28 Oct 2013

A Whatever-Whenever-Wherever Economy

By Ginny Grimsley
By: John Horvat II

When people ask me what is wrong with our modern day economy, I respond that it is frenzied and out of balance.

In my book, Return to Order, I coined the term "frenetic intemperance" to describe a restless and reckless spirit inside modern economy that foments a drive to throw off legitimate restraints and gratify disordered passions. This frenetic intemperance, I explain, is where we went wrong.

But frenetic intemperance is an abstract concept. It is not immediately apparent as to what I mean. I am always on the lookout for examples or expressions that help to clarify the concept and make it more understandable to the man in the street.

I recently found such an example that goes a long way in explaining frenetic intemperance. It involved an article that described television viewing habits. It said that the average American adult spends 4 hours, 31 minutes watching television each day. That might seem like a lot of viewing but it only tells half the story.

The television screen represents yesterday's entertainment. People today also look at other screens and monitors. And so, the article notes, in addition to the television viewing time, the average American adult spends yet another 5 hours, 16 minutes looking at other computer and phone screens each day.

The total of 9 hours, 47 minutes is an impressive amount of time before any screen. It indicates a certain lack of restraint that is characteristic of frenetic intemperance. There are missing priorities in these habits where the person gives in to the temptation to be constantly checking his devices. An economy that supports this kind of obsessive behavior is a clarifying example of what is meant by frenetic intemperance.

However, the article ended with an even more dramatic example of frenetic intemperance. It told the story of a man with three very young children who were fully hooked up to their screens. Two of the three could not even read yet they all had wi-fi-enabled mobile devices and could stream videos to them.

The father gloried in the fact that, "They expect to be able to see whatever they want, whenever they want, wherever they want."

This is a perfect expression to describe frenetic intemperance. It is an economy that throws off restraint and encourages a regime in which you seek out whatever you want, whenever you want and wherever you want.

This whatever-whenever-wherever economy is what is throwing everything out of balance. People must have everything now, regardless of the consequence. If it cannot be had immediately, there are always credit options to make it happen. If that does not work, there is always big government to turn things once considered privileges or luxuries into entitlements.

When society is not virtuous, a whatever-whenever-wherever economy leads to an economy that is run by the disordered whims and passions. Reason is no longer in control and consequently markets frequently crash. Self-interest alone comes to rule in accordance with personal preferences. Such a conception of life calls to mind the ideas of Scottish philosopher Dave Hume who famously wrote, "Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them."

The problem is that the passions can be true tyrants that do not respect reality. Real economy should be run by reason and temperance. It should lead men to virtue. This requires restraint, foresight and effort. It does not exclude the orderly passions and preferences that are part of the lives of men. However, these very human and necessary elements are secondary and cannot dominate.

Our problem today is our whatever-whenever-wherever economy is taking us to our ruin. It is filling us with frenetic intemperance. What we need is a return to order.

About John Horvat II: John Horvat II is a scholar, researcher, educator, international speaker and author "Return to Order: From a Frenzied Economy to an Organic Christian Society - Where We've Been, How We Got Here and Where We Need to Go," (www.returntoorder.org). For more than two decades he has been researching and writing about the socio-economic crisis in the United States.

25 Oct 2013

How to Financially Survive Your Golden Years

By Ginny Grimsley
Expert Offers Tips to Maximize Money for an Aging
Population

Americans are living longer these days from an average 47 years in 1900 to more than 78 years as of 2010. We are also experiencing a deluge of adults reaching retirement age now that includes 10,000 Baby Boomers turning 65 every day.

By 2030, when the last of the baby boomers have turned 65, nearly one in five Americans will be retirement age, according to the Pew Research Center's population projections. Money will be a big problem for many of them, especially if boomers develop health problems that affect their ability to live independently, says insurance expert and CEO of Life Care Funding Chris Orestis.

