On November 17, 2023, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued a notice of proposed rulemaking (the Proposed Regulations) regarding the investment tax credit (ITC) under Section 48 of the Internal Revenue Code of 1986, as amended (the Code) pursuant to changes authorized by the Inflation Reduction Act of 2022 (IRA). These proposed regulations provide the first substantive updates to the existing ITC Treasury Regulations in § 1.48-9 since 1987. This notice of proposed rulemaking also withdraws and reproposes portions of proposed rules issued on August 30, 2023, with respect to Section 48 and supplements proposed rules issued on June 21, 2023, with respect to the transferability regime under Section 6418.
The Proposed Regulations:
- clarify various energy property definitions, including geothermal energy property, combined heat and power system property, and solar energy property. The Proposed Regulations would also provide the first definitions for what qualifies as energy storage property;
- expand the functional interdependence test and integral part test to incorporate more project components of qualified energy property;
- clarify recapture rules for failing to meet prevailing wage and apprenticeship (PWA) requirements and timing for determining recapture events; provide corresponding changes to the transferability regime;
- formally adopt the “80/20 rule” in prior IRS guidance for purposes of repower projects;
- revise the “dual use” rule to reduce the minimum qualifying energy requirement from 75 percent to 50 percent; and
- clarify the interplay of qualified interconnection property with respect to the domestic content bonus and energy community bonus credit amounts.
A hearing on the Proposed Regulations is scheduled for February 20, 2024, with a deadline for public comments of January 22, 2024.
Clarifications to Eligible Energy Property Technologies
Acquisition of energy property. Proposed Regulation § 1.48-9(b)(2) would provide clarification regarding what “acquisition of energy property” means in a transaction by which a taxpayer obtains rights and obligations with respect to energy property, including legal title to the energy property under the jurisdiction in which the property was placed in service, by requiring that the taxpayer also have physical possession or control of the energy property. Proposed Regulation § 1.48-9(b)(3) would define “original use” as the first use to which a unit of energy property is put, whether or not such use is by the taxpayer. The Proposed Regulations state that the “original use” must begin with the taxpayer claiming the credit.
Intangible property. The Proposed Regulations provide that “energy property” does not include intangibles (e.g., PPAs, goodwill, going concern value, and Renewable Energy Certificates (RECs)), consistent with the definition of qualifying energy property under Section 48 as being tangible personal property.
Solar energy property. Proposed Regulation § 1.48-9(e)(1)(i) provides that “solar energy property” is equipment that uses solar energy to generate electricity, to heat or cool a structure, or to provide solar process heat. Proposed Regulation § 1.48-9(e)(1)(ii) defines the term “solar electric generation equipment” as equipment that converts sunlight into electricity through the use of devices such as solar cells or other collectors, while adopting the current statutory exclusion for any property used to generate energy for the purposes of heating a swimming pool. The Proposed Regulations would eliminate the exclusion for passive solar systems in existing Regulation § 1.48-9(d)(2) because Section 48 does not distinguish between passive and active solar energy systems. Proposed Regulation § 1.48-9(e)(1)(iii) expands the definition of solar process heat equipment to include equipment using solar energy to generate heat for use in industrial or commercial processes, thus removing long-standing confusion about the eligibility of solar process heat equipment for ITCs.
Geothermal energy property. Proposed Regulation § 1.48-9(e)(3) provides that geothermal energy property is equipment used to produce, distribute, or use energy derived from a geothermal deposit, including production and distribution equipment. Production equipment would include equipment necessary to bring geothermal energy from subterranean deposits to the surface; reinjection wells; and electricity generating equipment for projects that convert geothermal energy into electricity. The proposed regulations would add components of a building’s heating or cooling systems as distribution equipment.
Combined heat and power (CHP) system property. Proposed Regulation § 1.48-9(e)(6) adopts a streamlined definition of CHP and excludes property used to transport the energy source to the generating or distribution facility.
Biogas property. Proposed Regulation § 1.48-9(e)(11)(i) provides examples of functionally interdependent components of qualified biogas property, including waste feedstock collection systems, landfill gas collection systems, mixing or pumping equipment, and anaerobic digesters. Under the Proposed Regulations, upgrading equipment to enable the injection of biogas into a pipeline is not deemed necessary to satisfy statutory requirements with respect to the biomass methane percentage amounts, such that it be captured for sale or productive use. Accordingly, the Proposed Regulations explicitly disallow upgrading equipment as a functionally interdependent part of qualified biogas property.
Energy Storage Property
Definition of energy storage technology. Proposed Regulations in § 1.48-9(e)(10) would adopt the statutory definition of “energy storage technology” in Section 48(c)(6). This definition would confirm that the definition of energy storage technologies would not use a technology-specific definition, but rather provide a broader definition based on capabilities of energy storage technology. The ultimate effect of this definition is to include developing energy storage technologies that may otherwise not fit neatly into a technology-specific category.
Hydrogen storage. Proposed Regulation § 1.48-9(e)(10)(iv) provides clarification on hydrogen energy storage mediums, allowing for different hydrogen storage mediums to qualify under Section 48(c)(6)(A), including physical or material-based storage mediums. However, the Proposed Regulations provide that hydrogen energy storage property must store hydrogen that is solely used as energy and not for other purposes, such as the production of end products like fertilizers.
Functional interdependence test. Proposed Regulation § 1.48-9(e)(10) would apply the “functional interdependence test” (see discussion below) to determine whether components are included as part of the energy storage technology. Rechargeable electrochemical batteries of all types meet this functional definition by receiving energy through electricity, storing the electrochemical energy, and producing electricity. This provision contains a non-exclusive list of examples of different energy storage technologies that could qualify under Section 48. The Treasury Department is attempting to create broader language so that developing technologies in energy storage may qualify. Non-qualifying energy storage technologies that do not meet the functional definition under the Proposed Regulations include “virtual batteries” that aggregate controllable electricity demand but do not store electricity for later use. These virtual batteries primarily “shift” demand to different points in time, which is not defined as an energy storage technology under Section 48(c)(6). These rules would appear to allow taxpayers to treat solar or battery storage blocks or circuits (and similar units of other types of property) as separate units of energy property that may be placed in service on an independent basis.
