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Read this if you work within a State Medicaid Agency (SMA). This is the second article in a series of articles published in follow-up to the Medicaid Enterprise Systems Conference (MESC). A prior article highlighted industry MES trends and the value of the CMS and SMA MES partnership, while future articles will include guidance on SMA MES outcomes, how SMAs can embrace Artificial Intelligence (AI), and how SMAs can further support their teams in achieving organizational excellence.

At MESC in Louisville this year, CMS announced it would be publishing new Advanced Planning Document (APD) and testing guidance as well as seven required templates. Through these publications, CMS is acknowledging feedback and lessons learned from SMAs and vendors while also enabling standardization and connections across Medicaid Enterprise Systems (MES). This guidance is also sure to help further data standardization and MES integration within SMAs.

The seven required MES templates, identified below, are coming to you in the very near future:

1. MES APD: Used for Planning-Advanced Planning Documents (PAPDs), Implementation Advanced Planning Documents (IAPDs), Advanced Planning Document Updates (APDUs), and as-needed submissions. Used for both Medicaid Management Information System (MMIS) and Eligibility and Enrollment (E&E) APD submissions. 
2. MES Operations Advanced Planning Document (OAPD): Used to seek funding for system maintenance and operating costs.
3. Analysis of Alternatives (AOA) Template: Used to standardize submission of the CFR-required statement of alternative considerations detailed in the IAPD and other APDs (as applicable). CMS also noted that AOAs and reuse plans serve as a compelling factor in determining CMS support of SMA FFP requirements.
4. MES Medicaid Detailed Budget Table (MDBT): Used to provide a structure for submitting required detailed budget data within an APD.
5. Operations Reporting Workbook (ORW): Used for documenting metric definitions and values that show you are meeting applicable outcomes and benefits to Medicaid.
6. Certification Eligibility Triage Form: Used to determine whether Streamlined Modular Certification (SMC) applies to the project.
7. Monthly Project Status Report Template: Used to monitor, oversee, and manage risks associated with achieving APD-established project outcomes.

CMS also highlighted the next evolution of MITA 4.0, which promises to reduce the burden on SMAs in fulfilling their MITA obligations and aids in streamlining strategic planning efforts and implementation, as well as maintenance and operations (M&O) reporting. Learn more about how Alejandra Johnson, technical director of the Division of State Systems at CMS, and the MITA industry workgroup are moving MITA forward.

Keeping with the theme of furthering CMS and SMA’s partnership, two CMS state officers (SOs)—Jessica Dunlap and Dion Summerville—provided attendees with insight into the day in the life of a CMS SO. They highlighted the SO team structure, operational statistics, and some notable do’s and don’ts. Below are some of my personal favorites:

• The SOs are organized into five color teams and an operations team that spans all 56 SMAs.
• SOs are primarily responsible for reviewing procurement/APD documentation, conducting certification reviews, serving as a strategic partner for the SMA, participating in workgroups, and providing meeting support and technical assistance for SMAs.
• In FY2023, CMS SOs reviewed more than 675 APDs, 500 contracts, 90 SOWs and RFPs, and one audit. That’s a whole lot of documents!
• Other notable APD do’s and don’ts:
  • Do schedule meetings with your SO prior to APD submission.
  • Do clearly define outcomes and metrics.
  • Do forecast and schedule future APD submissions.
  • Do list all contracts and contract costs in the contractor resource section.
  • Do begin cost allocation discussions early.
  • Don’t forget your vendor and personnel resource statements.
  • Don’t forget to include procurement, testing, and implementation schedules.
  • Don’t forget that CMS has a 60-day review window.
  • Don’t skimp on writing your alternatives analysis.

CMS also highlighted the ongoing importance of SMAs building reuse plans into their APDs and announced forthcoming guidance—a testing framework—for SMAs to use in support of their modernization efforts.

CMS’s commitment to providing clearer guidance and standardized templates marks a pivotal step toward simplifying and enhancing SMA MES operations. CMS listened to the needs of SMAs and vendors and is fostering greater connectedness across the Medicaid landscape. As we prepare to adopt these templates and guidance, the message is clear: Success lies in collaboration, standardization, and proactive engagement with CMS. Let’s embrace these changes and continue building stronger, more efficient systems for those we serve.

Please contact our Medicaid consulting team if you have any questions or would like to learn more. We're here to help.

As we look ahead to fall, here’s a glimpse of what summer was like:

Summer is when the valuation team prepares for the busy times ahead. While our work never truly slows down, we take this opportunity to help ensure we’re well prepared during the busy times. Our summer was full of initiatives like training analysts, getting acquainted with future talent through our intern program, refining templates, and exploring new ways to help our clients create, grow, and protect value. We also spent a little more time digesting economic trends and forecasts and considering what implications these variables may have on business value.