"Life Care Funding created a financial solution for seniors that own a life insurance policy that converts the policy into a Long-Term Care Benefit Plan; this gives the policy owner the option to use their policy while still alive to help pay for their choice of any form of senior care services," says Orestis, a former insurance industry lobbyist who recently contributed to the federal Commission on Long-Term Care's fact-finding mission.

"With 30 percent of the Medicaid population consuming 87 percent of Medicaid dollars on long-term care services, we can see that's not going to be sustainable," Orestis says. "More individuals will be forced to find their own resources to pay for those needs. That's why states such as California, Florida, New York and Texas are embracing legislation requiring seniors to be notified that they can convert their life insurance policy for 30 to 60 percent of its death benefit value. The money can be put into an irrevocable fund designated specifically for any form of care they choose."

Orestis details more ways in which seniors might handle long-term care and other budgetary issues:

• Senior discounts really add up! Here's a list of establishments to check out: www.lifecarefunding.com/blog/senior-discounts/. Restaurants, supermarkets, department stores, travel deals and other merchants give various senior discounts with minimum age requirements ranging from 55 to 62. Some of these places are worth making habits, with 15 percent off the bill at Applebee's, 30 percent off at Banana Republic and 60 percent off at Food Lion on Mondays! Don't forget your free cup of coffee at Dunkin' Donuts if you're 55 or older, and don't be shy - at many of these places you'll have to ask for the discount.

• Long-term care is a matter of survival, so use your best options. The practice of converting a life insurance policy into a Life Care Benefit has been an accepted method of payment for private duty in-home care, assisted living, skilled nursing, memory care and hospice care for years. Instead of abandoning a policy when they can no longer afford the premiums, policy owners have the option to take the present-day value of the policy while they are still alive and convert it into a Long Term Care Benefit Plan. By converting the policy, a senior will remain in private pay longer and be able to choose the form of care that they want but will be Medicaid-eligible when the benefit is spent down.

• Your "last act" may be decades away, so plan accordingly. It makes sense to finally enjoy your money after a lifetime of savings, but be smart about it. Take time to organize your paperwork and create a master file that holds things such as insurance policies, investments, property, wills and trusts, etc. so you have your financial picture in one place. Also, live smart today and hold off on that new car if you don't need a new one. If your current car is paid off and you sit tight for an additional two years, you'll save $7,200 on a new car with $300 monthly payments. Refinancing your home may also be a very good idea, since rates are still hovering around their all-time lows. Get at least three quotes, compare rates, terms and potential penalties to make sure you're getting the best deal.  Also, live healthy and buy more fruits and vegetables and less junk food to lessen the chance you'll need long-term care in the future.

About Chris Orestis

Chris Orestis, nationally known senior health-care advocate and expert is CEO of Life Care Funding, which created the model for converting life insurance policies into protected Long-Term Care Benefit funds. His company has been providing care benefits to policy holders since 2007. A former life insurance industry lobbyist with a background in long-term care issues, he created the model to provide an option for middle-class people who are not wealthy enough to pay for long-term care, and not poor enough to qualify for Medicaid.

25 Oct 2013

Lessons from Rise and Fall of Arthur Andersen

By Ginny Grimsley

Former Partner Shares Life Lessons
from the Rise and Fall of Arthur Andersen
As Firm Marks 100th Year, Executive Recounts the Rewards
of Working at a Company Known for Integrity


By the time he was 30, Larry Katzen made partner at Arthur Andersen, then one of the "Big 8" accounting firms with a reputation for innovation and integrity.

In the ensuing years, the firm continued to soar in stature. With an emphasis on continuing education for employees and meticulous attention to detail, it was one of the most trusted accounting firms in the industry. Katzen enjoyed a fast-paced rise through the ranks, all the while learning, traveling, and parenting quadruplets with his wife and college sweetheart, Susan.

It all came crashing down in 2002 when the company was indicted based on false accusations having to do with the scandals at Enron. With the firm's survival in question, Katzen moved quickly to encourage employees to carefully complete all remaining assignments.