Energy Property and Component Parts
Functional interdependence of energy property components. Proposed Regulation § 1.48-9(f) adopts the functional interdependence and integral parts of energy property tests to avoid limiting future technologies from qualification. Proposed Regulation § 1.48-9(f)(2)(i) provides that a “unit” of energy property consists of all functionally interdependent components of property owned by the taxpayer that are operated together and can operate apart from other energy properties within a larger energy project. Components of these properties are functionally interdependent if the placement in service of each component is co-dependent on other components to generate or store electricity, thermal energy, hydrogen, or perform its intended functions under Section 48(c).
Integral part of energy property. Proposed Regulation § 1.48-9(f)(3)(i) provides that property owned by a taxpayer that is an “integral” part of energy property is energy property. An “integral” part of property must be used directly for the intended energy property function under Section 48(c) and Regulation § 1.48-9(e), as well as be essential to the completeness of the intended function.
Integral parts of energy property
Non-integral parts of energy property
Integral power conditioning equipment includes transformers, inverters, and converters. Parts related to the functioning or protection of power conditioning equipment, such as switches, circuit breakers, arrestors, and hardware and software used to monitor, operate, and protect power conditioning equipment are also considered integral.
“Upgrades” to biogas equipment necessary to condition the gas into an appropriate mixture for injection into a pipeline do not qualify as integral parts of energy property.
Integral transfer equipment, including equipment that allows for the aggregation or alteration of energy and voltage, respectively. Integral transfer equipment includes wires, cables, combiner boxes, and parts that facilitate the functioning and protection of equipment, like circuit breakers, fuses, and switches. Hardware and software used to monitor or protect transfer equipment are also considered integral.
Integral transfer equipment does not include transmission or distribution lines.
Roads used for the operation and maintenance of energy property qualify as integral parts of energy property.
Roads primarily used for site access or for employee or visitor vehicles do not qualify as an integral part of energy property.
Buildings that are integral to energy property are subject to an exception under Proposed Regulation § 1.48-9(f)(3)(iii)(E) and are treated as “structures.” Structures are either: essentially an item of machinery or equipment with respect to energy property, or essentially inseparable from the energy property the structure houses.
Buildings generally do not qualify as integral to energy property. In addition, fences are not integral parts of energy property.
Depreciation allowable. Proposed Regulation § 1.48-9(b)(4)(ii) would provide that if the basis or cost of energy property is not recovered through a method of depreciation but instead through a deduction of the full cost in one taxable year (e.g., under Section 179), a deduction for depreciation with respect to such property is not allowable to the taxpayer.
Placed in service requirement. The Proposed Regulations would clarify that the taxable year in which energy property is placed in service would be the earlier of the taxable year in which the period for depreciation of such property begins, or the taxable year in which the energy property is placed in a condition or state of readiness and availability for a specifically assigned function in either a trade or business or in the production of income, the latter of which is typically determined using a five-factor test derived from IRS guidance and case law. This test provides five common, though not exclusive, factors considered in determining placed in service dates, including:
- The approval of required licenses and permits;
- Passage of control of the facility to taxpayer;
- Completion of critical tests;
- Commencement of daily or regular operations; and
- Synchronization of the property into a power grid for generating electricity to produce income.
This standard is consistent with and reaffirms existing placed-in-service rules.
Clarifications Regarding Recapture and Prevailing Wage and Apprenticeship Requirements
Prevailing wage and apprenticeship requirements. Newly proposed Regulation § 1.48-13 provides a definition of an energy project for the PWA requirements, guidance on the 1 MW exception, and the recapture rules for failure to satisfy the PWA requirements.
Section 48(a)(10)(C) recapture rules revised. Proposed Regulation § 1.48-13 provides guidance on recapture rules relating to the PWA requirements. A taxpayer that has claimed an increased credit under Section 48(a)(9)(A)(i) and 48(a)(9)(B)(iii), but failed to satisfy the PWA requirements under proposed Regulation § 1.45-7(b)-(d) with respect to any period during the five-year period, beginning when the project is placed in service, is subject to a recapture (of up to 100 percent) of the increased credit amount. In addition, the failure to satisfy the PWA requirements subjects a taxpayer to the correction and penalty provisions of proposed Regulation § 1.45-7(c)(1). The five-year recapture period under Section 48(a)(10)(C) would begin on the day an energy project is placed in service and end on the day that is five years after this placed-in-service date. Each year within this recapture period would be characterized as a separate recapture year. Further, the recapture amount percentages will be determined consistently with the provisions set under Section 50(a), based on the year in which the recapture event occurred, i.e., the increased credit amount would “vest” in an amount equal to 20 percent each year. Notably, the Proposed Regulations define “recapture event” as a failure to pay prevailing wages, but do not mention failure to use apprentices, which is consistent with the statutory language which only requires apprentices to be used during construction. Finally, the Proposed Regulations clarify that the taxpayer would be entitled to the base 6 percent ITC amount in the event of a recapture resulting from failure to comply with the prevailing wage rules during the recapture period.
- Correction and penalty payments. Proposed Regulation § 1.48-13 provides that if a taxpayer claimed the increased credit under Section 48(a)(9)(B)(iii) or transferred a credit portion under Section 6418 and failed to satisfy the PWA requirements under proposed Regulation § 1.45-7(b)-(d) for any period with respect to the alteration or repair of any project during the five-year recapture period and the taxpayer does not make the correction and penalty payments under proposed Regulation § 1.45-7(c), then no penalty is assessed, and the increased credit amount is subject to recapture.
