Katz, Sapper & Miller

After a four-week trial, a jury ruled in favor of the government finding that Tuomey Healthcare System inappropriately compensated 19 specialists and concurrently submitted over $39 million in fraudulent Medicare claims. The decision is based on a whistleblower lawsuit filed in 2005 by a physician who had been negotiating to join the other 19 specialists in employment with Tuomey.

The basis for the government’s case revolved around Stark violations, citing that the compensation arrangement between Tuomey and the physicians took into account the amount of referrals the physicians would generate for Tuomey. The government also successfully argued that since Tuomey knowingly violated Stark Law, all of the Medicare claims were fraudulent and thus they were also in violation of the False Claims Act.

A portion of Tuomey’s defense centered on following the advice of legal counsel when establishing the contracts. The government argued that while this is a valid defense, Tuomey had fired an outside attorney with an opposing view of the physician contracts in late 2005 and thus they were “opinion shopping.” 

Tuomey was found to have submitted 21,730 Medicare claims during the period that violated the False Claims Act. The Sumter, South Carolina-based hospital could face a potential liability in excess of $350 million. Tuomey has 28 days from the verdict to appeal the case.

The Tuomey verdict shows just how important establishing a compliant fair market value compensation plan is when exploring arrangements and that the fair market value be scrutinized by a qualified independent party.   

For more information on Stark compliant fair market value, and/or physician compensation arrangements, please contact Aaron Brezko, a manager in Katz, Sapper & Miller’s Healthcare Resources Group at 317.805.2380 or abrezko@ksmcpa.com.

In many regions across the continental United States, patients are demanding greater convenience, access, and quality in the medical care they receive. Hospitals that want to capture a larger piece of the high growth markets are investing in ambulatory care and outpatient services. Between 2009 and 2010, ambulatory care and outpatient services rose 17 percent, outpacing growth in categories such as inpatient care, physician services and prescription drugs. One of the main goals of the Affordable Care Act is preventative service and reaching the patient or consumer before they end up in a hospital emergency room. Urgent care centers, outpatient clinics, retail pharmacies and health/wellness clinics are all signs of the movement into the outpatient arena.

Outpatient care comprises at least 40 percent of U.S. health system spending and total outpatient spending is projected to reach $182 billion in 2013. The growth in outpatient services can be linked directly to technological advances that have allowed smaller incisions to make procedures quicker and less complicated, as well as the move away from emergency room treatments. Ambulatory care and outpatient centers provide hospitals an effective method for reaching profitable patients and providing convenience to the consumer. In an article published by Becker's Hospital Review, the benefits of the movement toward ambulatory care are highlighted with interesting facts and figures.

What do you think about hospitals shifting their focus to outpatient care? We’d love to hear your thoughts.

For more information on the outpatient trend, and/or other issues related to the Affordable Care Act, please contact Mike Gizzi, a manager with Katz, Sapper & Miller's Healthcare Resources Group at 317.580.2010 or mgizzi@ksmcpa.com.

Katz, Sapper & Miller, LLP, is pleased to announce our seventh annual survey assessing the state of Indiana’s manufacturing and distribution industries is now underway. 

The Indiana Manufacturing Survey is conducted in partnership with the Indiana Manufacturers Association, Conexus Indiana, and Indiana University’s Kelley School of Business.

The survey remains open until May 31. Indiana manufacturers and distributors interested in participating are encouraged to do so by visiting the Indiana Manufacturing Survey site. Upon completion of the survey, respondents will have the opportunity to request a copy of the final results, which will be released in mid-2013.

Take the survey

Katz, Sapper & Miller's Transportation Services Group and Baker Donelson's Transportation Group will host our first Trucking Owners Business Roundtable. The event will be held in Baker Donelson's First Floor Events Center from 7:30 a.m. - 11:00 a.m. on Wednesday, June 5, 2013. The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses. Detailed agenda to come.

Seating is limited, so please RSVP to rsvp@bakerdonelson.com by Wednesday, May 29, 2013.

A block of rooms has been reserved for the night of June 4 at the Homewood Suites Nashville Downtown for a rate of $179 and at the Hilton Nashville Downtown for a rate of $249. Please ask for the Baker Donelson/Katz, Sapper & Miller Trucking Owners Business Roundtable when making your reservation. The deadline to reserve your room at these discounted rates is May 4, 2013.

Come for the roundtable and consider staying for Nashville's annual CMA Music Festival!

