Admittedly, the law only recently went into effect. But given that SB 1160 passed in October 2016, organizations have had nearly two years to prepare. So why are so many still not compliant?

My answer is twofold: effort and expense. 911勛圖 first navigated the complex path to URAC accreditation in 2008 and has undergone three reaccreditations since. We know firsthand how time consuming, resource intensive, and financially demanding the process is for an organization. It is an enterprise-wide commitment. In addition to daily processes the UR team must document and follow, our Technology, Compliance, Talent Management, and Marketing departments must also enact and adhere to detailed protocols. The cross-departmental efforts and sophisticated infrastructure needed to establish and maintain URAC accreditation, coupled with the financial investment necessary to meet the accreditation’s requirements, is likely why so few California providers have pursued it.

What remains to be seen is how long these non-accredited providers can hold out. According to the WorkCompCentral article, the California Division of Workers’ Compensation is drafting new regulations which may include penalties to ensure organizations comply with the law. But no amount of penalties can expedite the URAC accreditation process, which takes 10 to 12 months with no guarantee of success.

I urge companies currently processing California work comp claims to verify their UR��vendor’s accreditation status. For those who discover their vendor is among the non-compliant 40 percent, now is the time to consider an alternate solution. With the lengthy accreditation timeframe and the likelihood of increasing provider disputes over the validity of UR determinations by non-accredited UR organizations, it’s wise to��be proactive.

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Many providers contend the shift is the result of sicker patients coupled with the widespread implementation of electronic medical records, as treatment and documentation of more complex cases requires greater time and effort. But the persistent increase in costlier codes has made pursuing potential billing abuse a Justice Department priority.

One area of focus for federal investigators has been upcoding, the practice of deliberately billing for more extensive and costly services than were actually performed.

In February 2017, nationwide hospital staffing provider TeamHealth Holdings agreed to plus interest to settle allegations that its hospitalist group practice, IPC Healthcare, submitted upcoded bills to Medicare, Medicaid, the Defense Health Agency, and the Federal Employee Health Benefits Program.

In June 2017, Carolinas Healthcare System agreed to to resolve allegations that it billed federal health care programs for ���high complexity��� urine drug tests when the tests conducted were only of ���moderate complexity.��� According to court documents, this upcoding persisted for four years and cost the government an extra $80 per test.

In October 2017, multi-location New York Spine & Wellness Center agreed to to resolve improper billing claims after a federal inquiry determined the practice routinely billed for moderate sedation services ��� which require physicians spend at least 16 minutes with patients ��� despite its doctors not meeting the minimum time criteria.

But upcoding is not exclusive to tax-payer funded health care. In the case of New York Spine & Wellness Center, for example, a private insurer first detected the Center���s sedation upcoding in January 2015, initially rejecting two claims that fell short of the 16-minute rule. A subsequent audit by the same insurer resulted in more rejections, but the Center continued its upcoding abuse for two more years until the U.S. Attorney���s Office intervened, seeking to recover overpayments by the state���s Medicaid program. Indeed, of the $1.9 million settlement, more than $660,000 will be returned to the New York Medicaid coffers.

Outcomes such as these are terrific news for taxpayers, but such retrospective vigilance by the Feds has little to no impact on private insurers, employee organizations, and individual payers.

While the government concentrates on recouping federal dollars post-payment, medical cost containment firms must protect private payer clients from overpaying upfront. For example, 911勛圖 uses tools such as in-depth bill review by certified coders and nurse auditors and pre-negotiated, bundled rates to wean out upcoding and other billing abuses on a transactional level. Such proactive approaches are a key core competency of medical cost management, and continue to be as important today as they have been historically.

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We are also starting to see some substantive legislative action in response to the opioid crisis that extends beyond formulary adjustments or drug reclassifications.

Massachusetts is the most recent state to limit opioid use,��enacting legislation that limits prescriptions to a 7-day supply.�� Massachusetts is among the nation���s worst states for heroin and opioid usage, with more than 100 drug fatalities each month.�� Although the bill���s language grants providers the flexibility to prescribe outside the 7-day limit, it will force providers to document their reasons, and severely impede any provider from acting as a ���pill mill��� without legal repercussions.

