Amedisys Inc. (AMED) 2016年年度報告「NASDAQ」.pdf

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1、2016 Annual ReportDear Fellow Shareholders,It was a little more than two years ago that we sat down and really listened.From our patients,to our employees,to our referral sources,to our markets we looked at the essence of what we do and what drives our business,talked with our employees about what“b

2、est”looked like and asked our patients what they wanted.We built our strategy around the themes that emerged from these conversations.Our four-pronged strategy appears straightforward,because it comes from the people we serve and those that serve them.Consistently delivering on it requires disciplin

3、e,thoughtfulness and relentless focus.We want to be the gold standard in our selected disciplines.We believe we know what we should be,and we are working hard to get there.Like a family road trip with the inevitable question,“Are we there yet?”-we arent.But we are well on our way,and our results sho

4、w were making good progress.Our stakeholders have lots of reasons to be happy with our performance in 2016.We reported revenue of$1.44 billion,a 12%increase over 2015,adjusted EBITDA of$110 million and adjusted EPS of$1.55 per diluted share.We grew organically in all of our business units,with parti

5、cular strength in the hospice and personal care segments.We achieved a key milestone in December as we completed the conversion from our internally developed technology platform to HomeCare HomeBase(HCHB).We accomplished this with unprecedented speed,converting nearly 400 care centers in just over a

6、 year.While this caused some operational disruption during 2016,we are pleased to see this disruption winding down in the first quarter of 2017.Our front line clinicians are happy with the way HCHB supports greater efficiency for them in the home,and we believe this will support continued improvemen

7、t in the quality of care our patients receive,as well as better clinician productivity.Also during the year,we closed on three acquisitions,continuing our efforts to use capital to build our business.Our free cash flow is strong and improving,giving us enough financial flexibility to invest in promi

8、sing expansion opportunities we identify in the future.More specifically,we progressed on all four of our key strategies.ACHIEVE CLINICAL DISTINCTION Our primary mission is to provide our patients with outstanding clinical care.No metric better demonstrates this commitment than our latest ratings in

9、 home health from the all-important Medicare Star Rating program.We improved our average Star rating each quarter in 2016,with the January 2017 release ranking our Quality of Patient Care score of 3.91 Stars and Patient Satisfaction score of 3.80 Stars.We are striving for further improvement in 2017

10、,with our April average score for Quality of Patient Care across all of our home health care centers of 4.03 Stars,a 15%increase over last year.Thats our best performance to date.Three-quarters of our centers(75%)attained a rating of 4 Stars or better,compared to a little over one-quarter last year(

11、32%).With CMS and other payors intending to shift to reimbursement models based on the quality of care delivered,we expect to be well positioned to capitalize on this trend.Our agenda for clinical care remains ambitious.Were aiming for all of our home health care centers to achieve a quality Star ra

12、ting of 4 or higher by the end of 2017.Our hospice quality is equally impressive.Our quality of patient care ranks above the national CMS average on all seven quality measures tracked.In patient experience,we rank above the national CMS average on all eight quality measures tracked.In last years CMS

13、 hospice final rule,CMS signaled their intention to create a rating system similar to home healths Star ratings that will be publicly available.We expect to be at or near the top of the industry once those ratings are finalized.BECOME AN EMPLOYER OF CHOICE Because our people are our most important a

14、sset,and are responsible for the quality of the care our patients receive,we took further steps toward improving our“return on people.”We are building a Culture of Engagement,whereby our employees are inspired every day to bring their best self to work.This enables them to better serve our patients,

15、colleagues and referring physicians and hospitals helping us to better recruit,retain and develop outstanding,talented people.In an industry that generally experiences high turnover rates,typically in the mid-30 percent range,our overall voluntary turnover declined to 22%in 2016,with turnover among

16、our full time employees,who are responsible for 85%of our patient visits,falling to 18%.To drive continued improvement as an organization,we continue to listen to our people.Our second annual People Engagement Survey response rate was 24%higher than last year.The responses told us both what we are d

17、oing well,and where we can improve.Based on this feedback,each of our leaders has developed specific plans to address the opportunities identified in their areas.As we improve our understanding of the drivers of employee satisfaction through these engagement efforts,we expect our retention rates to

18、continue to improve,increasing our return on our human capital.OPERATIONAL EXCELLENCE AND EFFICIENCY During 2016,Amedisys reached a major milestone in bringing better information technology to our employees:HCHB software went live in all our home health and hospice care centers,seven months ahead of

19、 our original target.In transitioning from our proprietary software to this leading IT platform,were now optimizing efficiency and equipping our clinicians to better focus on care delivery.Additionally,in 2015 we committed to realize$46 million in annualized run rate efficiencies by the end of 2017,

20、and the successful completion of this platform migration is a key milestone in delivering these savings.Already we have improved the productivity of our existing staff,and now have the ability to deploy our resources more effectively.We will continue to maximize efficiencies in putting the right peo

21、ple in the right places at the right time to deliver the right high-quality care,and innovate aggressively along these lines.In 2016,we also designed and developed a propriety productivity and staffing tool that compiles,evaluates and correlates data to drive staffing optimization.This tool permits

22、operators to more deeply manage clinician productivity to better understand the operational levers available to manage our clinician capacity.DRIVING GROWTHAmedisys grew in all lines of business during 2016 despite challenges with the rapid rollout of HCHB.Amedisys acquired Associated Home Care,a le

23、ading personal care agency in Massachusetts a move consistent with our long-term strategy to broaden our scope of services that can be delivered at home.The Company also acquired Professional Profiles,a personal care agency based in Danvers,Massachusetts,and in early 2017,Home Staff,LLC,a personal c

24、are provider,headquartered in Worcester,Massachusetts.We are now the largest personal care provider in Massachusetts,caring for more than 15,000 patients annually.We also acquired Visiting Nurse Association of Long Island,a nonprofit organization based in Garden City,New York.In hospice,weve produce

25、d strong,consistent organic growth,with average daily census increasing by 16%and reaching 5,900 by the end of 2016.We see this as a validation of the outstanding care provided by our hospice team,the growing acceptance of the value of hospice care,and patients desire to remain in their homes.In hom

26、e health,same store episodic admissions grew by 4%,we completed over seven million patient visits and grew our census to over 55,000 patients.We continue to believe the combination of improved business development processes,recent leadership additions,and improved capacity driven by our new platform

27、 and tools will allow us to see solid year over year organic growth in the second half of 2017.A PROMISING OUTLOOK The arrival of the new President has sparked the most questions from investors over the last few months.At this early stage,we are working closely with our peers in home health and hosp

28、ice to communicate our point of view to the Trump Administration.We would like to see a regulatory environment more conducive to patient care in the home.We believe we have the opportunity as an industry to show the value that healthcare in the home provides,including lower costs,better outcomes and

29、 higher patient satisfaction.We remain focused on acquisition growth opportunities.Our current acquisition pipeline collectively represents well over$100 million in adjusted EBITDA.The good news is that we have both strong free cash flow and a strong balance sheet.We have the ability to act on strat

30、egic opportunities that we identify across each of our business segments.With our operating team and scalable infrastructure in place,and with consumer preferences,aging demographics and the cost advantages of home-based care working in our favor,we are well-positioned to be an industry consolidator

31、 with an aging-in-place solution in a highly fragmented market.Regardless of the potential policy and regulatory changes driven by the federal government,providing the highest quality of care is fundamental for us.What matters most is to do right by our patients and their families.That commitment di

32、stinguishes us more than anything else from our competition,and serves as a major driver of future growth.Our goal remains nothing less than to be the partner of choice wherever our patients call home.To our shareholders,thank you for your commitment to Amedisys.Despite the large-scale change that t

33、he organization initiated and implemented in 2016,we delivered solid results and built a strong foundation for the future.Of course,none of this would have been possible without the commitment of our more than 16,000 employees-your efforts keep exceeding our expectations.We expect to build upon our

34、progress in 2017 and look forward to our continued success.Paul Kusserow President and Chief Executive Officer957 1,005 1,086 850 900 950 1,000 1,050 1,100FY14FY15FY16($in Millions)Home Health Segment Revenue248 275 316 150 200 250 300 350($in Millions)Hospice Segment RevenueFY14FY15FY16$0.73$1.48$1

35、.55$0.50$1.00$1.50$2.00FY14FY15FY16Adjusted EPS*74 112 110 -20 40 60 80 100 120FY14FY15FY16($in Millions)Adjusted EBITDA*2016 FINANCIALS*The financial results for the years ended December 31,2014,December 31,2015 and December 31,2016 are adjusted for certain items and should be considered non-GAAP f

36、inancial measures.A reconciliation of these non-GAAP financial measures is included in the corresponding Form 8-K detailing annual results filed on February 28,2017 and March 8,2016.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTIO

37、N 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended:December 31,2016ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period fromtoCommission File Number:0-24260AMEDISYS,INC.(Exact Name of Registrant as Specified in its

38、 Charter)Delaware11-3131700(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)3854 American Way,Suite A,Baton Rouge,LA 70816(Address of principal executive offices,including zip code)(225)292-2031 or(800)467-2662(Registrants telephone number,including area

39、 code)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock,par value$0.001 per shareThe NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a

40、 well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Sect

41、ion 13 or 15(d)of the Securities Exchange Act of1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject tosuch filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submit

42、ted electronically and posted on its corporate Web site,if any,every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or forsuch shorter period that the registrant was required to submit and post su

43、ch files).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(229.405 of this chapter)is not containedherein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference inPa

44、rt III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reportingcompany.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting c

45、ompany”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate ma

46、rket value of the voting and non-voting common stock held by non-affiliates of the registrant,based on the last sale price asquoted by the NASDAQ Global Select Market on June 30,2016(the last business day of the registrants most recently completed second fiscalquarter)was$1.0 billion.For purposes of