While employment growth has been seen in the manufacturing industry, many manufacturers feel there could be much larger gains. In The Hill article, "Manufacturers urge lawmakers to help businesses grow," Vicki Needham reports that this is due to concerns about the health of the federal government and the nation’s current regulatory environment. Manufacturers believe they could be creating up to 20,000 new jobs monthly if they did not have to face all of the uncertainty. The biggest concerns are related to the regulatory environment and the impact from the new healthcare laws. Most manufacturers are still figuring out how the new laws are impacting their businesses. Until they know the exact impact, they will continue to be hesitant to hire.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

In a recent article authored by Tim Cook, published in the Indianapolis Business Journal, "Economic development deals need to benefit all sides," Cook outlines the various facets of economic development deals; charges officials with educating the public on such deals; and stresses the importance these deals have on Indiana's future economic success.

In a time when state and local officials make economic development announcements every day, an increasingly common question is, “How does this benefit me?”

For the company receiving incentives, that answer is easy enough; whether it be tax credits or a training grant, they receive some form of financial support. But, what about state and local government, and the public at large—what’s in it for them? [Read the full article ...]

Tim Cook is the partner in charge of Katz Sapper & Miller’s State and Local Tax Practice and leads the firm's subsidiary, KSM Economic Development. Tim works closely with companies across the country during the site selection process, assisting with identifying available sites, providing comparative analysis of qualified locations, and assisting in negotiating and securing economic development programs.

Co-sponsored by Katz, Sapper & Miller’s Transportation Services Group, KSM Transport Advisors and Scopelitis, Garvin, Light, Hanson & Feary, the most recent Trucking Owners Business Roundtable held in Indianapolis on Feb. 6 featured Thom Albrecht managing director of BB&T Capital Markets, who provided his 2013 economic forecast for the trucking industry. And Katie Feary-Gardner of Scopelitis, Garvin, Light, Hanson & Feary provided an overview of the Patient Protection and Affordable Care Act.

Additionally, a panel of health insurance experts discussed implementation issues related to the Patient Protection and Affordable Care Act.

As part of an ongoing series, the roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses.

To view a video replay of the roundtable and/or download the presentation slides, please click here.

Is the United States on the verge of a manufacturing renaissance? The data from MarketWatch related to on-shoring and re-shoring would suggest exactly that! Since the end of the recession, the U.S manufacturing sector has added approx. 500,000 new jobs to the economy. This is the first time that the sector has seen growing employment since the mid-90s. Most research supports the idea that these jobs are coming from U.S. companies re-shoring their production back to the U.S. However, MarketWatch reports that foreign companies increasingly see the U.S. as a good outsource location for their production (on-shoring). In the end, it will be difficult to tell if this results in an overall net gain or an overall net loss of jobs for the U.S. But it is a good sign that U.S. manufacturing is starting to gain momentum again!

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Katz, Sapper & Miller, LLP, and KSM Consulting, LLC, have partnered with TechPoint to present the KSM Executive Roundtable series throughout 2013, focusing on major issues technology CEOs are facing. This series offers information that cannot be easily found elsewhere, in a format with a free exchange of ideas with other qualified CEOs.

Our next event, "Valuation & Equity Events: Lessons Learned from Startup to IPO," is Tuesday, March 12.

Recent shifts in financial markets and venture capital investment strategies have led many business owners to question how these changes have impacted their companies' value. There is an art and a science to answering the all-important question: "What is my business worth?"
 
Whether your organization is being acquired, going public, or raising venture capital, the valuation of your business is dependent upon a variety of factors. Join us at the March 12 KSM Executive Roundtable, where our expert guests will relay their recent experiences:

• David Becker, president, CEO & chairman of First Internet Bank, has created and sold numerous companies, recently raising angel investment capital for RICS Software and currently preparing First Internet Bank for a NASDAQ offering.
• Christopher Day, managing principal of Navidar Group, brokered the recent sale of iGoDigital to ExactTarget.
• Tim DuVall will serve as the moderator, lending his expertise as a former CFO and partner at Katz, Sapper & Miller.

The roundtable is limited to a small, manageable group size, and only CEOs or executive managers from technology- or knowledge-based firms are invited to attend. This ensures that discussions are narrowly focused to provide optimal value for our invited guests.

This event is by invitation only. For more information or to RSVP, contact Elizabeth Anderson at 317.275.2080 or eanderson@techpoint.org.

A recent article in INdiana Connections, published by Inside INdiana Business in partnership with Conexus Indiana, highlights the findings of Katz, Sapper & Miller's recently released 2012 Indiana Manufacturing Survey.