"Arthur Andersen became fodder for the government's prosecution of Enron - although it had no role in Enron's demise," says Katzen, author of, "And You Thought Accountants Were Boring - My Life Inside Arthur Andersen," (www.Larryrkatzen.com), a unique look inside one of the world's most historically important accounting firms.

Arthur Andersen was eventually vindicated by a 9-0 Supreme Court ruling. By then, however, the damage had been done, creating chaos in the careers of thousands of employees. Arthur Andersen, which marked its 100th anniversary in September, still exists today, albeit in a different incarnation.
"I will never regret my time at the firm; it provided so much for me, including solid life lessons," says Katzen, who shares some of those.

• Do the right thing. At the end of Katzen's career, he had to help his employees find new jobs, which was an arduous process. "It was the right thing to do, which is its own reward, but the right actions also tend to have rewarding consequences," he says. That lesson had taken root during Katzen's college years at Drake University, when a trusted professor warned him against his plan to cancel a job interview with Arthur Andersen because he'd already received several promising offers. "If I hadn't done what was right, if I hadn't followed through on my commitment, my life would have gone down a very different path," he says.

• Listen to your heart. Although Arthur Andersen gave him the lowest salary offer, Katzen nonetheless felt it was the right place for him. "My personality seemed to blend with their corporate culture," he says. "So I turned down higher and more attractive offers and went with my heart." Listening to his heart also helped during his wife's fragile pregnancy with their quadruplets; if the couple hadn't approved using an experimental drug, "we probably would not have any children today," he says.

• Increases in responsibility come with personal sacrifice. Katzen had to uproot his life and family and move to a strange new town. But the short-term pain enabled the family to attain financial security and a better quality of life. "If you want to grow in an organization, success does not come without personal sacrifice," he says. "In my case, it resulted in four moves - but it was well worth it."

• Beware of the power of our government. In his first substantive experience in dealing with the IRS, Katzen quickly learned how coercive and powerful the agency can be. No matter how reasonable you may try to be with a government agency like the IRS, there is no guarantee it will respond in kind - and don't assume that you will get a fair trial, he says. "They have the power and authority to do whatever they want to do. In less than three months, our government put one of the world's most effective and profitable international accounting firms out of business."


About Larry Katzen

Larry Katzen worked at Arthur Andersen from 1967 to 2002, quickly rising through the ranks to become a partner at age 30. His new memoir details the government's unjust persecution of a company known for maintaining the highest standards.
25 Oct 2013

Dave Jamison, Executive Director of Iowa Finance Authority Elected to National Council of State Housing Agencies Board of Directors

By Nicholas Depew

DES MOINES - Iowa Finance Authority Executive Director Dave Jamison was recently elected to the National Council of State Housing Agencies (NCSHA) Board of Directors. The election was held during NCSHA's 43rd Annual Conference, October 19-22 in New Orleans, LA.

"I'm honored to have the opportunity to serve on the NCSHA Board of Directors to support their exceptional work in communicating the importance and far-reaching benefits that affordable housing programs have all across the country," said Iowa Finance Authority Executive Director Dave Jamison. "Affordable housing is central to thriving neighborhoods and communities as it provides many economic benefits and provides families with a stable place to call home, often resulting in higher educational achievement for children, proud neighborhoods and strong communities."

The National Council of State Housing Agencies - known as NCSHA - is a national nonprofit, nonpartisan association that advocates on behalf of housing finance agencies (HFAs) before Congress and the Administration for affordable housing resources. It represents the HFAs of the 50 states, the District of Columbia, New York City, Puerto Rico, and the U.S. Virgin Islands. Membership also includes more than 300 affordable housing industry partners.

"I look forward to working with Dave Jamison, Executive Director of the Iowa Finance Authority and the other Board officers and directors as we continue our efforts on behalf of all of our members to protect and strengthen federal housing programs in response to the wide range of housing needs HFAs serve," said Barbara Thompson, Executive Director of NCSHA.