Although summertime is a generally slower time for the valuation team, we’ve seen a notable increase in M&A activity. Transactional activity often follows interest rate trends. We’ve seen activity pick up significantly in the last nine months under the current stable interest rate environment. As rates drop, more deals are sure to follow.

Regarding estate planning, transferring a valuable business interest may become significantly more expensive in 2026. Federal gift and estate tax lifetime exemption amounts are at all-time highs; currently, $13.6 million per individual in 2024. Individuals should be aware of the scheduled sunset of the above-referenced amounts in 2025 with reversion back to previous levels of $5.0 million (adjusted for inflation). Further reading on this topic can be found here.

In our ESOP sector, we continue to perform annual valuations to assist employee-owned companies with share repurchases upon employee retirement. Not all of our ESOP clients have a calendar-year valuation date, so we start to see some of that activity pick up in the third quarter.

Another area where we remain busy is exit planning for business owners. Our goal is to engage with business owners at least five years prior to an exit so there is still time to make course corrections. If business owners delay the process of preparing for a transition, their odds of a successful transition diminish dramatically.

We track trends in several databases of private company transactions, among them GF Data, Capital IQ, DealStats, and BIZCOMPS. As presented below, we saw a slight uptick in multiples in the second quarter of 2024.

Don’t get too fixated on the multiples in this chart as an indicator of value for your company. Look at the trends. Multiples vary dramatically from industry to industry and business to business. If you are interested in exploring value drivers for your company, read this recent article.  

The value of privately held companies typically isn’t as volatile as share prices for public companies. However, activity in the stock market provides general guidance that is often much timelier than data available for private companies.  

There are a few indexes we keep an eye on. Although the S&P 500 is dominated by a handful of large tech stocks, it is generally considered the go-to benchmark for stock market performance. The Russell Midcap Index cuts out the largest 200 companies in the Russell 1000 Index, keeping 800 US companies with market capitalizations between $2 billion and $10 billion. The Dow Jones Industrial Average is comprised of 30 “blue chip” US stocks that may be similar to many private companies.  

Stock prices have followed a generally upward trend throughout the first and second quarters of 2024.

Many drivers of business value can be influenced or controlled by the decisions of the business’s management team, including product diversification, brand recognition, and employee retention. Other drivers are outside of management’s control, such as inflation and unemployment rates. According to Federal Reserve Economic Data, key drivers of the US economy generally remained near similar levels in 2Q as in 1Q.

¹ Indicates the likely effect on business value for most businesses. Depending on the business model, certain businesses may demonstrate an inverse relationship to economic variables compared to the market as a whole.

As many of our clients are located in New England, we’ve included a summary below of some of the key economic drivers that affect businesses in the Northeast, as quoted from the Beige Book - July 2024. If your business is headquartered outside of New England, reach out to us for an economic analysis specific to your market area. 

Economic activity  

Business activity expanded at a modest pace in recent weeks. Employment was flat amid slow wage growth, and prices increased slightly. Tourism activity rose moderately, while retail sales edged up but generally remained subdued. Sales of new automobiles rose, manufacturers reported modest revenue growth, on average, and software and IT services firms saw moderate revenue gains. Residential home sales increased on a year-over-year basis, supported in part by improvements in inventory levels. Overall commercial real estate activity was flat, on balance, with stable industrial leasing, steady increases in the retail sector, and seasonably slow office activity. However, the outlook for office properties weakened further as contacts expect rising foreclosures. On balance, the economic outlook was cautiously optimistic, but selected contacts expressed greater uncertainty related to the demand later this year being potentially restrained by the upcoming election.

Labor markets  

Employment was unchanged overall, and wages increased at a slight pace. Labor demand held steady with several retail and tourism contacts noting improvements in the available labor supply. In particular, Cape Cod contacts noted normal levels of availability of foreign-born workers through short-term visa programs, which support the seasonal labor demand in the area. Hotel contacts around Boston also reported a normalization of the labor supply across the city and noted that they were finally adequately staffed. Automotive mechanics—across all skill levels—remain in short supply in New Hampshire, but the shortage is most acute for collision repair workers. Headcounts were steady among manufacturers. On balance, manufacturers reported little change in their ability to find qualified workers during the second quarter, but several noted that hiring remains more difficult than before the pandemic. Average manufacturing wages rose slightly, with a small number of firms noting continued wage pressures. A software and IT services contact and a manufacturing contact each noted that they plan to boost hiring in the near term, but in general, hiring plans remain muted across sectors, and new hires are primarily used to replace attrition.

