Accounts Receivable, Net

12 Months Ended

Dec. 31, 2020

Accounts Receivable, Net

Accounts Receivable, Net

Note D — Accounts Receivable, Net

Accounts receivable, net represents outstanding amounts we expect to collect from the transfer of our products and services.  Principally, these amounts are comprised of receivables from Medicare, Medicaid, and commercial insurance plans.  Our accounts receivable represent amounts outstanding from our gross charges, net of contractual discounts, sales returns, and other implicit price concessions including estimates for payor disallowances  and patient non-payments.

We are exposed to credit losses primarily through our accounts receivable. These receivables are short in nature because their due date varies between due upon receipt of invoice and 90 days. We assess our receivables, divide them into similar risk pools, and monitor our ongoing credit exposure through active review of our aging buckets. Our activities include timely account reconciliations, dispute resolution, and payment confirmations. We also employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

As part of the new accounting standard discussed in Note A – “Organization and Summary of Significant Accounting Policies,” our expected loss methodology was developed using historical liquidation rates, current and future economic and market conditions, and a review of the current status of our patients and customers’ trade accounts receivable balances. We also grouped our receivables into similar risk pools to better measure the risks for each pool. After evaluating the risk for each pool, we determined that additional credit loss risk was immaterial for the Patient Care segment. For the Products & Services segment, an allowance for doubtful accounts is recorded, which is deducted from gross accounts receivable to arrive at “Accounts receivable, net.” As of December 31, 2020, we have considered the current and future economic and market conditions resulting in an increase to the allowance for doubtful accounts by approximately $0.3 million since December 31, 2019.

Accounts receivable, net as of December 31, 2020 and 2019 is comprised of the following:

	As of December 31, 2020						As of December 31, 2019
			Products &						Products &
(in thousands)	Patient Care		Services		Consolidated		Patient Care		Services		Consolidated
Gross charges before estimates for implicit price concessions	$	156,504	$	21,300	$	177,804	$	202,132	$	27,551	$	229,683
Less estimates for implicit price concessions:
Payor disallowances		(39,343)		—		(39,343)		(58,094)		—		(58,094)
Patient non-payments		(7,042)		—		(7,042)		(9,589)		—		(9,589)
Accounts receivable, gross		110,119		21,300		131,419		134,449		27,551		162,000
Allowance for doubtful accounts		—		(2,823)		(2,823)		—		(2,641)		(2,641)
Accounts receivable, net	$	110,119	$	18,477	$	128,596	$	134,449	$	24,910	$	159,359

Approximately 46.8% and 50.1% of gross charges before estimates for payor disallowances and patient non-payments, is due from the Federal Government (Medicare, Medicaid, and the VA) at December 31, 2020 and 2019, respectively.

The following table summarizes activities by year for the allowance for doubtful accounts:

	Allowance for
	Doubtful
(in thousands)	Accounts
Balance at December 31, 2017	$	14,065
Cumulative Effect of ASC 606		(9,894)
Additions		630
Reductions		(1,155)
Recoveries		(1,374)
Balance at December 31, 2018		2,272
Additions		1,877
Reductions		(762)
Recoveries		(746)
Balance at December 31, 2019		2,641
Additions		1,869
Reductions		(114)
Recoveries		(1,573)
Balance at December 31, 2020	$	2,823

The following tables represent gross charges before estimates for payor disallowances and patient non-payments, by major payor classification and by aging categories reduced by implicit price concessions and allowance for doubtful accounts to accounts receivable, net as of December 31, 2020 and 2019, respectively:

December 31, 2020	0-60		61-120		121-180		Over 180
(in thousands)	Days		Days		Days		Days		Total
Patient Care
Commercial insurance (excluding Medicare and Medicaid Managed Care)	$	43,069	$	10,743	$	5,335	$	12,316	$	71,463
Private pay		850		401		309		281		1,841
Medicaid		13,569		2,705		1,390		3,771		21,435
VA		4,291		692		263		279		5,525
Non-Medicare		61,779		14,541		7,297		16,647		100,264
Medicare		27,572		5,169		2,915		20,585		56,241
Products & Services accounts receivable, before allowance		14,091		4,598		841		1,769		21,299
Gross charges before estimates for implicit price concessions and allowance for doubtful accounts		103,442		24,308		11,053		39,001		177,804
Less estimates for implicit price concessions										(46,385)
Accounts receivable, before allowance										131,419
Allowance for doubtful accounts										(2,823)
Accounts receivable, net									$	128,596

December 31, 2019	0-60		61-120		121-180		Over 180
(in thousands)	Days		Days		Days		Days		Total
Patient Care
Commercial insurance (excluding Medicare and Medicaid Managed Care)	$	46,771	$	12,599	$	7,050	$	18,120	$	84,540
Private pay		1,081		535		435		569		2,620
Medicaid		13,779		3,903		2,314		8,068		28,064
VA		4,465		1,015		353		565		6,398
Non-Medicare		66,096		18,052		10,152		27,322		121,622
Medicare		36,654		8,181		5,191		30,484		80,510
Products & Services accounts receivable, before allowance		15,898		7,345		2,103		2,205		27,551
Gross charges before estimates for implicit price concessions and allowance for doubtful accounts		118,648		33,578		17,446		60,011		229,683
Less estimates for implicit price concessions										(67,683)
Accounts receivable, before allowance										162,000
Allowance for doubtful accounts										(2,641)
Accounts receivable, net									$	159,359