Company: EHC
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000785161-25-000009
Chunk: 83

Company: Encompass Health Corp
Filing Date: 2025-02-28
Form: 10-K
Item: Item 8
Chunk 83
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 determination that performing procedures relating to the valuation of patient accounts receivable – denied claims is a critical audit matter are the significant judgment by management to estimate the ultimate expected amount of collectible accounts receivable related to denied claims. This in turn led to a high degree of auditor judgment and effort to evaluate the audit evidence obtained related to the valuation of such denied claims.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of patient accounts receivable related to denied claims, which included controls around the identification of denied claims at period-end, as well as controls to assess the reasonableness of the success rate estimates.  These procedures also included, among others, i) evaluating management’s process for developing the estimate for collectible amounts related to denied claims, as well as the relevance and use of the historical billing and collection data as an input to the valuation analysis, ii) evaluating the reasonableness of management’s analysis and success rate estimate for denied claims by comparing it to the Company’s adjudicated denied claim results, iii) performing testing over a sample of denied revenue transactions by inspecting evidence that the claim was denied, and iv) performing testing over a sample of cash collections from the historical collection data used in management’s estimation of collectability.

/s/ PricewaterhouseCoopers LLP

Birmingham, Alabama

February 28, 2025

We have served as the Company’s auditor since 2003. 

F-4

Encompass Health Corporation and SubsidiariesConsolidated Statements of Comprehensive Income

 For the Year Ended December 31, 202420232022 (In Millions, Except Per Share Data)Net operating revenues$5,373.2 $4,801.2 $4,348.6 Operating expenses:   Salaries and benefits2,901.0 2,600.1 2,393.3 Other operating expenses802.6 719.1 670.4 Occupancy costs57.3 56.3 54.7 Supplies239.0 218.3 202.1 General and administrative expenses209.2 201.7 154.3 Depreciation and amortization299.6 273.9 243.6 Total operating expenses4,508.7 4,069.4 3,718.4 Loss on early extinguishment of debt