2016 Mortgage Loan Limits For Conforming Loans Now Available

2016 Mortgage Loan Limits For Conforming Loans Now Available

2016 Loan Limits: 11th Year At $417,000

2016 conforming loan limits are set at $417,000 for single-family homes nationwide, indicating no change in loan limits from the year prior

Mortgage loan limits have been set at $417,000 for 1-unit homes since 2006.

However, like last year, the Federal Housing Finance Agency (FHFA) added new metropolitan areas to its high-cost zones, giving buyers and residents of those areas access to extended loan limits which reach as high as $721,050.

Higher loan limits create home loan refinance opportunities for certain homeowners, and make it simpler for buyers to get access to conventional mortgage financing.

County-by-county, loan limits can vary.

This chart of loan limits in every US county summarizes conventional mortgage loan limits for homes of 1-unit, 2-unit, 3-unit, and 4-unit; and, includes loan limits for FHA loans and VA loans in every US county as well.

Current mortgage rates are unaffected by the news.

What Is A Mortgage Loan Limit?

Loan limits are appropriately named. They are the maximum allowable loan size for a mortgage. Loans for amounts above loan limits cannot be approved.

Mortgage loan limits can vary by product and by ZIP code.

For example, the Federal Housing Administration enforces a particular set of loan limits for its FHA loans which is different from how Fannie Mae and Freddie Mac do it; and, the Department of Veterans Affairs maintains its own specific limits (or, more accurately, no loan limits) for its VA loans.

For the FHFA, which runs Fannie Mae and Freddie Mac, theres a formula by which mortgage loan limits are assigning for a particular US county

For 2016, the floor for all counties is $417,000 for single-unit homes. This is the default mortgage loan limit nationwide.

However, in specific counties where the cost of living is higher than typical, and the typical home sale price is well above the national average, the FHFA assigns 2016 conforming mortgage loan limits to be a little higher.

Loans exceeding the local conforming loan limits can still get approved, however. This is what a jumbo loan is.

A jumbo loan is a loan which is too large for Fannie Mae or Freddie Mac to guarantee. Jumbo loans are available via local and national banks. Theyre sometimes sent to Wall Street like conforming loans, but not always.

In general, its more difficult to get approved for a jumbo loan as compared to a loan backed by the FHFA because of additional credit score requirements and more stringent income calculations.

Also, for jumbo loans, downpayment requirements are often larger.

This is why its important that government granted high-cost status to an additional group of cities for 2016, raising the total to 234 areas nationwide.

With an increase in their 2016 mortgage loan limits, more of todays home buyers can use low-downpayment mortgage programs such as the Conventional 97 program, as well as the 80/10/10 piggyback loan.

Furthermore, refinance programs such as HARP 2 can remain within reach for the hundreds of thousands of eligible US homeowners.

In some metropolitan areas, 2016 loan limits increased by as much as $34,500.

Click to see todays rates (Nov 30th, 2015)
Conforming Loan Limits For 2016

Fannie Mae and Freddie Mac have made no changes for 2016 to the conforming mortgage loan limit floor of $417,000. This is the same level at which the floor has been since 2006.

So, why hasnt the loan limit changed in 11 years? Its important to understand a little bit of history first.

In 2005, home values were rising quickly nationwide and Fannie Mae and Freddie Mac were losing business. Private mortgage lenders were offering lower mortgage rates and easier approval terms to buyers.

Naturally, buyers went with the best mortgage rate and the best deal so, to capture extra market share, Fannie Mae and Freddie Mac raised the maximum loan size they were willing to back.

In 2006, mortgage loan limits were increased by more $57,000 as compared to the year prior. This was the largest 1-year increase in history by more than double the previous record.

It was clear that Fannie Mae and Freddie Mac wanted to re-capture market share they had collectively lost.

However, beginning in late-2006, the housing market began to soften and by the start of 2007, last decades housing market downturn had commenced.

As home values dropped, private mortgage lenders left the market en masse. Fannie Mae and Freddie Mac became, almost literally, the last source of mortgage financing available.