47、 this determination shares beneficially owned by executive officers,directors and ten percentstockholders have been excluded,which does not constitute a determination that such persons are affiliates.As of February 24,2017,the registrant had 33,607,420 shares of Common Stock outstanding.DOCUMENTS IN

48、CORPORATED BY REFERENCEPortions of the registrants definitive Proxy Statement for its 2017 Annual Meeting of Stockholders(the“2017 Proxy Statement”)to be filedpursuant to the Securities Exchange Act of 1934 with the Securities and Exchange Commission within 120 days of December 31,2016 areincorporat

49、ed herein by reference into Part III of this Annual Report on Form 10-K.TABLE OF CONTENTSSPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS.1PART I.ITEM 1.BUSINESS.2ITEM 1A.RISK FACTORS.14ITEM 1B.UNRESOLVED STAFF COMMENTS.30ITEM 2.PROPERTIES.30ITEM 3.LEGAL PROCEEDINGS.31ITEM 4.MINE SAFETY DISCLOS

50、URES.31PART II.ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.32ITEM 6.SELECTED FINANCIAL DATA.34ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS.35ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOS

51、URES ABOUT MARKET RISK.58ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.58ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE.104ITEM 9A.CONTROLS AND PROCEDURES.104ITEM 9B.OTHER INFORMATION.107PART III.ITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVE

52、RNANCE.107ITEM 11.EXECUTIVE COMPENSATION.107ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS.107ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTORINDEPENDENCE.107ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.107PART IV.ITEM 15.EX

53、HIBITS AND FINANCIAL STATEMENT SCHEDULES.108ITEM 16.FORM 10-K SUMMARY.108SIGNATURES.109EXHIBIT INDEX.110EX-10.3 COMPOSITE AMEDISYS,INC.2008 OMNIBUS INCENTIVE COMPENSATION PLAN,ASAMENDEDEX-10.15 AMEDISYS HOLDING,L.L.C.SEVERANCE PLAN FOR KEY EXECUTIVES,AS AMENDEDEX-21.1 LIST OF SUBSIDIARIESEX-23.1 CON

54、SENT OF KPMG LLPEX-31.1 SECTION 302 CERTIFICATION OF PEOEX-31.2 SECTION 302 CERTIFICATION OF PFOEX-32.1 SECTION 906 CERTIFICATION OF PEOEX-32.2 SECTION 906 CERTIFICATION OF PFOEX-101 INTERACTIVE DATA FILESPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTSWhen included in this Annual Report on Form

55、 10-K,or in other documents that we file with the Securities andExchange Commission(“SEC”)or in statements made by or on behalf of the Company,words like“believes,”“belief,”“expects,”“plans,”“anticipates,”“intends,”“projects,”“estimates,”“may,”“might,”“would,”“should”and similar expressions are inte

56、nded to identify forward-looking statements as defined by the PrivateSecurities Litigation Reform Act of 1995.These forward-looking statements involve a variety of risks anduncertainties that could cause actual results to differ materially from those described therein.These risks anduncertainties in

57、clude,but are not limited to the following:changes in Medicare and other medical paymentlevels,our ability to open care centers,acquire additional care centers and integrate and operate these carecenters effectively,changes in or our failure to comply with existing federal and state laws or regulati

58、ons or theinability to comply with new government regulations on a timely basis,competition in the healthcare industry,our ability to integrate our personal care segment into our business efficiently,changes in the case mix ofpatients and payment methodologies,changes in estimates and judgments asso

59、ciated with critical accountingpolicies,our ability to maintain or establish new patient referral sources,our ability to attract and retainqualified personnel,changes in payments and covered services due to the economic downturn and deficitspending by federal and state governments,future cost contai

60、nment initiatives undertaken by third-party payors,our access to financing,our ability to meet debt service requirements and comply with covenants in debtagreements,business disruptions due to natural disasters or acts of terrorism,our ability to integrate,manageand keep our information systems secu

61、re,our ability to comply with requirements stipulated in our corporateintegrity agreement and changes in law or developments with respect to any litigation relating to the Company,including various other matters,many of which are beyond our control.Because forward-looking statements are inherently s

62、ubject to risks and uncertainties,some of which cannot bepredicted or quantified,you should not rely on any forward-looking statement as a prediction of futureevents.We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updatesor changes in our expectations

63、 concerning the forward-looking statements or any changes in events,conditionsor circumstances upon which any forward-looking statement may be based,except as required by law.For adiscussion of some of the factors discussed above as well as additional factors,see Part I,Item 1A,“RiskFactors”and Part

64、 II,Item 7,“Critical Accounting Estimates”within“Managements Discussion and Analysisof Financial Condition and Results of Operations.”Unless otherwise provided,“Amedisys,”“we,”“us,”“our,”and the“Company”refer to Amedisys,Inc.andour consolidated subsidiaries and when we refer to 2016,2015 and 2014,we

65、 mean the twelve month period thenended December 31,unless otherwise provided.A copy of this Annual Report on Form 10-K for the year ended December 31,2016 as filed with the SEC,including all exhibits,is available on our internet website at http:/ on the“Investors”pageunder the“SEC Filings”link.1PAR

66、T IITEM 1.BUSINESSOverviewAmedisys,Inc.is a leading healthcare services company focused on bringing care to the home.Our operationsinvolve servicing patients across the United States through our three operating divisions:home health,hospiceand personal care.We deliver the care that is best for our p

67、atients,whether that is home-based recovery andrehabilitation after an operation or injury,care that empowers patients to manage a chronic disease,hospice careat the end of life,or providing assistance with daily activities through our personal care division.We are among the largest,best established

68、 and most advanced providers of home health and hospice care in theUnited States,with 420 care centers in 34 states.Our 16,000 employees deliver the highest quality of care to thedoorsteps of patients in need,making more than 7.5 million patient visits to 385,000 patients annually.Over2,200 hospital

69、s and 61,900 physicians nationwide have chosen us as a partner in post-acute care.Our services are primarily paid for by Medicare due to the age demographics of our patient base(averageage 81).Medicare represented approximately 78%to 82%of our net service revenue over the last three years.We remain

70、focused on maintaining a profitable and strategically important managed care contract portfolio.Amedisys is headquartered in Baton Rouge,Louisiana,with an executive office in Nashville,Tennessee.Ourcommon stock is currently traded on NASDAQ Global Select Market under the trading symbol“AMED”.Founded

71、 and incorporated in Louisiana in 1982,Amedisys was reincorporated as a Delaware corporation prior tobecoming a publicly traded company in August,1994.Our strategy is to become the best choice for care wherever our patients call home by excelling in clinicaldistinction,operational excellence and eff

72、iciency and growth.Our mission is to provide compassionate homehealth,hospice and personal care services that apply the most advanced clinical practices toward allowing ourpatients to maintain a sense of independence,quality of life and dignity.We believe that focusing on providingexcellent care and

73、 becoming an employer of choice across the United States will differentiate us from ourcompetitors.Our Home Health Segment:Amedisys Home Health provides experienced,compassionate healthcare to help our patients recover fromsurgery or illness,live with chronic diseases,and prevent avoidable hospital

74、readmissions with 327 care centerslocated in 32 states.Our care team includes skilled nurses who are trained and certified to administermedications,care for wounds,monitor vital signs and provide a wide range of other nursing services;therapistsspecialized in physical,speech and occupational therapy

75、;and aides who assist our patients with completingimportant personal tasks.We take an empowering approach to helping our patients and their families understand their condition,how tomanage it and how to live life to the fullest with a chronic disease or other health condition.Our professional andcom

76、passionate clinicians are trained to understand the whole patient not just their medical diagnosis.This commitment to clinical distinction is evident in our clinical performance measures such as Star Ratings.Inthe Center for Medicare and Medicaid Services(“CMS”)preview reports for the April 2017 rel

77、ease,the Qualityof Patient Care star average across all Amedisys providers is 4.03.This number is subject to change for the finalrelease,and CMS has indicated proposed changes that may impact star scores starting with the July 2017 release.Our goal is to have all of our care centers achieve a 4.0 Qu

78、ality Star Rating,and we are implementing targetedaction plans to continue to improve the quality of care we deliver for our patients across the country.Our PatientSatisfaction average as of the last known release was 3.76,outperforming the industry average of 3.67.2Our Hospice Segment:Hospice is a

79、special form of care that is designed to provide comfort and support for those who are dealing with aterminal illness.It is a compassionate form of care that promotes dignity and affirms quality of life for thepatient,family members and other loved ones.We operate 79 hospice care centers in 21 state

80、s.Individuals with a terminal illness such as heart disease,pulmonary disease,Alzheimers,HIV/AIDS or cancermay be eligible for hospice care,if they have a life expectancy of six months or less.At Amedisys Hospice,our focus is on building and retaining an exceptional team,delivering the highest quali

81、tycare and service to our patients and their families,and establishing Amedisys as the preferred and preeminenthospice provider in each community we serve.In order to realize these goals,we invest in tailored training,development,and recognition programs for our employees,with specific focus in 2016

82、 on the implementation ofa new electronic medical record,employee skills training and leadership development.This has led to our teamsconsistent achievement at or above the national average in family satisfaction results and quality scores,as wellas the trust of the healthcare community driving a 17

83、%increase in new patient admissions and a 16%increase incensus.Another element of our approach is our outreach strategy to more fully reach the entire community of eligiblepatients.These outreach efforts have built our hospice patient population to more accurately represent the causesof death in the

84、 communities we serve,with a specific focus on heart disease,lung disease,and dementia in orderto address the historical underrepresentation of non-cancer diagnoses.By working to accept every patient with a life expectancy of six months or less who wants our compassionatecare,we fulfill our hospice

85、mission and strengthen our standing in the community.Our Personal Care Segment:On March 1,2016,Amedisys acquired its first personal care company an important step in executing ourstrategy of improving the continuity of care our patients receive as their clinical needs change.Our new segmentwas furth

86、er expanded when we purchased the assets of Professional Profiles,Inc.on September 1,2016.We nowoperate 14 personal-care care centers in Massachusetts.Personal care provides assistance with the essential activities of daily living.We believe that personal careservices are highly synergistic with our

87、 core skilled home health and hospice businesses,and that by acquiringthese capabilities in one of our most successful regions we will realize these benefits quickly.Responding to Changing Regulatory and Reimbursement Environment:As the government continues to seek opportunities to refine payment mo

88、dels,we believe that our strategy ofbecoming a leader in providing a range of service across the at-home care center continuum positions us well forthe future.Our ability to provide quality home health,hospice and personal care allows us to partner with healthsystems and managed care organizations t

89、o improve care coordination,reduce hospitalizations and lower costs.Homecare Homebase Implementation:During 2015,we made the strategic decision to discontinue AMS3,our third generation,proprietary operatingsystem,and transition to Homecare Homebase(“HCHB”),a leading home health and hospice platform.

