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Interest rates are the topic of the times including whether they are going to rise, fall or remain the same. Subsequent to the rate hike on December 16, 2015, the S&P 500 has fallen approximately 9.5% including a substantial decline in oil prices (16%). With the Fed's December 2015 predictions of continuing rate hikes during 2016 we were all eager to read the Federal Open Market Committee's ("FOMC") statement on January 27, 2016 regarding the economic outlook.  In the end the FOMC downgraded their economic outlook stating that inflation is expected to remain low but maintaining their 2% expectation.  In layman's terms:  the economy  is not as strong as the December predictions once believed, the Fed is hedging its bet and it will continue its policy of reinvesting agency and MBS holdings and rolling over treasury securities to maintain accommodative financial conditions. 

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Earlier this month, the CMS Center for Medicare and Medicaid Innovation (CMMI) announced the Accountable Health Communities Model and funding opportunity. The model is the first to test ways to address the health-related social needs of Medicare and Medicaid beneficiaries.

It makes available $157 million in funding for a five-year model to support local communities working together to address the unmet health-related social needs, such as food insecurity and inadequate or unstable housing, of community-dwelling beneficiaries. These unmet needs may increase an individual's risk of developing chronic conditions, reduce an individual's ability to manage these conditions, increase health care costs, and lead to avoidable health care utilization. 

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The Centers for Medicare & Medicaid Services (CMS) issued a final rule which revises the Medicaid home health services definition to add specific requirements for home health services which, under Medicaid, includes medical supplies, equipment and appliances.

IThis rule revises section 6407 of the Patient Protection and Affordable Care Act of 2010 and the Medicare Access and CHIP Reauthorization Act of 2016. The goal is for home health services, physician's documents, medical equipment, physicians and non-physician practitioners to document the face to face encounter with Medicaid eligible beneficiary 

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The Federal Deposit Insurance Corporation's ("FDIC") Board of Directors has issued a Notice of Proposed Rulemaking ("NPR") to revise the NPR previously issued in June 2015 in order to address the deposit insurance assessment system applicable to institutions with less than $10 billion in assets.  The revised NPR will be similar to the 2015 NPR with some differences including a revised one-year asset growth measure, the use of a brokered deposit ratio rather than the previously proposed core deposit ratio, removal of the brokered deposit adjustment and revision of the weights assigned to the proposed measures in the financial ratios method.  These refinements would become effective during the latter of  the quarter subsequent to the reserve ratio of the Deposit Insurance Fund ("DIF") reaching 1.15% or the quarter subsequent to the final rule being adopted.  In the end this should give some minor regulatory relief to the small bank institutions within the industry.      

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We continue to hear the impending doom that is the CECL Impairment Model and how it will impact financial institutions.  The American Bankers Association's President, in a letter to the Financial Accounting Standards Board's, expressed concern about the complexity of the new suggested model and whether it actually will result in any improvement in financial statement reporting and/or credit impairment analysis.  The ABA continues to work with the FASB to help create a new model, but wants to be sure it is the right model that can be scalable to all institutions while reducing any additional burden to the institution.     

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Millennials have been raised in an environment of instant gratification and their expectations are no different in the financial services sector. The number of Financial Service Executives citing customer experience management ("CEM") as a priority doubled from 2013 to 2015. Specifically, they felt the pressure to provide an experience on par with Amazon.com not long after many institutions first rolled out online customer interfaces. 

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On November 27, 2015, the Centers for Medicare and Medicaid Services (CMS) posted a survey and certification letter, S&C 16-04-NH, explaining the updates to the Focus Dementia Surveys.

In addition to the discussion of the background of this particular survey type, the results of the pilots that were completed in 2015 and subsequent expansion of the process, CMS has included the tools that the survey team will utilize when they conduct these surveys. The basis of the focus surveys is to ensure that the facility staff is in compliance with F-309 Care and Services for a Resident with Dementia, which was updated last year. Please know that these surveys can result in citations related to this tag and any others that are unrelated to dementia, should issues arise during the survey. 

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In an age of increasing focus and scrutiny on cyber security, personal information security and overall information technology security within the financial institutions industry, any measure that can provide assurance to an institution’s customer is priceless.  The new wave is a move from the dot.com domains to dot.bank domains to provide for better security measures, increased customer service, improved marketability and a move from the crowded dot.com domains of the internet.  Many U.S. institutions have applied for new domain names that end in dot.bank and fiscal year 2016 is expected to be the year of implementation.   

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In a divided three-judge panel, the 9th Circuit Court has determined that taxpayers have zero basis in stock received on demutualization of insurance. This decision is in conflict with the result in Fisher v US, a Federal Claims Court case which allowed the use of a cost recovery approach so that premiums could be applied to the value of shares received.

Mutual insurance companies are distinct from stock companies in that they are owned by the policyholders and not by stockholders. Mutual companies may convert to stock-based companies and, during this process, normally will issue stock shares to their policyholders. One question raised in this type of transaction is whether the former mutual company owners have any tax basis in their ownership interests. 

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Since marijuana is defined under federal law as a schedule 1 narcotic, financial institutions are hesitant to engage in business with medical marijuana dispensaries due to various risks inherent in these business relationships (primarily reputation and regulatory related). Federal guidelines have been issued for the Justice Department and Treasury not to prosecute banks as long as their customers (ie. medical marijuana businesses) are in compliance with eight federal requirements including not selling to minors, not selling to prohibited states, etc.  Additionally, the Justice Department is now prohibited from using federal funds to impede the ability of states to run their respective marijuana programs in compliance with state law.  But will this result in further banking reform to make it easier for owners of these types of businesses to obtain small business loans, accept credit/debit card payments and deposit their money in legitimate operating bank accounts?  Future federal regulations could prevent the federal government from spending money on penalizing financial institutions that accept legal/legitimate marijuana businesses as clients.  In my opinion, the Federal Government will continue loosening up current regulations and restrictions that should make it safer for both marijuana dispensary owners and financial institutions to engage in business.  Whether or not your financial institution currently conducts business with medical marijuana facilities or is considering taking on such a customer, it is extremely important for management (with the Board’s oversight) to perform extensive due diligence in order to address and mitigate certain risks involved.   

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