Organization

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

LHC Group, Inc. (the “Company”) is a health care provider specializing in the post-acute continuum of care. The Company provides services through five segments: home health, hospice, home and community-based services, facility-based services, the latter primarily through long-term acute care hospitals ("LTACHs"), and healthcare innovations ("HCI").

As of December 31, 2022, the Company, through its wholly and majority-owned subsidiaries, equity joint ventures, controlled affiliates, and management agreements, operated 920 service providers in 37 states within the continental United States and the District of Columbia.

LHC Group, Inc. and UnitedHealth Group Incorporated Merger

On March 28, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with UnitedHealth Group Incorporated ("Parent") and Lightning Merger Sub Inc., a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent. At a Special Meeting of Stockholders held on June 21, 2022, the stockholders of the Company approved the Merger. On December 6, 2022, the Company delivered written notice to UnitedHealth Group extending the Outside Date, as defined in the Merger Agreement, to March 28, 2023. The parties to the Merger continue to work toward the expected consummation of the Merger prior to the end of the first quarter of 2023.

COVID-19 Update

SARS-CoV-2 ("COVID-19") continues to cause disruption in the economy, in terms of increased costs and disruptions in the labor market. The impact of COVID-19 is lessened as vaccines have become available in the United States; however, we continue to see periodic increases in the number of cases due to the spread of COVID-19 variants. The effects of COVID-19 continue to materially impact our business. As a result, operating results for the twelve months ended December 31, 2022 may not be directly comparable to operating results for the twelve months ended December 31, 2021.

CARES Act

In response to COVID-19, the U.S. Government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") on March 27, 2020. The CARES Act also provided financial hardship relief to Medicare providers impacted by the COVID-19 pandemic in order to provide necessary funds when there is a disruption in Medicare claims submission and/or Medicare claims processing by distributing funds through the Accelerated and Advanced Payments Program ("CAAP").

In addition, the CARES Act suspended the 2% sequestration payment adjustments on Medicare patient claims with dates of service from May 1 through December 31, 2020, suspended the application of site-neutral payment for LTACH admissions that were admitted during the Public Health Emergency ("PHE"), and delayed payment of the employer portion of social security tax. On April 14, 2021, Congress passed legislation to continue the suspension of the 2% sequestration payment adjustments on Medicare patient claims with dates of service through December 31, 2021. On December 10, 2021, the Protecting Medicare and American Farmers from Sequester Cuts Act legislation passed, which continued the suspension of the sequestration payment adjustments for Medicare patient claims with dates of service through March 31, 2022. Medicare patient claims with dates of service between April 1 through June 30, 2022 had a 1% sequestration adjustment and Medicare patient claims with dates of service beginning July 1, 2022 had a 2% sequestration adjustment. On February 9, 2023, the U.S. Department of Health and Human Services extended the PHE until May 11, 2023.

CAAP

During the twelve months ended December 31, 2021, the Company had $106.5 million of accelerated payments under the CAAP, which was recorded in contract liabilities - deferred revenue in our consolidated balance sheets in accordance with Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers ("Topic 606"). On October 1, 2020, the repayment and recoupment terms for CAAP funds were amended by the Continuing Appropriations Act, 2021 and Other Extensions Act, which provides that recoupment will begin one year from the date the CAAP funds were received. The repayment terms began one year starting from the date the CAAP funds were issued and continued for 11 months, as CMS recouped the initial 25% of Medicare payments otherwise owed to the Company. If any amount of CAAP funds that we received from CMS remained unpaid after the initial 11 month period, CMS recouped 50% of Medicare payments otherwise owed to the Company during the following six months. Interest began accruing on any amount of the CAAP funds that we received from CMS that remained unpaid following those recoupment periods. CMS issued a repayment letter to the

Company for any such outstanding amounts, which must be paid in full within 30 days from the date of the letter. As of December 31, 2022, the Company repaid $106.5 million before any interest was accrued.

Other

The Company recognized the following amounts of net service revenue due to the suspension of the 2% sequestration payment adjustment and the suspension of LTACH site-neutral payments (amounts in thousands):


	Year Ended December 31,
	2022		2021		2020
Suspension of 2% sequestration payment adjustment	$	9,952	$	26,768	$	18,137
Suspension of LTACH site-neutral payment	20,311		25,744		19,205

As of December 31, 2021, the Company deferred $26.8 million of employer social security taxes, which was recorded in current liabilities - deferred employer payroll tax on our consolidated balance sheets. The Company paid $26.8 million back to the government during the twelve months ended December 31, 2022.