Prior to being appointed Executive Director of the Iowa Finance Authority in 2011, Jamison served as Story County Treasurer for sixteen years. Jamison is an Iowa native, U.S. Marine Corps veteran and a graduate of Iowa State University, where he received a BBA in Management.  He also holds a Finance Master certificate from the National Association of County Collectors, Treasurers and Finance Officers (NACCTFO) through the University of Missouri - St. Louis.

While Treasurer, Mr. Jamison was President of the Iowa State County Treasurers Association, Co-Chair of the ISCTA web site task force that established the IowaTreasurers.org web site for all 99 county treasurers and Chair of the Education Committee for NACCTFO.

The Iowa Legislature created The Iowa Finance Authority, the state's housing finance agency, in 1975 to undertake programs to assist in the attainment of housing for low-and moderate-income Iowans.

 

NCSHA Board of Directors

President

Brian A. Hudson, Pennsylvania Housing Finance Agency

 

Vice President

Thomas R. Gleason, MassHousing

 

Secretary/Treasurer

Grant S. Whitaker, Utah Housing Corporation

 

Immediate Past President

Gerald M. Hunter, Idaho Housing and Finance Association

 

At-Large Executive Committee Member

Richard L. McQuady, Kentucky Housing Corporation

 

Board Members

Stephen P. Auger, Florida Housing Finance Corporation

Anas Ben Addi, Delaware State Housing Authority

Dean J. Christon, New Hampshire Housing Finance Authority

Kim Herman, Washington State Housing Finance Commission

Dave Jamison, Iowa Finance Authority

Mary Kenney, Illinois Housing Development Authority

Douglas A. Garver, Ohio Housing Finance Agency

Ralph Perrey, Tennessee Housing Development Agency

Dennis Shockley, Oklahoma Housing Finance Agency

Raymond Skinner, Maryland Department of Housing and Community Development

Mary Tingerthal, Minnesota Housing

Cris White, Colorado Housing and Finance Authority

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24 Oct 2013

Popular IRAs, Annuities Have Dark Downsides, 3 Experts Warn

By Ginny Grimsley
CPA, Wealth Manager & Lawyer Share Tips for Investors

IRAs and annuities are growing in popularity as retirement investment options, according to recent surveys, but three financial experts warn they can have serious disadvantages.

"Last year, four out of 10 U.S. households had IRA accounts - that's up from 17 percent two decades ago," says CPA Jim Kohles, chairman of RINA accountancy corporation, (www.rina.com), citing an ICI Research survey. "But they can be bad for beneficiaries if you have a very large account."

Investment in annuities, touted as offering a potential guaranteed income stream, alsocontinue to grow with sales up 10 percent in the second quarter of this year.

"Annuities have several dark sides, both during your lifetime and for your beneficiaries," says wealth management advisor Haitham "Hutch" Ashoo, CEO of Pillar Wealth Management, (www.pillarwm.com). "My business partner, Chris Snyder, and I wouldn't recommend investing in them."

Putting large amounts of money in either annuities or IRAs can have serious tax consequences for your heirs, say Kohles, Ashoo and attorney John Hartog of Hartog & Baer Trust and Estate Law, (www.hartogbaer.com).

"If you want to ensure your beneficiaries get what you've saved, you need to take some precautions," Hartog says.

The three offer these suggestions:

• Take stock of your assets - you could be worth more than you think: If your estate is worth more than $5.25 million (for couples, $10.5 million), your beneficiaries face a 40 percent estate tax and federal and state income taxes, says Kohles, the CPA. "It can substantially deplete the IRA," he says.

To avoid that, take stock of your assets now - you may have more than you realize when you take into account such variables as inflation and rising property values. Be aware of how close to that $5/$10 million benchmark you are now, and how close you'll be a few years from now.

"Consider vacation and rental properties, vehicles, potential inheritances," Kohles says.

