LEDGER DECRYPTING CRYPTOCURRENCY TAXES NOVEMBER/DECEMBER 2018 Mazars USA LLP is an independent member firm of Mazars Group. CONTENTS 2 | Mazars USA Ledger CONTENTS NOVEMBER/DECEMBER 2018 4 | Questions Healthcare Companies Should Ask About the Data Driven 23 | Healthcare Policy and Procedure Best Practices Revenue Cycle 26 | FICE Discussion Paper: The Board's Preferred Approach to Classifying 6 | What’s Broken in Healthcare Financial Instruments as Liabilities or Equity 8 | Decrypting Cryptocurrency Taxes 33 | Why Provider Organizations Should Be Proponents of Capitation 12 | Cryptocurrency Attracting the Next Generation of Renters 37 | IFRS Alerts 14 | Lease Accounting for Broker Dealers 39 | Real Estate Alert 19 | Puts on Non-Controlling Interests: What Changes Are Proposed in the 41 | Tax Alerts FICE Discussion Paper *The Mazars USA Ledger contains articles and alerts published from October 1, 2018 - November 30, 2018. November/December 2018 | 3 HEALTHCARE QUESTIONS HEALTHCARE COMPANIES SHOULD ASK ABOUT THE DATA-DRIVEN REVENUE CYCLE BY DOUG BARRY A WHILE BACK, WHEN YOU FIRST READ ABOUT THE EQUIFAX CYBER BREACH WERE YOU SURPRISED? IT SEEMED ODD, CON- SIDERING THEY ARE ONE OF THE LARGEST ORGANIZATIONS IN THE BUSINESS OF HOUSING AND SELLING YOUR PERSONAL AND FINANCIAL DETAILS. I THINK MANY OF US THOUGHT COMPANIES LIKE THEIRS WERE BULLET-PROOF. THERE MAY HAVE EVEN BEEN A CASUAL CONFIDENCE AND ASSUMPTION THAT COMPANIES LIKE THAT WOULD EMPLOY SOME OF THE STRICTEST DATA PROTECTION MEASURES AVAILABLE. THEY WERE ALSO IN THE BUSINESS OF ACCURATELY ANALYZING YOUR FINANCIAL BEHAVIOR. THE INTEGRITY OF THIS DATA WAS ENORMOUSLY IMPORTANT, CONSIDERING CREDIT MARKETS RELY ON IT TO MAKE SOUND DECISIONS AS TO WHETHER OR NOT YOU ARE LIKELY TO REPAY A DEBT. THIS BREACH CHANGED THE WAY WE LOOK AT OUR OWN IDENTITY PROTECTION AND LESSENED OUR TRUST IN THE BIG THREE REPORTING AGENCIES. COMPANIES LIKE EQUIFAX DO MUCH MORE THAN ASSIST THE CREDIT MARKETS. THE BIG THREE - EXPERIAN, TRANS UNION AND EQUIFAX - HAVE GROWN TO BE SIGNIFICANT PLAYERS IN THE HEALTHCARE SPACE. THEY ARE DATA PARTNERS SUP- PORTING EFFORTS TO REFINE WORK-FLOW AND REDUCE COSTS TO COLLECT FOR SOME OF THE LARGEST HEALTH SYSTEMS IN THE COUNTRY. PROVIDERS EMBRACED ANALYTICS THAT PROVIDED THEM WITH INFORMATION REGARDING A PATIENT’S PROPENSITY TO PAY THEIR BILL. THEY EMBRACED HAVING THE ABILITY TO MOVE INDIGENT PATIENTS OUT OF THEIR COLLECTION TEAMS AND STRAIGHT TO PRESUMPTIVE ELIGIBILITY FOR A CHARITABLE WRITE-OFF. EMPLOYING THESE AUTOMATED MANAGEMENT TECHNIQUES MEANT HOSPITALS COULD COLLECT MORE MONEY AT A LOWER COST. SO WHAT NOW? THERE ARE NUMEROUS QUESTIONS THAT NEED TO BE ANSWERED. WAS YOUR PATIENT DATA PART OF THE BREACH? 4 | Mazars USA Ledger Most likely there won’t be any implications for the majority of providers demand to stop that facility’s information from being made public. The data with the exception of those hospitals that chose to place their patients who can contain medical and demographic information including social security failed to pay timely into one of the three credit bureaus with the hopes of and date of birth, which are frequently sold on the black market for profit. securing payment in the future. But what about patients who are processed IT Security Officers should frequently be at senior management meetings through the three credit agencies to determine eligibility or the likelihood of keeping them informed of potential threats and conveying current steps paying their debt? taken to shore-up defenses. With so many news stories highlighting a solution or protective measure What about the vendors who provide services to the organization? Health- requiring consumers to “freeze” their credit, it begs the question as to what care providers tend to have numerous buyers of products and services that will ultimately mean for hospitals and physician practices who utilize in a single organization. Frequently, receivable vendors are engaged this data on a regular basis. without the level of IT scrutiny needed in order to protect an organization from possible threats. When I was in the provider space, I can’t remember How many patients will opt to take this freezing measure? Will this begin to ever having to share a desired tool with an IT Security professional before impact the integrity of the financial modeling you apply today? Doesn’t your moving forward. automated receivable flow for propensity to pay and presumptive charity el- igibility rely on the financial information provided by these credit agencies? In Revenue Cycle there are numerous technical applications sold on the It most certainly relies on a large portion of it. market intended to help improve financial performance. The contracting phase usually concludes before the IT professionals get an opportunity to So what is the potential impact on your operations? Will patients who dig into the details. Allowing executives to engage vendors without having freeze