90、Wecompleted our rollout of HCHB during 2016 with all our care centers fully transitioned to our new platform as ofNovember 1,2016.Acquisitions:On March 1,2016,we acquired Associated Home Care for a total purchase price of$27.7 million.AssociatedHome Care owned and operated nine personal-care care ce

91、nters servicing the state of Massachusetts.3On September 1,2016,we acquired the assets of four personal-care care centers in Massachusetts for a totalpurchase price of$4.4 million.On October 20,2016,we acquired the assets of a home health care center in New York for a total purchase priceof$4.6 mill

92、ion.Financial Information:Financial information for our home health,hospice and personal care segments can be found in our consolidatedfinancial statements included in this Annual Report on Form 10-K.Our EmployeesAs of February 24,2017,we employed approximately 16,000 employees,consisting of approxi

93、mately 10,800home health care employees,2,800 hospice care employees,1,800 personal care employees and 600 corporateand divisional support employees.Payment for Our ServicesHome Health MedicareThe Medicare home health benefit is available both for patients who need care following discharge from ahos

94、pital and patients who suffer from chronic conditions that require ongoing but intermittent care.As acondition of participation under Medicare,beneficiaries must be homebound(meaning that the beneficiary isunable to leave his/her home without a considerable and taxing effort),require intermittent sk

95、illed nursing,physical therapy or speech therapy services,and receive treatment under a plan of care established andperiodically reviewed by a physician.Medicare rates are based on the severity of the patients condition,his orher service needs and other factors relating to the cost of providing serv

96、ices and supplies,bundled into 60-dayepisodes of care.An episode starts with the first day a billable visit is performed and ends 60 days later or upondischarge,if earlier.If a patient is still in treatment on the 60thday,a recertification assessment is undertaken todetermine whether the patient nee

97、ds additional care.If the patients physician determines that further care isnecessary,another episode begins on the 61stday(regardless of whether a billable visit is rendered on that day)and ends 60 days later.The first day of a consecutive episode,therefore,is not necessarily the new episodes first

98、billable visit.Annually,the Medicare program base episodic rates are set through federal legislation,as follows:PeriodBase episodepaymentJanuary 1,2014 through December 31,2014.$2,869January 1,2015 through December 31,2015.$2,961January 1,2016 through December 31,2016.$2,965January 1,2017 through De

99、cember 31,2017.$2,990Payments can be adjusted for:(a)an outlier payment if our patients care was unusually costly(capped at 10%oftotal reimbursement per provider number);(b)a low utilization payment adjustment(“LUPA”)if the number ofvisits during the episode was fewer than five;(c)a partial payment

100、if our patient transferred to another provideror we received a patient from another provider before an episode was complete;(d)a payment adjustment basedupon the level of therapy services required(with various incremental adjustments made for additional visits,withlarger payment increases associated

101、 with the sixth,fourteenth and twentieth visit thresholds);(e)a paymentadjustment if we are unable to perform periodic therapy assessments;(f)the number of episodes of care providedto a patient,regardless of whether the same home health provider provided care for the entire series of episodes;(g)cha

102、nges in the base episode payments established by the Medicare program;(h)adjustments to the base4episode payments for case mix and geographic wages;and(i)recoveries of overpayments.Medicare can alsomake various adjustments to payments received if we are unable to produce appropriate billing document

103、ation oracceptable authorizations.In addition,we make adjustments to Medicare revenue if we find that we are unable toobtain appropriate billing documentation,authorizations or face to face documentation.Home Health Non-MedicarePayments from Medicaid and private insurance carriers are episodic-based

104、 rates(60-day episode of care)orper-visit rates depending upon the terms and conditions established with such payors.Episodic-based rates paidby our non-Medicare payors are paid in a similar manner and subject to the same adjustments as discussed abovefor Medicare;however,these rates can vary based

105、upon negotiated terms.Hospice MedicareThe Medicare hospice benefit is also available to Medicare-eligible patients with terminal illnesses,certified by aphysician,where life expectancy is six months or less.Medicare rates are based on standard prospective rates fordelivering care over a base 90-day

106、or 60-day period(90-day episodes of care for the first two episodes and60-day episodes of care for any subsequent episodes).Payments are based on daily rates for each day abeneficiary is enrolled in the hospice benefit.Rates are set based on specific levels of care,are adjusted by awage index to ref

107、lect health care labor costs across the country and are established annually through federallegislation.We make adjustments to Medicare revenue when we find we are unable to obtain appropriate billingdocumentation,authorizations or face to face documentation and other reasons unrelated to credit ris

108、k.The levelsof care are routine care,general inpatient care,continuous home care and respite care.Beginning January 1,2016,CMS has provided for two separate payment rates for routine care:payments for the first 60 days of careand care beyond 60 days.In addition to the two routine rates,on January 1,

109、2016,Medicare also beganreimbursing for a service intensity add-on(“SIA”).The SIA is based on visits made in the last seven days of lifeby a registered nurse(“RN”)or medical social worker(“MSW”)for patients in a routine level of care.We bill Medicare for hospice services on a monthly basis and our p

110、ayments are subject to two fixed annual caps,which are assessed on a provider number basis.Generally,each hospice care center has its own provider number.However,where we have created branch care centers to help our parent care centers serve a geographic location,the parent and branch may have the s

111、ame provider number.The annual caps per patient,known as hospice caps,are calculated and published by the Medicare fiscal intermediary on an annual basis and cover the twelve monthperiod from November 1 through October 31.The caps can be subject to annual and retroactive adjustments,which can cause

112、providers to be required to reimburse the Medicare program if such caps are exceeded.The two caps are detailed below:Inpatient Cap.When we provide hospice care on an inpatient basis,the payments that we are entitledto receive at the higher inpatient reimbursement rate are subject to a cap.This cap l

113、imits the number ofdays that are paid at the inpatient care rate(both respite and general)under a provider number to 20%of the total number of days of hospice care(both inpatient and in-home)that is furnished to allMedicare patients served by the provider.The daily Medicare payment rate for any inpa

114、tient days ofservice that exceed the cap is at the routine home care rate,and the provider is required to reimburseMedicare for any amounts it receives in excess of the cap;andOverall Payment Cap.This cap is calculated by the Medicare fiscal intermediary at the end of eachhospice cap period to deter

115、mine the maximum allowable payments per provider number.We estimateour potential cap exposure using information available for both inpatient day limits as well as perbeneficiary cap amounts.The total cap amount for each provider is calculated by multiplying thenumber of beneficiaries electing hospic

116、e care during the period by a statutory amount that is indexedfor inflation.5Our ability to stay within these limitations depends on a number of factors,each determined on a providernumber basis,including the average length of stay and mix in level of care.Hospice Non-MedicareNon-Medicare payors pay

117、 at rates different from established Medicare rates for hospice services,which are basedon separate,negotiated agreements.We bill and are paid by these non-Medicare payors based on such negotiatedagreements.Personal Care Non-MedicarePersonal care payments are received from payor clients including st

118、ate and local governmental agencies,managed care organizations,commercial insurers and private consumers,based on rates that are eithercontractual or fixed by legislation.Controls over Our Business System InfrastructureWe establish and maintain processes and controls over coding,clinical operations,

119、billing,patient recertificationsand compliance to help monitor and promote compliance with Medicare requirements.Coding Specified diagnosis codes are assigned to each of our patients based on their particular healthcondition and ailment(such as diabetes,coronary artery disease or congestive heart fa

120、ilure).Becausecoding regulations are complex and are subject to frequent change,we maintain controls surroundingour coding process.In order to reduce associated risk of coding failures,we provide coding trainingand annual update training to clinical assessment managers;provide coding training during

121、 orientationfor new employees;provide monthly specialized coding education;obtain outside expert codinginstruction;have certified coders code all patient outcome and assessment information sets(“OASIS”)and have automated coding edits based on pre-defined compliance metrics in our point of care(“POC”

122、)system.Clinical Operations Regulatory requirements allow patients to be admitted to home health care ifthey are considered homebound and require skilled nursing,physical therapy or speech therapyservices.These clinical services include:educating the patient about their disease;assessment andobserva

123、tion of disease status;delivery of clinical skills such as wound care;administration of injectionsor intravenous fluids;management and evaluation of a patients plan of care;physical therapy servicesto assist patients with functional limitations and speech therapy services for speech or swallowingdis

124、orders.In order to help monitor and promote compliance with regulatory requirements,we provideeducation on Medicare Guidelines and Conditions of participation;hold recurrent homecare regulatoryeducation;utilize outside expert regulatory services;and have a toll-free hotline to offer additionalassist

125、ance.Billing We maintain controls over our billing processes to help promote accurate and completebilling.In order to promote the accuracy and completeness of our billing,we have annual billingcompliance testing;use formalized billing attestations;limit access to billing systems;hold weeklyoperation

