USPH US Physical Therapy Inc

ITEM 8.01   Other Event.

U.S. Physical Therapy, Inc. (the “Company”) reported today that the 3.75% reduction in the Medicare physician fee schedule for therapy services, which was to be effective January 1, 2022, per the finalized rule by the Centers for Medicare and Medicaid Services (“CMS”), has been addressed in the Protecting Medicare and American Farmers from Sequester Cuts Act (“Act”) signed into law on December 10, 2021.  Based on various provisions in the Act, the Company now estimates that the Medicare rate reduction for the full year of 2022 will be approximately 0.75%.  In addition, the Act included a three-month extension of the 2% sequester relief applied to all Medicare payments through March 31, 2022, followed by 3 months of 1% sequester relief through June 30, 2022.  Sequester relief would then end on June 30, 2022.  The Act did not address the 15% reduction in Medicare payments for services performed by a physical or occupational therapist assistant rather than a  physical or occupational therapist, which will begin on January 1, 2022.

Medicare represents approximately 30% of the Company’s physical therapy revenue.  The Company estimates that a total of approximately 35% of its physical therapy revenue, including certain of the Company’s commercial contracts, are tied to current year Medicare rates.

Summary of Risk Factors

Our business can be affected by certain risks, uncertainties and factors which include, but are not limited to:

•	the multiple effects of the impact of public health crises and epidemics/pandemics, such as the novel strain of COVID-19, for which the financial magnitude cannot be currently estimated;

•	changes as the result of government enacted national healthcare reform;

•	changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;

•	revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;

•	business and regulatory conditions including federal and state regulations;

•	governmental and other third party payor inspections, reviews, investigations and audits, which may result in sanctions or reputational harm and increased costs;

•	compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;

•	changes in reimbursement rates or payment methods from third party payors including government agencies, and changes in the deductibles and co-pays owed by patients;

•	revenue and earnings expectations;

•	legal actions, which could subject us to increased operating costs and uninsured liabilities;

•	general economic conditions;

•	availability and cost of qualified physical therapists;

•	personnel productivity and retaining key personnel;

•	competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and other intangible assets;

•	competitive environment in the industrial injury prevention services business, which could result in the termination or non-renewal of contractual service arrangements and other adverse financial consequences for that service line;

•	acquisitions, and the successful integration of the operations of the acquired businesses;

•	impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interest (minority interests);

•	maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;

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a security breach of our or our third party vendors’ information technology systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 of the Health Information Technology for Economic and Clinical Health Act;

•	maintaining adequate internal controls;

•	maintaining necessary insurance coverage;

•	availability, terms, and use of capital; and

•	weather and other seasonal factors.

See also Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 1, 2021 and the additional Risk Factor noted in Item 2 of our Quarterly Report on Form 10Q for the period ending September 30, 2021 filed on November 9, 2021.

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