Specifically, Massachusetts’ , Section 19D states:

(a) When issuing a prescription for an opiate to an adult patient for outpatient use for the first time, a practitioner shall not issue a prescription for more than a 7-day supply. A practitioner shall not issue an opiate prescription to a minor for more than a 7-day supply at any time and shall discuss with the parent or guardian of the minor the risks associated with opiate and the reasons why the prescription is necessary.

(b) Notwithstanding subsection (a), if, in the professional medical judgment of a practitioner, more than a 7-day supply of an opiate is required to treat the adult or minor patient���s acute medical condition or is necessary for the treatment of chronic pain management, pain associated with a cancer diagnoses or for palliative care, then the practitioner may issue a prescription for the quantity needed to treat such acute medical condition, chronic pain, pain associated with a cancer diagnosis or pain experienced while the patient is in palliative care. The condition triggering the prescription of an opiate for more than a 7-day supply shall be documented in the patient’s medical record and the practitioner shall indicate that a non-opiate alternative was not appropriate to address the medical condition.

I think we will see more states follow suit with similar legislation, as new drug formularies and tighter opioid rules have already been proposed across the country. All of this movement will hopefully culminate in a new���and hopefully successful���phase in the nation���s battle against the ongoing opioid healthcare crisis.

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This to me was an example of “task management” with all of its flaws — creating rule after rule about every little action a person can take to achieve a desired outcome. I think we can all agree that reducing obesity and diabetes, improving people’s lives, and reducing healthcare costs are all noble goals.�� I just don’t think my body and health��should be��anyone else’s to control.

Just imagine how easy the goal is to circumvent and how hard it is to administer:

• Can people buy��two drinks?
• Can they go to two stores side by side?
• Can they mail order��two liter sodas?
• Can they drive across the bridge to New Jersey to buy soda in bulk?
• What about unlimited refills?
• What about all other types of sugar?��Candy bars?�� Desserts?�� White flour? All bread?���� Fruit? Afterall,��too much��fructose��can mimic soda.

Clearly, to really “control” this issue, the government would need to pass a lot more laws. To make things fair, we’d have to consider everything else that’s bad for our health, like��smoking, drinking��and fried��food.�� I would argue that any of these��is��causing more damage than soft drinks.��While Bloomberg’s pet peeve is sugar water, the next mayor’s could be something else.��It’s a slippery slope of “task management” once started.

What about other issues that people think are important and are damaging society?��Are intelligence and culture important for our children? Why not consider banning reality TV, which often plays to the lowest common denominator of humanity.�� People and US magazine really don’t add any value to the intelligence of society.�� Instead we should be reading something edifying like��the New York Times or Wall Street Journal.�� So let’s tax the People and Us readers extra.

You can see where this all leads to:�� more and more rules. With additional rules comes people trying to “get away” with things which��would��require more costs to “manage” an outcome.

Outcome leadership assumes people have an intrinsic incentive to maintain their own bodies and health and we should support them in achieving that goal.�� Maybe they’ll get help from a charitable institution with a focus on education and incentives to reduce obesity and diabetes by 25 percent.�� Maybe allow the free market to charge more for insurance for people��who are not healthy.�� Let people choose and teach them how to be successful.

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For those of you who do not know the trends in the industry, hospital groups are consolidating and buying physician practices and Ambulatory Surgery Centers (ASCs). They can charge more for government services than independent groups (Medicare, Medicaid, etc.) so the value of the purchased entity jumps as soon as they purchase it. In addition, with regional monopolistic power, they have more leverage negotiating PPO rates, which drives up costs to the general market.�� This trend will continue with the national healthcare law changes.

This is why 911勛圖 has been focused on developing new techniques to attack this problem.�� ��and focusing on has been at the forefront of our product development innovations for the last few years.�� Having medical management programs that can impact this trend will become more and more critical as time goes on.

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“To achieve liberty and peace, two powerful human emotions have to be overcome. Number one is ‘envy’ which leads to hate and class warfare. Number two is ‘intolerance’ which leads to bigoted and judgmental policies. These emotions must be replaced with a much better understanding of love, compassion, tolerance and free market economics. Freedom, when understood, brings people together. When tried, freedom is popular.
 