"Industry experts liken the past year in Indiana's manufacturing sector to halftime of a football game: players took some hard hits the first two quarters, as the recession did on some Hoosier companies, but they are now examining what worked, what didn't and defining their game-winning strategy moving forward." [Read more ...]

The annual survey is conducted by Indiana University's Kelley School of Business - Indianapolis and is compiled through the combined efforts of Katz, Sapper & Miller, Conexus Indiana, and the Indiana Manufacturers Association. To learn more, download a copy of the survey.

The U.S. Department of Commerce recently released a new study titled The Geographic Concentration of Manufacturing Across the United States, which presented some interesting information on U.S. manufacturing and Indiana’s role in the industry. Manufacturing has a strong influence on the overall U.S. economy, with 25% of GDP growth from 2009 to 2011 coming from the manufacturing sector. However, this is the first study that the Commerce Department has done on the geographic nature of the manufacturing industry. The findings reveal:

• In 2010, 629 counties (the U.S. has a total of 3,145) reported that 20% of total earnings came from the manufacturing sector.
  • Indiana ranked highest with 22.3% of the state’s earnings coming from the manufacturing sector (national average was 9.9%).
  • Indiana had the most counties included in the figure above (50 counties).
  • The study found that of the 629 counties noted above, 68% of them were located in rural or micropolitan areas.
• In 181 counties, 20% of all jobs in the county were manufacturing jobs.
  • Indiana had the highest percentage of its employment in the manufacturing industry, with 13.1% of employment relating to manufacturing jobs (national average was 7.0%).
  • Indiana had 26 counties that fell into this category.
  • Approximately 80% of these counties were located in rural or micropolitan areas.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Healthcare reform is coming! You might hear it referred to as the Patient Protection and Affordable Care Act (PPACA), or a host of other names. Regardless, it will be here before you know it. If you employ more than 50 full-time equivalent workers (FTEs), there are a few simple steps you can take to help you navigate healthcare reform:

• Establish an accurate way to keep track of all employees' hours in 2013.
• Determine whether it is better to "pay or play." In other words, it is more lucrative for you to pay a penalty under the employer mandate or to offer a benefit plan that meets the minimum requirements for affordability and coverage?
• Attend a conference or two. Many conferences are being held to help business owners understand the impacts of healthcare reform.
• Surround yourself with trusted advisors, from your benefits firm to your accounting firm and your attorney. And please get your staff involved in these conversations. 

As you already know, there is enough new regulation here to confuse even the most experienced benefit advisors, so speak with everyone you can and learn as much as you can. These steps will get started in the right direction.

While we are on the topic, there is a provision on the PPACA that will impact your bottom line in 2014:

In 2014, every employer – regardless of self-insurance – that has a healthcare benefit program will pay a "transitional reinsurance" fee. This fee will be assessed over every life that is insured on your policy and will be assessed at $6.00 per head, per month. That number decreases to $3.00 in 2015 and $1.00 in 2016. Consider an employer with 500 employees on a benefit program. The average household size is employee plus two, which totals 1,500 lives at $6.00 each per month. That amounts to $9,000 per month, or $108,000 in 2014. The proceeds of the “transitional reinsurance” go to commercial insurers to stabilize premiums in the individual market.

Again, reach out to your trusted advisors and seek their input. You won't regret it.

KSM Profit Advisors, an affiliate of Katz, Sapper & Miller, helps companies increase profits and become more competitive by reducing costs through innovation and improved efficiency. For more information about how KSM Profit Advisors can help your company, contact Scott Grotjan at sgrotjan@ksmpa.com.

Indianapolis, Ind. (Feb. 1, 2013) - The certified public accounting firm of Katz, Sapper & Miller LLP (KSM) is pleased to announce that Michael Gizzi has joined the firm as a manager in its Healthcare Resources Group.

Gizzi contributes to the firm’s hospital and physician group consulting initiatives, including strategic planning, operational performance improvement and healthcare reform education.

“Mike’s experience in healthcare consulting makes him a great fit for KSM,” said David Charles, a partner in KSM’s Healthcare Resources Group. “He offers a unique perspective that can help our clients overcome industry challenges.”

Prior to joining the healthcare advisory practice of a Big Four firm, where he served both local and national healthcare clients, Gizzi played professional basketball in France, Greece and Italy for more than 12 years. He received a Bachelor of Science degree in finance from LaSalle University and is a member of the Medical Group Management Association as well as the American College of Healthcare Executives.

Mike Gizzi can be reached at 317.580.2010 or mgizzi@ksmcpa.com.