The FHA existed, the VA was available, and there was Fannie Mae and Freddie Mac. Beyond that, there wasnt much — especially for buyers with anything less than perfect credit.

So, between 2007-2011, despite rapidly falling home values and a deteriorating market for credit, government held conforming loan limits exactly where they were.

This was a clear message to the markets.

In the past, the government had raised loan limits when home values climbed, and lowered loan limits when home values dropped. This wasnt going to be how the government supported housing going forward.

Officials defended their decision by saying that making mortgage credit available to US home buyers was crucial to the housing markets recovery.

In hindsight, this has been proved correct, but by 2009, with the outcome still uncertain, the government decided to take its support for housing a step farther.

In 2009, the conforming loan limits were given an increase in specific high-cost areas nationwide; areas in which the median home sale price handily exceeded the national average.

This move slowed falling home prices, as expected, and the program remains in effect today.

As of 2016, there are 234 high-cost areas nationwide which includes New York City, New York; Los Angeles, California; and the entire San Francisco-San Jose-Oakland metropolitan region, among others.

The baseline, non-high-cost conforming loan limits for 2016 are :

  • 1-unit home : $417,000
  • 2-unit home : $533,850
  • 3-unit home : $645,300
  • 4-unit home : $801,950

High-cost conforming loan limits range up to $625,000 for a one-unit home; $800,775 for a two-unit home; $967,950 for a three-unit; and $1,202,925 for a four-unit.

In Hawaii, loan limits are even higher.

Click to see todays rates (Nov 30th, 2015)
39 US Counties Granted 2016 Loan Limit Increases

There is no change in the 2016 conforming mortgage loan limit from the year prior, but 39 US counties have been granted an increase in their local mortgage loan limit.

These are areas in which the median home sale price increased last year to a point where they exceed the national average handily.

These counties are considered high-cost.

10 counties in Colorado (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park ) received a $34,500 increase in their local conforming loan limits — the largest increase assigned to any US county.

The conforming loan limit for these 10 Colorado counties is now $458,800.

The next largest conforming loan limit increase ($33,500) was granted to Sonoma County, California, where the local loan limit is now $554,300.

A handful of counties in Massachusetts and New Hampshire received a modest loan limit boost of $5,750. Each county is linked to Bostons expanding housing market.

A complete list of the US counties receiving an increase to their local conforming loan limit, with a comparison against their prior-year limits, follows:

  • Monterey County, California 2016 Loan Limit: $529,000 (2015: $502,550)
  • Napa County, California 2016 Loan Limit: $625,500 (2015: $615,250)
  • San Diego County, California 2016 Loan Limit: $580,750 (2015: $562,350)
  • Sonoma County, California 2016 Loan Limit: $554,300 (2015: $520,950)
  • Adams County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Arapahoe County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Boulder County, Colorado 2016 Loan Limit: $474,950 (2015: $456,550)
  • Broomfield County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Clear Creek County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Denver County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Douglas County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Elbert County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Gilpin County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Jefferson County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Park County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Essex County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Middlesex County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Norfolk County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Plymouth County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Suffolk County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Rockingham County, New Hampshire 2016 Loan Limit: $523,250 (2015: $517,500)
  • Strafford County, New Hampshire 2016 Loan Limit: $523,250 (2015: $517,500)
  • Cannon County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Cheatham County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Davidson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Dickson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Hickman County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Macon County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Maury County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Robertson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Rutherford County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Smith County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Sumner County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Trousdale County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Williamson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Wilson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • King County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)
  • Pierce County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)
  • Snohomish County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)

Note that these counties receiving an increase in 2016 conforming loan limits only. More than 200 US counties remain high-cost eligible.

Verify your local limits before assuming that your loan wont qualify as conforming.

What Are Todays Mortgage Rates And Loan Limits

2015 conforming loan limits are unchanged from the year prior, baselined to $417,000 nationwide. Loan limits, however, will vary by state and county — sometimes by a lot.

Get todays live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see todays rates (Nov 30th, 2015)

Elijah Cummings expands settlement probe

Structured settlements are awarded to ensure that individuals who have suffered grievous injuries — like children in Baltimore who have been exposed to lead paint — are taken care of well into the future, Cummings said in a statement.

