The Healthcare Industry Gets a Dose of Unclaimed Property

by Maureen Ferrari 27. February 2017 15:07
Among the many compliance obligations that corporations have, one that can be the most complicated and costly to an organization, if neglected, is unclaimed property compliance. While each state has its own unclaimed property law, and no two laws are exactly alike, every state has the authority to audit the books and records of a holder if the state has “reason to believe” that the holder is not in compliance with the state’s unclaimed property law. States have recently targeted the healthcare industry, including both providers and insurers, for unclaimed property audits. The level of risk for an unclaimed property liability in the healthcare industry can be greater than average due to the unique accounting challenges that may give rise to its occurrence. This includes: · Multiple payors, including the patient, insurer or multiple insurers, Medicare/Medicaid can result in overpayment for services. It is often challenging to determine who is entitled to the refund. · Decentralized accounting systems in large healthcare organizations create risk on an enterprise-wide level, including all affiliates such as outpatient care centers, rehabilitation centers and physician practices. · Accounting adjustments/overpayment for contractual allowances. This can occur when a healthcare provider unknowingly uses an expired contract to estimate and record a receivable. If the incorrect amount is recorded and the payment is larger than the estimate, it will result in a credit. Other causes can be an incorrect billing for service or a miscoding of services provided. · De minimis write offs. Many healthcare institutions have a policy of writing off what they consider to be de minimis credit balances. According to most unclaimed property laws, there are no de minimis amounts of unclaimed property, therefore, any and all amounts are owed to the owner and if the owner cannot be located, they must be reported to the state. · Unapplied cash or other payment is common in the healthcare industry and can occur when they cannot be attributed to a specific patient. · Unclaimed patient accounts and security deposits are a common source of unclaimed property generated by long-term care and assisted living facilities. Recognizing that the healthcare industry is susceptible to unclaimed property liabilities, the states have begun to issue audit notices via their third-party audit firms. States frequently utilize the services of audit firms to represent the state in an audit because they lack the resources or expertise to engage in audits in certain industries. Most often, the audit firms will represent multiple states in the audit, with the state of incorporation taking the lead in the audit. It is not uncommon for unclaimed property audits to go on for years. What can healthcare providers do to minimize exposure? · Have detailed policies and procedures for the handling of inactive and unclaimed accounts. Keep them updated and ensure that the entire enterprise is operating under the same procedures. · Have a record retention policy to support unclaimed property compliance. While the typical record retention period for tax is seven (7) years, unclaimed property record retention should exceed ten (10) years, as that is often the minimum lookback period for an unclaimed property audit. · Ensure that unclaimed property liabilities are addressed in all contracts with third party providers. · Make an unclaimed property compliance review part of your merger and acquisition transactional due diligence. · Be aware of business to business transactions that may be exempt from unclaimed property in some states. · Ensure that transaction details are maintained or systems archived in the event of a system conversion. · Report unclaimed property on an annual basis to all states where a liability exists and ensure that all operating entities are reporting either on their own or as part of a consolidated enterprise-wide report. If your organization has a questionable or inconsistent unclaimed property reporting history, there are things that you can do to get ahead of an audit: · Control your own destiny. Perform a self-assessment to determine liability, state by state. · Take advantage of opportunities to voluntarily comply. Most states have a voluntary compliance/disclosure program that will allow you to report out-of-compliance property penalty and interest free. If you enroll in a voluntary program, you can likely avoid an audit. · Establish policies and procedures that are implemented enterprise-wide. It is important that all entities, divisions and subsidiaries are utilizing the same standards for handling and reporting dormant accounts. · Ensure that unclaimed property compliance is part of your compliance and risk evaluations. Consider hiring an advocate to evaluate your unclaimed property exposure and develop a compliance strategy that is cost effective and time sensitive. A state-specific solution is the best solution, as one size does not fit all when working with the states. Unclaimed Property Advocates, LLC, an affiliate of Urish Popeck & Co., LLC, is a full-service unclaimed property annual reporting and advisory service organization. For more information, please contact Maureen Ferrari Grollman, Managing Partner, at or via telephone at 610-256-7931.