Tax year in issue. To preemptively address issues regarding the five-year recapture period misaligning with tax year ends, the Proposed Regulations provide that a recapture event is determined at the close of the tax year that begins or ends within the five-year recapture period. Under the Proposed Regulations, the increased tax for the recapture amount would be assessed with respect to the taxable year in which the recapture event occurred.
Reporting requirements. Proposed Regulation § 1.48-13 includes annual reporting requirements to verify PWA requirements are met. These requirements are in addition to the previously proposed Regulation § 1.45-7(b)-(d), which created recordkeeping and reporting requirements. Further, the Proposed Regulations provide that taxpayers that claim the 30 percent ITC are required to include with tax returns filed for years including the recapture period, information with respect to the payment of prevailing wages for any alteration or repair of the project during the recapture period (assuming the PWA requirements applied in the construction of the applicable project).
Transferability under Section 6418. The Proposed Regulations confirm the notification requirements for an eligible taxpayer and clarify that a transferee taxpayer is responsible for any amount of increased tax under Section 48(a)(10)(C).
Energy project definition. Proposed Regulation § 1.48-13(d) provides a definition of “energy project” as one or more energy properties operated as part of a singular project, for the following categories: (1) PWA requirements under Section 48(a)(9); (2) domestic content bonus credit amount under Section 48(a)(12); and (3) energy communities bonus credit amount under Section 48(a)(14). Further, Section 45 qualified facilities that are “co-located” with Section 48 energy property will not be considered part of the project unless an election under Section 48(a)(5) is made. Thus, a taxpayer can claim production tax credits (PTC) on the electricity output from a wind, solar or other renewable energy project and an ITC on a co-located battery storage property.
- Multiple Energy Properties may be treated as one project. Subject to conditions, multiple energy properties may be treated as one project, if at any point during the construction of the multiple properties, a single taxpayer owns all the properties, and two or more factors are met as set forth under Notice 2018-59, which factors are incorporated into the Proposed Regulations. These factors are:
- the energy properties are constructed on contiguous pieces of land;
- the energy properties are described in a common power purchase, thermal energy, or other off-take agreement or agreements;
- the energy properties have a common intertie;
- the energy properties share a common substation, or thermal energy off-take point;
- the energy properties are described in one or more common environmental or other regulatory permits;
- the energy properties are constructed pursuant to a single master construction contract; or
- the construction of the energy properties is financed pursuant to the same loan agreement.
We note that this test may result in some unintended consequences and should be reviewed closely.
- Related taxpayers treated as one taxpayer. Proposed Regulation § 1.48-13(d) provides that related taxpayers are to be treated as one taxpayer in determining whether multiple energy properties are in fact a project. Relatedness is defined under Regulation § 1.52-1(b), typically as members of a group of trades or businesses that are under common control.
1 MW exception. The 1 MW exception applies through proposed Regulation §1.48-13(e), which provides that the increased credit amount is also available under Section 48 for energy projects with a maximum net output of less than 1 MW of electrical or thermal energy. The determination of “nameplate capacity” is expressed in MWs of either electrical or thermal energy.
- Exceptions. Electrochromic glass, fiber-optic solar, and microgrid controllers are not eligible for this exception as they do not generate thermal or electrical energy.
- Measurements. Proposed § 1.48-13(e) provides for specific MW conversion factors.
Retrofitted Property Plus the “80/20” Rule, the Dual Use Rule, and Eligible Basis Provisions
The 80/20 Rule applies to energy property under Section 48.Proposed Regulation § 1.48-14(a) applies the 80/20 Rule to energy property under the Section 48 ITC following comments requesting specific regulations to address the applicability of the 80/20 Rule to energy property. Importantly, the 80/20 test is applied in ITC projects to each “unit of energy property,” which means that all functionally interdependent components owned by the taxpayer or related parties would be tested in the aggregate. Thus, if a taxpayer claims an ITC on a wind farm, the 80/20 test is applied to the entire wind farm rather than to each turbine or other piece of equipment separately. This in turn may influence the decision whether to claim PTCs or an ITC. With respect to PTCs, some repowered turbines may qualify as new while others may not. With respect to ITCs, taxpayers must determine whether the entire project is new due to a repowering.
Dual use property and the 50 percent cliff. Proposed Regulation § 1.48-14(b)(2)(i) modifies the 75 percent cliff in existing Regulation § 1.48-9 to a 50 percent cliff. Specifically, this would require energy property to derive a minimum of 50 percent of energy from a qualifying source during annual measurement periods. If at least 50 percent of the energy is used from qualifying sources, a proportionate amount of the eligible basis of the energy property will be considered to calculate the Section 48 ITC. In addition, proposed Regulation § 1.48-14(b)(2)(ii) allows the dual use rule to permit the aggregation of energy inputs from more than one energy property. Importantly, the ITC must still be prorated to the extent the energy percentage is between 50 percent and 100 percent (and proportionally recaptured to the extent the percentage is reduced). Thus, if the energy percentage is 70 percent in the year the equipment is placed in service, the ITC amount is 70 percent of the ITC that could otherwise be claimed. Note that the dual use rule is not relevant to a battery or other energy storage property.
- The annual measurement period. Proposed Regulation § 1.48-14(b)(2)(iii) provides an annual measuring period for an item of dual use property being any period of 365 (or 366 in leap years) consecutive days, starting on the placed-in-service date.
- Incremental costs. Proposed Regulation § 1.48-14(d)(1) continues to apply the incremental cost of energy property as properly included in the eligible basis of the energy property used to calculate the Section 48 ITC. Under existing Regulation § 1.48-9(k), incremental cost is defined as the excess of the total cost of equipment over the amount that would have been expended for the equipment if the equipment were not used for a qualifying purpose related to the Section 48 ITC. As an illustration, energy property that costs $100 performs a qualified pollution control function as well as a non-qualified function. If it costs $60 to perform the non-qualified function, the incremental cost to the energy property would be the difference of $40.