A few cities in the United States are synonymous with booming growth. These areas, such as Silicon Valley and Austin, Texas, have built much of their success on the back of technology developments. However, a recent Kauffman study, "The Ascent of America's High-Growth Companies," which analyzes the geography and founder mobility of Inc. 500 firms, indicates high-growth companies are not relegated to locating in areas infamous for high-growth. Instead, the study finds cities such as Indianapolis, Salt Lake City, and Buffalo are not only perfectly capable of housing high-growth companies, but are successfully doing so. 

In a recent Indianapolis Business Journal article, "National Shift in 2012 Signals Opportunity Ahead for Indiana Tech," by Mike Langellier, CEO of TechPoint, Langellier points out only five other metro areas produced more Inc. 500 high-growth businesses per capita than Indy in the past 10 years.  

The Kauffman study also finds that the founders of these Inc. 500 companies often choose to stick close to the roots they developed in college. However, 75 percent of Inc. 500 founders start their firms in locations other than the metro area where they last earned a degree. In his article, Langellier points out that Indiana has some great universities and ranks second in attracting out-of-state students. The problem is, 80 percent leave the area once they graduate. Based on the Kauffman report, it is not as if these graduates are necessarily leaving for the coasts and beach weather as some might assume.While these founders are mobile, they often don't travel too far. Sixty-seven percent of the founders prefer to abide in the same region as where they earned that last degree. What does this mean? Indianapolis isn't necessarily competing with Silicon Valley and Austin.  Instead, Indy may be competing with Louisville, Chicago and Cincinnati to retain the talent produced from our in-state colleges and universities.

Wherever the competition, it is imperative to Indianapolis’ growing technology-based companies to retain the talent coming out of Indiana institutions.

Charles Decker is a CPA in Katz, Sapper & Miller's Business Advisory Group. For more information, contact Charles at cdecker@ksmcpa.com.

A recent article in the Council of Supply Chain Management Professionals’ Quarterly Supply Chain newsletter, "Three Trends to Watch in 2013," addresses what the council sees as the top trends to watch for in 2013.

1. Reshoring of Jobs: This is a concept that received a lot of attention in 2012 due to rising labor costs in foreign countries, quality issues and transportation costs. Additionally, there will be increased concerns in 2013 over the ongoing labor strikes that have occurred at many U.S. ports recently, which serves as a reminder that there are risks associated with manufacturing offshore. Finally, there is far more risk to an international supply chain than a domestic supply chain (the potentional for things like natural disasters or political upheavals are higher).
2. Rise of Demand-Driven Replenishment: The idea that manufacturers will use actual data from customers (i.e., point-of-sale systems at a retailer) to determine the amount of production that needs to occur.
3. “Big Data” Analytics: With modern technology, manufacturers are able to use much larger quantities of information in an efficient and timely manner. Access to this information provides new opportunities to improve efficiencies and eliminate bottlenecks in production.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Canadian National (CN) and the Indiana Rail Road Company (INRD) announced last week construction of an intermodal terminal in Indianapolis is currently underway. The new terminal will be located at INRD’s current location downtown, about one mile from Lucas Oil Stadium. The terminal is expected to start receiving empty containers as early as June 2013 and will offer Indiana importers and exporters direct access to the west coast Port of Vancouver and the Port of Prince Rupert.

The announcement of the new terminal is great news for the transportation industry as well as Indiana manufacturers who recently indicated they are well positioned and ready to compete, based the results of Katz, Sapper & Miller’s 2012 Indiana Manufacturing Survey: ”Halftime” for Indiana Manufacturing. For more information, download the report or read the full press release from CN and INRD.

The Manufacturing Institute recently released the eighth edition of The Facts About Modern Manufacturing. The report highlights the importance of manufacturing not only to the U.S. Economy but to the global economy as well. In fact, the report claims that the U.S. manufacturing sector is the largest manufacturing sector in the world and is the eighth-largest economy in the world. Additionally, 57% of all U.S. exports are manufactured goods.

The report does point out a few areas of concern. First, U.S. manufacturing exports were more than three times that of China’s exports in 2000. However, in 2011, Chinese manufactured exports topped U.S. manufactured exports by 21%. Additionally, the U.S. manufacturing industry must complete with a 17.6% higher structural cost burden (incorporating tax liabilities, employee benefit costs, litigation costs and regulatory compliance costs) than its nine largest competitors. Finally, despite the increases in U.S. manufacturing over the past few years, the sector has seen a decrease in its market share of global exports from 19% in 2000 to only 14% in 2007.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

The Indiana Department of Revenue recently announced significant changes to its sales tax policy regarding sales of optional maintenance and warranty contracts. The policy change was announced via an updated Information Bulletin #2, effective Jan. 1, 2013.

