Dirk Allison: Yes. It’s something we started three or four years ago. We really were on the front end of seeing that payers wanted to start looking at a different way of having these contracts. Some of the states were moving towards that direction. So we made the investment. We talked about that this is the first full quarter with our new technology, our software system. One of the limiting factors we had before on our ability to grow value-based care contracting was the fact that a lot of it was still done manually, while we were looking for the system. Now that, that’s we believe we will have additional opportunities grow that business, and it will continue to be a focus of Addus along with the other things that we’re doing. But certainly, value-based care is one of the main reasons why we’re trying to get size and coverage in a state.
Scott Fidel: And then just one quick follow-up just on that sort of size and scale point you’re making. So currently, Addus is in 21 states for personal care. Obviously, you’ve got a few states like Illinois that drive a lot of the revenue. So you definitely have some of the smaller states as well. And is there, maybe give us an update just on you’re thinking around, are there some of those 21 states where you think you may need to exit because of the rule? And if you have a sort of estimate on, I guess, what the revenue contribution would be from those states that may no longer be sustainable under the new rules? And that’s it for me. Thanks.
Dirk Allison: Yes. I think the difficulty, Scott, in determining whether or not a state is viable today is we don’t know over the next six years what’s going to happen with the payment rate of that state, the various rules required. We do know that most states in which we operate and I’d say in all the states we operate, the program is very valuable to the state, to the Medicaid program. So today, there are some smaller states we’re in that we’ll be looking at and we’ll be monitoring to see how they change. But I would say as of today, there’s no state that we’ve identified that cannot be successful in this particular with this particular rule.
Operator: The next question comes from Andrew Mok with Barclays.
Andrew Mok : Just wanted to follow-up on the 80/20 rule. First, despite some of the changes in the final rule that you’re more constructive on, it still sounds like there’s still a fair amount of uncertainty hanging over the industry and even the likelihood that this gets finalized in six years or so. So, one, are you able to share with us a preliminary estimate of the unmitigated impact of the rule as it impacts your P&L today? Thanks.
Dirk Allison: No, we can’t because, again, with so much still out there, we’re still looking for clarification of definitions. We’re talking to states about what they’re going to do as it relates to the rule. It would be unfair to try to give a number because, again, with a six-year time frame, there is so much that will change, not just with Addus but with the states themselves. So what we’re approaching it from is truly standing back, Andrew, and saying with our size and coverage in our markets, we’re going to be fine. And the way to be for us to work with this rule is to continue to do the things that we’ve been doing, grow our markets in those states, look at our technology and try to get more efficient with our cost basis.
And one thing that I think people are truly probably missing, the fact is market share growth, as small providers are not able to work under this rule, and we believe strongly that is a problem as exists today. And as you bring margin from that market share move, you will mitigate the issue related to your margin with this rule.
Andrew Mok : And then it sounds like one of the big definitional swing factors of the role of the clinical supervision. Do you have a sense for how much clinical supervision costs are sitting in your G&A line today that would potentially be reclassed to direct care for the purposes of the pass through adjustment? Thanks.
Dirk Allison: Well, I think the difficulty there is what’s the definition of clinical. I think some of the folks in there’s different thoughts in the industry as about what may qualify in that particular line and so we don’t know today, we don’t have enough information from the rule to tell you exactly what that percentage would be. We can’t tell you it will be positive. So I think that’s certainly one of the nice changes in the rule as the clinical supervision salaries have got put into the definition, which will be helpful as we continue to mitigate any issues.
Operator: The next question comes from Jared Haase with William Blair.
Jared Haase: I’ll maybe ask one just sticking with value-based care opportunities and appreciate the comments around having the technology system in place to sort of help that scale. I was hoping are you able to kind of level set for us just today kind of what the penetration is within your book of business in terms of value-based contracts either on a sort of percentage of revenue basis or maybe the number of partners that you have in a value-based contract? And then having the technology system in place, do you have a sense as to maybe how quickly that could scale over the next handful of years?
Brad Bickham: Yes. On the value base, as Dirk pointed out, this is the first quarter where we’ve had our new IT software in place that allows us to really start scaling this program. We currently have seven value-based contracts in effect, and we certainly could add more. There’s not a there certainly is not a lack of interest in doing it. And we’re talking with several of those payers about actually expanding those programs. We cover currently a little over 6,000 clients that are in value-based arrangement. From a revenue standpoint, still immaterial, but there is certainly, I think, this is an opportunity to grow. As I mentioned, we have several payers that we’re currently in that are very pleased with how these arrangements are working and are looking for us to actually expand those significantly.
Jared Haase: And then, maybe I’ll just ask a follow-up on the home health segment. And it sounded like from the prepared remarks, there’s some process improvements you guys are implementing. I think you mentioned around staffing and referral conversion rate. So would love to just hear a little bit about maybe what some of those workflows look like from an improvement perspective. And then also sticking with kind of the referral dynamic, if you take a step back and think about all the sort of structural pressures facing Medicare Advantage plans on their rates and MLRs and some of the issues that they’re working through. Have you guys noticed any changes just in terms of post-acute care referral trends with those plans? Are they getting a bit more restrictive in terms of prioritizing quality with the post-acute care providers that they’re referring to? Anything really changed on that front?