Prices 

Prices increased at a slight pace, on average, and movements in input costs were mixed. Most manufacturing contacts noted either small increases, or no change, in both input costs and finished prices; in contrast, one seafood manufacturer reported modest declines in both. Input costs at an online retailer have remained stable despite pressures in some shipping lanes. Hotel room rates in the Greater Boston area have risen moderately year-over-year, but hospitality contacts on Cape Cod reported average nightly room rates for the season to be flat compared with last year. Prices for software and IT services increased slightly, on balance, during the second quarter, but one contact noted a marked slowing of input cost increases. Office and industrial rent prices were flat with slight increases in retail rents. Residential homes prices across the First District² rose moderately despite some improvement in inventory levels.

² The Federal Reserve System’s First District includes Connecticut (excluding Fairfield County), Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont.

Retail and tourism 

First District retail contacts reported slight growth in recent months, on balance, while tourism contacts saw moderate growth, net of seasonal factors. An online retailer noted an intensifying pressure to offer discounts on lower-cost items but also saw an uptick in sales for their higher-end products. Automotive dealers in New Hampshire experienced increased sales of new vehicles in recent months and continued strength in the recreational and power-sports segments of the market (that is, RVs and ATVs). Mainstreet retailers on Cape Cod have had a slightly above average start to the season with fewer store vacancies than in recent years. Airline passenger traffic through Boston increased moderately year-over-year, with significant gains from Caribbean and European travel. Hotel occupancy in greater Boston rose notably, boosted importantly by the NBA finals and several large conventions. Tourism and convention activity for Boston in 2024 is expected to grow, and Cape Cod contacts anticipate a seasonably strong summer. On balance, retailers were cautiously optimistic.

Manufacturing and related services 

Manufacturing revenues rose modestly through the second quarter. All firms contacted noted slight increases in demand, though one reported sales falling short of high expectations. Average input costs and sale prices remained flat in recent months, but results were mixed across firms. Wages rose slightly, with two firms pointing to significant wage pressure. On balance, headcounts remained level with no recent employment growth. A contact discussed ongoing efforts to recruit workers in anticipation of a new facility opening in the immediate future. One contact noted the role of limited housing supply restricting the ability to increase headcount as desired. Most firms reported unchanged plans for capital spending, but some pointed to new investments, including expanded facilities and clean energy solutions. Most contacts report optimistic outlooks with rising sales throughout the remainder of 2024.

IT and software services 

First District contacts in software and IT services reported, on balance, stable demand and continued moderate revenue growth in recent months. Two contacts noted small price increases for their products and services. One contact noted that the significant input cost increases they had experienced over the past two years are moderating, and another contact expects cost savings from transitioning to third-party cloud servers. Headcounts and wages remained unchanged across contacts. Contacts had mixed outlooks but generally predicted steady demand. Concerns included pressure from their customers to focus on AI integration strategies and uncertainty surrounding the upcoming elections restraining some customer decisions. Despite those concerns, contacts overall expressed optimism surrounding continued moderate demand and waning inflationary pressures.

Commercial real estate 

First District contacts described commercial real estate activity as flat overall. Office leasing slowed somewhat, as is typical for summer, but fell to an extremely low level in Hartford, CT. Office rents were flat, and office vacancy rates increased slightly. After having softened earlier in the year, industrial leasing was stable. Industrial vacancy rates remained extremely low, and industrial rents have reportedly stabilized at levels well above 2019 averages. The retail sector experienced steady demand, but tenants showed greater caution amid worries about consumer spending. Investment sales were flat, even though demand for non-office properties remained healthy. In general, bank lending to commercial real estate remained weak, but the CMBS market and life insurance companies continued to provide funding. However, one small regional bank expanded its (non-office) CRE portfolio modestly. Construction was flat or down slightly and still concentrated in the multifamily sector. For non-office properties, contacts expected stable, if restrained, activity going forward, reflecting elevated political and economic uncertainty. The outlook for office properties weakened further, as contacts expected a significant increase in foreclosures in the coming 12 months.

Residential real estate 

Contacts in housing markets across the First District reported annual growth in inventory. Rhode Island, Maine, Vermont, and New Hampshire all reported significant increases in the number of single-family homes and condos on the market in May. In contrast, inventory levels in Massachusetts were comparable to those from a year ago. These inventory changes were accompanied by moderate annual growth in both prices and in the number of closed sales. Contacts noted that despite these improvements, the inventory levels remain short of a balanced market. The resulting imbalance leaves some buyers in the position of having to compete for desired properties, but others noted that the upward trends could produce a more favorable environment for buyers in the months ahead.

• To learn more about ESOPs, here is a brief overview of ESOPs we put together. 
• Interested in learning more about business valuations? Read this recent article or pick up a copy of our book, A Field Guide to Business Valuation.
• Today’s business reading, suggested by analyst José Calvo, is The Lean Startup by Eric Riles. 

