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Discontinued Operations
 12 Months Ended
Dec. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
In April 2021, the Company began participating in the Global and Professional Direct Contracting of the Centers for Medicare & Medicaid Services ("CMS"), which utilizes a structured model intended to reduce expenditures and preserve or enhance quality of care for people with Medicare fee-for-service ("FFS"). CMS rebranded the DC Model and renamed the model the ACO Realizing Equity, Access, and Community Health (REACH) Model ("ACO REACH Model") effective January 1, 2023. As a participating entity in the DC Model, referred to as the ACO REACH Model at January 1, 2023, with a global risk arrangement, the Company assumes the responsibility of guaranteeing the performance of its care network. The ACO REACH Model is intended to reduce administrative burden and support a focus on complex, chronically ill patients.
On December 1, 2023, the Company notified CMS that it will no longer participate as a REACH ACO in connection with the 2024 performance year. The Company’s exit from the ACO REACH Program was made after the Company determined that it is in the Company's best interest to fully exit the ACO REACH Program, and follows its November 2022 announcement of a strategic reduction in the number of ACO REACH participating physicians in 2023. The nature of the remaining activities relate to the settlement with CMS related to prior performance years which was settled in December 2024.
Key components of the financial agreement for ACO REACH included:
•Performance Year Benchmark. The target amount for Medicare expenditures on covered items and services (Medicare Part A and B) furnished to an Accountable Care Organization's ("ACO's") aligned beneficiaries during a performance year. The Performance Year Benchmark will be compared to the ACO's performance year expenditures. This comparison will be used to calculate shared savings and shared losses. The Performance Year Benchmark is established at the beginning of the performance year utilizing prospective trend estimates and is subject to retrospective trend adjustments, if warranted, before the Financial Reconciliation.
•Performance Year. A calendar year.
•Risk-Sharing Arrangements. Used in determining the percent of savings and losses that ACOs are eligible to receive as shared savings or may be required to repay as shared losses.
•Financial Reconciliation. The process by which CMS determines shared savings or shared losses by comparing the calculated total benchmark expenditure for a given ACO's aligned population to the actual expenditures of that ACO's aligned beneficiaries over the course of a performance year that includes various risk-mitigation options such as stop-loss reinsurance and risk corridors.
•Risk-Mitigation Options. ACOs may elect a "stop-loss arrangement" each performance year, which is designed to reduce the financial uncertainty associated with high-cost expenditures of individual beneficiaries. The Company has elected participation in the program for the current performance year. Additionally, CMS has created a mandatory risk corridor program that allocates the ACO's shared savings and losses in bands of percentage thresholds, after a deviation of greater than 25% of the Performance Year Benchmark.
A summary of the carrying amounts of major assets and liabilities, which were classified as held for settlement in the Consolidated Balance Sheets, follows:
December 31, 2024December 31, 2023
(in thousands)
Assets(1)
Cash and cash equivalents$— $6,456 
Surety bond and deposits— 55,089 
Non-Insurance receivable— 10,926 
Total assets$— $72,471 
Liabilities(1)
Unpaid claims$— $2,856 
Accrued salaries and benefits— 110 
Non-Insurance performance year obligation, current— 15,568 
Non-Insurance payable— 41,565 
Total liabilities$— $60,099 
(1) The assets and liabilities of the disposal group are classified as current in the Consolidated Balance Sheet at December 31, 2023.
A summary of the results from discontinued operations included in the Consolidated Statements of Operations and Comprehensive Loss follows:
Year ended December 31,
202420232022
(in thousands)
Revenues:
Non-Insurance revenue$(396)$773,177 $2,380,135 
Total revenues(396)773,177 2,380,135 
Operating Expenses:
Net medical claims incurred(5,276)771,798 2,460,879 
General and administrative expenses1,326 4,482 4,239 
Restructuring costs297 110 — 
Total operating expenses(3,653)776,390 2,465,118 
Gain (loss) from operations3,257 (3,213)(84,983)
Net income (loss)$3,257 $(3,213)$(84,983)
A summary of cash flows from discontinued operations included in the Consolidated Statements of Cash Flows follows:
Year ended December 31,
202420232022
(in thousands)
Net cash (used in) provided by operating activities$(47,605)$(109,514)$100,674 
Performance guarantees
Certain of the Company's arrangements with third-party providers require it to guarantee the performance of its care network to CMS. As a result of the Company's former participation in the ACO REACH Model, the Company determined that it was making a performance guarantee with respect to providers under the Non-Insurance arrangement that should be recognized in the consolidated financial statements. The performance guarantee identified relates to the Company guaranteeing the performance of the third-party medical providers. Thus, the contract with CMS is accounted for as a performance guarantee under ASC 460, Guarantees. At the inception of the performance year, the Company measures and recognizes the performance guarantee receivable and obligation, issued in this standalone arm's length transaction, using the practical expedient to fair value as set forth in ASC 460-10-30-2(a). The Company estimates the annualized benchmark, which is the amount recognized in both the Non-Insurance performance year receivable and the Non-Insurance performance year obligation, current. This is consistent with ASC 460-10-25-4, which provides that a guarantor shall recognize in its statement of financial position a liability for that guarantee. In addition, when the guarantee is issued in a standalone transaction for a premium, the offsetting entry should be considered received (such as cash or a receivable) according to ASC 460-10-25-4. Thus the Company recognizes the Non-Insurance performance year receivable on its balance sheets.
