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):



	First Quarter
	2013		2012		Percentage Variance
Medicare:
Home Health	$	193.1	$	190.6	1.3	%
Hospice	167.3		182.0		(8.1	)%
Total Medicare	360.4		372.6		(3.3	)%
Medicaid and Local Government	18.2		19.5		(6.1	)%
Commercial Insurance and Other:
Paid at episodic rates	14.3		20.0		(28.6	)%
Other	22.7		23.6		(3.9	)%
Total Commercial Insurance and Other	37.0		43.6		(15.3	)%
Total net revenues	$	415.6	$	435.7	(4.6	)%

For the first quarter of 2013, the Company recorded no hospice Medicare cap expense as compared to $2.1 million for the first quarter of 2012, which is reflected in net revenues in the Company’s consolidated statements of comprehensive income. For the Medicare cap year 2013, which began November 1, 2012, the Company has recorded $0.5 million in Medicare cap expense and has four hospice providers currently estimated to be in excess of Medicare cap limits.

The Medicare 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 March 31, 2013 and December 31, 2012, the Company had Medicare cap liabilities of $15.0 million and $15.9 million, respectively, which was reflected in Medicare liabilities in the Company’s consolidated balance sheets.

Accounts receivable attributable to major payer sources of reimbursement were as follows (in thousands):



	March 31, 2013			December 31, 2012
Medicare	$	197,273		$	192,541
Medicaid and Local Government	31,991			31,259
Commercial Insurance and Other	34,279			36,057
Gross Accounts Receivable	263,543			259,857
Less: Allowance for doubtful accounts	(8,615		)	(8,777		)
Net Accounts Receivable	$	254,928		$	251,080

As of March 31, 2013 and December 31, 2012, the Commercial Insurance and Other payer group included self-pay accounts receivable relating to patient co-payments of $2.0 million and $1.7 million, respectively.