yandprivacyobligations,includinganewfederalsecuritybreachnotificationrequirementthatunauthorizedacquisitions,access,useordisclosureofPHIbereportedto,dependingonthenumberofpeopleaffectedandtheirlocation,affectedindividuals,theDepartmentofHealthandHumanServicesandlocalmediaoutlets,(3)restrictionsonmar

257、ketingcommunications,aprohibitiononbusinessassociatesfromreceivingremunerationinexchangeforPHI,andaprohibitiononcoveredentitiesfromreceivingremunerationinexchangeforPHIwithoutexpresspatientauthorizationand(4)thecivilandcriminalpenaltiesthatmaybeimposed19TableofContentsforHIPAAviolations.PursuanttoHI

258、PAA,asamendedbyHITECH,wearerequiredtoreportbreachesofunsecuredPHItoourcoveredentityclients,suchasourphysiciangrouppartners,within60daysofdiscoveryofthebreach,andnotifycertainagenciesandpotentiallythemediainaccordancewithclause(2)above.Wehaveexperiencedcybersecurityincidentsinthepastandmayexperiencet

259、heminthefuture.Anyinterruptioninaccesstomemberinformation,unauthorizedaccesstoinformation,improperdisclosureorotherlossofinformationcouldresultin,amongotherthings,federalorstategovernmentinvestigationsandliabilityunderlawsandregulationsthatprotecttheprivacyofmemberinformation,suchasHIPAA,potentially

260、resultingindamagesandregulatorypenalties.HIPAAmandatesthattheSecretaryofHHSconductperiodicauditsofcoveredentitiesandbusinessassociatesforcompliancewiththeHIPAAPrivacyandSecurityRules.HIPAAimposespenaltiesforcertainviolations,subjecttoacapof$1.5millionforviolationsofthesamestandardinasinglecalendarye

261、ar.Asingledataprivacyordatasecurityincidentcan,intheviewofHHS,resultinviolationsofmultiplestandards.HIPAA,asamendedbytheHITECHAct,alsoauthorizesstateattorneysgeneraltofilesuitonbehalfoftheirstatesresidents.WhileHIPAAdoesnotcreateaprivaterightofactionallowingindividualstosueusinfederalcourtforviolati

262、onsofHIPAA,itsstandardshavebeenusedasabasisforestablishingadutyofcareinstate-lawcivilsuitsallegingnegligenceorrecklessnessforthemisuseofPHI.AfindingofliabilityunderHIPAAcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Inordertoensurecompliance,weencryptandbackupd

263、ata,maintaincompany-widesecurityawarenesstraining,enterintobusinessassociateagreementswithourpartners,aswellasensureourpartnershaveimplementedphysicalsecurityandsafeguardsatthedatacenterswhereourdataisstoredandconductregularinternalandexternalsecurityaudits.Althoughweemployadministrative,physicaland

264、technologicalsafeguardstohelpprotectconfidentialandothersensitiveinformationfromunauthorizedaccessordisclosure,ourinformationtechnologyandinfrastructure,andthatofourthird-partyserviceproviders,maybevulnerabletoattacksbyhackersorviruses,failuresorbreachesduetothird-partyactionandemployee(includingcon

265、tractor)negligence,errorormalfeasance.Additionally,manystatesalsoenactedlawsthatprotecttheprivacyandsecurityofconfidential,personalandhealthinformation,whichmaybeevenmorestringentthanHIPAAandmayaddadditionalcompliancecostsandlegalriskstoouroperations.Someofthesestatelawsmayimposefinesandpenaltiesonv

266、iolatorsandmayaffordprivaterightsofactiontoindividualswhobelievetheirpersonalinformationhasbeenmisused.Wearealsosubjecttoaprovisionofthefederal21stCenturyCuresActthatisintendedtofacilitatetheappropriateexchangeofhealthinformation.InMay2020,theUnitedStatesDepartmentofHealthandHumanServicesOfficeofthe

