Company: PIII
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001628280-25-015305
Chunk: 297

Company: P3 Health Partners Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 297
---
 the reasonableness of the completion factors, per member per month healthcare cost trends factors, and the PAD used by the Company’s management and its actuarial specialist by comparing our independently determined IBNR estimate to management’s recorded IBNR liability, and (iii) evaluating the reasonableness of management’s prior period estimates using subsequent claims development.

Determination of the Premium Risk Adjustment Revenue

As described in Note 3 to the consolidated financial statements, the Company’s consolidated capitated revenue included approximately $33.5 million of estimated premium risk adjustment revenue during the year ended December 31, 2024. Medicare pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual patient, also known as the hierarchal condition categories (“HCC”). Medicare Advantage plans with higher acuity patients receive higher premiums. Conversely, Medicare Advantage plans with lower acuity patients receive lesser premiums. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after final data is compiled (using a Risk Adjustment Factor or “RAF”).

We identified the determination of Medicare Advantage premium risk adjustment revenue as a critical audit matter. The principal considerations for this determination were the significant complexities involved in determining the HCC and the corresponding RAF. Auditing these elements involved especially challenging and complex calculations due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

•Assessing the accuracy of the underlying data used in the determination of the HCC by vouching a selection of encounter data to underlying support.

P3 Health Partners Inc. | 2024 Form 10-K | 77

•Utilizing personnel with specialized knowledge and skills in actuarial methods to assist in determining the HCC and the corresponding risk adjustment revenue.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2021.

Las Vegas, Nevada

March 27, 2025

P3 Health Partners Inc. | 2024 Form 10-K | 78

P3 HEALTH PARTNERS INC. and SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

December 31,20242023ASSETSCURRENT ASSETS:  Cash $38,816 $36,320 Restricted