Where to find us

• Casey Karlsen and Seth Webber will be leading a four-part workshop series for business owners about increasing business value and liquidity beginning on October 8.
• Lexi Dysinger, Meridith Byrne, and Seth Webber will be attending the New England Chapter of The ESOP Association’s Fall Conference in Springfield, Massachusetts on October 15 and October 16.
• Casey Karlsen will be presenting a session titled “Exit Planning and Value Acceleration” at the Maine Tax Forum on November 7.
• Erik Olson, Seth Webber, and Casey Karlsen will be hosting a transaction advisory overview session on January 15.

Interested in meeting the team? Please reach out to us. We would love to connect. 

Read this if you sponsor an employee benefit plan. 

The Department of the Treasury and the Internal Revenue Service recently issued final regulations updating the required minimum distribution (RMD) rules.

Effective on September 17, 2024, the regulations adhere closely to the proposed regulations issued in 2022 (REG-105954-20). The IRS did say in a press release that the final regulations did take into account some comments. Two such instances:

• Applying the qualified annuity exception when an employee had died and, after the employee's death, the beneficiary made an irrevocable election as to the method and the amount of the annuity payments before Dec. 20, 2019. 
• The applicability date in the proposed regulations of distribution calendar years beginning on or after Jan. 1, 2022, has been changed to distribution calendar years beginning on or after Jan. 1, 2025.

Proposed regulations for additional RMD issues under the SECURE 2.0 Act

The IRS also issued proposed regulations (REG-103529-23) to address additional RMD issues under the SECURE 2.0 Act, including:

• Applicable age determinations for employees born in 1959
• Purchases of annuity contracts with a portion of an employee's individual account
• Distributions from designated Roth accounts
• Sec. 4974 excise tax waivers related to timely corrected RMD failures
• Spousal elections under Section 327 of the SECURE 2.0 Act related to the death of an employee before the employee’s required beginning date
• Divorce after the purchase of a qualifying longevity annuity contract
• Outright distributions to a trust beneficiary

The new proposed regulations include provisions for which Treasury and IRS are soliciting public comments, including provisions addressing other changes relating to RMDs made by the SECURE 2.0 Act. For details on how to submit comments, see the proposed regulations.

If you have questions regarding the final rule or the proposed regulations, please contact our Employee Benefits Team. We’re here to help.

Read this if you are interested to see how AI can help your organization.

Over the past few decades, technological advancements have revolutionized various industries, compelling businesses to integrate sophisticated tools and software into their operations. Initially, these innovations sparked apprehension, but with education and adaptation, their value became undeniable, embedding them into business workflows. The same will hold true for AI integration, but this time, the pace is unprecedented. Businesses that delay even a year or two risk being left behind, jeopardizing their competitive edge in the marketplace.

"AI won't replace you, but someone using AI will" is a prevalent notion, highlighting how AI tools are already automating repetitive tasks across industries. A 2024 report by Business Insider supported earlier findings, suggesting that many job roles, especially those involving routine tasks, are at significant risk of automation. Another recent IT study conducted by the CPA Firm Management Association revealed that 73% of organizations currently adopt a "wait and see" approach to AI/ChatGPT.

Businesses that leverage AI and automation will likely outpace those that do not. The quicker businesses recognize AI's current impact, the sooner they can adapt to maintain competitiveness. Here are four steps to effectively integrate AI into your organization.