267、NationalCoordinatorforHealthInformationTechnologyandCMSissuedcomplementarynewrulesthatareintendedtoclarifyprovisionsofthe21stCenturyCuresAct.Therules,intendedtoenhanceinteroperabilityandpreventinformationblocking,createsignificantnewrequirementsforhealthcareindustryparticipants,includingrequirements

268、to(i)providepatientswithconvenientaccesstohealthcareinformation,(ii)supportelectronicexchangeofdatafortransitionsofcareand(iii)requireparticipationintrustnetworkstoimproveinteroperability.The21stCenturyCuresActauthorizescivilmonetarypenaltiesupto$1millionperinformationblocking“violation.”Itisunclear

269、atthistimewhatthecostsofcompliancewiththenewruleswillbe,andwhatadditionalriskstheremaybetoourbusiness.Variousotherfederalandstatelawsmayapplythatrestricttheuseandprotecttheprivacyandsecurityofindividuallyidentifiableinformation,aswellasemployeepersonalinformation,includingcertainstatelawsmodeledtoso

270、meextentontheEuropeanUnionsGeneralDataProtectionRegulation.Federalandstateconsumerprotectionlaws,includinglawsthatdonotontheirfacespecificallyaddressdataprivacyorsecurity,havebeenappliedtodataprivacyandsecuritymattersbyarangeofgovernmentagenciesandcourts.Consumer Protection Laws Healthcareprovidersa

271、realsosubjecttotheTelephoneConsumerProtectionAct(“TCPA”),whichregulatesthemannerinwhichabusinessmayadvertiseitsproductsandservicestoconsumersbyphone,textandfax.TheTCPAwasenactedbyCongresstocombataggressivetelemarketingandfaxadvertisingpracticesbelievedtoinvadeconsumerprivacy.TheTCPAalsoregulatestheu

272、seofautomatedequipmenttodelivercallsortextmessagestomobilephoneswithoutpriorexpressconsent.CongressempoweredtheFCCtointerprettheTCPAthroughrules,regulationsanddeclaratoryrulings.A2015orderfromtheFCCclarifiedthatcallsortextmessagesthathaveanexpresshealthcare-relatedpurposesuchastreatmentfollow-up,app

273、ointmentconfirmationsandremindersorpre-operativeinstructionsareexemptfromtheTCPA.Intheseinstances,providersarenotrequiredtoreceivepriorexpressconsentfrompatientsbeforereachingoutbyphoneortext.Ashealthcarecompanies,suchasourselves,increasingly20TableofContentsrelyonmobiledeliveryplatformsandothertech

274、nologiestocommunicatewithpatientsaboutappointments,billingandotherissues,thepotentialforlegalexposureundertheTCPAalsoincreases.EachcallortextmadeinviolationoftheTCPAcancostupto$1,500perinstanceinfinesanddamages.Becausethereisnocaponstatutorydamages,violationscanresultinmillionsofdollarsinpenalties.C

275、ompetition and Antitrust Laws Wearesubjecttonumerousstatutesthatgoverncompetitioninourindustry,includingtheShermanAct,theFTCActandtheClaytonAct.TheShermanAct,15U.S.C.1-7,outlaws“everycontract,combination,orconspiracyinrestraintoftrade,”andany“monopolization,attemptedmonopolization,orconspiracyorcomb

276、inationtomonopolize.”ThepenaltiesforviolatingtheShermanActcanbesevere.Mostenforcementactionsarecivil,butindividualsandbusinessesthatviolatetheShermanActmaybeprosecutedcriminallybytheDOJ.Criminalprosecutionsaretypicallylimitedtoclearviolations,suchaswhencompetitorsfixprices,allocatemarketsorrigbids.T

277、heShermanActimposescriminalpenaltiesofupto$100millionforacorporationand$1millionforanindividual,alongwithupto10yearsinprison.Underfederallaw,themaximumfinemaybeincreasedtotwicetheamounttheconspiratorsgainedfromtheillegalactsortwicethemoneylostbythevictimsofthecrime,ifeitherofthoseamountsismorethan$1