- Costs includable in the basis of related energy property. Proposed Regulation § 1.48-14(g)(1) provides that only amounts paid or incurred for property are included in the basis of the related energy property. Proposed Regulation §1.48-14(g)(6) would provide that reimbursement for those costs may not be included in the basis of the property.
- Ownership of energy property. Proposed Regulation § 1.48-14(e) provides that taxpayers who own eligible energy property may qualify for the Section 48 credit only to the extent of the taxpayer’s eligible basis in the property itself. Further, where multiple parties hold ownership interests in energy property, each party may be entitled to a credit to the extent of that taxpayer’s fractional interest in the property. These clarifications may help enable more ownership structures involving both tax-exempt and taxable entity owners.
Qualified Interconnection Costs
Qualified interconnection property is not energy property. Proposed Regulation § 1.48-14(g)(2) clarifies that qualified interconnection property is not considered in determining whether an energy property satisfies the domestic content bonus credit amount and the energy communities bonus credit amount. However, under Proposed Regulation § 1.48-14(g), costs paid or incurred for the installation of energy property with a maximum net output of no more than 5 MW are included in the basis of a related energy property.
- 5 MW exception measured at level of energy property. Proposed Regulation § 1.48-14(g)(3) would provide that if an energy project is comprised of multiple energy properties with a combined nameplate capacity of more than 5 MW, each energy property would be eligible to include amounts paid or incurred for qualified interconnection property if each energy property satisfies the 5 MW limitation.
- Maximum net output of energy property. Proposed Regulation § 1.48-14(g)(3) provides that the maximum net output of an energy property is measured only by nameplate generating capacity of the unit when it is placed in service.
Taxpayers may generally rely on the Proposed Regulations with respect to property placed in service after December 31, 2022, and during a taxable year beginning on or before the date the final regulations are published in the Federal Register, provided that the taxpayer and all related persons apply the Proposed Regulations in their entirety and in a consistent manner.
With respect to the PWA requirements, taxpayers may rely on that portion of the Proposed Regulations for projects that begin construction on or after January 29, 2023, and on or before the date the regulations are published as final regulations in the Federal Register, provided that, beginning after October 28, 2023, taxpayers follow the portion of the Proposed Regulations that relate to the PWA requirements in their entirety and in a consistent manner. Proposed Regulation § 1.48-13(d) applies to energy projects that begin construction after November 22, 2023.
Proposed Regulation § 1.6418-5(f) would apply special notification rules to credit recaptures under Section 48(a)(10)(C) to taxable years ending on or after the date the final regulations are published.
Request for Public Comments
Treasury and the IRS request comments on all aspects of the Proposed Regulations, in particular the following:
- the need for further guidance with respect to proposed Regulation § 1.48-9(d), which would allow for co-located (shared) qualified facilities eligible for the Section 45 to be treated as an integral part of Section 48 energy property;
- alternative approaches in assessing limitations on the use of hydrogen energy storage property with respect to proposed Regulation § 1.48-9(e)(10)(iv), as well as what documentation is needed to demonstrate that energy property is used to store hydrogen solely used to produce energy;
- whether “second life” batteries or recycled components that may meet the modification rule under proposed Regulation § 1.48-9(e)(10)(v) for energy storage technology should be considered new components for purposes of the 80/20 Rule;
- what types of components may be used to modify existing energy storage technology and whether there are identifiable challenges related to recycled components used to meet the modification rule;
- with respect to Section 48(c)(6)(A)(I), how the exclusion for property primarily used in the transportation of goods or individuals and not to produce electricity should be defined, as well as the specific types of property that may be covered by this exclusion;
- whether “virtual batteries” and similar demand shifting technology excluded by proposed Regulation § 1.48-9(e)(10) should be considered as energy storage technologies;
- further guidance regarding what types of components may be included within the definition of cleaning and conditioning property provided in the definition of qualified biogas property in Section 48(c)(7)(B);
- whether the rules for functionally interdependent property provided in proposed Regulation § 1.48-9(f)(2)(ii) would be sufficient to determine the components that should be included as part of a microgrid controller, or whether another test is needed;
- if additional types of property meet the requirements of proposed Regulation § 1.48-9(f)(3) and could be considered an integral part of energy property;
- whether other methods of measurement with respect to proposed Regulation § 1.48-13(e) may allow electrochromic glass property, fiber-optic solar, and microgrid controllers to qualify for increased credit amounts, provided that the above energy projects generate a maximum net output of less than one megawatt (the One-Megawatt Exception);
- if proposed Regulation § 1.48-13(e)(13) provides suitable tests for measuring the One-Megawatt Exception, or whether an alternative is more suitable;
- comments on the application of the dual use rule to Section 48 after its amendment by the IRA;
- further guidance on whether a rule is needed to address the inapplicability of the dual use rule to microgrid controllers or similar technologies;
- whether the application of the five-megawatt limitation to a single energy property under proposed Regulation § 1.48-14(g)(3) is sufficiently clear; and
- the extent to which multiple energy properties with separate nameplate capacities of less than 5 MW would utilize common power condition equipment for economic or regulatory reasons and/or common interconnection agreements or would instead utilize separate power conditioning equipment and/or interconnection agreements.
A hearing on the Proposed Regulations is scheduled for February 20, 2024, with a deadline for public comments of January 22, 2024.
Our team would be pleased to assist you in your strategic planning. For more information on issues pertaining to tax and energy and climate solutions, please contact Wilson Sonsini attorneys Nicole Gambino, Hershel Wein, Brandon King, or Jaron Goddard.