I want to understand how private companies make profits buying and selling settlements that are meant to ensure victims have reliable incomes, and how we can best protect vulnerable individuals from predatory and abusive practices, he said.

The investigation is led by Democrats, who represent a minority on the committee.

In his letters, Cummings asked whether secondary market annuities are regulated under state law and what disclosures are made to purchasers. The Democrat also requested a list of structured settlements originally owned by Maryland residents that have been offered for sale by the companies.

Rilling identifies budget, tax relief and relieving school overcrowding as …

NORWALK — Mayor Harry W. Rilling plans to roll up his sleeves on the city budget, tax relief, school overcrowding and making City Hall more efficient when he starts his second term in office.

Theres the possibility that we might be able to consolidate positions so that we reduce duplication of effort, Rilling said. We want to make sure that we are running the government as efficiently and smoothly as possible.

Such consolidations would involve individual positions rather than departments, he said.

Rilling, a Democrat and the citys former police chief, defeated Republican challenger Kelly L. Straniti in Norwalks 2015 mayoral election Nov. 3.

On Thursday, he sat down with The Hour to thank voters for again placing their faith in him and to lay out his priorities for 2015-17. For a video of the interview, visit www.thehour.com.

First and foremost, were going to be starting to work on our operating budget for 2016-2017, and Ive given instructions to my finance director and my department heads that we need to come in either at, or close, to zero increase, because we really need to get our arms around taxes and make sure that were not forcing our senior citizens out of their homes, Rilling said.

In a related matter, Rilling said he will reach out to the Connecticut Conference of Municipalities to work for tax reform. He labeled Connecticuts heavy reliance on local property taxes to fund schools and local services as regressive.

School overcrowding will pose a significant challenge for Rilling during his second term. Norwalk schools are at capacity, as evidenced by the use of portable classrooms at Jefferson Elementary School. The citys school board is awaiting a facilities utilization study.

Rilling said he will pursue short and long-term solutions to school overcrowding with the latter focused five, 10, 15 and 20 years into the future. The search for short-term solutions is already underway, according to Rilling.

We looked at land. We looked at an existing building that had been used as a school, and right now, both of them are presenting challenges, significant challenges, so were not sure either of those are going to be suitable, Rilling said. But there are some other existing buildings around town that were looking at that might be used.

In another matter related to planning, Rilling expressed receptiveness to hiring a city planner — as called for by some residents during the mayoral race — and updating Norwalks Master Plan of Conservation and Development.

He said the existing master plan, smaller neighborhood master plans, and the economic development plan completed during his first term in office will be considered.

(We are) trying to consolidate it all, so we have some sort of logical road map of where we are, where we want to be and how were going to get there, Rilling said.

For lack of council votes, Rilling failed during his first term to launch a charter revision commission to explore extending Norwalks mayoral term to four years. He plans to try again.

I think for the most part the returning council members are feel that charter revision is an important process (and) we need to move forward with it, Rilling said. So that will be coming up, I think, rather early in this next term.

A two-thirds majority vote is needed among council members to form a charter revision commission. Voters would have the final say and a four-year mayoral term, if approved by them, wouldnt take effect until Rillings second term is over.

During Rillings first term, several major redevelopment projects got underway, including Wall Street Place and Head of the Harbor South. Meanwhile, General Growth Properties is moving forward with plans for The SoNo Collection, a regional shopping center at the 95/7 site.

Theres a lot of progress and we expect no delays — no major delays in any of those projects, Rilling said. And certainly some new projects will be coming along. We will facilitate them as well.

Rilling is less optimistic that officials can jumpstart the rebuilding of Washington Village without court help. The roughly $100 million project is the subject of a lawsuit that calls into question rebuilding in a flood plain.

Hopefully, the court will rule that the plaintiffs have no standing in that issue, Rilling said. Unfortunately, its just going to take a little bit of time.

Rilling said he intends to continue his Mayors Night Out events and task forces. He said the Mayors Night Out events have provided residents an opportunity to get issues resolved by meeting with council members and city department heads.