Good News for U.S. Competitiveness: The Defend Trade Secrets Act

by Ken Urish 26. May 2016 09:24
Trade secrets are critical to competitiveness in every industry, and it is not just the obvious secrets like Coke’s formula or the air pressure of New England Patriot footballs. Many companies mistakenly focus their protection efforts only on key patents, proprietary processes, etc., and overlook other, less obvious factors that contribute to their competitive edge. These need to be identified and protected along with the highest profile secrets. The Defend Trade Secrets Act (DTSA), passed by Congress in May 2016, is a new weapon for companies to fight trade secret loss. It is estimated that $300 billion of trade secrets are lost every year due to cyber attacks, criminal activity, and/or employee theft and negligence. The DTSA allows companies to pursue their legal cases in federal court. Previously, these laws were determined on a state-by-state basis, making prosecution complicated and difficult for victims of trade secret attacks. The DTSA also supports whistleblower activity, as it provides immunity for individuals or employees who confidentially report the trade secrets theft to an attorney or the government. Whistleblower protection is a key component of good governance practices and a quality ethics and compliance program. On the downside, the DTSA is also more federal regulation. While it does impose new burdens on business (i.e. new reporting requirements, burden of proof that shows “reasonable measures” were taken to protect trade secrets), the benefits of the DTSA outweigh this drawback. The more tools U.S. companies have to protect their trade secrets, the more competitive we will be in the global economy.

Unclaimed Property News - Delaware Offers a Carrot

by Ken Urish 11. July 2012 15:15
By virtue of its being the legal home for a large majority** of corporate America, Delaware is the big dog in the world of abandoned or unclaimed property. Policies and procedures regarding the reporting of unclaimed property are under scrutiny by state treasuries across the country because it is increasingly seen as a key resource to plug budget holes. Very understandable, since recoveries by states are literally found money. Because Delaware leads the country in unclaimed property receipts by a wide margin, it is significant that Governor Jack Markel is about to sign into law a new and alternative Voluntary Disclosure Agreement Program (“VDA”). The program is designed to be an incentive for holders to bring their reporting into compliance with Delaware’s laws, in return for a reduced look-back period. The earlier participants enroll the shorter the look-back period will be. Enrollees by 6-30-13 will be limited to a 1996 look-back period; those that wait until 6-30-14 may be eligible for a 1993 period. Delaware’s current VDA requires reporting back to 1991. Will this program increase compliance? State treasurers nationwide will be watching with great interest, as will those of us that practice in the area of unclaimed property recovery. For more details on Delaware’s new VDA, please see this state and local tax alert.     ** More than 900,000 business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 63% of the Fortune 500 (source: State of Delaware).
Categories: Tax

Making Your Online Presence More Secure

by Chris Talipsky 3. July 2012 14:24
You might not give a second thought to having the same password on all your online sites. But this could lead to your bank account being emptied or your email being hijacked and your identity stolen. You may have even been savvy and used strong passwords but still are vulnerable just because your dog's name is Fido. [More]
Categories: Tech Tips

The Tax Gap - are you the 86%?

by Rocco Romano 27. January 2012 10:35
Every 5 years the IRS releases updated Tax Gap estimates, and it has just published the findings for 2006, the most recent year for which figures were analyzed. The Tax Gap statistic measures compliance by comparing total tax liabilities to total tax receipts (including with enforcement collections and late payments). It also identifies some primary reasons for non compliance in that particular reporting year (non-filing, underreporting, and underpayment were the top 3). As far as a trend, not much changed over the last two years that were analyzed. The "net tax gap" for 2006 was 85.5% compliance; in 2001 it was 86.3%.What did that mean for Treasury receipts? In 2006, the unrealized 14.5% equates to $385 billion dollars. Just remember, the tax group at Urish Popeck have the specialized skills to help to keep you and your business in compliance - while minimizing the taxes you owe. Minimizing taxes doesn't contribute to the Tax Gap - it just saves you money. For more information regarding the new tax gap estimates released by the IRS, please read their Article: IRS Releases New Tax Gap Estimates.
Categories: Tax