278、00million.TheFTCAct,15U.S.C.41-58,bans“unfairmethodsofcompetition”and“unfairordeceptiveactsorpractices.”TheSupremeCourthassaidthatallviolationsoftheShermanActalsoviolatetheFTCAct.Thus,althoughtheFTCdoesnottechnicallyenforcetheShermanAct,itcanbringcasesundertheFTCActagainstthesamekindsofactivitiestha

279、tviolatetheShermanAct.TheFTCActalsoreachesotherpracticesthatharmcompetition,butthatmaynotfitneatlyintocategoriesofconductformallyprohibitedbytheShermanAct.OnlytheFTCbringscasesundertheFTCAct.TheClaytonAct,15U.S.C.12-27,addressesspecificpracticesthattheShermanActdoesnotclearlyprohibit,suchasmergersan

280、dinterlockingdirectorates(thatis,thesamepersonservingasanofficerordirectoroftwocompetingcompanies).Section7oftheClaytonActprohibitsmergersandacquisitionswheretheeffect“maybesubstantiallytolessencompetition,ortotendtocreateamonopoly.”AsamendedbytheRobinson-PatmanActof1936,15U.S.C.13,theClaytonActalso

281、banscertaindiscriminatoryprices,servicesandallowancesindealingsbetweenmerchants.TheClaytonActwasamendedagainin1976bytheHart-Scott-RodinoAntitrustImprovementsAct,15U.S.C.18a,torequirecompaniesplanninglargemergersoracquisitionstonotifythegovernmentoftheirplansinadvance.TheClaytonActalsoauthorizespriva

282、tepartiestosuefortrebledamageswhentheyhavebeenharmedbyconductthatviolateseithertheShermanorClaytonActandtoobtainacourtorderprohibitingtheanticompetitivepracticeinthefuture.Inadditiontothesefederalstatutes,moststateshaveantitrustlawsthatareenforcedbystateattorneysgeneralorprivateplaintiffs.Manystates

283、tatutoryprovisionsarebasedonfederalantitrustlaw,namely,Sections1and2oftheShermanAct,andSections3and7oftheClaytonAct.Asthehealthcareindustryhascontinuedtoevolveinresponsetoconsumerdemandandcompetitioninthemarketplace,theeffectoftheantitrustlawsinhealthcareisalsochanging.Wehaveexpandedouroperationssig

284、nificantlysinceourinception,organicallyaswellasthroughacquisitions.Suchgrowth,andourlong-termcontractswithphysicianpartners,couldexposeustorisksrelatedtoantitrustinvestigationsandlitigation.Competitionandantitrustlawinquiriesoftencontinueforseveralyearsand,ifviolationsarefound,canresultinsubstantial

285、fines.Other Laws and Regulations Somestatesinwhichweoperaterequirelicensingorregistrationforoperationsrelatedto,amongothers,utilizationreviewonbehalfofpayors,includingreviewingmedicalnecessityandappropriatenessofhealthcareservices,orprocessingclaimsinconnectionwithinsuranceormanagedcareproducts.Such

286、lawsvaryfromstatetostate,andouroperationsmaybesubjecttoexemptionincertainstates.21TableofContentsAdditionally,ourphysicianpartnersaresubjecttonumerousfederal,stateandlocallicensinglawsandregulations,relatingto,amongotherthings,professionalcredentialingandprofessionalethics.Ourphysicianpartners,aswel

287、lastheirnursepractitioners,mustsatisfyandmaintaintheirindividualprofessionallicensingineachstatewheretheypracticemedicine.Further,organizationsthatreceivereimbursementfromafederalorstategovernmentpayorareexpectedbythefederalgovernmenttohaveacomplianceprogram.Forthoseorganizationsthatdonotreceivereim

288、bursementfromanyfederalorstategovernmentpayors,acomplianceprogramisnotmandatorybutisconsideredbestpractice.Asaresult,wemaintainaprogramtomonitorcompliancewithfederalandstatelawsandregulationsapplicabletohealthcareentities.Wehaveacompliancedepartmentthatischargedwithimplementingandsupervisingourcompl