The task forces, he said, are making progress on issues such as building bicycle paths, improving energy efficiency and providing parking in SoNo.

When Rilling is sworn into office Nov. 17, he will be working with a largely veteran council.

The institutional knowledge is still there, Rilling said. I dont think theres going to be any hiccups or any delays in getting the things moving. I think were in good shape.

He thanked voters and expressed enthusiasm about starting his second term as mayor.

I want to say thank you to the residents for giving me the opportunity to serve a second term as mayor, Rilling said. The first time was a wonderful opportunity to start moving Norwalk forward, and now I have the opportunity to continue what weve started, which is really important.

Developers eye tax relief on deemed rental income

NEW DELHI: The developers concerns over the tax provision wherein they are required to pay tax on deemed rental income on unsold apartments may be addressed in the coming Budget. Finance minister Arun Jaitley, at a conclave conducted by Confederation of Real Estate Developers Associations of India (CREDAI), has assured the developers and builders that the government will look into the tax issues.

The deemed rental income is the notional income assigned to an appartment at the prevailing market rate even though its not given on rent.

Getamber Anand, CREDAI president and CMD of ATS Infrastructure, said, The taxation of deemed rental income is affecting the builders in a big way . Particularly in slowdown, developers are normally left with unsold inventory even after completing the project. They are thus required to hold, though they do not want to, till the time they eventually find buyers for the same.

Crowdfunding movement targets real estate

Crowdfunding involves raising funding for a project from a large number of people, typically via the Internet. One of the most successful and well-known crowdfunding companies is US-based Kickstarter, which helps artists, musicians, filmmakers, designers, and other creators fund projects.

Local Thundafund is a South African success story after funding over 140 projects worth a total of over R5 million since its 2013 launch.

For as long as humans have accumulated wealth, land and real estate has been the number one vehicle of growing and preserving wealth, according to Wealth Migrate, which says 49% of the worlds wealth is held in real estate.

However, out of seven billion people globally, only 12.9% of people have access to real estate and the subsequent wealth affect it causes.

Picken says the worlds greatest challenge is the wealth gap, which sees the top 1% controlling the worlds wealth. Empowering the other 99% is his goal.

It is not a matter of if it will happen, it is a matter of ensuring it does happen, to create a better and more sustainable planet for all.

Getting real

Disruption in the real estate industry is Pickens plan, as is giving as many people as possible access to wealth-building assets previously reserved for only the top echelon of investors worldwide.

During the global financial crisis in 2008, he realised the significant opportunities undervalued property markets presented to investors and was inspired to take advantage of the growing crowdfunding movement to open access to global assets to investors.

To date, the company has helped people invest in commercial property from five continents. An example of how the project works for investors was the purchase of a medical portfolio of seven buildings to a value of $16 million. The money was raised from investors all over the world and Picken says the outcome speaks for itself.

Since we bought the buildings a year ago, the returns have been cash on cash of over 10% and increase of equity of over $2 million. Clients have been paid each quarter and more than 80% have reinvested in other projects.

Changing perceptions

The idea of crowdfunding also comes with its own group of naysayers but Picken says the company is slowly getting people to come around to the idea.

It is in a constant state of flux, moving from early adopters to disruption. It is taking hold so fast around the world and the regulators have even come to the party.

Wealth Migrate was awarded its compliance certificate from the USs Securities and Exchange Commission, and is building compliance in the UK, Australia, Singapore, Malaysia, Hong Kong and South Africa.

Picken says technology continues to disrupt industries and he believes crowdfunding is going to revolutionise real estate, investing and wealth, and allow everybody access to the best opportunities and the best partners globally.

The goal is to be the global trusted real estate marketplace and to empower a billion people through the wealth movement by 2020, he says.

Analysis and Asta Funding, Inc. (ASFI) Earnings Review

Mangrove Partners holds 2.01% of its portfolio in Asta Funding, Inc. for 967,770 shares. Rbf Capital Llc owns 267,695 shares or 0.42% of their US portfolio. Moreover, First Wilshire Securities Management Inc has 0.21% invested in the company for 110,756 shares. The Florida-based Zpr Investment Management has invested 0.13% in the stock. Bridgeway Capital Management Inc, a Texas-based fund reported 185,750 shares.

