Net Revenues and Accounts Receivable

Net revenues in the Home Health and Hospice segments were derived from all major payer classes and were as follows (in millions):



	For the Year Ended
	2012		2011		2010
Medicare:
Home Health	$	749.0	$	799.2	$	822.7
Hospice	715.5		729.1		326.2
Total Medicare	1,464.6		1,528.3		1,148.9
Medicaid and Local Government	74.4		83.1		74.0
Commercial Insurance and Other:
Paid at episodic rates	85.2		77.7		86.4
Other	88.6		109.7		105.2
Total Commercial Insurance and Other	173.8		187.4		191.6
Total net revenues	$	1,712.8	$	1,798.8	$	1,414.5

For 2012, 2011 and 2010 the Company recorded hospice Medicare cap expense of $4.4 million, $4.3 million and $4.5 million, respectively, which is reflected in net revenues in the Company’s consolidated statements of comprehensive income. The payment cap, which is calculated for each provider by the Medicare fiscal intermediary at the end of the hospice cap period, is determined under the proportional method. The proportional method allocates each beneficiary's Medicare payment cap based on the ratio of the number of days the beneficiary received hospice services from the Company over the total number of days the beneficiary received hospice services from all providers. The Medicare payment cap amount is then further allocated between the hospice cap periods based on the ratio of the number of days the Company provided hospices services during each cap period. The sum of each beneficiary's Medicare cap payment, as determined above, represents the aggregate Medicare payment cap. Medicare revenue paid to a provider during the hospice cap period cannot exceed the aggregate Medicare payment cap. As of December 31, 2012 and 2011, the Company had Medicare cap liabilities of $15.9 million and $15.6 million, respectively, which were reflected in Medicare liabilities in the Company’s consolidated balance sheets.

Odyssey, prior to the acquisition by Gentiva, had filed appeals with CMS to change the methodology previously used to calculate the Medicare payment cap in order to utilize the proportional method of determining the payment cap, as described above. This method allocates the Medicare payment cap over the cap years that the beneficiary is on service. In connection with those appeals, the Company has received final settlement letters for many of its providers and recorded approximately $1.5 million as net revenue for the period ended December 31, 2012 in the Company's consolidated financial statements.

Accounts Receivable

Accounts receivable attributable to major payer sources of reimbursement are as follows:



	December 31, 2012			December 31, 2011
Medicare	$	192,541		$	217,028
Medicaid and Local Government	31,259			46,553
Commercial Insurance and Other	36,057			38,570
Gross Accounts Receivable	259,857			302,151
Less: Allowance for doubtful accounts	(8,777		)	(11,562		)
Net Accounts Receivable	$	251,080		$	290,589

The Commercial Insurance and Other payer group included self-pay accounts receivable relating to patient co-payments of $1.7 million and $2.1 million, respectively, as of December 31, 2012 and December 31, 2011.

The Company’s only financing receivable is the notes receivable from CareCentrix, Inc. The Company measures impairment based on the present value of expected cash flows after considering assumptions relating to risk factors and economic conditions. On an ongoing basis, the Company assesses the credit quality based on the Company’s review of CareCentrix, Inc.’s financial position and receipt of interest payments when due. Based on the Company’s analysis, as of December 31, 2012 and 2011, the Company had no allowances for credit losses.