126、al meetings;use automated daily billing operational indicators;and take prompt correctiveaction with employees who knowingly fail to follow our billing policies and procedures in accordancewith a well-publicized“Zero Tolerance Policy”.Patient Recertification In order to be recertified for an additio

127、nal episode of care,a patient mustcontinue to meet qualifying criteria and have a continuing medical need.This could be caused bychanges in the patients condition requiring changes to the patients medical regimen or modified careprotocols within the episode of care.The patients progress towards goal

128、s is evaluated prior torecertification.As with the initial episode of care,a recertification requires orders from the patientsphysician.Before any employee recommends recertification to a physician,we conduct a care centerlevel,multidisciplinary care team conference.6Compliance The quality and reput

129、ation of our personnel and operations are critical to our success.We develop,implement and maintain ethics,compliance and quality improvement programs as acomponent of the centralized corporate services provided to our home health and hospice care centers.Our ethics and compliance program includes a

130、 Code of Ethical Business Conduct for our employees,officers,directors and affiliates and a process for reporting regulatory or ethical concerns to our ChiefCompliance Officer through a confidential hotline,which is augmented by exit interviews of departingemployees and monthly interviews with rando

131、mly-selected,current employees.We promote a cultureof compliance within our company through persistent messages from our senior leadership to ouremployees stressing the importance of strict compliance with legal requirements and company policiesand procedures.We also employ a comprehensive complianc

132、e training program that includesmandatory compliance training and testing for all new employees upon hire and annually for all staffthereafter.In addition to our compliance training,we also conduct numerous proactive,complianceaudits focusing on key risk areas,which are conducted by clinical auditor

133、s who work for ourCompliance Department.Our Regulatory EnvironmentWe are highly regulated by federal,state and local authorities.Regulations and policies frequently change,andwe monitor changes through trade and governmental publications and associations.Our home health and hospicesubsidiaries are c

134、ertified by CMS and therefore are eligible to receive payment for services through the Medicaresystem.We are also subject to federal,state and local laws and regulations dealing with issues such as occupationalsafety,employment,medical leave,insurance,civil rights,discrimination,building codes,envir

135、onmental issuesand adverse event reporting and recordkeeping.Federal,state and local governments are expanding the numberof regulatory requirements on businesses.We have set forth below a discussion of the regulations that we believe most significantly affect our home healthand hospice businesses.Li

136、censure,Certificates of Need(CON)and Permits of Approval(POA)Home health and hospice care centers operate under licenses granted by the health authorities of their respectivestates.Additionally,certain states,including a number in which we operate,carefully restrict new entrants intothe market based

137、 on demographic and/or demonstrative usage of additional providers.In such states,expansionby existing providers or entry into the market by new providers is permitted only where a given amount of unmetneed exists,resulting either from population increases or a reduction in competing providers.These

138、 states rationthe entry of new providers or services and the expansion of existing providers or services in their marketsthrough a CON process,which is periodically evaluated and updated as required by applicable state law.Currently,state health authorities in 17 states and the District of Columbia

139、require a CON or,in the State ofArkansas,a POA,in order to establish and operate a home health care center,and state health authorities in 12states and the District of Columbia require a CON to operate a hospice care center.We operate home health care centers in the following CON states:Alabama,Arka

140、nsas(POA),Georgia,Kentucky,Maryland,Mississippi,New Jersey,New York,North Carolina,South Carolina,Tennessee and WestVirginia,as well as the District of Columbia.We provide hospice related services in the following CON states:Alabama,Maryland,North Carolina,Tennessee and West Virginia.In every state

141、where required,our care centers possess a license and/or CON or POA issued by the state healthauthority that determines the local service areas for the home health or hospice care center.In general,theprocess for opening a home health or hospice care center begins by a provider submitting an applica

142、tion forlicensure and certification to the state and federal regulatory bodies,which is followed by a testing period of7transmitting data from the applicant to CMS.Once this process is complete,the care center receives a provideragreement and corresponding number and can begin billing for services t

143、hat it provides unless a CON or POA isrequired.For those states that require a CON or POA,the provider must also complete a separate applicationprocess before billing can commence and receive required approvals for capital expenditures exceeding amountsabove prescribed thresholds.State CON and POA l

144、aws generally provide that,prior to the addition of new capacity,the construction of newfacilities or the introduction of new services,a designated state health planning agency must determine that aneed exists for those beds,facilities or services.The process is intended to promote comprehensive hea

145、lth careplanning,assist in providing high-quality health care at the lowest possible cost and avoid unnecessaryduplication by ensuring that only those health care facilities and operations that are needed will be built andopened.Medicare ParticipationOur care centers must comply with regulations pro

146、mulgated by the United States Department of Health andHuman Services and CMS in order to participate in the Medicare program and receive Medicare payments.Among other things,these regulations,known as“conditions of participation(“COPs”),”relate to the type offacility,its personnel and its standards

147、of medical care,as well as its compliance with state and local laws andregulations.CMS has adopted alternative sanction enforcement options which allow CMS(i)effective as ofJuly 1,2013,to impose temporary management,direct plans of correction,or direct training,and(ii)effective asof July 1,2014,to i

148、mpose payment suspensions and civil monetary penalties in each case on providers out ofcompliance with the conditions of participation.CMS issued a proposed rule on October 9,2014,revising thecurrent home health conditions of participation.We provided public comments on the proposed changes.OnJanuar

149、y 12,2017,CMS finalized the new COPs and published them in the Federal Register.The new COPs arecurrently scheduled to go into effect on July 13,2017,though that could be further delayed.CMS has engaged a number of third party firms,including Recovery Audit Contractors(“RACs”),ProgramSafeguard Contr

150、actors(“PSCs”),Zone Program Integrity Contractors(“ZPICs”)and Medicaid IntegrityContributors(“MICs”),to conduct extensive reviews of claims data and state and Federal Government healthcare program laws and regulations applicable to healthcare providers.These audits evaluate the appropriatenessof bil

151、lings submitted for payment.In addition to identifying overpayments,audit contractors can refer suspectedviolations of law to government enforcement authorities.Federal and State Anti-Fraud and Anti-Kickback LawsAs a provider under the Medicare and Medicaid systems,we are subject to various anti-fra

152、ud and abuse laws,including the Federal health care programs anti-kickback statute and,where applicable,its state lawcounterparts.Subject to certain exceptions,these laws prohibit any offer,payment,solicitation or receipt of anyform of remuneration to induce or reward the referral of business payabl

153、e under a government health careprogram or in return for the purchase,lease,order,arranging for,or recommendation of items or services coveredunder a government health care program.Affected government health care programs include any health careplans or programs that are funded by the United States

154、government(other than certain federal employee healthinsurance benefits/programs),including certain state health care programs that receive federal funds,such asMedicaid.A related law forbids the offer or transfer of anything of value,including certain waivers ofco-payment obligations and deductible

155、 amounts,to a beneficiary of Medicare or Medicaid that is likely toinfluence the beneficiarys selection of health care providers,again subject to certain exceptions.Violations ofthe anti-fraud and abuse laws can result in the imposition of substantial civil and criminal penalties and,potentially,exc

156、lusion from furnishing services under any government health care program.In addition,the statesin which we operate generally have laws that prohibit certain direct or indirect payments or fee-splittingarrangements between health care providers where they are designed to obtain the referral of patien

157、ts from aparticular provider.8Stark LawsCongress adopted legislation in 1989,known as the“Stark Law,”that generally prohibited a physician fromordering clinical laboratory services for a Medicare beneficiary where the entity providing that service has afinancial relationship(including direct or indi

158、rect ownership or compensation relationships)with the physician(or a member of his/her immediate family),and further prohibits such entity from billing for or receivingpayment for such services,unless a specified exception is available.The Stark Law was amended throughadditional legislation,known as

159、“Stark II,”which became effective January 1,1993.That legislation extendedthe Stark Law prohibitions beyond clinical laboratory services to a more extensive list of statutorily defined“designated health services,”which includes,among other things,home health services,durable medicalequipment and out

160、patient prescription drugs.Violations of the Stark Law result in payment denials and may alsotrigger civil monetary penalties and program exclusion.Several of the states in which we conduct business havealso enacted statutes similar in scope and purpose to the federal fraud and abuse laws and the St

161、ark Laws.Thesestate laws may mirror the Federal Stark Laws or may be different in scope.The available guidance andenforcement activity associated with such state laws varies considerably.Federal and State Privacy and Security LawsThe Administrative Simplification provisions of the Health Insurance P

162、ortability and Accountability Act of 1996,as amended(“HIPAA”),directed that the Secretary of the U.S.Department of Health and Human Services(“HHS”)promulgate regulations prescribing standard requirements for electronic health care transactions andestablishing protections for the privacy and security

163、 of individually identifiable health information,known as“protected health information.”The HIPAA transactions regulations establish form,format and data contentrequirements for most electronic health care transactions,such as health care claims that are submittedelectronically.The HIPAA privacy reg

164、ulations establish comprehensive requirements relating to the use anddisclosure of protected health information.The HIPAA security regulations establish minimum standards for theprotection of protected health information that is stored or transmitted electronically.Violations of the privacyand secur

165、ity regulations are punishable by civil and criminal penalties.The American Recovery and Economic Reinvestment Act of 2009(“ARRA”),signed into law by PresidentObama on February 17,2009,contained significant changes to the privacy and security provisions of HIPAA,including major changes to the enforc

166、ement provisions.Among other things,ARRA significantly increased theamount of civil monetary penalties that can be imposed for violations of HIPAA.ARRA also authorized stateattorneys general to bring civil enforcement actions under HIPAA.These enhanced penalties and enforcementprovisions went into e

167、ffect immediately upon enactment of ARRA.ARRA also required that HHS promulgateregulations requiring that certain notifications be made to individuals,to HHS and potentially to the media in theevent of breaches of the privacy of protected health information.These breach notification regulations went