To subsequently measure and recognize the performance guarantee, the Company follows ASC 460-10-35-2(b) and applies a systematic and rational approach to reflect its release from risk. Under this approach, the Company amortizes on a straight-line basis over the performance year, the obligation. The Company has determined this systematic and rational method is appropriate, as it matches the period in which the guarantee is fulfilled. In addition, ASC 460-10-35-2 provides further guidance on the subsequent measurement related to the Company's performance guarantee. Per ASC 460-10-35-2, depending on the nature of the guarantee, the guarantor's release from risk typically can be recognized over the term of the guarantee using one of three methods: (1) upon expiration or settlement, (2) by systematic or rational amortization, or (3) as the fair value of the guarantee changes. The Company has determined that method (2) is the appropriate method of recognition as discussed above.
With respect to each performance year in which the ACO is a participant, the final consideration due to the ACO from CMS ("shared savings") or the consideration due to CMS from the ACO ("shared loss") is reconciled in the subsequent years following the performance year. The shared savings or loss is measured periodically and will be applied to the Non-Insurance performance obligation, current or Non-Insurance performance receivable if the Company is in a probable loss position or probable savings position, respectively. The ACO has entered into an agreement with CMS and a third-party to cover the financial threshold determined by CMS.
In April 2021, the Company began participating in the Global and Professional Direct Contracting of the Centers for Medicare & Medicaid Services ("CMS"), which utilizes a structured model intended to reduce expenditures and preserve or enhance quality of care for people with Medicare fee-for-service ("FFS"). CMS rebranded the DC Model and renamed the model the ACO Realizing Equity, Access, and Community Health (REACH) Model ("ACO REACH Model") effective January 1, 2023. As a participating entity in the DC Model, referred to as the ACO REACH Model at January 1, 2023, with a global risk arrangement, the Company assumed the responsibility of guaranteeing the performance of its care network. The ACO REACH Model is intended to reduce administrative burden and support a focus on complex, chronically ill patients. On December 1, 2023, the Company notified CMS that it will no longer participate as a REACH ACO in connection with the 2024 performance year. The Company’s exit from the ACO REACH Program was made after the Company determined that it is in the Company's best interest to fully exit the ACO REACH Program, and follows its November 2022 announcement of a strategic reduction in the number of ACO REACH participating physicians in 2023.
Certain of the Company's arrangements with third-party providers require it to guarantee the performance of its care network to CMS, which, if not obtained, could potentially result in payment to CMS. The Non-Insurance performance year obligation and receivable are amortized on a straight-line basis for the amount that represents the completed performance. The Company is unable to estimate the maximum potential amount of future payments under the guarantee. This is attributable to the stop-loss arrangement and the corridors (tiered levels) in the arrangement. A certain percentage of these arrangements will still be the responsibility of the Company, in addition to a number of variables that are not reasonable for the Company to estimate, such as, but not limited to, risk ratings and benchmark trends that have an inestimable impact on the estimate of future payments.
The tables below include the financial statement impacts of the performance guarantee:
December 31, 2024December 31, 2023
(in thousands)
Non-Insurance performance year obligation (1)
$— $15,568 
(1) This obligation represents the consideration due to providers, net of the shared savings or loss for the period and amortization of the liability.
Year ended December 31,
202420232022
(in thousands)
Amortization of the Non-Insurance performance year receivable$— $(751,362)$(2,385,116)
Amortization of the Non-Insurance performance year obligation— 751,362 2,385,116 
Non-Insurance revenue(396)773,177 2,380,135 
Reinsurance
Within the ACO arrangement there is an option for each ACO participant to elect participation in a reinsurance arrangement, which is not a separate contract and is included in the current ACO arrangement. The stop loss (charges) premiums and recoupments are incurred in accordance with the regulations set forth in the participation agreement in direct relation to the direct contracting program and will reduce the exposure of high dollar claims to the Company. The premiums (recoupments) are recognized as revenue (contra-revenue), respectively, within Non-Insurance revenue on the Statement of Operations as there is a right to the recoupments as the point of attachment in the stop loss agreement.
The effects of the ACO reinsurance arrangements on the accompanying consolidated financial statements for the years ended December 31, 2024 and 2023, respectively, were as follows:
Year ended December 31,
202420232022
(in thousands)
Non-Insurance revenue, gross and net
$(396)$773,177 2,380,135 
Claims incurred, gross and net(5,276)771,798 2,460,879 
Reinsurance recoverable, gross and net— 10,926 $52,955 
Reinsurance recoverable represents the portion of paid claims and unpaid claims that are covered by reinsurance. Amounts recoverable from reinsurers are estimated in a manner consistent with the methods used to determine unpaid claims.