Asta Funding, Inc. is engaged in the business of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables. The company has a market cap of $110.36 million. The Firm operates through four divisions: Consumer receivables, Personal injury claims, structured settlements and disability advocacy. It has 104.85 P/E ratio. The Consumer receivables segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumer receivables.

Creating The Next Generation: The Payment Model We Need From Medicare

Four years of nation-wide testing by The Centers for Medicare and Medicaid Services (CMS) has now proven that the current shared savings payment models do not work effectively for low-cost Accountable Care Organizations (ACOs). High-cost ACOs have more room to improve and therefore more opportunity for savings.

For those organizations that have already developed efficient, low-cost care delivery systems, Shared Savings is retrogressive. In this model, inefficiency is rewarded and lower-cost systems are penalized. In fact, we have lost about 40 percent of the members of the first cohort of ACOsthe Pioneer programdue mostly to the payment system design. Even the recently announced Next Generation ACO Model, with its welcome improvements, does not address a number of significant fundamental issues that must be addressed in order to create a sustainable model.

Overview Of Our Model

After being challenged by members of CMS and others to design a better payment scheme, we studied the issues and are proposing a global risk-adjusted payment system that we will detail in this post. At a high level, CMS would pay ACOs a set amount to cover all health care costs for a population of enrollees. This would be a per-member, per-year payment with appropriate adjustments for risk and geography. ACOs would be expected to improve their performance over time while CMS compresses the variation in per-member, per-year payments being made to participating ACOs. While all ACOs would be expected to improve, the least efficient ACOs would be expected to make the greatest improvements.

Non-participants would remain on the Medicare fee-for-service payment system with progressive downward adjustments in fees. In essence, the model would reward provider systems on the path to improvement and reward those that are achieving the goals of the triple aim lower cost, higher quality, and a better patient experience.

Issues With The Current CMS Model

The core fundamental issue is CMS reluctance to pay providers a competitive amount based on the entirety of care delivered rather than the history of payments. CMS payments in all of the ACO models remains tied to historical fee-for-service payments rather than the value of care delivered.

For example, if an ACO can perform a knee replacement and produce a good outcome, it should be paid a risk- and region-adjusted amount for the outcome delivered. Once risk and region are adjusted, the payment should be nearly the same across the country. Under this model, health care systems would simply compete on providing the best outcomes at the greatest efficiency.

In the current CMS models, if an ACO is producing good outcomes and has already developed coordinated care, it is not being rewarded. CMS continues to underpay the advanced ACO while actually paying the less-efficient competitor a higher rate. CMS payment for health services must become more market based and payments should be made for delivering outcomes.

Some may argue that advanced ACOs have already proven that they can deliver care at that low price. This is simply not true and this underpayment is covered by cost-shifting from other patients. What appears as “low cost” in CMS is actually just low total reimbursement and oftentimes an indicator of an advanced-practice model operating in a fee-for-service system.

CMS must develop a competitive global payment that is adjusted for risk and geography and is not linked to prior total reimbursement. Failure to acknowledge historical improvements and the true cost of delivery will eventually drive the best performers out of the market altogether.

Key Components Of A Successful Model

There are six key components of a global risk-adjusted payment system that need to be in place for all to succeed.