168、 intoeffect on September 23,2009,and HHS began to enforce violations on February 22,2010.Violations of thebreach notification provisions of HIPAA can trigger the increased civil monetary penalties described above.ARRAs numerous other changes to HIPAA have delayed effective dates and require the issu

169、ance ofimplementing regulations by HHS.The Health Information Technology for Economic and Clinical Health(“HITECH”)Act was enacted in conjunction with ARRA.On January 25,2013,HHS issued final modificationsto the HIPAA Privacy,Security,and Enforcement Rules mandated by the HITECH Act,which had beenpr

170、eviously issued as a proposed rule on July 14,2010.Among other things,these modifications make businessassociates of covered entities directly liable for compliance with certain HIPAA requirements,strengthen thelimitations on the use and disclosure of protected health information without individual

171、authorizations,and adoptthe additional HITECH Act enhancements,including enforcement of noncompliance with HIPAA due to willfulneglect.The changes to HIPAA enacted as part of ARRA reflect a Congressional intent that HIPAAs privacyand security provisions be more strictly enforced.It is likely that th

172、ese changes will stimulate increasedenforcement activity and enhance the potential that health care providers will be subject to financial penalties forviolations of HIPAA.9In addition to the federal HIPAA regulations,most states also have laws that protect the confidentiality of healthinformation.A

173、lso,in response to concerns about identity theft,many states have adopted so-called“securitybreach”notification laws that may impose requirements regarding the safeguarding of personal information,suchas social security numbers and bank and credit card account numbers,and that impose an obligation t

174、o notifypersons when their personal information has or may have been accessed by an unauthorized person.Some statesecurity breach notification laws may also impose physical and electronic security requirements.Violation ofstate security breach notification laws can trigger significant monetary penal

175、ties.The False Claims ActThe Federal False Claims Act gives the Federal Government an additional way to police false bills or requests forpayment for health care services.Under the False Claims Act,the government may fine any person whoknowingly submits,or participates in submitting,claims for payme

176、nt to the Federal Government which are falseor fraudulent,or which contain false or misleading information.Any person who knowingly makes or uses afalse record or statement to avoid paying the Federal Government,or knowingly conceals or avoids an obligationto pay money to the Federal Government,may

177、also be subject to fines under the False Claims Act.Under theFalse Claims Act,the term“person”means an individual,company,or corporation.The Federal Government haswidely used the False Claims Act to prosecute Medicare and other governmental program fraud in areas such asviolations of the Federal ant

178、i-kickback statute or the Stark Laws,coding errors,billing for services not provided,and submitting false cost reports.The False Claims Act has also been used to prosecute people or entities that billservices at a higher reimbursement rate than is allowed and that bill for care that is not medically

179、 necessary.Inaddition to government enforcement,the False Claims Act authorizes private citizens to bring qui tam or“whistleblower”lawsuits,greatly extending the practical reach of the False Claims Act.The penalty for violationof the False Claims Act is a minimum of$5,500 for each fraudulent claim p

180、lus three times the amount ofdamages caused to the government as a result of each fraudulent claim.The Fraud Enforcement and Recovery Act of 2009(“FERA”)amended the False Claims Act with the intent ofenhancing the powers of government enforcement authorities and whistleblowers to bring False Claims

181、Actcases.In particular,FERA attempts to clarify that liability may be established not only for false claims submitteddirectly to the government,but also for claims submitted to government contractors and grantees.FERA alsoseeks to clarify that liability exists for attempts to avoid repayment of over

182、payments,including improperretention of federal funds.FERA also included amendments to False Claims Act procedures,expanding thegovernments ability to use the Civil Investigative Demand process to investigate defendants,and permittinggovernment complaints in intervention to relate back to the filing

183、 of the whistleblowers original complaint.FERA is likely to increase both the volume and liability exposure of False Claims Act cases brought againsthealth care providers.On February 12,2016,CMS finalized the so-called“60-day rule,”which is the obligation of providers to reportand return Medicare ov

184、erpayments within 60 days of identifying the same.A provider who retains overpaymentsbeyond 60 days may be liable under the False Claims Act.“Identification”is identified as when a person“has,orshould have through the exercise of reasonable diligence,”identified and quantified the amount of anoverpa

185、yment.The final rule also established a six year lookback period,meaning overpayments must be reportedand returned if a person identifies the overpayment within six years of the date the overpayment was received.Providers must report and return overpayments even if they did not cause the overpayment

186、.In June 2016,the Department of Justice issued a rule that more than doubles civil monetary penalties under theFalse Claims Act.These increases took effect on August 1,2016 and apply to False Claims Act violations afterNovember 2,2015.In addition to the False Claims Act,the Federal Government may us

187、e several criminal statutes to prosecute thesubmission of false or fraudulent claims for payment to the Federal Government.Many states have similar falseclaims statutes that impose liability for the types of acts prohibited by the False Claims Act.As part of the Deficit10Reduction Act of 2005(the“DR

188、A”),Congress provided states an incentive to adopt state false claims actsconsistent with the Federal False Claims Act.Additionally,the DRA required providers who receive$5 millionor more annually from Medicaid to include information on Federal and state false claims acts,whistleblowerprotections an

189、d the providersown policies on detecting and preventing fraud in their written employee policies.Civil Monetary PenaltiesThe United States Department of Health and Human Services may impose civil monetary penalties upon anyperson or entity who presents,or causes to be presented,certain ineligible cl

190、aims for medical items or services.The amount of penalties varies,depending on the offense,from$2,000 to$50,000 per violation.In addition,persons who have been excluded from the Medicare or Medicaid program and still retain ownership in aparticipating entity,or who contract with excluded persons,may

191、 be penalized.Penalties also are applicable incertain other cases,including violations of the Federal anti-kickback statute,Stark Law or False Claims Act,andpayments to limit certain patient services and improper execution of statements of medical necessity.FDA RegulationThe U.S.Food and Drug Admini

192、stration(“FDA”)regulates medical device user facilities,which include homehealth care providers.FDA regulations require user facilities to report patient deaths and serious injuries to FDAand/or the manufacturer of a device used by the facility if the device may have caused or contributed to the dea

193、thor serious injury of any patient.FDA regulations also require user facilities to maintain files related to adverseevents and to establish and implement appropriate procedures to ensure compliance with the above reporting andrecordkeeping requirements.User facilities are subject to FDA inspection,a

194、nd noncompliance with applicablerequirements may result in warning letters or sanctions including civil monetary penalties,injunction,productseizure,criminal fines and/or imprisonment.Patient Protection and Affordable Care ActIn March 2010,comprehensive health care reform legislation was signed into

195、 law in the United States throughthe passage of the Patient Protection and Affordable Care Act and the Health Care and Education ReconciliationAct(collectively,“PPACA”).Since the 2016 election,it has been widely discussed that the PPACA will be“repealed and replaced.”The effect of any major modifica

196、tion or repeal of the PPACA on our business,operations,or financial condition cannot be predicted at this time.Even as of December 31,2016,it is difficult to predict the full impact of PPACA due to the laws complexity andphased in effective dates,as well as our inability to foresee how CMS and other

197、 participants in the health careindustry will respond to the choices available to them under the law.PPACA calls for a number of changes to bemade over time that will likely have a significant impact upon the health care delivery system.For example,PPACA mandates decreases in home health reimburseme

198、nt rates,including a four-year phased rebasing of thehome health payment system that began in 2014 and will continue through 2017.These reimbursement changesare described in detail in Part II,Item 7,“Managements Discussion and Analysis of Financial Condition andResults of Operations:Overview Economi

199、c and Industry Factors.”PPACA has established a number of newrequirements impacting our business operations,and promises to give rise to other changes that couldsignificantly impact our businesses in the future.For example,PPACA also mandates the creation of a homehealth value-based purchasing progr

200、am,the development of quality measures,and the testing of alternativepayment and delivery models,including ACOs and the Bundled Payments for Care Improvement initiative.SeePart I,Item 1A,“Risk Factors:Risks Related to Laws and Government Regulations”for a more completediscussion of PPACA and the ris

201、ks it presents to our businesses.11The Improving Medicare Post-Acute Care Transformation ActIn October 2014,the Improving Medicare Post-Acute Care Transformation Act(“IMPACT Act”)was signed intolaw requiring the reporting of standardized patient assessment data for quality improvement,payment anddis

202、charge planning purposes across the spectrum of post-acute care providers(“PACs”),including skilled nursingfacilities and home health agencies.The IMPACT Act requires PACs to begin reporting:(1)standardized patientassessment data at admission and discharge by October 1,2018 for post-acute care provi

203、ders,including skillednursing facilities and by January 1,2019 for home health agencies;(2)new quality measures,includingfunctional status,skin integrity,medication reconciliation,incidence of major falls,and patient preferenceregarding treatment and discharge at various intervals between October 1,

204、2016 and January 1,2019;and(3)resource use measures,including Medicare spending per beneficiary,discharge to community,andhospitalization rates of potentially preventable readmissions by October 1,2016 for post-acute care providers,including skilled nursing facilities and by October 1,2017 for home

205、health agencies.Failure to report such datawhen required would subject a facility to a two percent reduction in market basket prices then in effect.The IMPACT Act further requires HHS and the Medicare Payment Advisory Commission(“MedPAC”),acommission chartered by Congress to advise it on Medicare pa

206、yment issues,to study alternative PAC paymentmodels,including payment based upon individual patient characteristics and not care setting,with correspondingCongressional reports required based on such analysis.The IMPACT Act also included provisions impactingMedicare-certified hospices,including:(1)i

207、ncreasing survey frequency for Medicare-certified hospices to onceevery 36 months;(2)imposing a medical review process for facilities with a high percentage of stays in excess of180 days;and(3)updating the annual aggregate Medicare payment cap.The Comprehensive Care for Joint Replacement Bundled Pay