The problem we have faced over the years has been that economic interventionists are swayed by envy, whereas social interventionists are swayed by intolerance of habits and lifestyles. The misunderstanding that tolerance is an endorsement of certain activities, motivates many to legislate moral standards which should only be set by individuals making their own choices. Both sides use force to deal with these misplaced emotions. Both are authoritarians. Neither endorses voluntarism. Both views ought to be rejected.

I have come to one firm conviction after these many years of trying to figure out ‘the plain truth of things.’ The best chance for achieving peace and prosperity, for the maximum number of people world-wide, is to pursue the cause of LIBERTY.”
 

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Here’s a putting the US debt crisis into context by comparing it to a family’s annual household budget.

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Let’s also assume that, like most businesses, a lot of cash has gone out the door that can’t be expensed right away, if at all. There are a lot of examples: entertaining clients and meals are only 50% deductible. That means if you spend $100 on a client dinner, only $50 of it can be taken off taxes, so you pay another $20 in taxes over and above the $100. You have to entertain those prospects or clients if competitors do, so there’s no choice. I saw Obama and Boehner had their on the taxpayers’ dime.  They understand the value of networking too.  Also, some normal expenses for the owners are not deductible, like health insurance for employees. Say that these non-deductible expenses amount to 1% of costs — very conservative.

Assets purchased are not viewed as expenses right away. They get “depreciated” as an expense over time.  So, as the company buys computers, servers, machines, furniture, vehicles, inventory, etc., cash goes out the door, but deductions like depreciation must be taken over many years time. Say that’s 5% of the total revenue out the door in cash, but not counted as costs on taxes.

Revenue billed does not always match cash in the door. Customers don’t always pay, or pay on time. This applies to most business to business (B2B) companies, and non-cash businesses.  Even timely payments can be 30 days after a bill is sent. Say with past dues, it averages 45 days. That is a lot of cash a company is “loaning” their clients.

As we stated, the S-Corp income shows on the shareholders taxes; if there are four equal owners, they each show $250k in income.  Even though the income is declared by the owner on their taxes, businesses need to leave cash in the business to pay bills, make payroll, look safe to the bank and clients, etc. – so let’s say four weeks of cash needed to run the business must be left in the bank for the company to operate safely.

In this situation, in year one, the cash out the door for the company would be more than $1.5 million above the cash in the door. The “rich” owners have burned their safety net of cash, they’re scrambling for a line of credit to defer accounts payable, not pay other businesses on-time. This is not an unusual situation for a business in its first few years.

I was shocked how bad it was in the first few years when we started the business. We were struggling to survive cash flow wise, we were not taking salaries, and when we did, they were small ones, and supposedly, according to my taxes, we were making good money. During the first seven years in business, we paid out more than four times in taxes than the founders actually got to keep.  I stopped looking after seven years – it was too depressing.

Look at an entrepreneur who is paying herself a $50,000 a year salary (it was a lot less for me the first few years).  Say the company makes $300,000 in taxable profit.  The entrepreneur needs to leave all the profit in the busiess due to cash needs described above.  She now has a taxable income of $350,000.  She is a part of the “rich”, not paying their “fair share” we hear about.  Her tax bill is $140,000 for the year.  The entreprenuer gets to keep the non-tax portion of her salary, or $30,000.  So the government receives $4.67 for ever $1.00 she get to keep for starting the business, risking her career and capital, and working full time. 

Especially for a growing company, it takes a long time for accounts receivable payments, depreciation discounts off of taxes, cash reserves for the business, etc. to build-up to a sustainable level. All I know is that we may not have made it in those first few years had there been even a slight tax increase.

Warren Buffett, an Obama supporter, recently said the tax rate was not high enough on the super rich. That is the basis for the “Buffett Rule” tax increases being proposed today.  Buffett was brilliant at minimizing his taxes by taking almost 100% of his take home pay as capital gains (the 15% capital gains tax rate is much lower than the income tax rate).  Three major issues stand-out to me. 

1. Basing a tax system on a once in a lifetime business person’s success might not represent the norm for other people.  He has achieved the richest man in the world status on a few occasions, and is currently the third most affluent.  Not many people, even successful ones, can compete with his results, even at tax avoidance.