  1. Payment should be adjusted for risk, geography, and outcomes, such that it is market competitive wherever that care is delivered. This would set up a competitive market that would drive more efficient and higher-quality care.
  2. ACOs should be expected to put processes in place to improve the health of Medicare enrollees. This will produce savings for the organizations that keep their populations healthy and out of crisis. CMS should not risk-adjust those savings away from ACOs. This will require development of a flexible risk adjustment model that rewards health systems for improvements in care delivery that result in lower-risk scores.
  3. The system must provide flexibility for patient mobility and properly assign accountability to the system that manages the care in a given time period. In certain regions of the country, ACOs lose control over a sizable fraction of Medicare patients every year as they move seasonally. When a patient will be absent from the ACO’s geographic region for three months or more, we must have the ability to transfer that person’s enrollment and accountability to another provider, using appropriate geographic adjustments to the payment.
  4. Patient benefits must also be aligned. Benefits should be aligned using a mechanism such as reference pricing that allows for patient choice and patient responsibility. Payment for a total knee replacement, for instance, should be set at an appropriately adjusted price across markets and regions. Patients who choose to have an elective procedure outside of the ACO at a higher-priced facility should pay the price difference. Patients should also be given benefit enhancements to encourage participation in their health care choices.
  5. CMS will need to continue to act as insurer and provide secondary reinsurance in order to account for catastrophic events to ACOs. Small and mid-size ACOs could be bankrupted by caring for a small cancer cluster and a single rare blood disorder that costs $1 million to treat annually. Even the biggest ACOs need a cushion against events over which they have no control.
  6. Every ACO should be rewarded for efficient management of all patients, including outlier patients. We recommend rewarding the successful management of high-cost patients through an upside-only type mechanism. If we include all patients in the design it will encourage retention and management of outliers.

Risk-Adjusted Payment

Setting the initial per-member, per year (PMPY) payment will be critical for ACOs in the system. Ideally, the PMPY payment would be set around the current national average per-person adjusted for geography and risk of the population with Hierarchical Condition Categories. We may need a stepwise approach toward the ideal system. Initially, the PMPY payments could take into account the current regional average per-person cost, adjusted for risk. Then, in following years, the risk-adjusted PMPY base would be modified to keep in step with the economy (eg GDP plus 1 percent) and establish the year’s new PMPY target for all ACOs. Over time, the variation in payments across the country would diminish.

For those ACOs in the lowest-cost percentile, expected financial improvement would be less than expected financial improvement for higher-cost systems. An ACO with a PMPY cost of $8,000, for instance, might have a 0 percent expected improvement target while ACO’s costing $11,000 PMPY would be expected to improve by 1 percent and an ACO charging $16,000 PMPY might have a 1.8 percent improvement target. Ultimately, payment should only vary across the nation due to risk and region.

For patients, the biggest change would be the required selection of a primary care provider within their ACOs. The primary care physician will be the main point of contact for the patient and will manage the patient’s plan of care and work with the patient to establish a wellness approach. Typically a family practice or internal medicine doctor will take on this role. This relationship will be crucial for improving health of the patient while controlling costs.

During the transition to global payment, we will still need to reference a fee schedule. Since the role of the primary care provider is crucial in managing care, we should immediately establish a case-management fee similar to the recently introduced chronic disease management fees, but applicable to the entire attributed population. This will eventually be a part of the global PMPY payment but should be introduced in the fee schedule now in order to support current and future infrastructure development.

Population Health

Health risk and socioeconomic assessments would be part of the commitment to wellness and coordinated care to identify those at risk before they incur poor outcomes and expense. Wellness visits should not be a separate benefit, but designed into the benefits of all Medicare beneficiaries. Patients may require education on healthy cooking, stress management, or exercise, and providers could seamlessly integrate those elements into a plan of care. If socioeconomic barriers are identifiedsuch as transportation issues or inability to safely store medicinesthose those would be addressed as well.

Further work is needed to improve access to data necessary to improve care. As we transition to systems of care managing a population of patients, ACOs will need complete access to unblinded data held at the Health Insurance Marketplace and state-run Health Information Exchanges in addition to the data provided directly from CMS. Timely data is needed to reduce duplication of services, identify the best interventions in patient care, and to help coordinate overall across organizations and throughout a patient’s life.

In order to compare the effectiveness of health interventions across organizations, we will need a common set of quality metrics that drive all reporting. This is the only way we can provide transparency and comparison data to consumers in a market-driven system. Since we know that what we measure drives behaviorand improvementthese measures must be few and focused. In the absence of a national measurement set, state organizations such as those that participate in the Network for Regional Healthcare Improvement (NRHI) could provide comparative measurements for ACOs.