208、ment ProgramIn November 2015,CMS announced the final Comprehensive Care for Joint Replacement bundled paymentprogram(“CJR Program”).The CJR Program implements a mandatory payment model in which acute carehospitals in 67 metropolitan statistical areas will receive a bundled payment for all inpatient

209、care provided inconnection with a lower extremity joint replacement or reattachment procedure,as well as for all related careprovided within a 90-day episode of care following discharge from such hospital.The bundled payment will bein lieu of separate payments provided to post-acute healthcare provi

210、ders for services provided within such 90-dayepisode of care.The CJR Program will test this payment model over five performance periods between April 1,2016 and December 31,2020 to see if Medicare expenditures can be reduced while at the same time improvingcare coordination and preserving or enhanci

211、ng the quality of care provided to Medicare beneficiaries.Pre-Claim Review Demonstration for Home Health ServicesOn June 8,2016,CMS announced the implementation of a three year Medicare pre-claim review demonstrationfor home health services provided to beneficiaries in the states of Illinois,Florida

212、,Texas,Michigan andMassachusetts.The demonstration began in Illinois in August 2016 and will expand to Florida for home healthservices that begin on or after April 1,2017.CMS is expected to announce staggered start dates for the otherstates in the coming months.The pre-claim review is a process thro

213、ugh which a request for provisionalaffirmation of coverage is submitted for review before a final claim is submitted for payment.The pre-claimreview demonstration may result in an increase in administrative costs or reimbursement delays related to homehealth services in such states,which could have

214、an adverse effect on our results of operations and cash flow.Home Health Groupings ModelIn the Calendar Year 2017 Home Health Proposed Rule,released in July 2016,CMS provided informationregarding potential changes to the Home Health Prospective Payment System(“HHPPS”),known as the HomeHealth Groupin

215、gs Model(“HHGM”).Among a number of major differences from the current payment system,the HHGM would distinguish between referrals from institutions and those from the community,with12community referrals receiving lower payments.In addition,a 60-day episode would consist of two 30-dayperiods,each pai

216、d separately,with the initial 30-day period paid higher than any other period.CMS did notsolicit comments at that time but noted that a more detailed Technical Report would be released with additionalresearch and analysis conducted on the HHGM.The HHGM Technical Report was issued in December 2016.We

217、are closely monitoring this potential change to the HHPPS and have joined industry stakeholders in directlyengaging CMS on this concept and its impact on home health agencies.CMS has not indicated if HHGM will beincluded in the Calendar Year 2018 Home Health Proposed Rule which will be released in m

218、id-summer 2017.Atthis time we are unable to determine the impact this potential change in reimbursement methodology might haveon Amedisys.Our CompetitorsThere are few barriers to entry in the home health and hospice jurisdictions that do not require certificates ofneed or permits of approval.Our pri

219、mary competition in these jurisdictions comes from local privately andpublicly-owned and hospital-owned health care providers.We compete based on the availability of personnel,thequality of services,expertise of visiting staff,and,in certain instances,on the price of our services.In addition,we comp

220、ete with a number of non-profit organizations that finance acquisitions and capital expenditures on atax-exempt basis or receive charitable contributions that are unavailable to us.Available InformationOur company website address is .We use our website as a channel of distribution forimportant compa

221、ny information.Important information,including press releases,analyst presentations andfinancial information regarding our company,is routinely posted on and accessible on the Investor Relationssubpage of our website,which is accessible by clicking on the tab labeled“Investors”on our website home pa

222、ge.Visitors to our website can also register to receive automatic e-mail and other notifications alerting them whennew information is made available on the“Investors”subpage of our website.In addition,we make available onthe Investors subpage of our website(under the link“SEC Filings”),free of charg

223、e,our annual reports onForm 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,ownership reports on Forms 3,4 and 5and any amendments to those reports as soon as reasonably practicable after we electronically file or furnish suchreports with the SEC.Further,copies of our Certificate of

224、Incorporation and Bylaws,our Code of EthicalBusiness Conduct,our Corporate Governance Guidelines and the charters for the Audit,Compensation,Compliance and Ethics,Nominating and Corporate Governance and Quality of Care Committees of our Boardare also available on the Investors subpage of our website

225、(under the link“Corporate Governance”).Reference toour website does not constitute incorporation by reference of the information contained on the website andshould not be considered part of this document.Additionally,the public may read and copy any of the materials we file with the SEC at the SECs

226、PublicReference Room at 100 F Street,NE,Room 1580,Washington,D.C.20549.Information on the operation of thePublic Reference Room may be obtained by calling the SEC at(800)SEC-0330.Our electronically filed reportscan also be obtained on the SECs internet site at http:/www.sec.gov.13ITEM 1A.RISK FACTOR

227、SThe risks described below,and risks described elsewhere in this Form 10-K,could have a material adverse effecton our business and consolidated financial condition,results of operations and cash flows and the actualoutcome of matters as to which forward-looking statements are made in this Form 10-K.

228、The risk factorsdescribed below and elsewhere in this Form 10-K are not the only risks faced by Amedisys.Our business andconsolidated financial condition,results of operations and cash flows may also be materially adversely affectedby factors that are not currently known to us,by factors that we cur

229、rently consider immaterial or by factors thatare not specific to us,such as general economic conditions.If any of the following risks are actually realized,our business and consolidated financial condition,results ofoperations and cash flows could be materially adversely affected.In that case,the tr

230、ading price of our commonstock could decline.You should refer to the explanation of the qualifications and limitations on forward-looking statements under“Special Caution Concerning Forward-Looking Statements.”All forward-looking statements made by us arequalified by the risk factors described below

231、.Risks Related to ReimbursementFederal and state changes to reimbursement and other aspects of Medicare and Medicaid could have amaterial adverse effect on our business and consolidated financial condition,results of operations and cashflows.Our net service revenue is primarily derived from Medicare

232、,which accounted for 78%,80%and 82%of ourrevenue during 2016,2015 and 2014,respectively.Payments received from Medicare are subject to changesmade through federal legislation.When such changes are implemented,we must also modify our internal billingprocesses and procedures accordingly,which can requ

233、ire significant time and expense.These changes,as furtherdetailed in Part I,Item 1,“Business:Payment for Our Services,”can include changes to base episode paymentsand adjustments for home health services,changes to cap limits and per diem rates for hospice services andchanges to Medicare eligibility

234、 and documentation requirements or changes designed to restrict utilization.Anysuch changes,including retroactive adjustments,adopted in the future by the Center for Medicare and MedicaidServices(“CMS”)could have a material adverse effect on our business and consolidated financial condition,results

235、of operations and cash flows.In April of 2015,Congress passed and President Obama signed the so-called“doc fix”in the form of theMedicare Access and CHIP Reauthorization Act of 2015(“MACRA”).This law replaces a long-standingphysician reimbursement formula with statutorily prescribed physician paymen

236、t updates and provisions.MACRA provides for an increase of 3%of the payment amount otherwise made for home health servicesfurnished in rural areas,and sets Medicare reimbursements for post-acute care providers to increase by 1.0%infiscal year 2018.On September 1,2016,CMS published annual changes in

237、Medicaid hospice payment rates.As finalized,CMSestimates hospices will see a 2.1%($350 million)increase in Medicare payments for fiscal year 2017,whichreflects a market basket update of 2.7%,reduced by 0.6%as required by PPACA.CMS will reimburse hospiceproviders with two routine home care rates,to p

238、rovide separate payment rates for the first 60 days of care andcare beyond 60 days,a change that was instituted in 2016.In addition,the rule finalizes changes to the hospicequality reporting program,including new quality measures.The final rule also describes a potential futureenhanced data collecti

239、on instrument as well as plans to publicly display quality measures and other hospice databeginning in the middle of 2017.As of December 31,2016,we estimate our impact of the 2017 final rule to bean increase of approximately 2%.In October 2016,CMS issued a final rule to update and revise Medicare ho

240、me health reimbursement rates forcalendar year 2017.The final rule implements the final year of the four-year phase-in of the rebasing adjustments14to the home health prospective payment system rates as required by the PPACA.CMS also provides an update tothe Home Health Quality Reporting Program.CMS

241、 estimates that the net impact of the payment provisions of thefinal rule will result in a decrease of 0.7%in reimbursement to home health providers.The decrease is the resultof a 2.8%market basket increase minus 0.3%for productivity,a 2.3%decrease for the last year in the four-yearrebasing cycle an

242、d a 0.97%decrease for the second year in a three-year series of cuts for nominal case mixgrowth.Our impact could differ depending on differences in the wage index and the impact of coding and outlierchanges.As of December 31,2016,we estimate our impact of the 2017 final rule to be a decrease ofappro

243、ximately 2%.On February 2,2016 CMS published a final rule adding new requirements for Medicaid home health services.Among other things,the final rule requires that for the initial ordering of home health services,the physicianmust document that a face-to-face encounter that is related to the primary

244、 reason the beneficiary requires homehealth services occurred no more than 90 days before or 30 days after the start of services.The final rule requiresthat for the initial ordering of certain medical equipment,the physician or authorized non-physician practitionermust document that a face-to-face e

245、ncounter that is related to the primary reason the beneficiary requires medicalequipment occurred no more than 6 months prior to the start of services.Although the final rules stated effectivedate is July 1,2016,CMS created an exception for state legislation by giving state agencies that require sta

246、telegislation to until July 1,2017 or July 1,2018 to publish requirements imposed by the rule.There are continuing efforts to reform governmental health care programs that could result in major changes inthe health care delivery and reimbursement system on a national and state level,including change

247、s directlyimpacting the reimbursement systems for our home health and hospice care centers.Though we cannot predictwhat,if any,reform proposals will be adopted,health care reform and legislation may have a material adverseeffect on our business and our financial condition,results of operations and c

