SEC Company Response from AMERICAN HOMEPATIENT INC (CIK 0000879181) — Oct 4, 2005
AMERICAN HOMEPATIENT INC (CIK 0000879181)
Date: Oct. 4, 2005 · CIK: 0000879181 · Accession: 0000950144-05-010065
AI Filing Summary & Sentiment
File numbers found in text: 000-19532
Letter
Division of Corporation Finance United States Securities American HomePatient, Inc. Form 10-K for the Fiscal Year Ended December 31, 2004 Filed March 31, 2005 File No. 000-19532
Dear Ms. Ino:
This letter is in response to the questions you posed in our recent phone conversation regarding our August 5, 2005 letter to the Securities and Exchange Commission.
1. Please explain to us why the balances disclosed in Exhibit 1 do not appear to agree to the balances in your financial statements.
In the bottom section of Exhibit 1 to our initial response dated August 5, 2005, there is a column headed “10K Ref. Pg.” which indicates the page in Registrant’s Form 10-K upon which a footnote detailing Accounts Receivable shows the amount of “Patient Receivables” which does agree with the amount on Exhibit 1.
2. We recognize that your analysis for accruing your allowance for doubtful accounts does not rely on payor type. We still feel that this information is useful to an investor in understanding the amounts reported in your balances. Please revise the information in Exhibit 1 to include the aging by payor class.
As we discussed, American HomePatient has made many acquisitions which have resulted in some of its subsidiaries utilizing software which provides less information than the main system used by most of the Company. The Company has made steady progress in moving toward one system but historical data that was not captured contemporaneously (such as aging by payor group) is difficult and often impossible to generate currently. As requested, we have revised Exhibit 1 from our initial response to show aging by payor to the extent possible for fiscal year 2004. In addition, the registrant will begin disclosing accounts receivable aging by payor classification in its 2005 Form 10-K filing.
Ms. Keira Ino
October 4, 2005
Page 2
3. Please provide to us a discussion in disclosure type format about the pending approval process described in your response. Include how much of these amounts are included in your “open order” amounts.
As far as “Medicaid Pending” receivables, please understand that this is a relatively small amount of our receivables because it only relates to patients who have received our services and who are applying for Medicaid benefits for the first time. Since most of our services are ongoing, such as oxygen treatment for COPD patients, the vast majority of these services for any period are for established patients who have historically received Medicaid benefits. For those who are applying for Medicaid benefits for the first time and for whom those Medicaid benefits are denied, the amount is billed to the individual and is included in the “Billed Revenue” Private Pay category in Exhibit 1 to this response. Since these amounts are small, we have never automated a system to capture them as differentiated from other “Private Pay”.
The amount of Medicaid Pending which is included in the Open Orders category cannot be determined for past periods. In order to demonstrate the magnitude of Medicaid Pending, we have manually accumulated the amount of these orders included in the “Open Order” category as of the end of August. We are able to do this for the current open orders and only by manually reviewing source documents. We did so on a test basis during our August close and estimate that “Medicaid Pending” included in the open order category as of August 31, 2005 is $3,187 and using the same factors at December 31, 2004 would provide an estimate of “Medicaid Pending” in open orders at that time of $2,194. We also used this process to estimate the maximum amount of receivables in the “Private Pay” category of “Billed Receivables” on the attached aging which were previously “Medicaid Pending” That maximum amount is approximately $122,000 but is likely much less than that. Our test would suggest it would be one third of that amount or about $40,000.
Although we strongly believe the amounts of “Medicaid Pending”, which are the only “third party pending” amounts included in accounts receivable, are immaterial to investors and should require no disclosure, we understand that you would prefer a statement that these items are in fact immaterial. The registrant agrees to making such a disclosure, beginning with its 2005 Form 10-K, which states that “third party pending” amounts are not material.
After you have had the opportunity to review this letter, please call me at (615) 221-8548 to confirm that the responses in this letter satisfactorily address your questions or to raise any additional questions or comments you may have.
Sincerely,
/s/ Stephen L. Clanton
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AMERICAN HOMEPATIENT, INC.
(AMERICAN HOMEPATIENT LETTERHEAD)
October 4, 2005
Ms. Keira Ino
Staff Accountant
Division of Corporation Finance
United States Securities
and Exchange Commission
100 First Street, NE
Washington, DC 20549
Re:
American HomePatient, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 31, 2005
File No. 000-19532
Dear Ms. Ino:
This letter is in response to the questions you posed in our recent phone conversation regarding
our August 5, 2005 letter to the Securities and Exchange Commission.
1. Please explain to us why the balances disclosed in Exhibit 1 do not appear to agree to the
balances in your financial statements.
In the bottom section of Exhibit 1 to our initial response dated August 5, 2005, there is a column
headed “10K Ref. Pg.” which indicates the page in Registrant’s Form 10-K upon which a footnote
detailing Accounts Receivable shows the amount of “Patient Receivables” which does agree with the
amount on Exhibit 1.
2. We recognize that your analysis for accruing your allowance for doubtful accounts does not rely
on payor type. We still feel that this information is useful to an investor in understanding the
amounts reported in your balances. Please revise the information in Exhibit 1 to include the aging
by payor class.
As we discussed, American HomePatient has made many acquisitions which have resulted in some of its
subsidiaries utilizing software which provides less information than the main system used by most
of the Company. The Company has made steady progress in moving toward one system but historical
data that was not captured contemporaneously (such as aging by payor group) is difficult and often
impossible to generate currently. As requested, we have revised Exhibit 1 from our initial
response to show aging by payor to the extent possible for fiscal year 2004. In addition, the
registrant will begin disclosing accounts receivable aging by payor classification in its 2005 Form
10-K filing.