Patient Mobility And Reference Pricing

ACOs will not be working exclusively within their own boundaries, of course. Some percentage of patients will need specialty care or will elect to take certain procedures to other providers. They will get sick while traveling or go south for the winter and have a myocardial infarction. Therefore, CMS needs to create reference pricing and complete definitions of an episode of care that can transcend regional marketplaces.

For example, if the ACO provider reimbursement for a total knee replacement is $28,000 including pre-work, surgery, and four weeks of integrated physical therapy, that should be the patient’s benefit as well. Should the patient decide to seek that knee replacement outside of her ACO and there is a difference in cost or included therapies, the beneficiary would be responsible for the difference.

ACOs should provide bundled services for common episodes of care and publish outcome measures. ACOs could collaborate with CMS and private payers to establish universal criteria for care appropriateness and revisit those criteria as medical knowledge advances. Should a requested procedurea liver transplant, for instancenot be appropriate given the patient’s comorbidities, the ACO would establish a care plan to help reduce a patient’s risk factors and help him qualify at a future date, if realistically attainable. The patient should earn additional credits against his deducible when he follows through on care plans established in these informed or shared-decision-making sessions. This care plan should, of course, be based on clinical best practices.


Recognizing that the incidence of illnesses in health care is not always predictable, CMS must offer reinsurance. ACOs cannot be expected to act as insurance companies and most will not have sufficient populations over which to spread risk. CMS should retain the risk and carve out those costs when setting the ACO total PMPY fees. Even though the ACO is not at risk for catastrophic loss, it should be eligible for financial rewards for effectively managing outlier cases. This will create incentives for ACOs to stay engaged in efficiently treating these cases.

For CMS beneficiaries whose claims are in excess of the reinsurance threshold, a national average Hierarchical Condition Category (HCC) cost per unit should be established. For example, the total of all medical costs over the CMS reinsurance threshold is $2.5 billion and the total HCC units associated with these beneficiaries is 250,000 units. This would mean that the population costs per HCC unit is $10,000. Let’s say an ACO has a beneficiary that incurs $125,000 and the reinsurance threshold is $100,000. The patient’s HCC score is 15. In comparing the ACO’s actual cost ($125,000) to expected costs of $150,000 (HCC score of 15 x $10,000 per unit) the ACO saves CMS $25,000 and should share in that savings.

Patient Management

CMS should also continue working towards having ACOs manage pharmaceutical costs. Pharmacy is an integral component of patient care. And management of this benefit has significant downstream effects on health outcomes and cost of care. Pharmacy information also provides valuable inputs to help identify gaps in care, compliance with medication plans, and identification of disease states.

The top performing ACOs should expect additional credits from CMS and increases in PMPY awards for performers in the top quartile of all ACOs. The ACOs should be in open competition with one another to provide the best patient outcomes at the lowest cost. Incentives can spur this kind of positive competition.

This will require CMS to develop new capabilities of support, but it could also reduce the administrative burden by moving away from a purely claims-based program to one that is focused on overall cost and health outcomes for beneficiary populations. CMS will need to improve real-time data sharing capability and work toward greater compatibility between legacy systems.

We hope that this draft of a global risk-adjusted payment system sparks debate and collaboration, and then significant movement on the part of CMS toward a first experiment. Providers such as Bellin-Thedacare HealthPartners and others are willing to step forward and experiment with these payment changes that ultimately support the very reason we chose this profession to begin with improving the health of our patients.

DoD, GAO disagree on how many financial management goals the agency has met

The Defense Department has made some progress in implementing congressionally mandated financial management strategies, but theres some disagreement over how many goals the DoD has actually met, according to a Sept. 28 Government Accountability Office report.

In 2011, a congressional panel examined the capacity of DoDs financial management system for providing timely, reliable and useful information for decision making and reporting.

The panel, in its January 2012 report, included 29 recommendations addressed to DoD in four areas:

  • Financial Improvement and Audit Readiness strategy and methodology;
  • Challenges to achieving financial management reform and auditability;
  • Financial management workforce; and
  • Enterprise resource planning systems implementation.

GAO determined in its report that the DoD met six of the panels recommendations and partially met the other 23.