Investor interest in telehealth surged during the Covid-19 pandemic. While the healthcare industry’s widespread adoption of telehealth was driven by necessity due to social distancing practices, such expansion would not have been possible without federal and state governments waiving many legal and regulatory requirements that had previously hindered such telehealth growth. Many of these waivers were temporary and tied to public health emergencies (“PHEs”) which either have already or will soon expire. In turn, the volume of telehealth investments has already begun to decline. In fact, 2023 is projected to be the lowest telehealth funding year since 2019. This begs the question – is the slowing telehealth investment due to the tightening credit markets and an expected economic downturn, or should the telehealth industry expect the trend of decreased investor interest to continue in a post-PHE world?
A review of federal, state, and private payer activity indicates interest in telehealth remains strong. As such, as the credit market stabilizes and fears of a recessions begin to recede, we expect investor interest in telehealth to return.
Background on pandemic telehealth coverage policies
Prior to the Covid-19 pandemic, payers had created numerous policy and coverage barriers that served to limit widespread telehealth adoption. For example, Medicare had requirements preventing patients from receiving telehealth services from their homes, as well as the frequency limits of certain telehealth services. Many state Medicaid programs and private payers had similar telehealth restrictions. On January 31, 2020, a PHE was first announced at the Federal level. Pursuant to the PHE, the Department of Health and Human Services, Centers for Medicare and Medicaid Services (“CMS”) waived many of the key Medicare telehealth requirements that had previously limited widespread telehealth adoption, with state Medicaid programs and private payers quickly following CMS’ lead.
Insights on telehealth interest from federal, state and private payer action
The federal telehealth waivers were set to end when the federal PHE expired on May 11, 2023. Although CMS was supportive of continuing expanded telehealth coverage, many restrictions on telehealth were set by statute, and therefore congressional action was required to permanently change policies. Under heavy industry pressure, on December 29, 2022, Congress temporarily extended many of the telehealth flexibilities afforded by the PHE to Medicare beneficiaries through December 31, 2024. Given the current gridlock in Congress, legislative efforts to further codify telehealth coverage expansion are unlikely to be revisited until late 2024. While budgetary pressures may continue to lead to temporary rather than permanent extensions, with CMS, industry, and public support, Congress is unlikely to force a return to a pre-pandemic telehealth world.
When it comes to making coverage determinations, states often follow the lead of Medicare. However, given the expectation that Congress will not act further on telehealth solutions until late 2024, state action provides helpful insight into the strength of the telehealth industry post-PHEs.
Many state Medicaid programs offer more generous telehealth coverage policies that have continued to broaden in the last couple of years. States have long removed geographical restrictions imposed on where telehealth services take place. In fact, Hawaii, Montana, and Maryland are the only state Medicaid programs that still restrict reimbursable telehealth services to rural areas. Furthermore, 37 state Medicaid program plus Washington, D.C. allow patients to receive telehealth services in their home. Removing geographical restrictions and increasing the types of eligible originating sites means that more patients, including previously underserved populations, can access telehealth services.
With respect to the delivery method of telehealth services, all state Medicaid programs reimburse for live video and 36 state Medicaid programs and Washington, D.C. also reimburse for audio-only telehealth services. Moreover, 28 state Medicaid programs reimburse for asynchronous telehealth services, also referred to as store-and-forward policies, which allow providers and patients to directly share information with each other before and after telehealth appointments. This movement by state Medicaid programs beyond the historical live video requirements provides reimbursement opportunities for telehealth providers and technology. The success of such programs could also lead to further adoption from Medicare of store-and-forward services (which are covered only covered by Medicare in Hawaii and Alaska as part of a telehealth demonstration project).
States have additionally taken legislative action to address private payer reimbursement for telehealth services. The majority of states have passed service parity laws, requiring telehealth services to be covered if they would otherwise be covered if rendered in-person. Payment parity laws, which 24 states have passed, require telehealth services to be reimbursed at the same rate as in-person services.
Beyond the flexible telehealth policies provided by state Medicaid programs, states are demonstrating commitment to telehealth services by announcing their own investments into telehealth offerings. For example, Minnesota’s Department of Health released a report in June 2023 detailing how telehealth services have filled in the gaps of healthcare access and delivery. Other states, like Ohio and New Mexico, are expanding broadband access to remove the technological barriers to telehealth access. Ohio is concentrating its broadband expansion efforts to providing telehealth access to K-12 students and Governor Grisham of New Mexico recently announced that a part of the state’s $675 million federal grant to expand broadband access throughout the state will be allocated to improving access to telehealth services. In March 2023, Governor Roy Cooper of North Carolina issued a $1 billion investment plan to address the state’s mental health and substance use crisis, which includes $225 million for raising Medicaid reimbursement rates for behavioral health services and allocates $50 million towards facilitating access to mental health treatment including through telehealth for rural communities.
Private payer action also offers valuable insight into the strength of the post-PHE telehealth market. Although private payers have always had the flexibility to determine coverage for telehealth services (within the boundaries set by law), their partnerships and newly added services demonstrate commitment to coverage and reimbursement for telehealth services. For example, BlueCross BlueShield of Massachusetts’s expanded network of mental health providers recently expanded its mental health network include telehealth partners with Headway and Talkiatry, (and has correspondingly increased its mental health spend from $610 million in 2019 to $1.3 billion in 2022). Aetna provides its members access to CVS Health Virtual Primary Care, which expanded this year to include telehealth mental health care appointments with licensed therapists and psychiatrists. Similarly, Humana continues to grow its mental health telehealth platform with the addition of Array Behavioral Care in February 2022 and Valera Health in July 2023 as in-network providers.
Notwithstanding the end of PHEs and corresponding loss in many waivers and policies that allowed for increased telehealth adoption during the pandemic, the recent actions of state governments and private payers indicate that interest in telehealth remains strong. We therefore expect investor interest in telehealth providers and technology to similarly stay strong as economic headwinds recede.