289、ianceprogram,whichincludestheadoptionof(i)aCodeofConductforouremployeesandaffiliatesand(ii)aprocessthatspecifieshowemployees,affiliatesandothersmayreportregulatoryorethicalconcernstoourcomplianceofficer.WebelievethatourcomplianceprogrammeetstherelevantstandardsprovidedbytheOIGoftheDepartmentofHealth

290、andHumanServices.Animportantpartofourcomplianceprogramconsistsofconductingperiodicauditsofvariousaspectsofouroperations.Wealsoconductmandatoryeducationalprogramsdesignedtofamiliarizeouremployeeswiththeregulatoryrequirementsandspecificelementsofourcomplianceprogram.Wearealsoimpactedbyfederalandstatel

291、awsandpoliciesthatrequireproviderstoenrollintheMedicareprogrambeforesubmittinganyclaimsforservices,topromptlyreportcertainchangesinitsoperationstotheagenciesthatadministertheseprograms,andtore-enrollintheseprogramswhenchangesindirectorindirectownershipoccurorinresponsetorevalidationrequestsfromMedic

292、are.Available InformationO.Weuseourwebsiteasaroutinechannelfordistributionofinformationthatmaybematerialtoinvestors,includingnewsreleases,financialinformation,presentationsandcorporategovernanceinformation.InformationcontainedorconnectedtoourwebsiteisnotincorporatedbyreferenceinthisAnnualReportonFor

293、m10-Kunlessexpresslynoted.OurAnnualReportsonForm10-K,QuarterlyReportsonForm10-Q,CurrentReportsonForm8-KandanyamendmentstothosereportsfiledorfurnishedpursuanttoSection13(a)or15(d)oftheSecuritiesExchangeActof1934(the“ExchangeAct”)areavailableonourwebsite,freeofcharge,assoonasreasonablypracticableafter

294、weelectronicallyfilesuchmaterialswith,orfurnishthemto,theU.S.SecuritiesandExchangeCommission(“SEC”).Additionally,theSECmaintainsawebsitethatcontainsreports,proxyandinformationstatements,andotherinformationregardingissuersthatfileelectronicallywiththeSEC,includingus,atwww.sec.gov.22TableofContentsITE

295、M 1A.Risk FactorsThe section below discusses the most significant risk factors that may materially adversely affect our business,results of operations and financial condition.Risks Related to Our Business We have a history of net losses,we anticipate increasing expenses in the future,and we may not

296、achieve or maintain profitability.Wehaveincurredsignificantnetlossesinthepast,includingnetlosses(includingdiscontinuedoperations)of$406.8million,$60.1million,and$282.7millionfortheyearsendedDecember31,2021,2020,and2019,respectively.Asaresultoftheselosses,wehadaccumulateddeficitsof$957.7millionand$55

297、1.2millionasofDecember31,2021and2020,respectively.Weexpectthatourexpenseswillincreasesubstantiallyintheforeseeablefutureandourlosseswillcontinue,includingfortheyearendedDecember31,2022,inpartasweinvestingrowingourbusiness,expandingourmanagementteam,buildingrelationshipswithphysicianpartnersandpayors

298、,developingnewservicesandcomplyingwiththerequirementsassociatedwithbeingapubliccompany.Theseexpensesmayprovetobemoresignificantthanwecurrentlyanticipate,andwemayencounterunforeseenexpenses,difficulties,complications,delaysandotherunknownfactorsthatmayadverselyaffectourbusiness.Wemaynotsucceedinsuffi

299、cientlyincreasingourrevenuetooffsettheseexpenses.Consequently,wemaynotbeabletoachieveandmaintainprofitabilityforthecurrentoranyfuturefiscalyear.Ourpriorlossesandpotentialforfuturelosseshavehadandwillcontinuetohaveanadverseeffectonourstockholdersequityandworkingcapital.Any failure by us to identify a