Also, take advantage of the lower tax rates you enjoy today, particularly if they're going to skyrocket after your death. "A lot of people want to pay zero taxes now and that's not necessarily a good idea," he says. For instance, if you're at that upper level, consider converting your traditional IRA to a ROTH IRA and paying the taxes on the money now so your beneficiaries won't have to later.

• No matter what your estate's value, avoid investing in annuities. Wealth management adviser Ashoo warns annuities, offered by insurance companies, can cost investors an inordinate amount of money during their lifetime and afterward.

"Insurance companies try to sell customers on the potential for guaranteed income, a death benefit paid to beneficiaries, or a 'can't lose' minimum return, but none of thosecompensates for what you have to give up," he says.

That includes being locked in to the annuity for five to seven years with hefty penalties for pulling out early; returns that fall far short of market investments on indexed annuities; high management fees for variable annuities; declining returns on fixed-rated annuities in their latter years; and giving up your principle in return for guaranteed income.

"If you own annuities and have a substantial estate, there are smart ways to unwind them to minimize damage," Ashoo says.

• Consider spending down your tax-deferred IRA early. If you're in the group with $5 million/$10 million assets, it pays to go against everything you've been taught and spend the IRA before other assets, says attorney Hartog.

"It's a good vehicle for charitable gifts if you're so inclined. And if you're 70½ or older, this year you can direct up to $100,000 of your IRA-required minimum distribution to charity and it won't show up as taxable income," Hartog says. (That provision is set to expire next year.)

You might also postpone taking Social Security benefits until you're 70½ and withdraw from your IRA instead. "That willmaximize your Social Security benefit - you'll get 8 percent more."

Finally, anyone who has accumulated some wealth will do best coordinating their financial planning with a team of specialists, the three say.

As a CPA, Kohles is focused on minimizing taxes; wealth management adviser Ashoo's concern is the client's goals and lifestyle; and lawyer Hartog minimizes estate taxes.

"We get the best results managing tax consequences and maintaining our clients' lifestyles by working together," Hartog says.

About Jim Kohles, Haitham "Hutch" Ashoo & John Hartog: Jim Kohles is chairman of the board of RINA accountancy corporation of Walnut Creek, Calif. He is a certified public accountant specializing in business consulting, succession and retirement planning, and insurance.Haitham "Hutch" Ashoo is the CEO of Pillar Wealth Management, LLC, in Walnut Creek, Calif., specializing in client-centered wealth management. John Hartog is a partner at Hartog & Baer Trust and Estate Law in Orinda, Calif.He is a certified specialist in estate planning, trust and probate law, and taxation law. All three advise ultra affluent families.

24 Oct 2013

Loebsack: Water Infrastructure Bill Creates Jobs and Invests in Our Economy

By Joe Hand

Legislation includes Loebsack's measure to move Cedar Rapids flood protection forward

Washington, D.C. - Congressman Dave Loebsack released the following statement today after the House of Representatives passed the Water Resources Reform and Development Act (WRRDA). This bipartisan legislation will authorize Corps of Engineers funding for improvements to ports, waterways and projects tied to flood protection, drinking water, dams and levees and environmental restoration. The legislation also includes flood protection measures that Loebsack fought to expand after the Floods of 2008. Congressman Loebsack fought to secure funding that was needed to complete the study and allow the Cedar Rapids flood protection project to be included in this bill. He also pushed to move WRRDA forward in order to address critical flood protection and transportation concerns on the Mississippi River. He is a cosponsor of legislation that was incorporated into WRRDA that will explore the creation of public-private partnerships between the Army Corps of Engineers and private entities as financing alternatives for lock and dam capital projects.

"In what has become par for the course in Washington, an issue of high importance to many Iowans and to the nation was again delayed and put on the back burner. While I am pleased that the House Republicans have finally moved the Water Resources Reform and Development Act forward, it is far past time.