Photo: elenabs, Getty Images
It is no surprise that the United States’ fight against corruption is not confined to its borders. For decades, the government has sought to prosecute individuals and companies across the globe who have been involved in bribery schemes that touch on U.S. interests or use the U.S. banking system.
The government’s most powerful tool for fighting foreign corruption is the aptly named Foreign Corrupt Practices Act (FCPA), which criminalizes bribing foreign government officials in exchange for a business advantage. The FCPA has resulted in numerous high-profile cases against companies and their employees, huge fines, and eye-popping whistleblower awards. The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) both have specialized units that enforce the FCPA.
But the anti-bribery provisions of the FCPA are triggered only when the corruption involves a foreign government official. While that term is defined very expansively—it even includes employees of state-owned enterprises—it still applies only to the public sector.
What about foreign commercial bribery? Commercial bribery is similar to public bribery, except that it involves bribing an employee of a private company rather than bribing a government official. While commercial bribery may not raise the same broad concerns about undermining democracy and eroding citizens’ faith in government, it still disrupts the economy and harms companies and their stakeholders. And it still is a crime in many jurisdictions, including the United States and many foreign countries.
The U.S. federal government prosecutes individuals and companies for commercial bribery using the honest services fraud statute, which criminalizes the use of bribes or kickbacks to deprive an individual or entity of its intangible right of honest services—in other words, the right of an employer to the honest services of its employees. Courts have endorsed the use of the honest services fraud statute to prosecute commercial bribery, at least domestically.
But a high-profile corruption case from the world of professional soccer may rein in federal prosecutors’ ability to use the honest services fraud statute to prosecute foreign commercial bribery.
After a long-running and wide-ranging investigation into corruption in international soccer, U.S. prosecutors brought charges against dozens of individuals and entities between 2015 and 2020. The defendants included officials at the governing body of international soccer, FIFA (headquartered in Switzerland), and its regional affiliates, such as CONMEBOL (in South America) and CONCACAF (in North and Central America), as well as executives at sports broadcasting companies. Most of these defendants cooperated or pleaded guilty, but a handful went to trial in the Eastern District of New York. One of the defendants, an Argentine sports media and marketing company, was charged with bribing CONMEBOL officials to obtain the broadcasting rights for South American World Cup qualifying matches and the immensely popular Copa Libertadores and Copa América soccer tournaments. Another defendant, an executive at a different media company, was charged as a co-conspirator in the Copa Libertadores bribery scheme.
The government charged these two defendants with conspiracy to commit honest services wire fraud and money laundering. The jury convicted both defendants, finding them guilty of using bribes to deprive FIFA and CONMEBOL of their intangible right to the honest services of their officials. After trial, however, the defendants argued that the honest services fraud statute does not encompass commercial bribery in foreign countries. The district court agreed, and it granted their motions for acquittal.
To understand the district court’s reasoning, it helps to know the backstory of the honest services fraud statute. Even before that statute existed, courts historically interpreted the general fraud statute to criminalize depriving a victim of honest services. The courts applied this honest services theory to cover a wide variety of circumstances where an employee acted disloyally to his employer, such as accepting a bribe or conducting undisclosed self-dealing. But in a 1987 decision, McNally v. United States, the Supreme Court quashed that theory, finding that the “intangible right to honest services” was ambiguous and holding that the fraud statute was limited to protecting property rights.1 Almost immediately, Congress reacted by passing a new statute that codified the honest services theory of fraud, though it included no language that clarified what it meant by the “intangible right to honest services.”
In 2010, the Supreme Court in Skilling v. United States reiterated that the honest services theory was too vague. Instead of entirely striking Congress’s statute, however, it narrowed the statute’s application to “only the bribe-and-kickback core of the pre-McNally case law”—that is, only cases involving traditional bribes and kickbacks.2 That narrow definition was reaffirmed just a few months ago in Percoco v. United States, where the Supreme Court clarified that if a certain type of bribery scheme had not been consistently accepted by the courts, then it does not fall into the pre-McNally “core.”3
The district court here found that there were no pre-McNally cases applying the honest-services theory of fraud to foreign commercial bribery. So, applying Skilling and Percoco, it ruled that foreign commercial bribery falls outside the scope of the honest services fraud statute.
The district court also supported its decision by noting that Percoco and another Supreme Court case from earlier this year, Ciminelli v. United States, both rejected novel wire fraud theories and chastised federal prosecutors for overextending the limits of the fraud statutes (see client alert). The district court interpreted those opinions as generally discouraging the extension of the fraud statutes to novel situations, such as applying the honest services fraud statute to foreign commercial bribery.
The district court held that foreign commercial bribery is not a federal crime under the honest services fraud statute. That may not be the end of the story, though, since federal prosecutors have appealed the decision to the Second Circuit. The Second Circuit has often given federal prosecutors leeway in their interpretations of the fraud statutes, although it remains to be seen how receptive that court will be after the Supreme Court reversed it twice earlier this year.
For the time being, federal prosecutors have lost a tool in their arsenal to fight foreign corruption in the private sphere. But before companies and individuals relax their vigilance on avoiding commercial bribery, they should remember these practice pointers:
- Many foreign jurisdictions criminalize commercial bribery, so even if payors of foreign bribes could avoid U.S. prosecution, they may still be prosecuted in those foreign jurisdictions with the possibility of aid from U.S. prosecutors.
- Foreign commercial bribery may still trigger other U.S. criminal statutes. For example, there is a separate statute that prohibits bribing employees of organizations, including foreign organizations, that receive money from the U.S. government.
- What a company believes is commercial bribery may actually be public bribery that triggers the FCPA, due to the FCPA’s broad definition of “foreign official.” A common example of an unexpected “foreign official” is a doctor at a state-owned hospital.