248、ash flows through decreasingpayments made for our services.We could be affected adversely by the continuing efforts of governmental payors to contain health care costs.Wecannot assure you that reimbursement payments under governmental payor programs,including Medicaresupplemental insurance policies,

249、will remain at levels comparable to present levels or will be sufficient to coverthe costs allocable to patients eligible for reimbursement pursuant to these programs.Any such changes couldhave a material adverse effect on our business and consolidated financial condition,results of operations andca

250、sh flows.Our hospice operations are subject to two annual Medicare caps.If such caps were to be exceeded by any ofour hospice providers,our business and consolidated financial condition,results of operations and cash flowscould be materially adversely affected.With respect to our hospice operations,

251、overall payments made by Medicare to each provider number(generallycorresponding to a hospice care center)are subject to an inpatient cap amount and an overall payment cap,whichare calculated and published by the Medicare fiscal intermediary on an annual basis covering the period fromNovember 1 thro

252、ugh October 31.If payments received by any one of our hospice provider numbers exceedseither of these caps,we may be required to reimburse the Medicare program for payments received in excess ofthe caps,which could have a material adverse effect on our business and consolidated financial condition,r

253、esultsof operations and cash flows.Quality reporting requirements may negatively impact Medicare reimbursement.Hospice quality reporting was mandated by PPACA,which directs the Secretary to establish quality reportingrequirements for hospice programs.For fiscal year 2014,and each subsequent year,fai

254、lure to submit requiredquality data will result in a 2 percentage point reduction to the market basket percentage increase for that fiscalyear.This quality reporting program is currently“pay-for-reporting,”meaning it is the act of submitting data thatdetermines compliance with program requirements.1

255、5Similarly,in the Calendar Year 2015 Home Health Final Rule,CMS proposed to establish a new“Pay-for-Reporting Performance Requirement”with which provider compliance with quality reporting programrequirements can be measured.Home health agencies that do not submit quality measure data to CMS are subj

256、ectto a 2.0%reduction in their annual home health payment update percentage.Home health agencies are requiredto report prescribed quality assessment data for a minimum of 70.0%of all patients with episodes of care thatoccur on or after July 1,2015.This compliance threshold increases by 10.0%in each

257、of two subsequent periods-i.e.,for episodes beginning on or after July 1,2016 and before June 30,2017,home health agencies must scoreat least 80%,and for episodes beginning on or after July 1,2017 and thereafter,the required performance level isat least 90%.The Improving Medicare Post-Acute Care Tra

258、nsformation Act of 2014(the“IMPACT Act”)requires thesubmission of standardized data by home health agencies and other providers.Specifically,the IMPACT Actrequires,among other significant activities,the reporting of standardized patient assessment data with regard toquality measures,resource use,and

259、 other measures.Failure to report data as required will subject providers to a2%reduction in market basket prices then in effect.Additionally,reporting activities associated with theIMPACT Act are anticipated to be quite burdensome.There can be no assurance that all of our agencies will continue to

260、meet quality reporting requirements in thefuture which may result in one or more of our agencies seeing a reduction in its Medicare reimbursements.Regardless,we,like other healthcare providers,are likely to incur additional expenses in an effort to comply withadditional and changing quality reportin

261、g requirements.Any economic downturn,deepening of an economic downturn,continued deficit spending by the FederalGovernment or state budget pressures may result in a reduction in payments and covered services.Adverse developments in the United States could lead to a reduction in Federal Government ex

262、penditures,including governmentally funded programs in which we participate,such as Medicare and Medicaid.In addition,if at any time the Federal Government is not able to meet its debt payments unless the federal debt ceiling israised,and legislation increasing the debt ceiling is not enacted,the Fe

263、deral Government may stop or delaymaking payments on its obligations,including funding for government programs in which we participate,such asMedicare and Medicaid.Failure of the government to make payments under these programs could have amaterial adverse effect on our business and consolidated fin

264、ancial condition,results of operations and cash flows.Further,any failure by the United States Congress to complete the federal budget process and fund governmentoperations may result in a Federal Government shutdown,potentially causing us to incur substantial costswithout reimbursement under the Me

265、dicare program,which could have a material adverse effect on our businessand consolidated financial condition,results of operations and cash flows.As an example,the failure of the 2011Joint Select Committee to meet its Deficit Reduction goal resulted in an automatic reduction in Medicare homeand hos

266、pice payments of 2%beginning April 1,2013.Historically,state budget pressures have resulted in reductions in state spending.Given that Medicaid outlays area significant component of state budgets,we can expect continuing cost containment pressures on Medicaidoutlays for our services.In addition,sust

267、ained unfavorable economic conditions may affect the number of patients enrolled in managedcare programs and the profitability of managed care companies,which could result in reduced payment rates andcould have a material adverse effect on our business and consolidated financial condition,results of

268、 operationsand cash flows.Future cost containment initiatives undertaken by private third party payors may limit our future revenue andprofitability.Our non-Medicare revenue and profitability are affected by continuing efforts of third party payors to maintain orreduce costs of health care by loweri

269、ng payment rates,narrowing the scope of covered services,increasing case16management review of services and negotiating pricing.There can be no assurance that third party payors willmake timely payments for our services,and there is no assurance that we will continue to maintain our currentpayor or

270、revenue mix.We are continuing our efforts to develop our non-Medicare sources of revenue and anychanges in payment levels from current or future third party payors could have a material adverse effect on ourbusiness and consolidated financial condition,results of operations and cash flows.Risks Rela

271、ted to Laws and Government RegulationsWe are operating under a Corporate Integrity Agreement.Violations of this agreement could result insubstantial penalties or exclusion from participation in the Medicare program.On April 23,2014,with no admissions of liability on our part,we entered into a settle

272、ment agreement with theU.S.Department of Justice relating to certain of our clinical and business operations.Concurrently with our entryinto this agreement,we entered into a Corporate Integrity Agreement(“CIA”)with the Office of InspectorGeneral-HHS(“OIG”).The CIA,which has a term of five years,form

273、alizes various aspects of our alreadyexisting ethics and compliance programs and contains other requirements designed to help ensure our ongoingcompliance with federal health care program requirements.Among other things,the CIA requires us to maintainour existing compliance program,executive complia

274、nce committee and compliance committee of the Board ofDirectors;provide certain compliance training;continue screening new and current employees to ensure they areeligible to participate in federal health care programs;engage an independent review organization(“IRO”)toperform certain auditing and re

275、views and prepare certain reports regarding our compliance with federal healthcare programs,our billing submissions to federal health care programs and our compliance and risk mitigationprograms;and provide certain reports and management certifications to the OIG.Additionally,the CIAspecifically req

276、uires that we report substantial overpayments that we discover we have received from the federalhealth care programs,as well as probable violations of federal health care laws.Upon breach of the CIA,wecould become liable for payment of certain stipulated penalties,or could be excluded from participa

277、tion infederal health care programs.Although we believe that we are currently in compliance with the CIA,anyviolations of the agreement could have a material adverse effect on our business and consolidated financialcondition,results of operations and cash flows.Pending civil litigation could have a

278、material adverse effect on the Company.We and certain of our current and former directors,senior executives and other employees are defendants in afederal securities class action.We are also a defendant in several class action lawsuits.See Part II,Item 8,Note 10 Commitments and Contingencies for a m

279、ore detailed description of these proceedings.These actionsremain in preliminary stages and it is not yet possible to assess their probable outcome or our potential liability,if any.We cannot provide any assurances that the legal and other costs associated with the defense of theseactions,the amount

280、 of time required to be spent by management on these matters and the ultimate outcome ofthese actions will not have a material adverse effect on our business and consolidated financial condition,resultsof operations and cash flows.Our insurance may not cover all of the costs associated with defendin

281、g the pending federal securities classaction,and any potential liability costs associated with this matter,and we maintain no insurance that coversany portion of the pending class action lawsuits.With respect to the pending securities class action,we may be obligated to indemnify(and advance legalex

282、penses to)both current and former officers,employees and directors in connection with this matter.Wemaintain directorsand officersliability insurance that we believe should cover a portion of the legal costs andpotential liability costs associated with this matter.However,such insurance coverage doe

283、s not extend to all ofthese expenditures,and the insurance limits may be insufficient even with respect to expenditures that wouldotherwise be covered.Furthermore,our insurance carriers may seek to deny coverage in this matter,in whichcase we may have to fund the indemnification amounts owed to such

284、 directors and officers ourselves.We do not17maintain any insurance that will cover any part of the class action lawsuits in which we are defendants.If ourinsurance coverage is denied or is not adequate,it may have a material adverse effect on our business andconsolidated financial condition,results

285、 of operations and cash flows.We are subject to extensive government regulation.Any changes to the laws and regulations governing ourbusiness,or to the interpretation and enforcement of those laws or regulations,could have a material adverseeffect on our business and consolidated financial condition

286、,results of operations and cash flows.Our industry is subject to extensive federal and state laws and regulations.See Part I,Item 1,“Our RegulatoryEnvironment”for additional information on such laws and regulations.Federal and state laws and regulationsimpact how we conduct our business,the services

287、 we offer and our interactions with patients,our employees andthe public and impose certain requirements on us such as:licensure and certification;adequacy and quality of health care services;qualifications of health care and support personnel;quality and safety of medical equipment;confidentiality,

288、maintenance and security issues associated with medical records and claims processing;relationships with physicians and other referral sources;operating policies and procedures;policies and procedures regarding employee relations;addition of facilities and services;billing for services;requirements

289、for utilization of services;documentation required for billing and patient care;andreporting and maintaining records regarding adverse events.These laws and regulations,and their interpretations,are subject to change.Changes in existing laws andregulations,or their interpretations,or the enactment o

290、f new laws or regulations could have a material adverseeffect on our business and consolidated financial condition,results of operations and cash flows by:increasing our administrative and other costs;increasing or decreasing mandated services;causing us to abandon business opportunities we might ha

