SecProbe.io

CORRESP
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corresp

Frank M. Placenti

Direct: 602-364-7451

Fax: 602-364-7070

fmplacenti@bryancave.com

September 9, 2005

VIA EDGAR CORRESPONDENCE, FACSIMILE AND U.S. MAIL

Mr. Joel Parker

Branch Chief

Division of Corporate Finance

Securities and Exchange Commission

450 5th Street, N.W.

Washington, D.C. 20549

    Re:

    VistaCare, Inc.

Form 10-K for the transition period from January 1, 2004

to September 30, 2004

File No. 000-50118

Dear Mr. Parker:

As previously indicated, this firm represents VistaCare, Inc, (the “Company”) in connection with
your comment letter dated April 27, 2005, regarding the above-referenced filing. This letter is a
follow up to our conference call on June 27, 2005, and is meant to supplement the information in
our letters dated May 31, 2005 and June 10, 2005. This letter is being faxed to you as well as
being sent by U.S. mail, and will be filed on EDGAR as correspondence.

During the conference call, you sought further information regarding how VistaCare determined its
adjustment to net patient revenue for exceeding the Medicare Cap. As noted on page 10 of the
Company’s Forms 10-Q for the periods ended March 31, 2005 and June 30, 2005, the Company actively
monitors each of its locations as to their specific admission and
discharge rates and average length
of stay in an attempt to determine the total Medicare payments received by each location and
whether a location is likely to exceed the annual Medicare Cap. If the Company determines that a
location is likely to exceed the annual Medicare Cap, the Company estimates the amount that a
location may be required to repay and the Company accrues that amount. The Company’s projection
model assumes that its fiscal intermediary will calculate its Medicare Cap liability in a manner
consistent with prior years and that the Medicare Cap expense is incurred ratably throughout the
Medicare regulatory year.

Mr. Joel Parker

September 9, 2005

Page 2

In determining the estimated reductions to revenue, the Company uses a projection model for each
location that forecasts the annual amount the Company could be required to repay Medicare based on
actual historical information. The projection model does not conduct a sensitivity analysis on
that historical information. In addition, the Company does not conduct a sensitivity analysis on
an aggregated basis because Medicare Cap exposure is calculated on a location-by-location basis.
Thus, the Company does not calculate, for instance, what impact a revision to length of stay by 5%
on an aggregated basis will have on its adjustment to net revenue for exceeding the Medicare Cap.
Further, because Medicare determines liability on a location-by-location basis, a small change in
the length of stay or in the number of patients having received prior hospice care could have a
significant impact on one location’s potential Medicare Cap
expense, while a similar change at a different
location could have no impact whatsoever on that location’s Medicare Cap
expense. In using actual historical
data, the Company believes it uses the only reasonable assumptions available to project its
estimated Medicare Cap
expense.

The Company believes that the disclosure concerning the Company’s estimates is accurate and
adequately informs shareholders how it determines its estimates and the risks associated with its
estimates. The Company provides investors with an understanding about how management forms its
judgments about future events, including the variables and assumptions underlying the estimates,
and the impact on its financial statements as to the methods, assumptions and estimates underlying
the calculation of the Medicare Cap expense. Thus, the Company believes its current disclosure
complies with the guidance provided by Financial Reporting Release No. 60 and the proposed rule
changes discussed in Release No. 33-8098.

During the conference call you also sought additional information on the $11.2 million reduction in
revenue related to patient service dates during the 2004 Medicare regulatory year, which ran from
September 28, 2003 through September 27, 2004. This $11.2 million estimate related to the
Company’s fiscal year 2004 (which was a transition period that ran from January 1, 2004 through
September 30, 2004) for exposure to Medicare Cap expense during the Medicare regulatory year ended
September 28, 2004. The Company’s estimate was based on its projection model that forecasts the
annual amount the Company could be required to repay Medicare based upon each location’s actual
historical program specific admission and discharge rates and average length of stay calculation.
Based upon the Company’s model, all but an immaterial amount of the $11.2 million related to the
Company’s 2004 fiscal year.

The Company confirms that it will continue to provide full and complete disclosure of its estimates
and how its estimated calculation of Medicare Cap expense compares to the actual assessment as
determined by the Company’s fiscal intermediary. In future Forms 10-K, beginning with its Form
10-K for the fiscal year ended September 30, 2005, the Company will include a table comparing its
estimated calculation of Medicare Cap expense to the actual assessments as determined by its
fiscal intermediary for each of the fiscal years covered by such annual report. The table will
look similar to the draft table included as Annex A. The proposed table summarizes the data
provided in the text and provides shareholders with the ability to compare the Company’s estimated
Medicare Cap expense to

2

Mr. Joel Parker

September 9, 2005

Page 3

the actual Medicare Cap expense as determined by its fiscal intermediary. Such a table should
alleviate any concerns about the Company’s disclosure regarding its estimates.

We believe that the Company has complied with the Staff’s comments and concerns. The Company
discloses its critical accounting estimates, the effect the accounting estimates may have on the
company’s financial presentation and the potential for changes in the estimates. This disclosure
is compliant with the federal securities laws and the publicly available staff guidance on such
disclosure.

We are looking forward to having any outstanding issues resolved as soon as possible. If you have
any questions, please contact Michael McCoy of Bryan Cave LLP at 602-364-7176 or the undersigned at
602-364-7451.

Very truly yours,

Frank M. Placenti

FMP:lrs

3

Annex A

Medicare Cap Reduction to

Revenue and Assessments

(in millions)

    Estimated reduction to

    Actual reduction to revenues

    net patient

    based on assessment

    revenue

    letters received

    2003

    $
    4.6
    (1)

    $
    7.5

    2004

    14.8
    (2)

    8.1
    (3)

    2005

    4.8

    0.0
    (4)

    Notes:

    1

    We pulled forward the $1.3 million accrual for 2002 into 2003
upon receipt of an assessment letter from our fiscal
intermediary indicating that there would be no assessment for
the 2002 Medicare Cap year.

    2

    Includes $1.6 million for
assessment letters received in 2004 for the 2003 Medicare cap
year.

    3

    As of September 7, 2005, we have received 31 of our 34
assessment letters pertaining to our fiscal year 2004. The
information in this column may change depending upon the
information received in the final 3 assessment letters.

    4

    We have not received any assessment letters for our fiscal year
2005.

As further discussed in Note 1 to this Form 10-K, our estimates assume factors controlled by our
fiscal intermediary and our estimates are affected by many factors.