SecProbe.io

CORRESP
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corresp

    Frank M. Placenti

    Direct: 602-364-7451

    Fax: 602-364-7070

    fmplacenti@bryancave.com

October 28, 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 in
response to a comment issued on October 12, 2005, and is meant to supplement the information in our
letters dated May 31, 2005, June 10, 2005 and September 9, 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.

While the Company endeavors to record an accurate estimate of its Medicare Cap liability, actual
assessments may ultimately differ. In determining its estimated Medicare Cap liability, the
Company uses an internally-developed projection model that forecasts the annual amount the Company
could be required to repay Medicare based upon the historical admissions, discharge rate and
average length of stay of each of its provider locations.

In 2003, the Company’s actual assessment differed from its estimate by approximately $1.6 million.
The Company attributes the difference to the following factors: (i) its fiscal intermediary
disallowing certain beneficiaries; (ii) patients who received care with another hospice provider;
and (iii) activity that took place subsequent to the end of the 2003 Medicare Cap year that was not
known or knowable until actual assessments were made.

Mr. Joel Parker

October 28, 2005

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The third category, i.e., activity that took place subsequent to the end of the 2003 Medicare Cap
year, included patients who were initially billed to commercial insurance companies based upon
patient or other third party instructions where such coverage did not exist or where the Company
later determined that Medicare should have been billed for at least part of the claim. To a lesser
degree, the changes were due to changes in the level of care delivered to the patient discovered
after the close of the fiscal year end. The Company internally determined that $400,000 of the
$1.6 million difference from estimated Cap exposure related to patients who were initially billed
to commercial insurance companies where Medicare should have been billed or to changes in the level
of care.

You have requested clarification on whether this category of differences accounting for just
$400,000 in variance from estimates were material to the Company and whether those activities
constituted the correction of an error in previously issued financial statements under APB Opinion
20.

For the twelve months ended December 31, 2003, the nine-month transition period ended September 30,
2004 and the nine months ended June 30, 2005, the Company had revenues of over $190 million, $150
million and $170 million, respectively. As such, the Company believes that the $400,000 attributed
to those activities in 2003 is immaterial to its operations or financial results and believes such
activities will continue to be immaterial.

The Company further believes that such activities do not constitute the correction of an error in
previously issued financial statements. When the Company invoices a commercial insurance company
or determines the level of care record for each patient, the Company uses the best available
information at that time. If that information turns out to be incorrect, it is because the
information provided by a third party was incorrect. The patient, the patient’s family or the
patient’s nursing home usually provides such information. The reduction to revenues for those
activities is not a result of a misuse or misapplication of known facts that existed at the time
the financial statements were prepared. The reduction to revenues is the result of subsequently
provided information that was not known or knowable to the Company when it prepared its financial
statements.

For instance, when a patient enters the hospice program, the patient or the patient’s family is
asked whether the patient has commercial insurance and whether the patient’s policy covers hospice
care. If the answer is in the affirmative and the patient provides documentation of such
insurance, the patient’s commercial insurance provider is invoiced. It is only after the
commercial insurance company denies the claim or reduces the claim amount that the Company learns
that (i) the patient’s policy does not provide hospice care; (ii) another commercial insurance
company should be billed; or (iii) that Medicare should be billed. It often takes up to six months
for the commercial insurance company initially billed to pay or deny a claim.

A patient’s level of care may change based on facts not known to the Company when it determines its
projected revenue. Typically, the level of care changes because a patient is moved from the
patient’s home to a hospital due to a more acute medical issue and then returns home when the
medical problem is resolved. This results in a change in the chargeable level of care from in home
to in patient

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Mr. Joel Parker

October 28, 2005

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and then from in patient to in home. The Company relies on the patient, the patient’s family, the
patient’s nursing home or the hospital to notify the Company of a change in the level of care.
Until such formal notification, the Company is often not aware that a change in the level of care
occurred.

Based on the above, the Company does not believe a reduction to revenue based on such activity is
material to its operation and that those activities do not constitute the correction of an error in
previously issued financial statements because it did not misuse or misapply known facts that
existed at the time the financial statements were prepared.

We look 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

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