"Our crumbling infrastructure is an area I believe continued investment in is absolutely critical. These are investments that create jobs, have a direct impact on our economy, and provide safety and protection for Iowans. Iowa farmers, manufacturers, businesses and local economies rely on the Mississippi River infrastructure. It is clear that the locks and dams along the Mississippi River are deteriorating and significantly harming the economic development in the region. This bill is very important to Iowa, not just for the locks and dams, but also for much of our flood protection and Army Corps projects that are needed to keep our communities safe. The House and Senate must act without further delay to work out the differences between the two bills so a comprehensive WRRDA bill can be signed into law."

The Senate passed its version of WRRDA earlier this year and the two bills will now go to a Conference Committee to reconcile the differences.

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24 Oct 2013

Switch in Third Party Administrators producing savings for Davenport, says Alderman Jason Gordon

By Jason Gordon
Davenport, Iowa - October 24 2013 - A switch in Third Party Administrators (TPA), the entity that processes city employee insurance claims and provides employees with a PPO network of doctors, is producing significant cost savings for the City of Davenport. Effective January 1st of this year, the city switched from its previous TPA to United Health Care, after the city went out with a Request for Proposals (RFP) last year. Alderman Gordon first brought up the potential for cost savings if a new TPA was secured during FY13 budget discussions, and continued to work on the issue throughout the year. "For the first few months under the new TPA, we didn't see the savings right away as we were still paying out claims from the previous TPA, but by about July 1, we started to see the cost savings I thought we would," said Alderman Gordon. He continued, "It is my understanding from finance staff that we have seen a 12% savings in health care claims in the first quarter of FY14 compared to the same period last year. Assuming that trend continues for the rest of this calendar year, the savings to the taxpayer will be between $1 to $1.5 million."

Alderman Gordon was the driving force behind the switch in the city's TPA. "I had a conversation with a colleague who works in the insurance industry, and I was convinced we could save money if we went out to bid for a new TPA. I am not sure staff was initially convinced it was the best idea, and putting together an RFP is somewhat labor intensive, so I kept gently insisting that we pursue this course of action."

Alderman Gordon indicated that he is excited to see what the savings will be in 2014. "That will really be the first full year that the new TPA is processing 100% of our employees' insurance claims, and I am optimistic that the savings to the taxpayer might be closer to $2 million. As we continue to deal with growing budget constraints, I am proud of the fact that I found a way to save taxpayers approximately $1.5 million this year."

For more information, contact:
Jason Gordon
563/529-4468
gordon.c.jason@gmail.com

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22 Oct 2013

How to Reduce the Biggest Expense of Your Life: Taxes

By Ginny Grimsley
Financial Engineer Discusses Ways to Troubleshoot
Unnecessary Financial Burdens

Taxes account for the most expensive burden you'll experience in your lifetime, says engineer-turned-independent financial planning coach Rao K. Garuda.

In addition to federal, state, city and death taxes, there are 59 other varieties. Relatively few taxes, however, account for the bulk of the burden on citizens, says Garuda, whose clients include retirees, people planning for retirement, physicians, business owners and other professionals.

He thinks his fellow Americans deserve a shot at keeping more of their money.

"When I came to the United States, I had less than $10 in my pocket, but I had an excellent education as an engineer. When I married a physician, I realized how expensive it is to make a good living here," says Garuda, (www.aca-incorp.com), who quickly applied his analytical engineering mind to understanding the complicated tax system.

"Since this country has given me so much, I wanted to repay my fellow Americans with strategies for keeping more of their own money."

Garuda identifies some of the most expensive and common tax hurdles affecting Americans and offers advice on troubleshooting our tax system.

• Problem: The IRA tax: great on the front end, terrible down the road.
Solution: An IRA is tax-deferred, which means it will accumulate value over time. But when you withdraw from it, you will be heavily penalized with high taxes. That's why you should convert this asset to a Roth IRA, which allows your money to grow tax-free. Since the money put in was already taxed you don't have to pay any taxes when you take it out, and, overall, you'll save a significant amount of money.