2. Buffett offers this after his wealth has been made beyond what is possible to be spent in his remaining years.  The US tax system taxes earnings, not wealth.  It taxes those trying to become the next Buffett, not Buffett himself.  He can whatever he would like in taxes.  He has that right, so he could solve the “inequity” at any time.

3. The reason capital gains tax is lower than income tax is that the earnings were already taxed at the corporate level (it is a double tax).  In effect, the income is taxed at a higher rate overall, but not as shown on his personal taxes.  In addition, Buffett’s company, Berkshire Hathaway (where most of the taxes are actually paid) admittedly knows that they .  Instead of paying up (), Berkshire Hathaway is threatening the IRS with protracted litigation and is in the process of cutting a deal with the IRS Appeals office.  It’s kind of hard to take him seriously on this subject given the disconnect between his actions vs. his words.

So, keep this in mind when you hear about increased taxes, even on the rich.  S-Corp small businesses are the majority of the “rich.” They do not actually have that cash … it’s all sitting as assets in the business, trying to grow and survive.  I’m sure there are some people making a fortune who do not struggle or some of us feel may not feel earned it.  So what?  Basing fiscal policy on anecdotal stories of people, who we feel are fiscally luckier than us, is a formula for failure. We need to encourage our economic engine to bolster the small businesses that create jobs.  Remember, this is America – the Land of Opportunity, not the Land of Entitlement.

Company X’s Tax Burden to Nowhere
Revenue: $ 10,000,000
Cost of Goods Sold: $ 5,000,000
Salaries: $ 2,500,000
Other Expenses: $ 1,500,000
Profit: $ 1,000,000
Taxes: $ 400,000
Assumed Cashflow: $ 600,000

Assets Purchased (un-depreciated): $ 500,000
Non-Deductible Expenses (meals/ent/etc.): $ 100,000
Cash Left in Business: $ 692,308
Accounts Receivable: $ 1,250,000
Accounts Payable: $ (500,000)
Net Cashflow: $ (1,442,308)

Q1 Estimated (110% of prior year): $ 110,000
Total Net Cashflow: $ (1,552,308)

The post The Cash Flow of Business appeared first on 911勛圖.

California is notorious for their high levels of taxes and cost.  They also passed an Internet law and , likely putting a lot of small California vendors out of business.  Over a million high earners have in the last few years to lower tax states.

We all read about .  Why do people think that is happening?  When I was on my honeymoon, I met quite a few business people from around the world.  Three of them said they tried to set up US businesses, but the taxes, regulations and employment laws were too burdensome.  They said China was way easier.  China?  A communist country?  Anyone else think something is really wrong here?

There is a concept called in economics.  The premise is simple.  When the supply of “something to sell” is low and the demand is high, prices rise.  Alternatively, when the supply of “something to sell” is abundant and the demand is low, prices drop. If you raise the price beyond people���s demand for it, they won���t buy it.
  
Look at the housing market for an example. The market was hot and more people wanted to and could buy homes (easy loans), so housing prices skyrocketed.  When prices got too high, nobody could get loans and more houses were built than people could buy, so prices have been on a steady decline.  Supply and demand.

The Verizon iPhone is another example.  The AT&T iPhone sells out in minutes and is often on backorder because they created demand by being first to market. Verizon over guessed their demand, ordered too many iPhones, did not sell all their supply and now give them away with corporate contracts.

The same economic forces apply to government.  It is much more obvious and rapid when it comes to state regulations.  Companies can move to a new state very easily, especially if they are near a border or are a national company with locations in multiple states.  If regulations or taxes are higher or more difficult in one state versus another, growth is pushed to the state with less expensive regulations.  Let me put it this way.  If it is less expensive to move than to stay, businesses or people will move. 

When governments talk about raising taxes to raise revenue, they never take into account supply and demand.  They assume behavior will stay the same.  What happens in reality is the people and companies that are negatively impacted will adjust behavior or move. The people and companies that stay, have to, because they are smaller or are the ones receiving the benefits, not paying for them.  The net effect is the people funding the government spending leave, cut back or push growth elsewhere; and those taking government spending stay — and then the budgets don’t balance.

Government overspending is incredibly destructive and we as citizens need to make sure that we force them to have a controlled budget and live within that budget at all times.  Otherwise they will always bring us to the brink, wasting our and our children’s future opportunities.  It is simple economics.

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