Ms. Keira Ino
October 4, 2005
Page 2
3. Please provide to us a discussion in disclosure type format about the pending approval process
described in your response. Include how much of these amounts are included in your “open order”
amounts.
As far as “Medicaid Pending” receivables, please understand that this is a relatively small amount
of our receivables because it only relates to patients who have received our services and who are
applying for Medicaid benefits for the first time. Since most of our services are ongoing, such as
oxygen treatment for COPD patients, the vast majority of these services for any period are for
established patients who have historically received Medicaid benefits. For those who are applying
for Medicaid benefits for the first time and for whom those Medicaid benefits are denied, the
amount is billed to the individual and is included in the “Billed Revenue” Private Pay category in
Exhibit 1 to this response. Since these amounts are small, we have never automated a system to
capture them as differentiated from other “Private Pay”.
The amount of Medicaid Pending which is included in the Open Orders category cannot be determined
for past periods. In order to demonstrate the magnitude of Medicaid Pending, we have manually
accumulated the amount of these orders included in the “Open Order” category as of the end of
August. We are able to do this for the current open orders and only by manually reviewing source
documents. We did so on a test basis during our August close and estimate that “Medicaid Pending”
included in the open order category as of August 31, 2005 is $3,187 and using the same factors at
December 31, 2004 would provide an estimate of “Medicaid Pending” in open orders at that time of
$2,194. We also used this process to estimate the maximum amount of receivables in the “Private
Pay” category of “Billed Receivables” on the attached aging which were previously “Medicaid
Pending” That maximum amount is approximately $122,000 but is likely much less than that. Our
test would suggest it would be one third of that amount or about $40,000.
Although we strongly believe the amounts of “Medicaid Pending”, which are the only “third party
pending” amounts included in accounts receivable, are immaterial to investors and should require no
disclosure, we understand that you would prefer a statement that these items are in fact
immaterial. The registrant agrees to making such a disclosure, beginning with its 2005 Form 10-K,
which states that “third party pending” amounts are not material.
After you have had the opportunity to review this letter, please call me at (615) 221-8548 to
confirm that the responses in this letter satisfactorily address your questions or to raise any
additional questions or comments you may have.
Sincerely,
/s/ Stephen L. Clanton
Stephen L. Clanton
Executive VP and CFO
Enclosure
American HomePatient, Inc.
Patient Accounts Receivable Aging Summary by Payor
As of December 31, 2004
(In Thousands)
Billed A/R Aging:
Unapplied
Total
Current
31-60
61-90
91-120
121-180
181-360
>360
Cash
Managed Care
17,378
7,942
2,897
1,452
993
1,203
2,079
812
—
Medicare
13,989
9,540
1,302
623
591
656
947
330
—
Medicaid
6,544
2,550
1,002
578
388
585
1,252
189
—
Other Payors
5,628
2,318
1,069
549
381
434
701
176
—
Private Pay
4,068
994
621
546
396
257
931
323
—
Billed A/R Aged by Payor
47,607
23,344
6,891
3,748
2,749
3,135
5,910
1,830
—
Other Billed A/R (Note A)
5,933
2,706
839
544
251
389
639
565
—
Unapplied Cash (Note B)
(514
)
—
—
—
—
—
—
—
(514
)
Total Billed Aging
53,026
26,050
7,730
4,292
3,000
3,524
6,549
2,395
(514
)
Unbilled A/R:
Unapplied
Total
0-90
91-180
>180
Cash
Managed Care
2,249
1,614
381
254
—
Medicare
5,857
3,706
1,175
976
—
Medicaid
1,382
873
288
221
—
Other Payors
713
510
108
95
—
Private Pay
11
5
3
3
—
Unbilled A/R Aged by Payor
10,212
6,708
1,955
1,549
—
Other Unbilled A/R (Note A)
2,086
1,613
285
188
—
Total Unbilled Aging
12,298
8,321
2,240
1,737
—
Open
Orders:
Unapplied
Total
0-90
91-180
181-360
>360
Cash
Total Open Orders (Note C)
2,439
2,439
—
—
—
n/a
Total Patient Accounts Receivable (Gross):
Unbilled &
Open Orders
Unbilled
Unbilled
Unapplied
Total
Current
0-90
31-60
61-90
91-120
121-180
91-180
>180
181-360
>360
Cash
Managed Care
19,627
7,942
1,614
2,897
1,452
993
1,203
381
254
2,079
812
—
Medicare
19,846
9,540
3,706
1,302
623
591
656
1,175
976
947
330
—
Medicaid
7,926
2,550
873
1,002
578
388
585
288
221
1,252
189
—
Other Payors
6,341
2,318
510
1,069
549
381
434
108
95
701
176
—
Private Pay
4,079
994
5
621
546
396
257
3
3
931
323
—
A/R Aged by Payor
57,819
23,344
6,708
6,891
3,748
2,749
3,135
1,955
1,549
5,910
1,830
—
Other A/R
10,458
2,706
4,052
839
544
251
389
285
188
639
565
—
Unapplied Cash
(514
)
—
—
—
—
—
—
—
—
—
—
(514
)
Total Aged A/R
67,763
26,050
10,760
7,730
4,292
3,000
3,524
2,240
1,737
6,549
2,395
(514
)
Note A: Primarily represents legacy systems and other billing systems that are unable to provide aging data by payor.
Note B: Aging for Unapplied Cash cannot be determined.
Note C: Aging data by payor is not available for open orders. Revenue related to open orders in excess of 90 days is not accrued.