• Problem: Too many people don't take advantage of creating tax-free income via insurance products.
Solution: From a financial perspective, retirees and professional planners run into a significant issue: seniors, blessed with good health, who outlive their money. But with certain insurance products, retirees can create tax-free income while covering the later years of retirement - and protect their wealth if they become severely ill. There are certain insurance products tied to the stock market that can help people accumulate assets in the long run. Many of these products offer a tremendous upside for potential without the downside of increased risk.

• Problem: Missed opportunities - people who don't take advantage of free money in a 401k.
Solution: Perhaps the company you work for is, like many others, bureaucratic to the point of being impractical. Your employer may not have done the best job communicating details about benefits such as matching 401k contributions, or you may not have taken the time to learn them. Now's the time; this is free money! If your employer is offering a 50 percent match on your first 6 percent of contributions to the 401k, you should be contributing at least 6 percent. Educate yourself on your company's plan so you can take full advantage.

About Rao K. Garuda

Rao K. Garuda, CLU, ChFC, is president and CEO of Associated Concepts Agency, Inc. - "The Missing Piece" of financial planning -- founded in 1978, and a popular speaker at seminars and conferences for financial industry professionals. He came to the United States from India 35 years ago with a degree in engineering and, after marrying a physician, realized he had to learn how to reduce the couple's taxes. Disappointed in the financial advice he received from professionals, he went to business school and developed expertise in tax reduction, and protecting money from stock market losses. Rao is a founding member of First Financial Resources, a national organization with over 75 partners in the USA; a life member of the Million Dollar Round Table (MDRT), and a life member of MDRT's Top of the Table for 21 consecutive years.

22 Oct 2013

False Claims Act Continues to Show Its Value

By Grassley Press

Tuesday, October 22, 2013

Senator Chuck Grassley made the following statement after the Taxpayers Against Fraud Education Fund released a report showing that the False Claims Act provides a 20:1 benefit to cost ratio in fighting health care fraud for the federal government.

Grassley is the author of the 1986 law updating the federal False Claims Act.  His qui tam amendments empower whistleblowers to file suit on behalf of the federal government against contractors who fraudulently claim taxpayer dollars.  The law is the most successful tool of the federal government in rooting out fraud against the federal treasury, and has helped recover nearly $35 billion in taxpayer funds that would otherwise be lost.

"Time and time again the False Claims Act has proven its worth to taxpayers.  The law has empowered whistleblowers to come forward, risk their careers and root out the shady characters looking to give the taxpayer a bad deal.  In 1986 the focus was defense contractors.  Now, proving the law's flexibility and value, it's the most effective tool against health care fraud, as evidenced by the report released today.

"The threats to this successful law are constant.  Any efforts to undermine this successful law should be met with skepticism by the courts and Congress."
21 Oct 2013

Medicaid Program Integrity Initiative Saves $86 Million over 3 years

By Tim Albrecht
  • Iowa Medicaid Enterprise (IME) says initiative exceeds savings targets by $18.5 million over three years 
  • Innovative program targets fraud, abuse, errors across Medicaid programs, including personal care providers, in-home respite care, Medicaid-funded lawn-mowing and snow-removal abuses, inappropriate hospital charges, Medicaid/Medicare dual-eligible billing errors 

 

(Des Moines) - Gov. Terry E. Branstad announced today that an Iowa Medicaid initiative saved taxpayers $41 million in fiscal year 2013. That brings the total three-year savings of the program integrity effort to more than $86 million.

"The savings are six times greater than the overall cost of the program integrity contract, and $18.5 million above the savings target. That's very good news for taxpayers," said Branstad. "These savings help us provide better care for 400,000 Iowans in need, without reducing provider rates or trimming services."

The savings were achieved through a three-year, $14 million program integrity contract awarded to Optum of Eden Prairie, Minn. Optum, which manages most of the program integrity work for Iowa Medicaid Enterprise, will continue its program integrity efforts for FY 2014 in the first of two performance-based option years under the contract.

