Oct. 3, 2011

Our company, along with three other publicly traded home health companies, received a letter in May 2010 from the Senate Finance Committee requesting information on therapy utilization for the period of 2006 through 2009.

On Oct. 3, the Senate Finance Committee issued its report on this matter. Let us reiterate the message we communicated to the committee. Our business operations focus on providing cost-effective care based upon the individualized needs of the patients we serve. In 2010, we shared independent analysis with the committee that concluded our company’s overall therapy utilization and reimbursement per episode for the period under review were both 13 percent below the national average. A copy of the letter we sent to the committee in June 2010 is posted on our website for your review.

We shared the following key facts with the committee:

• LHC’s reimbursement per therapy episode was 8 percent lower than the national average from 2006 through 2009.
• LHC’s therapy patients reported outcomes that were 7 percent better than the national average from 2006 through 2009.
• LHC showed a 7 percent increase in overall quality outcomes from 2006 through 2009.
• LHC improved the overall quality outcomes at acquired agencies by 21 percent from 2006 through 2009.

The report issued by the Senate Finance Committee focused solely on the nation’s four publicly traded home health companies. As part of our overall compliance efforts, we monitor our company’s data in comparison to national averages for all home health care providers nationwide. Below we have included a table showing LHC Group’s distribution of therapy visits for 2009-2011 as compared to the distribution of therapy visits for all 10,197 U.S. home health providers in 2009, the most recent independent data available from the CMS Standard Analytical File claims data. As you can see in the table, our therapy distribution patterns mirror the industry averages.

The Senate Finance Committee report calls for a therapy reimbursement model that relies on factors other than therapy utilization to determine reimbursement levels. Although LHC Group’s therapy distribution patterns are comparable to industry averages for all home health providers, we also support a therapy reimbursement approach that focuses on patient well-being and health characteristics rather than therapy utilization. In fact, over the past year, we have been working with the Partnership for Quality Home Healthcare, an advocacy organization established in 2010, to advance policy solutions that would achieve this result.

Thank you for your continued support of LHC Group as we fulfill our mission of providing high-quality, cost-effective care to the patients we serve.