Note: The Department's positions on mandatory maintenance contracts and maintenance contracts related to software have been unchanged by the updated bulletin.

The Department's former policy was to treat optional maintenance and optional warranty contracts the same, imposing tax on the sale of either type of contract when it contained a right to have tangible personal property and there was a reasonable expectation that property would be provided under the contract.

The updated bulletin outlines the following state policies:  [Read more ...]

The 2012 Taxpayer Relief Act signed into law by President Obama Jan. 2, 2013, extended several of the business tax breaks that had expired as of Dec. 31, 2011.  The Research and Expense Credit is one of the tax breaks retroactively extended in the Act. The credit now applies to qualified research expenses paid or accrued after Dec. 31, 2011, and before Jan. 1, 2014, thus allowing companies to take advantage of the tax benefits for a few more years. 

The calculation of the credit will remain the same. Therefore, entities are allowed a credit of up to 20% of its qualified research expenditures over a base amount, which is calculated over a set measurement period. Congress, however, has implemented changes allowing more flexibility in situations where the business is a member of a controlled group or where ownership changes occur. For members of a controlled group, the credit is now determined proportionately to each member’s share of the aggregate research expenses. The rules are also relaxed for those that acquire a new business or major portion of a business. The credit now allows the expenses and gross receipts of the predecessor owner to be included for the calculation of the measurement period. The Alternative Simplified Method calculation is still available in determining the research credit at the election of the taxpayer. 

Indiana also provides a Research and Development Credit for taxpayers who have qualified research activities within the state of Indiana. The Indiana credit is 15% of the first $1 million in qualified research expenses and 10% for qualified research expenses above $1 million. The Indiana credit is calculated in a similar fashion to the federal credit. 

If your company is involved in research and development, you may be able to benefit from the Research Credit, For more information, please contact your KSM advisor.

Amanda Williams is a staff accountant in Katz, Sapper & Miller’s Business Advisory Group.  For more information, contact Amanda at awilliams@ksmcpa.com.

Congress has said that the tax side of the “Fiscal Cliff” has been averted. January 1, at the 11th hour, both the Senate and the House approved the American Taxpayer Relief Act of 2012, and President Obama signed the bill into law the following day.  So where, or how, will manufacturing companies feel that relief?  

As of Dec. 31, 2012, many business tax provisions were set to permanently expire. The newly passed legislation has extended many of these provisions through 2013. 

• The well-known business tax code Section 179 encompassing small business expensing has been extended through 2013. 
• For 2012 and 2013, the expensing limit of qualified property under code Section 179 is $500,000 with a $2 million investment limit.
• Also enhancing the tax effect of capital investments is the extension of bonus depreciation. The Act extends bonus depreciation through 2013, allowing 50% of qualified property to be expensed in the initial year of use. 
• The final depreciation-related provision allows for the extension of 15-year straight-line depreciation for qualified leasehold improvements through 2013.

Other selected business provisions that may affect manufacturing companies are as follows:

• The research credit has been restored for 2012 and extended for 2013. The Act also added modifications for businesses under common control and situations where there is a change in ownership.
• The Work Opportunity Tax Credit has been restored for 2012 and extended for 2013.
• For S corporations, the rules related to basis adjustments for charitable contributions of property have been restored for 2012 and extended for 2013.
• The reduced five-year recognition period for S corporation built-in gains tax has been restored for 2012 and extended for 2013.
• The 100% capital gain exemption for qualified business stock has been restored and extended for stock acquired prior to Jan. 1, 2014.
• The Alternative Fuel and Alternative Fuel Mixture Credit has been restored for 2013 and extended for 2013. This includes propane used in forklifts.

It is important to note that the Act did not extend the 2% Social Security payroll tax cut that had been in place in 2011 and 2012. Thus, all employee wages below $113,700 will be subject to the full 6.2% Social Security tax rather than the reduced 4.2% that applied in 2011 and 2012.

The information covered above only reflects business tax effects of the Act and does not encompass individual, estate or gift tax provisions that are likely to affect owners of flow-through manufacturing companies. For more information on these provisions, visit Katz, Sapper & Miller’s news page. We would be happy to discuss any of the provisions and their impact on you and your business.   

Ali Todd is a CPA in Katz, Sapper & Miller’s Business Advisory Group. For more information, contact Ali at ATodd@ksmcpa.com or 317.428.1102.