- Public companies should also remember that the FCPA’s accounting provisions have been used to charge foreign commercial bribery, albeit indirectly. Those provisions require issuers to maintain adequate accounting controls to prevent and detect the payment of bribes—public or private—and to record all payments accurately.
If you have any questions about this client alert or how these important issues could affect you or your company, do not hesitate to reach out to a member of Wilson Sonsini Goodrich & Rosati’s white collar crime and government investigations practices.
OKLAHOMA CITY (KOKH) – – Maersk and Kodiak Robotics have launched the first commercial autonomous trucking lane between Houston and Oklahoma City.
The freight lane marks an expansion of the collaboration which began with their first autonomous freight deliveries together in November 2022.
Maersk says they expect self-driving trucks to become a competitive advantage.
“Since our founding, we have focused on developing an autonomous product that is easy for global innovation leaders to integrate into their networks, and Maersk is a perfect fit,” said Erez Agmoni, Maersk’s global head of innovation. “Hauling commercial freight gives us the opportunity to work together to integrate Kodiak’s autonomous trucking solution into Maersk’s operations. As the first autonomous trucking company to establish this new commercial lane between Houston and Oklahoma City, we are demonstrating our team’s ability to introduce new lanes and bring new efficiencies to the entire logistics industry.”
“Autonomous trucking solutions have the potential to address long-term challenges faced by the trucking industry,” said Don Burnette, founder and CEO of Kodiak. “For Kodiak, safety and performance are foundational to its autonomous trucking solution. Each vehicle is equipped with 18 different sensors, including cameras, radar, and lidar, that provide the platform with a 360-degree view around the truck. Every tenth of a second, the truck evaluates the performance of more than 1,000 safety-critical processes and components in both the self-driving stack and the underlying truck platform. The trucks learn in parallel, with system upgrades shared to the entire fleet simultaneously, and are not subject to environmental distractions.”
Maersk and Kodiak says they will continue to explore future avenues for collaboration across Maersk’s growing North American logistics network.
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For a glimpse into how ranching works, residents can check out the Commercial Heifer Show & Sale at the Calhoun County Fair.
The Buyers Luncheon is 11:30 a.m. Saturday, Oct. 21, with the auction following at 1 p.m.
Beth Boone, 14, and Gunner Evans, 16, will be showing in the commercial heifer show that teaches the young people the details of cattle productions that includes purchasing, development, dehorning, vaccination, breeding, exhibition and marketing of replacement cows.
“It’s fun and I like that it focuses on the ranching side of things,” said Evans on why he chose to participate in the program. He has been participating in it for five years.
Boone, in her sixth year of showing heifers, said she liked how it taught about real-world ranching and “how to develop and market high quality replacement cattle. I also enjoy gentling and getting attached to my heifers, because I know they will be purchased by a local rancher to become a mama cow in their pasture.”
“Most of all, I enjoy my relationship with the local ranchers who have bought my heifers in the past. I like talking to my buyers at the feed store to see how the heifers are doing and seeing pictures of their new calves. Also, I like that this program allows me to be involved in the county fair without haltering and feeding out a meat animal,” Boone added.
Boone and Evans both come from ranching families and the program helps them stay connected.
“I’m proud to be a fifth generation cattle rancher. My parents and I own and operate our cattle ranch, just like my grandparents and great-grandparents on both my mom’s and dad’s side have done for decades, said Boone. “One of my favorite things about this program is how well it relates to my family’s ‘real-world ranching’ activities because it focuses more on the breeding and marketing aspect of ranching instead of the feeding and halter-breaking aspect of showing. In our ranching business, we develop gentle cattle to sell to other ranchers (we have never needed to feed out an animal to butcher).”
Evans said his father’s side of the family has been in ranching for a long time.
“I help work the cows in the fall and spring and that helps in the commercial heifer program because we are doing the same things,” he said.
HOW IT STARTED
In 2001, members of two local ranching families decided to develop a program that would teach 4-H and FFA members the realities of working in the cattle business.
John Behrens and Mark Malaer were instrumental in kicking off the program that would “teach the cattle business and the day-to-day working with cattle. We felt like it was a good project,” said Behrens.
The program had three pens of heifers the first few years but has grown to as many as 21 pens.
There are three categories: Open for heifers that are not pregnant; bred for expectant heifers; and pairs for a heifer and her calf.
“Twenty-one is the limit. We haven’t had to do a sift in case there were not enough pens,” said Behrens. “We tag them in June ahead of time so we always have enough pens.”
The project requires land for the heifer because it requires grazing the animal for the length of the project, explained Behrens.
“Sometimes they will share pastures – cousins and neighbors. I’ve seen a lot of kids grow up in this program,” he said.
What the program gives the participants is the knowledge of the business as they head into it.
It teaches them the cattle business, bookkeeping and record books.
“They keep track of the cost they put into it and then they know what price they need to break even or make the most money,” said Behrens. “I’ve not seen too many (participants) lose but it comes back to the true cattle business – some years you do good and sometimes you don’t break even.”
It also teaches the breeding program and how to watch the forage and grasses to determine if the pastures need to be rotated or supplements added.
The heifers will be in the pens behind the show barn at the Calhoun County Fairgrounds and people are encouraged to come by and talk to the exhibitors or their parents about the projects and what it takes to get it to the fair. The only time the pens will be locked is during the judging.
Evans will be showing F1 Brafords, which have a tiger strip.
“I’m trying to do pairs this year, which means they will have a calf with them,” he said.
Boone will be showing chocolate colored Simbrahs, Stella and Bella, that have a white blaze on their faces.
“Bella should be calving soon, and Stella is heavily bred. Stella is exceptionally gentle. These heifers were raised and developed on my family’s farm and have been vaccinated appropriately. I am very proud of the way I have developed my heifers in anticipation of the 2023 county fair,” she said.