1. Grasping AI and new technologies
   Understanding AI, automation, and various quickly changing technologies is vital. Many contemporary applications labeled as AI are built on algorithms designed to execute specific tasks, which we term "augmented intelligence." For instance, customer service chatbots that handle routine inquiries or document automation tools that organize data exemplify narrow AI, crafted for distinct purposes. Robotic Process Automation (RPA) mimics human actions related to data entry or transaction processing but requires human intervention if any process changes occur. Many vendors offer scripting between programs, widely used in various sectors, to facilitate tasks such as data integration from multiple sources to enhance cash receipts and disbursement transactions, banking, and payroll into enterprise resource planning systems.
2. Educating your team on Generative AI technologies
   The initial step to harnessing Generative AI (GenAI) is educating your team on its safe and effective use. GenAI tools like OpenAI's ChatGPT, Anthropic's Claude, and Microsoft's Copilot utilize large language models to generate human-like responses to text prompts. You can leverage GenAI to condense extensive data, draft communications, and assist with complex tasks like writing code or creating financial models. Users must understand that GenAI can produce inaccurate or biased information, known as "hallucinations." Training should emphasize not entering confidential data into GenAI systems and making sure that all AI-generated content is reviewed by knowledgeable personnel. Introductory training should cover the risks and benefits of GenAI, as well as best practices for generating accurate and useful responses.
3. Establishing a robust AI usage policy
   A comprehensive AI usage policy is essential for safe and effective AI integration. This policy should define acceptable AI use, including what can be done without permission, how to set up accounts, and outlining mandatory training before use. The policy should also stipulate that all AI-generated content must be verified by a knowledgeable individual who is accountable for the information and technically able to review and validate the AI-generated content. The policy should be clear on data privacy and security, particularly regarding the handling of sensitive information. Additionally, the policy should encourage ongoing education and adaptation as AI technologies evolve.
4. Appointing AI specialists
   Identifying AI specialists within your organization is crucial. These individuals should be involved in daily operations and interested in exploring AI's potential benefits. They should be given time and resources to investigate new AI solutions, attend relevant conferences, and participate in webinars. Pilot projects that address significant challenges or improve efficiency should be prioritized. For example, Microsoft 365's Copilot integrates AI capabilities into familiar tools like Excel and Word, making it a practical starting point for many businesses. Regular discussions and updates on AI advancements should be part of team meetings to ensure everyone stays informed and engaged.
5. Getting started
   Embarking on your AI journey begins with defining clear objectives—what do you want to achieve with AI, and how will it drive value for your business? Once your goals are set, allocate the necessary resources, including budget, talent, and time, to support this initiative. Next, assess your businesses’ readiness and specific needs, identifying any gaps in skills, infrastructure, or data. Preparing your data is crucial, as clean, relevant, and well-structured data forms the foundation of any successful AI project. Aligning on the right tools and technology is equally important, ensuring they fit your objectives and existing systems. Start by piloting AI tools in a controlled environment, monitoring results closely, and being ready to make adjustments based on what you learn. This iterative approach will help you fine-tune your strategy and maximize the impact of AI on your organization.

Whether businesses are ready or not, the evolution of AI solutions is rapid and unprecedented. Business solutions like Microsoft 365 Copilot and OpenAI ChatGPT are already making an impact across various industries. Organizations should have dedicated personnel to monitor and integrate these advancements, supported by robust internal policies and ongoing education to ensure secure and effective implementation.

Ready to transform your technology landscape? Have questions about your specific situation? Our team is here to guide you every step of the way. Please contact us. We're here to help. 

Read this if your organization is interested in creating successful well-being programs.

In today’s evolving business landscape, firms are more aware than ever of the need to attract, engage, and retain employees. Central to these efforts are employee well-being programs, which are rapidly becoming ubiquitous. In fact, nine out of 10 businesses now have some form of a well-being program. This newfound focus is also reflected in employee survey data, with 71% of workers reporting that they believe their employers are more concerned about employees’ mental health than in the past. Moreover, over 80% agree that how employers support mental health will be an important consideration for them when they look for future work.

Despite this profound cultural shift, perceived workforce well-being remains virtually unchanged since 2022, thus begging the question: what can your organization do to maximize its investments in human capital?

The Fitbit fallacy

Imagine your firm has just introduced a new well-being program. Employees are eagerly strapping on their new Fitbits, competing in step challenges, and sharing their progress on social media. Initially, the energy is palpable and infectious; however, after just a few short months, you begin to notice empty wrists among your colleagues. Participation plummets, and these shiny new Fitbits are relegated to gather dust in desk drawers.

So, what went wrong?

A key insight into the problem is that well-being is not only influenced by individual choices, but also by the organizational context. Many workplace factors, such as workload, autonomy, communication, and culture, can create conditions that undermine or support employee health. Simply offering individual-level interventions, such as Fitbits or yoga classes, is not enough to address the systemic issues that affect well-being. 

Gilding the lily

Historically, workplace well-being initiatives were designed around the individual, providing meditation apps, incentivizing exercise, and so on. However, recent research indicates that these initiatives—while laudable—are far less likely to have a sustainable impact on employee health than systemic solutions, including organizational-level interventions. As noted by Dr. William Fleming, Research Fellow at the University of Oxford’s Well-being Research Centre, “There’s growing consensus that organizations have to change the workplace and not just the worker.” It’s like planting a seed in rocky soil: without the right environment, it won’t thrive—even with the best of intentions.

Tilling the soil

Just as planting a seed in rocky soil requires tilling the ground to create the right conditions for growth, cultivating a sustainable culture of well-being in an organization requires far more than ‘surface-level’ programming. Rather, well-being demands a holistic and strategic approach that considers the employee experience in its entirety, from physical and mental health to social and emotional well-being. Moreover, it also requires that the organization align its well-being goals with business objectives and outcomes and demonstrate how investing in employee well-being can enhance performance, productivity, and innovation. As noted by the World Health Organization, "A healthy workplace is one in which workers and managers collaborate to use a continual improvement process to protect and promote the health, safety, and well-being of all workers and the sustainability of the workplace."