300、nd develop successful new geographies,physician partners and payors and to successfully execute upon our growth initiatives may have a material adverse effect on our business,financial condition,cash flows,and results of operations.Ourbusinessdependsonourabilitytoidentifyanddevelopsuccessfulgeograph

301、iesandrelationshipswithphysicianpartnersandpayors,andtosuccessfullyexecuteuponourgrowthinitiativestoincreasetheprofitabilityofourphysicianpartners.Inordertopursueourstrategysuccessfully,wemusteffectivelyimplementourplatform,partnershipandnetworkmodel,includingidentifyingsuitablecandidatesandsuccessf

302、ullybuildingrelationshipswithandmanagingintegrationofnewphysicianpartnersandpayors.Wecontractwithalimitednumberofphysicianpartnersandrelyonphysicianpartnerswithineachgeography.Ourgrowthinitiativesinourexistinggeographiesdepend,inpart,onourphysicianpartnersabilitytogrowtheirpracticesthroughtheadditio

303、nofPCPstoincreasetheircapacitytoserviceMedicarepatients,andtoeffectivelymeetincreasedpatientdemand.OurphysicianpartnersmayencounterdifficultiesinrecruitingadditionalPCPstotheirpracticesduetomanyfactors,includingsignificantcompetitionintheirgeographies.Accordingly,thelossordissatisfactionofanyphysici

304、anpartners,ourinabilitytorecruitandintegratephysicianpartnersintoourmodel,orthefailureofourphysicianpartnerstorecruitadditionalPCPsormanageandscalecapacitytotimelymeetpatientdemand,couldsubstantiallyharmourbrandandreputation,impactourcompetitiveness,inhibitwidespreadadoptionofourplatform,partnership

305、andnetworkmodelandimpairourabilitytoattractnewphysicianpartnersandmaintainexistingphysicianpartnerships,bothinnewgeographiesandingeographiesinwhichwecurrentlyoperate,whichcouldhaveamaterialadverseeffectonourbusiness,financialcondition,cashflows,andresultsofoperations.Further,ourgrowthstrategydepends

306、,inpart,onsecuringandintegratingnewhigh-caliberphysicianpartnersandexpandingintonewgeographiesinwhichwehavelittleornooperatingexperience.Integrationandotherriskscanbemorepronouncedforlargerandmorecomplicatedrelationshipsorrelationshipsoutsideofourcorebusinessspace,orifmultiplerelationshipsarepursued

307、simultaneously.Additionally,newgeographiesmaybecharacterizedbystakeholderpreferencesfor,andexperiencewith,aTotalCareModel,ratesofMAenrollment,MAreimbursementrates,payorconcentrationandratesofunnecessaryvariabilityinandutilizationofmedicalcarethatdifferfromthoseinthegeographieswhereourexistingoperati

308、onsarelocated.Likewise,newgeographiesintowhichweseektoexpandmayhavelawsandregulationsthatdifferfromthoseapplicabletoourcurrentoperations.Asanimmatureandrapidlygrowingcompany,wemaybeunfamiliarwiththeregulatoryrequirementsineachgeographythatweenter,andwemaybeforcedtoincursignificantexpenditurestoensur

309、ecompliancewithrequirementstowhichwearesubject.Ifweareunableorunwillingtoincursuchcosts,ourgrowthinnewgeographiesmaybelesssuccessfulthaninourcurrentgeographies.23TableofContentsFurther,ourgrowthtodatehasincreasedthesignificantdemandsonourmanagement,operationalandfinancialsystems,infrastructureandoth

310、erresources.Wemustcontinuetoimproveourexistingsystemsforoperationalandfinancialmanagement,includingourreportingsystems,proceduresandcontrols.Theseimprovementscouldrequiresignificantcapitalexpendituresandplaceincreasingdemandsonourmanagement.Wemaynotbesuccessfulinmanagingorexpandingouroperationsorinm

311、aintainingadequatefinancialandoperatingsystemsandcontrols.Ifwedonotsuccessfullymanagetheseprocesses,ourbusiness,financialcondition,cashflows,andresultsofoperationscouldbeharmed.We may be unsuccessful in executing our operating strategies,or we may not achieve results consistent with our historical p