291、ve otherwise pursued;decreasing utilization of services;forcing us to restructure our relationships with referral sources and providers;orrequiring us to implement additional or different programs and systems.Additionally,we are subject to various routine and non-routine reviews,audits and investiga

292、tions by theMedicare and Medicaid programs and other federal and state governmental agencies,which have various rightsand remedies against us if they establish that we have overcharged the programs or failed to comply withprogram requirements.Violation of the laws governing our operations,or changes

293、 in interpretations of thoselaws,could result in the imposition of fines,civil or criminal penalties,and the termination of our rights toparticipate in federal and state-sponsored programs and/or the suspension or revocation of our licenses.If webecome subject to material fines,or if other sanctions

294、 or other corrective actions are imposed on us,our businessand consolidated financial condition,results of operations and cash flows could be materially adversely affected.18We face periodic and routine reviews,audits and investigations under our contracts with federal and stategovernment agencies a

295、nd private payors,and these audits could have adverse findings that may negativelyimpact our business.As a result of our participation in the Medicare and Medicaid programs,we are subject to various governmentalreviews,audits and investigations to verify our compliance with these programs and applic

296、able laws andregulations.We also are subject to audits under various government programs,including the RAC,ZPIC,PSCand MIC programs as well as in accordance with the requirements of our CIA,in which third party firms engagedby CMS or by the Company conduct extensive reviews of claims data and medica

297、l and other records to identifypotential improper payments under the Medicare program.Private pay sources also reserve the right to conductaudits.If billing errors are identified in the sample of reviewed claims,the billing error can be extrapolated to allclaims filed which could result in a larger

298、overpayment than originally identified in the sample of reviewedclaims.Our costs to respond to and defend reviews,audits and investigations may be significant and could have amaterial adverse effect on our business and consolidated financial condition,results of operations and cash flows.Moreover,an

299、 adverse review,audit or investigation could result in:required refunding or retroactive adjustment of amounts we have been paid pursuant to the federal orstate programs or from private payors;state or federal agencies imposing fines,penalties and other sanctions on us;loss of our right to participa

300、te in the Medicare program,state programs,or one or more private payornetworks;ordamage to our business and reputation in various markets.These results could have a material adverse effect on our business and consolidated financial condition,results ofoperations and cash flows.If a care center fails

301、 to comply with the conditions of participation in the Medicare program,that care centercould be subjected to sanctions or terminated from the Medicare program.Each of our care centers must comply with required conditions of participation in the Medicare program.If wefail to meet the conditions of p

302、articipation at a care center,we may receive a notice of deficiency from theapplicable state surveyor.If that care center then fails to institute an acceptable plan of correction to remediatethe deficiency within the correction period provided by the state surveyor,that care center could be terminat

303、edfrom the Medicare program or subjected to alternative sanctions.CMS outlined its alternative sanctionenforcement options for home health care centers through a regulation published in 2012;under the regulation,CMS may impose temporary management,direct a plan of correction,direct training or impos

304、e paymentsuspensions and civil monetary penalties,in each case,upon providers who fail to comply with the conditions ofparticipation.Termination of one or more of our care centers from the Medicare program for failure to satisfy theprograms conditions of participation,or the imposition of alternativ

305、e sanctions,could disrupt operations,requiresignificant attention by management,or have a material adverse effect on our business and reputation andconsolidated financial condition,results of operations and cash flows.CMS issued a proposed rule on October 9,2014,revising the Medicare conditions of p

306、articipation for home health care centers across the industry,with anunknown effective date.We provided public comments on the proposed changes,but do not know at this timewhat effect the finalized revisions will have on our operations,and there can be no assurances that the revisionswill not have a

307、 material adverse effect on our business and consolidated financial condition,results of operationsand cash flows.We are subject to federal and state laws that govern our financial relationships with physicians and otherhealth care providers,including potential or current referral sources.We are req

308、uired to comply with federal and state laws,generally referred to as“anti-kickback laws,”that prohibitcertain direct and indirect payments or other financial arrangements between health care providers that are19designed to encourage the referral of patients to a particular provider for medical servi

309、ces.In addition to theseanti-kickback laws,the Federal Government has enacted specific legislation,commonly known as the“StarkLaw,”that prohibits certain financial relationships,specifically including ownership interests and compensationarrangements,between physicians(and the immediate family member

310、s of physicians)and providers ofdesignated health services,such as home health care centers,to whom the physicians refer patients.Some ofthese same financial relationships are also subject to additional regulation by states.Although we believe wehave structured our relationships with physicians and

311、other potential referral sources to comply with these lawswhere applicable,we cannot assure you that courts or regulatory agencies will not interpret state and federal anti-kickback laws and/or the Stark Law and similar state laws regulating relationships between health care providersand physicians

312、in ways that will adversely implicate our practices or that isolated instances of noncompliancewill not occur.Violations of federal or state Stark or anti-kickback laws could lead to criminal or civil fines orother sanctions,including denials of government program reimbursement or even exclusion fro

313、m participation ingovernmental health care programs,which could have a material adverse effect on our business and consolidatedfinancial condition,results of operations and cash flows.We may face significant uncertainty in the industry due to government health care reform.The health care industry in

314、 the United States is subject to fundamental changes due to ongoing health care reformefforts and related political,economic and regulatory influences.In March 2010,comprehensive health carereform legislation was signed into law in the United States through the passage of the Patient Protection andA

315、ffordable Health Care Act and the Health Care and Education Reconciliation Act(collectively,“PPACA”).However,it is difficult to predict the full impact of PPACA due to the laws complexity and phased-in effectivedates,as well as our inability to foresee how CMS and other participants in the health ca

316、re industry will respondto the choices available to them under the law.PPACA makes a number of changes to Medicare payment rates and also calls for a rebasing of the home healthpayment system that began in 2014 and will continue through 2017.These reimbursement changes are describedin detail in Part

317、 II,Item 7,“Managements Discussion and Analysis of Financial Condition and Results ofOperations:Overview Economic and Industry Factors.”Regulations implementing the provisions of the PPACA and related initiatives may similarly increase our costs,decrease our revenues,expose us to expanded liability

318、or require us to revise the ways in which we conduct ourbusiness.PPACA also calls for a number of other changes to be made over time that will likely have a significant impactupon the health care delivery system.For example,PPACA mandates creation of a home health value-basedpurchasing program,the d

319、evelopment of quality measures,and decreases in home health reimbursement rates,including rebasing,as further described in Part II,Item 7,“Managements Discussion and Analysis of FinancialCondition and Results of Operations:Overview Economic and Industry Factors.”In addition,various health care refor

320、m proposals similar to the federal reforms described above have alsoemerged at the state level,including in several states which we operate.We cannot predict with certainty whathealth care initiatives,if any,will be implemented at the state level,or what the ultimate effect of federal healthcare ref

321、orm or any future legislation or regulation may have on us or on our business and consolidated financialcondition,results of operations and cash flows.In addition to impacting our Medicare businesses,PPACA may also significantly affect our non-Medicarebusinesses.PPACA makes many changes to the under

322、writing and marketing practices of private payors.Theresulting economic pressures could prompt these payors to seek to lower their rates of reimbursement for theservices we provide.At this time,it is not possible to estimate what impact PPACA may have on ournon-Medicare businesses.20Finally,efforts

323、to repeal or substantially modify provisions of the PPACA continue in Congress.The ultimateoutcomes of legislative efforts to repeal,substantially amend,eliminate or reduce funding for the PPACA isunknown.While these attempts have not been successful to date,the results of the Presidential and Congr

324、essionalelections in 2016 could have a significant impact on future efforts to amend or repeal PPACA.In addition to theprospect for legislative repeal or revision,the President and members of his administration hostile to the PPACAcould seek to impose substantial changes upon the PPACA through admin

325、istrative action,including revisedregulation and other Executive Branch action.The effect of any major modification or repeal of the PPACA onour business,operations,or financial condition cannot be predicted,but could be materially adverse.Risks Related to our Growth StrategiesOur growth strategy de

326、pends on our ability to acquire additional care centers and integrate and operate thesecare centers effectively.If our growth strategy is unsuccessful or we are not able to successfully integratenewly acquired care centers into our existing operations,our business and consolidated financial conditio

327、n,results of operations and cash flows could be materially adversely affected.We may not be able to fully integrate the operations of our acquired businesses with our current businessstructure in an efficient and cost-effective manner.Acquisitions involve significant risks and uncertainties,includin

328、g difficulties in recouping partial episode payments and other types of misdirected payments for servicesfrom the previous owners;difficulties integrating acquired personnel and business practices into our business;thepotential loss of key employees,referral sources or patients of acquired care cent

329、ers;the delay in paymentsassociated with change in ownership,control and the internal process of the Medicare fiscal intermediary;andthe assumption of liabilities and exposure to unforeseen liabilities of acquired care centers.Further,the financialbenefits we expect to realize from many of our acqui

330、sitions are largely dependent upon our ability to improveclinical performance,overcome regulatory deficiencies,improve the reputation of the acquired business in thecommunity and control costs.The failure to accomplish any of these objectives or to effectively integrate any ofthese businesses could

331、have a material adverse effect on our business and consolidated financial condition,results of operations and cash flows.State efforts to regulate the establishment or expansion of health care providers could impair our ability toexpand our operations.Some states require health care providers(includ

332、ing skilled nursing facilities,hospice care centers,home healthcare centers and assisted living facilities)to obtain prior approval,known as a CON or POA,in order tocommence operations.See Part I,Item 1,“Our Regulatory Environment”for additional information on CONsand POAs.If we are not able to obta

333、in such approvals,our ability to expand our operations could be impaired,which could have a material adverse effect on our business and consolidated financial condition,results ofoperations and cash flows.Federal regulation may impair our ability to consummate acquisitions or open new care centers.Changes in federal laws or regulations may materially adversely impact our ability to acquire care ce