Here are some strategies to consider when making a commitment to well-being initiatives:

1. Leadership commitment: Well-being should be a core value, championed by leadership. When executives prioritize their own well-being and actively participate in well-being programs, it sets a powerful example for the entire organization.
2. Integrated policies: Policies should reflect a commitment to well-being. This includes flexible working hours, mental health days, and comprehensive health benefits. Policies should be rooted in a culture of respect, necessitating a shift from a ‘command and control’ mindset to a ‘trust and empower’ perspective. Central to this shift is establishing work structures and operational systems that create transparency and accountability. 
3. Physical environment: The workplace environment plays a crucial role in employee well-being. Ergonomic workstations, presence of natural light and nature elements, access to privacy rooms, and relaxing places to unplug from technology can significantly influence physical and mental health.
4. Community building: Foster a sense of community from day one! Design onboarding practices that introduce new hires to the values, norms, and expectations of your organization. Provide opportunities for socialization, mentoring, and collaboration, as a strong sense of belonging can enhance overall well-being. Encourage team-building activities, social events, and peer support networks. 
5. Continuous feedback: Well-being means different things to different people. Regularly solicit feedback from employees about their overall employee experience—not just your well-being initiatives. Use this feedback to make continuous improvements, and then communicate those improvements. When employees feel heard and valued, their engagement and satisfaction increase.

Reap the rewards

Investing in organizational factors that support well-being isn’t just a feel-good initiative; it’s smart business strategy. Research shows that companies with robust well-being programs see higher employee engagement, reduced absenteeism, and increased productivity. In other words, a healthy workforce is a high-performing workforce. Moreover, these companies also enjoy lower healthcare costs, improved retention rates, and enhanced employer branding. By fostering a culture of well-being, companies can not only attract and retain top talent, but also boost their bottom line and competitive edge.

Conclusion

While Fitbits, chair massages, and yoga are great starting points, they are simply insufficient to create a wholesome work environment. Establishing an enduring culture of well-being requires integrating it deeply—and holistically—into the organization’s core practices and values.

Put simply, you can’t expect to ‘yoga’ your way to employee well-being; rather, you must place a comprehensive and systematic approach toward cultivating a workplace environment in which your most valuable resource—your people—can flourish. By doing so, you can cultivate a culture where employees not only survive but thrive. 

If you have any questions about well-being programs or questions about your specific situation, please contact our Well-being Consulting team. We’re here to help.

Read this if you work within a State Medicaid Agency (SMA). This is the first article in a series of articles published in follow-up to the Medicaid Enterprise Systems Conference (MESC). Future article topics will speak to guidance shared at MESC on MITA 4.0, Advanced Planning Documents (APD), forthcoming templates, Artificial Intelligence (AI) in Medicaid, and operational reporting requirements.

If you haven’t already embraced the Centers for Medicare and Medicaid Services (CMS) as a partner for your SMA Medicaid Enterprise System (MES), now is a great time to start. CMS was out in full force at the Medicaid Enterprise Systems Conference (MESC), highlighting trends across the MES space, bringing policy and regulatory changes to the front of conversations, and showcasing SMA collaboration and reuse at every turn. Across sessions and collaborative workshops, CMS clarified the value it seeks from MITA 4.0, the steps taken to move it forward, and the industry partners committed to making it a reality. Most evident was CMS’s message about the value that can come from engaging CMS and SMA state officers (SOs) early and often in your enterprise planning, implementation, and operations discussions.

In true partner fashion, CMS highlighted several trends in Medicaid to help inform SMAs’ MES journeys:

• Certain module enhancements may no longer require streamlined modular certification and can be eligible for enhanced funding (i.e., Health Information Exchange [HIE], prescription drug monitoring program [PDMP], and data warehouse [DW] modules).
• SMAs continue to focus on a single module or vendor at a time as opposed to multiple modules for the same vendor.
• SMAs continue to implement cloud-based end-to-end solutions as replacements for legacy Medicaid Management Information System (MMIS) modules.
• SMAs are asking to forego Operational Readiness Reviews (ORRs) altogether due to testing delays and skip straight to requesting certification. CMS is asking SMAs to stop requesting ORRs be skipped and instead prioritize making sure the solution’s testing is comprehensive, of quality, and producing results that instill confidence in the solution’s ability to fulfill your program needs.
• During CMS site visits, SMAs shared concerns regarding procurement, vendor management, and public health emergency (PHE) unwinding as they relate to various MMIS projects.
• SMAs are continuing to replace legacy systems, and the industry should expect to see more MMIS module certifications as states and territories shift to new solutions.