312、erformance.Oursuccessisdependentonourabilitytosuccessfullyexecuteupondefinedoperatingstrategiesinourexistingandfuturegeographies.SuchstrategiesincludesuccessfullygrowingourgeographiesthroughtheadditionofPCPsandourphysicianpartnerscapacitytoservenewmembers,providingmedicalservicesforourmembersatappro

313、priatelevelsofutilizationandcost,andgeneratingmedicalservicesrevenuethroughappropriateandeffectivecontractingstrategieswithourMApayors.Wemaynotbesuccessfulinexecutinguponthesestrategies,orwemayfailtoimplementsuchstrategiesinfuturemarketsaseffectivelyaswithourinitialmarkets.Thefailuretosuccessfullyex

314、ecuteuponsuchstrategiesortoproduceresultsconsistentwithourhistoricalresultsorthefinancialandoperationalmodelsusedintheanalysisofourpotentialrelationshipsmayresultinaninabilitytogrowourbusiness;maycauseongoingoperatinglosses,assetwrite-offs,restructuringcostsorotherexpenses;andmayhaveamaterialadverse

315、effectonourbusiness,financialcondition,cashflows,andresultsofoperations.Further,asarapidlygrowingandrelativelyimmaturecompanywithalimitedoperatinghistory,itisuncertainwhetherourplatform,partnershipandnetworkmodelwillachieveandsustainhighlevelsofdemand,physicianandpayoracceptanceandmarketadoption.Due

316、toourlimitedoperatinghistory,itisalsodifficultforustoevaluateourbusinesscomparedtopriorperiods.Ifwedonotdevelop,ifwedevelopmoreslowlythanweexpect,ifweencounternegativepublicityorifourvaluepropositionsforphysicianpartners,patientsandpayorsdonotdrivesufficientmembergrowth,thegrowthofourbusinesswillbeh

317、armed.Oursuccesswilldependtoasubstantialextentonourabilitytodemonstratethevalueofourplatform,partnershipandnetworkmodeltophysiciansandpayors.Ourabilitytoreplicatethesuccessofourmodelalsoenablesustoattractandretainskilledphysicianpartners.Accordingly,ifweareunabletoeffectivelymanageourgrowthandreplic

318、atethesuccessofourplatform,partnershipandnetworkmodelinnewgeographiesandwithnewpartners,ourbusiness,financialcondition,cashflows,andresultsofoperationscouldbeharmed.Amounts of medical expenses that are incurred on behalf of our members may exceed the amount of medical revenues we receive to provide

319、care for such members.Underouragreementswithourpayors,wereceiveaPMPM-basedcapitationpayment,andweassumefinancialriskfortheexpenseofprovidingmedicalservicesonbehalfofourphysicianpartners.Totheextentthatutilizationofmedicalservicesorthecostofprovidingsuchservicesincreasesbeyondourexpectations,thetotal

320、costtoprovidemedicalservicestoourmembersmayexceedthecorrespondingamountofrevenuewereceive,whichmayresultinlossesandadverselyimpactourbusiness,financialcondition,cashflows,andresultsofoperations.Additionally,factorsthatimpactmedicalcostsincurredbyourmembers,andmedicalexpensesweincur,maybesubjecttoflu

321、ctuationswhichwemaynotbeabletocontrol.Suchfactorsincludethefollowing:ChangestotheMedicarefeescheduleorotherrateschedulesthatserveasthebasisforpaymentsissuedtohospitals,specialtyandancillaryphysiciansandotherproviders;Contractualratespaidtohospitals,specialtyandancillaryphysiciansandotherproviders;Th

322、eutilizationratesofhealthcareservices,includinginpatienthospitalization,byourmembers;Changestomemberbenefitlevelsestablishedannuallybypayors;andTheutilizationrateandcostofpharmaceuticalsorspecialtydrugsutilizedbyourmembers.24TableofContentsFluctuationsinthemagnitudeofthehospitalandphysiciannetwork,i