In its May 2015 Financial Improvement and Audit Readiness, or FIAR, plan status report, DoD claimed it met more of the recommendations than the GAO has asserted. DoD reported that nine recommendations were met and 20 were partially met.

GAO and DoD continued to disagree over the three recommendations, which included one that requires a testament to audit readiness in each of the FIAR plan status reports.

GAO claims that while each FIAR plan status report is coordinated among FIAR Governance Board members, those Board members did not explicitly attest in the reports to whether DoD is on track to achieve audit readiness in 2017.

For more:
– download the report, GAO-15-463 (.pdf)

Related Articles:
Hale: DoD wont produce full auditable financial statement by Sept. 30
Dodaro: Audit readiness at DoD must overcome decades of unconcern

Positive credit report highlights conservative budgeting

HALFMOON gt;gt; Three years of cost-cutting measures, a determined effort to eliminate a highway budget deficit and an upturn the economy, has brought the town good news from a highly regarded credit rating firm.

Moodys Investment Services recently removed the towns negative financial outlook and upgraded it to stable. As part of its report, Moodys also affirmed the towns Aa3 credit rating high quality and very low credit risk.

The positive report was good news for Supervisor Kevin Tollisen, his administration, and the town board. It confirmed all his efforts to cut spending wherever possible and to stop using fund balances to balance the towns annual budgets were worthwhile.

Were very pleased with Moodys change from a negative to a stable outlook, Tollisen said. Were taking an aggressive approach to making sure our budget is being closely reviewed. We want to make sure our expenditures are not exceeding our budget revenues.

Moodys noted the towns manageable debt, its stable tax base, improved operating performance and the general stability of its other credit factors in its report.

The fiscal 2013 and 2014 audited financials reflect a two-year trend of positive operating performance that has returned the available operating reserves to a positive position which provides greater operating flexibility, the report stated. The Aa3 rating reflects the towns sound financial position that has improved in recent years and is subject to economically sensitive revenues given the lack of a general town tax.

Because of that aggressive approach of reviewing each expenditure the town has been able to improve its fund balance from $28,000 to $1.2 million. Critical to that improvement was Tollisens determination to eliminate a highway budget deficit of more than $400,000 in two years rather than the three that was planned prior to his taking office in 2014.

Weve done it by conservative budgeting, Tollisen said. I meet with the department heads once a month and the first thing on the agenda is the budget. By staying with our budgeted items and having everyone spending only whats necessary, were on the path for financial improvement and Im very pleased that that will continue.

He noted that the town also is slowly moving toward reducing its dependence on sensitive revenues by considering a town-wide highway tax. Currently, the town gets the bulk of its operating revenue from its share of the countys mortgage and property taxes. Tollisen has held seven workshops in the past two months to discuss how a highway tax will help maintain the towns highway infrastructure.

He has a 20-year highway plan for road maintenance and road improvements but that plan needs a stable source of revenue. A highway tax would do that, but presenting that possibility to a citizenry that has been steadfast and proud for many years that its town had no taxes for the operation of town government is not easy. Continued…

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Moody’s republishes Moody’s Approach to Rating Transactions Backed by …

New York, October 27, 2015 — Moodys Investors Service has republished Moodys Approach
to Rating Transactions Backed by Structured Settlements. The republication
is due to an update of the effective date of the credit rating methodology
set as of 21 May 2015.

The republication of the credit rating methodology will not result in
any rating changes.

This press release is not intended to provide a summary of the methodology.
For a full explanation of the methodology, please consult the updated
report, now available on www.moodys.com and accessible
via the link provided below:


NOTE TO JOURNALISTS ONLY: For more information, please call
one of our global press information hotlines: New York +1-212-553-0376,
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You can also email us at mediarelations@moodys.com or visit our
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This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.

Andrew Butville
Asst Vice President – Analyst
Structured Finance Group
Moodys Investors Service, Inc.
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New York, NY 10007
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Luisa De Gaetano
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Releasing Office:
Moodys Investors Service, Inc.
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Moodys republishes Moodys Approach to Rating Transactions Backed by Structured Settlements