Lastly—and for the first time at MESC—CMS presented a summary and synthesis of regulatory changes that highlighted each regulatory requirement’s timing so that it could serve as an input into SMA efforts. This is an incredibly valuable reference for all SMAs and is available via outreach to your SO!

Partnering with CMS is not optional—it's essential. CMS’s presence and insights at MESC underscored the importance of early and ongoing collaboration. By aligning with CMS guidance and leveraging its expertise, SMAs can navigate MES complexities more effectively. Whether it's embracing MITA 4.0, staying informed on regulatory changes, or integrating new technologies, the path to success lies in a strong partnership with CMS. Let’s continue to engage, collaborate, and build a future where our collective efforts drive meaningful outcomes for the Medicaid community.

Please contact our Medicaid team if you have any questions or would like to learn more. We're here to help.

Read this if your company is eligible for the Employee Retention Credit (ERC) and has filed a claim.

In a recent news release, the IRS announced that it will begin processing low-risk ERC claims submitted prior to September 15, 2023, when a moratorium on processing new claims was effective. The IRS indicated 50,000 low-risk ERC claims will be processed and paid out quickly. The IRS projects payments will begin in September, with additional payments going out in subsequent weeks. The IRS anticipates adding another large block of additional low-risk claims for processing and payment in the fall.

The IRS also indicated it has sent out 28,000 disallowance letters in recent weeks to businesses whose claims showed a high risk of being incorrect. The IRS estimates that these disallowances will prevent up to $5 billion in improper payments. We have seen a couple of denial letters that relate to the quarter ended September 30, 2021. Those denial letters indicate the IRS does not believe the employer was subject to government orders that impacted operations—nor did the employer incur a significant reduction in gross receipts. If you received a denial letter related to the quarter ended September 30, 2021, and do not have the appropriate support for the impact of government orders or a reduction in gross receipts then it may not make sense to appeal the denial.

The IRS also announced that it has shifted the moratorium period on new claims that was effective as of September 14, 2023. Per the agency, it will now start judiciously processing claims filed between Sept. 14, 2023, and Jan. 31, 2024. Like the rest of the ERC inventory, work will focus on the highest and lowest risk claims at the top and bottom end of the spectrum. This means there will be instances where the agency will start taking action on claims submitted in this time period when the agency has seen a sound basis to pay or deny a refund claim.

Given the complexity of the ERC (and to reduce the risk of improper payments), the IRS is moving methodically and deliberately on both the disallowances as well as additional payments to balance the needs of businesses with legitimate claims against the promoter-fueled wave of improper claims that came into the agency.

“The Employee Retention Credit is one of the most complex tax provisions ever administered by the IRS, and the agency continues working hard to balance our work to protect taxpayers from improper claims while also making payments to qualifying businesses,” said IRS Commissioner Danny Werfel. “It has been a time-consuming process to separate valid claims from invalid ones. During the past year, we maintained a steady cadence of both ERC approvals and disapprovals.”

As the IRS begins to process additional claims, the agency reminds businesses that they may receive payments for some valid tax periods—generally quarters—while the IRS continues to review other periods for eligibility. ERC eligibility can vary from one tax period to another if, for example, government orders were no longer in place or a business’s gross receipts increased. Alternatively, qualified wages may vary due to a forgiven Paycheck Protection Program loan or because an employer already claimed the maximum amount of qualified wages in an earlier tax period.

The IRS also reminds businesses that if they receive a denial of an ERC claim, they have options available to file an administrative appeal by responding back to the address on the denial letter. IRS.gov also has additional information on administrative appeals with the IRS-independent Office of Appeals.

Our take: For those employers still waiting to receive their ERC claims and who worked with a non-tax professional to calculate and claim the credit, now is the time to determine if you have (or received from the third-party vendor) the appropriate documentation to verify eligibility to claim the credit and confirm the calculation of the credit. At a minimum, you should have documented support for the reduction in gross receipts test or full/partial shutdown test related to the eligibility of the businesses or organizations to claim the credit and detailed support.

In addition, we recommend an employer who has received payment for some, but not all claims call the IRS to verify the outstanding Forms 941-X are actually on file at the IRS. We have encountered situations where the IRS has no record of receiving a Form 941-X and the client has the return receipt confirming receipt by the IRS.

Lastly, employers who receive a denial letter are encouraged to reach out to their tax advisor for assistance with the appeals process if they believe they are in fact eligible for the credit. 
 

Benchmarking doesn’t need to be time and resource consuming. Read on for four simple steps you can take to improve efficiency and maximize resources.