323、ncludingthediscontinuationofahospitalorspecialtyorancillaryphysiciansparticipationinourMApayorsprovidernetwork,couldadverselyimpactourbusiness,financialcondition,cashflows,andresultsofoperations.As we expand into new geographies,we may be unable to secure contracts with MA payors,or such contracts m

324、ay be established at less favorable financial terms than are necessary to meet our financial targets.Asweenterintonewgeographies,potentialphysicianpartnerswilltypicallyprovidecaretomembersaffiliatedwithoneormoreMApayors,inastructureotherthanaTotalCareModel.Ourabilitytosuccessfullyoperateinamarketisd

325、ependentuponourabilitytoenterintocontractualrelationshipswithMApayorswhichhaveanexistingpresenceinthatmarketunderaglobalriskstructure.MApayorsmaytakethepositionthatitisnotintheirstrategicorfinancialintereststoenterintoacontractwithus,ortheymayhavealreadyestablishedexclusiverelationshipswithothervalu

326、e-basedcareprovidersoraffiliatesinageographyand,therefore,electtonotenterintoasimilararrangementwithus.Therefore,wemaybeunsuccessfulinexecutingcontractualrelationshipswithMApayors,orsuchcontractsmaybeestablishedatfinancialtermswhichresultinlowerrevenuesorhighercoststhanweprojectorthatarenecessarytog

327、enerateprofitsinagivengeography.TotheextentweareunsuccessfulinestablishingcontractualrelationshipswithMApayorsinnewgeographies,orsuchrelationshipsareestablishedatlessfavorabletermsthanweproject,wemaynotbeabletosuccessfullylaunchintoagivengeography,orthemembershiporrevenuelevelsweareabletoattainwillb

328、elowerthanourprojections.We incur startup costs during the initial stages of development of our physician partner relationships and program initiatives,and if we are unable to maintain and grow these physician partner relationships or program initiatives over time,we may not recover these costs.Wede

329、voteresourcestotheestablishmentofnewphysicianpartnerrelationships,includingcostsrelatingtophysicianrecruitingtoenhanceaccessandsupportgrowthofthenetwork,physicianincentivestosupportthetransitiontoaTotalCareModelandoperationalsupport.Ourstartupinvestmentinnewphysicianpartnerscanbesignificantandtheass

330、ociatedrevenuemustbeearnedandsustainedovertimeinorderforustorecoupthesecosts.Asourbusinessgrows,ourphysicianpartnershipstartupcostscouldoutpaceourbuildupofrecurringrevenueifwedonotachieveeconomiesofscale,andwemaybeunabletoachieveprofitabilityuntilourrevenuesassociatedwithnewpartnershipsaremoremature

331、.Wemayneverrecoupourstartupcostsinaphysicianpartnerrelationship,includingasaresultofsuchphysicianpartnersdifficultytransitioningtoaTotalCareModel.Ifwefailtoachieveappropriateeconomiesofscale,ifwefailtomanageoranticipatetheevolutionoftheTotalCareModelorifwefailtoraisenecessarycapitaltofundourstartupc

332、osts,ourbusiness,financialcondition,cashflows,andresultsofoperationscouldbemateriallyadverselyaffected.WealsodevoteresourcestoestablishingprograminitiativestoensureasuccessfultransitiontoaTotalCareModelformembers,physicianpartnersandpayors.Establishmentoftheseprograminitiativesrequiresinvestmentstha

333、tmaynotberecouped.Forexample,investmentinpreventivecareandincentivizingphysicianpartnerstocompleteannualwellnessvisitsmayincreaseourtotalmedicalservicesexpense,particularlyintheshortterm,andmayfailtogenerateexpectedcostsavingsinthelongterm.Ifwefailtorealizequalityofcareoutcomesandprojectedrevenuesorcostsavingsduetoeffectivelymanagedhealthcarecostswiththeseprograminitiatives,ourbusiness,financialco