their personal credit files provide you with incomplete or less their IT Security team dictate the strength and minimum standards required accurate data on which to base your decisions? Will it simply reduce the for technology invites trouble. number of patients you can automate into a preferred work flow? These products are sought after by Revenue Cycle professionals because One thing is for sure; you need to explore the impact with your current ven- of their perceived technical superiority when compared to the offerings of dor, and you need to plan to address it. A significant reduction in available most HIS systems. The perception of advanced technical capability often data could ultimately impact your staffing should you begin reverting back can be misinterpreted by the buyer to mean they have somehow met very to more manual processes when assessing patients’ abilities to resolve stringent security guidelines. It can leave one with a false sense of security. their debts. When we perform assessments of clients, we often see these types of con- tracts have not been appropriately vetted. It is essential to have a qualified It is by now clear that we live in an era in which healthcare organizations cyber security expert assess your situation. are forced to allocate valuable dollars away from delivering patient care and towards improving information systems security. Whether you use data to streamline your workflow, technology to enhance performance, or just want to protect patients’ identities from being compro- Facilities must invest heavily to protect their patient’s information from be- mised, the need to be more collaborative and to engage in interdepartmen- ing hacked or accessed by an increasing number of outside threats. More tal reviews and discussions prior to making any decisions to provide a third and more we read about attacks on healthcare organizations by foreign party with your data has never been more important. and domestic cyber criminals. Doug is a Principal in our New York Practice. He can be reached at Those successful in accessing a provider’s system can bring internal op- 212.375.6558 or at [email protected]. erations to a grinding halt. Frequently the attack is coupled with a ransom FEATURED GUIDE 2018 Tax Planning Guidelines for Individuals and Businesses In 2018, tax planning was significantly impacted by the Tax Cuts and Jobs Act (TCJA), which contains arguably the most sweeping changes in US tax law since the enactment of the Tax Reform Act of 1986. The TCJA has affected many areas of taxation including international tax, individual and business income tax, estate and gift tax, state and local tax, compensation and benefits, and not-for-profit tax. Scan the barcode to view full guide. November/December 2018 | 5 HEALTHCARE WHAT’S BROKEN IN HEALTHCARE BY MARK MARTEN While many in this nation are confused about the direction of healthcare, we look toward the future. Regardless of the design, one thing is clear – we need more accountability in healthcare. There still isn’t a clear understanding of risk-based contracting in the industry. This value-based payment model is inevitable and will ultimately shape the future of health- care in a way that will be mutually beneficial to patients, providers, and payers. So why are the details still so murky, and where does all this trepidation come from? As with many visionary endeavors, risk-based payment sharing can require heavy collabora- tion, strategic planning, complex contracts, a slow return on investment, and uncertainty in the near term. Risk Sharing 101 Risk-based payments are meant to provide more accountability by requiring providers and hospitals to share in the risk of treating the entire spectrum of a population. Physicians are required to lower costs by providing quality care to reduce utilization, while hospitals must learn to deliver care more efficiently and coordinate with others. 6 | Mazars USA Ledger TRUE RISK True risk is accountability for the total cost of care for the lifetime of a pop- ulation. Some members are healthy and rarely access care, while others require intense services provided by multiple professionals. We must get to a point where we as collective providers are responsible for the cost of care for an entire population. This can be done through working with a communi- ty and taking on the payment and administration of services. One successful true risk model is Medicare Advantage, wherein a plan is paid a monthly capitated fee to provide care for its assigned members. This is most often delivered through a network of physicians and providers who are responsible for some or all of the prepaid amount. They must keep the cost of care less than the payment in order to make a margin so they can MEDICARE LEADS THE WAY continue to reinvest in the lifetime care of their patients. Over the last 50 years, we have seen Medicare take the lead on reforming the delivery of healthcare.