Stop us if you’ve heard this one before (from your Board of Trustees or Finance Committee): “I wish there was a way we could benchmark ourselves against our competitors.”

Have you ever wrestled with how to benchmark? Or struggled to identify what the Board wants to measure? Organizations can fall short on implementing effective methods to benchmark accurately. The good news? With a planned approach, you can overcome traditional obstacles and create tools to increase efficiency, improve operations and reporting, and maintain and monitor a comfortable risk level. All of this can help create a competitive advantage — and it  isn’t as hard as you might think.

Even with a structured process, remember that benchmarking data has pitfalls, including:

• Peer data can be difficult to find. Some industries are better than others at tracking this information. Some collect too much data that isn’t relevant, making it hard to find the data that is.
   
• The data can be dated. By the time you close your books for the year and data is available, you’re at least six months into the next fiscal year. Knowing this, you can still build year-over-year trending models that you can measure consistently.
   
• The underlying data may be tainted. As much as we’d like to rely on financial data from other organization and industry surveys, there’s no guarantee that all participants have applied accounting principles consistently, or calculated inputs (e.g., full-time equivalents) in the same way, making comparisons inaccurate.

Despite these pitfalls, benchmarking is a useful tool for your organization. Benchmarking lets you take stock of your current financial condition and risk profile, identify areas for improvement and find a realistic and measurable plan to strengthen your organization.

Here are four steps to take to start a successful benchmarking program and overcome these pitfalls:

1. Benchmark against yourself. Use year-over-year and month-to-month data to identify trends, inconsistencies and unexplained changes. Once you have the information, you can see where you want to direct improvement efforts.
2. Look to industry/peer data. We’d love to tell you that all financial statements and survey inputs are created equally, but we can’t. By understanding the source of your information, and the potential strengths and weaknesses in the data (e.g., too few peers, different size organizations and markets, etc.), you will better know how to use it. Understanding the data source allows you to weigh metrics that are more susceptible to inconsistencies.

3. Identify what is important to your organization and focus on it. Remove data points that have little relevance for your organization. Trying to address too many measures is one of the primary reasons benchmarking fails. Identify key metrics you will target, and watch them over time. Remember, keeping it simple allows you to put resources where you need them most.

4. Use the data as a tool to guide decisions. Identify aspects of the organization that lie beyond your risk tolerance and then define specific steps for improvement.

Once you take these steps, you can add other measurement strategies, including stress testing, monthly reporting, and use in budgeting and forecasting. By taking the time to create and use an effective methodology, this competitive advantage can be yours. Want to learn more? Check out our resources for not-for-profit organizations here.

Read this if you are an IT director, information security officer, compliance officer, risk manager, or organizational leader interested in enhancing resilience and robust continuity strategies.

Disaster Recovery (DR) involves processes and strategies to promptly restore critical business functions and IT systems following disruptive events like natural disasters, cyberattacks, hardware failures, or pandemics. The DRP is designed to restore operability at an alternative site after a declared disaster while minimizing downtime and data loss to resume normal operations.

The DR team, responsible for DRP planning, implementation, and management, is charged with minimizing the impact of a disaster on the organization and expediting the recovery of critical business functions. Assembling a team with both operational and technical perspectives is crucial.

Defining a clear chain of command is also important to specify when the DR team can make decisions, ensuring effective delegation of authority and control during a disaster. The DR team lead should initiate the plan after consulting team members and assessing the situation.

Key roles on a DR team include:

• Team lead: Oversees the entire DR planning and execution process. Responsible for coordinating activities and ensuring the DRP is up to date.
• Technology lead: Manages the IT infrastructure recovery process, including data backup and restoration, system recovery, and network restoration.
• Security lead: Manages the security aspects of the recovery process, including protecting sensitive information and ensuring that security measures are in place during the recovery process.
• Communications lead: Manages communication during and after a disaster, both internally and externally. Ensures that all relevant stakeholders are informed about the situation and communication channels are established.
• Human resources lead: Manages the human aspect of disaster recovery, including employee safety, relocation, and communication of HR policies during the recovery process.
• Legal/compliance representative: Makes sure that the recovery process adheres to legal and regulatory requirements, including data protection and privacy regulations.
• Facilities coordinator: Coordinates the recovery of physical facilities and sources alternative workspaces if the primary location is compromised. 
• Vendor/supplier coordinator: Coordinates with external vendors and suppliers to make available necessary resources and services during the recovery process.

Disaster Recovery Plans: Conclusion

To create an effective DRP aligned with the organization's needs and risks, it is crucial for the DR team to encompass representatives from various departments. Regular training, testing, and updating of the plan are essential for maintaining preparedness and effectiveness in addressing potential disasters.