Iowa Medicaid Enterprise Director Jennifer Vermeer said savings under the program integrity contract include both "cost avoidance," which is money not spent because claims errors or fraudulent activities are caught in advance, and "recoveries," which refers to funds inappropriately billed to Medicaid that providers must repay.

A strong emphasis on avoidance is especially beneficial to Medicaid programs, since it is less costly than "chasing" inappropriately paid claims in an effort to recover funds.  Optum discovered inappropriate behavior by both providers and beneficiaries.

"We are pleased with the innovative approaches Optum has instituted," Vermeer said. "We've put those who deliberately seek to defraud the system on notice that we're using some very sophisticated techniques to thwart their efforts. For those who make mistakes or are misinformed, there's an educational component to the program that our Medicaid providers have found helpful."

The majority of the approximately 20,000 Medicaid providers bill appropriately and understand how the program works. But, Vermeer said the few who are fraudulent can cost taxpayers millions.

Some examples of potential fraud or inappropriate claims and payments that Optum analysts found include :

  • Questionable In-home Respite Care Claims: Iowa Medicaid pays for some in-home non-medical services to families with disabled children, who can't be left alone, to give parents an opportunity to shop or run errands. Program integrity analysts found that some of these companies were billing for services not provided, submitting bills that show they were at two different households at the same time, or inflating the time they were at a household. In addition, parents sometimes had siblings or other relatives establish a "storefront day care center," and would bill Medicaid for in-home respite care through the company. Optum's work has resulted in a change in the law that now prevents billing through a day care center.
  • Questionable Chore Claims: People who are eligible for Medicaid-paid nursing home care can sometimes remain in their homes with the help of various services, including chores such as lawn mowing and snow removal. Program integrity analysts found that some chore providers billed for snow removal on days it did not snow, or billed excessively for mild snowfall. In addition, analysts compared plot plans with lawn-mowing claims and discovered that often, providers would bill for far more hours than it would take to mow a small lawn. In one case, analysts found that one provider was submitting bills of $700 per month for lawn care at one single-family address.
  • Questionable Durable Medical Equipment Claims: Generally, durable medical equipment, which includes items such as oxygen tank dispensers, home hospital beds, wheelchairs, etc. - are either purchased outright or rented by Medicaid, whichever is more cost-effective. In some cases, for example, a patient may require a wheelchair or a nebulizer for only a short period of time, and renting is more cost-effective than buying. Program integrity analysts found many instances of companies submitting rental claims long past when purchasing the item would be less expensive. In other cases, companies would submit rental claims even after Medicaid had already purchased the item from them, meaning they were receiving double payments.
  • Questionable "Swing Bed" Claims: Critical access hospitals - defined as smaller, rural hospitals - at times keep injured or very sick patients in more expensive "swing bed" units, which can cost $4,000 per day, rather than moving them to lesser expensive care settings in the same hospital or to different facilities. For example, in several rehab cases, the level of care required could have been handled just as well in a nursing home setting, which costs Medicaid about $250 per day. Program integrity analysts focused on cases where patients were kept in "swing beds" for more than a year - generating up to $1.5 million in Medicaid bills - and found many cases of inappropriate billing by hospitals. The program's efforts resulted in a legislative change that now requires some prior authorization before patients are placed in swing beds.

In addition, Vermeer said there were other Medicaid fraud areas in which IME is collaborating with law enforcement officials, who are investigating based on information from Optum analysts. Steve Larsen, executive vice president of Optum Government Solutions, said Iowa's Medicaid program has become a national model in program integrity.

"The state shares our philosophy about payment accuracy - every taxpayer dollar must be properly spent, and every provider must be properly paid for the critical work they do," Larsen said.

###

For more information:

Amy Lorentzen McCoy

Iowa Department of Human Services

515-281-4848

amccoy@dhs.state.ia.us

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