Evans said he has learned about responsibility to his heifers as part of the program, especially during the fair.
“I have to go up there twice a day to make sure they have food and water and that everything looks ok. It also teaches me how to manage my money with buying them and the cost for taking care of them,” he said.
Building a solid reputation is one of many things Boone said she learned through the program.
“Through the Commercial Heifer Program, I have learned more about cattle reproduction and health, vaccinations, breed characteristics, and the importance of having a low birth weight bull,” she said. “I’ve also learned that marketing and building a reputation with local ranchers brings more value on auction day than the color of the ribbon on your pen.“
The auction is the culmination of the work with the heifers for the participants. Buyers are an integral part of the fair for all the participants – from heifers and steers to chickens and turkeys and everything in between.
“I would like to tell the local ranchers and buyers that there are 14 pens of good heifers that will sell on Saturday, October 21 at 1:30 p.m. at the Calhoun County Fairgrounds. There will be a buyers luncheon at 11:30 at the Extension Office, followed by time to walk around and view the heifers on display at the auction. This is a good opportunity to talk to the exhibitors and their families directly to find out more information about the heifers,” said Boone. “I would also like to tell buyers that the majority of our heifers sell for market prices and below, and if they buy a pen of heifers, they will receive a thank you letter and buyers basket. I hope our buyers understand how much we appreciate their support. I would also like to add that if you are not shopping for a pen of heifers, you can still support the youth ranchers by giving an add-on gift of any amount in person at auction, or online at https://calhounheifersale.com.”
Evans wants the buyers to know that “we have fun doing this and most of the time the heifers are more gentle because they are handled more than if you just went to an auction and bought them.”
Boone and Evans both have plans for their futures.
“I plan on going to college and then joining the Air Force as an officer. I want to then be a pilot in the Air Force,” said Evans.
Boone plans to attend Texas A&M before attending medical school at Baylor School of Medicine to be an emergency medicine physician.
“After I graduate, I would like to find a job nearby and help my parents with our ranch,” she said.
House prices set to plummet for the first time in over a DECADE, claims analyst once dubbed the ‘Oracle of Wall Street’ – as she reveals four states expected to see values decline
- Meredith Whitney said an ageing boomer population would ease inventory
- Pennsylvania, Connecticut, New Jersey and Illinois at biggest risk of declines, she said
- Do YOU have a nightmare home buying or selling story? Please email: firstname.lastname@example.org
House prices are set to plummet for the first time in a decade, claims a former Oppenheimer analyst who was dubbed the ‘Oracle of Wall Street.’
Meredith Whitney is famed for sending an accurate research report sounding the alarm overs risks incurred by Citigroup before the financial crisis.
But as warning bells emerge again over the health of the US economy, Whitney told Insider she did not fear another recession thanks to robust consumer spending which has been bolstered by low unemployment rates.
Instead, her focus is on American house prices which she expects to decline for the first time in over a decade. It marks a stark reversal of a pandemic-inspired trend which has seen home values shoot up by 42 percent since March 2020, according to CoreLogic.
Meredith Whitney is famed for sending an accurate research report sounding the alarm about the risks Citigroup was taking on before the financial crisis. She predicts house prices will plummet
However, Texas could fare much better – after experiencing a huge influx of California residents who migrated there in search of cheaper living costs.
She said: ‘This is state-specific. And so I expected this to happen. With 10-years-plus — 12 years — of data, now I can look at it and know that, in fact, it did happen and it is happening.’
Four states expected to see house price declines, according to ‘Oracle of Wall Street’ Meredith Whitney
Whitney, who is now the CEO of investment research firm Meredith Whitney Advisory Group, said declines were being driven by an ageing Baby Boomer population who are likely to downsize, freeing up their homes for buyers.
She told Insider: ”I’m always data-driven, so it’s just the math. If you look at the percentage of homeowners that are 50 and up, that’s a staggering amount.
‘And if you look at it historically, 50% of those over 50 typically sell and downsize, and that’s expense-driven.’
Figures from the National Association of Realtors show that the average age of a first-time homebuyer is now at a record-high of 36 years old.
Similarly Census data reveals only 10 percent of homeowners are under the age of 35.
Whitney speculates that the surge in Boomers downsizing will ease housing shortages – which have been blamed for keeping the market red-hot despite soaring mortgage rates.
She added: ‘It’s just a matter of time. Again, it’s not something that happens in one fell swoop, but it’ll be interesting to see the repercussions of that.’
Her comments come as buyers face a perfect storm of high house prices and elevated mortgage rates.
The latest data from government-backed lender Freddie Mac shows the average rate on a 30-year fixed rate mortgage is hovering at 7.49 percent.
But the majority of American homeowners fixed a deal when rates were between two and three percent as recently as 2021.
It means many are reluctant to move as doing so could add another $1,000 to their monthly payments.
Some 82 percent of would-be homebuyers recently told Freddie Mac they felt ‘locked into’ their current properties.
But despite stalling demand, prices have remained artificially high thanks to limited housing inventory.
Last week Zillow economist Jeff Tucker said buyers were in a ‘sweet spot’ this fall as 9.2 percent of new home listings had their asking prices slashed in the week to September 23
In August, housing affordability reached its worst level since 2006, according to figures from the Atlanta Federal Reserve.
However new data suggests the tide may be turning, as Whitney predicts.
Last week Zillow economist Jeff Tucker said buyers were in a ‘sweet spot’ this fall as 9.2 percent of new home listings had their asking prices slashed in the week to September 23.
It marked an increase from 6 percent in April and 7.9 percent in the same week in September 2019.
National law firm Husch Blackwell announces its significant expansion in Texas with the addition of lawyers from Norris & Weber, a Dallas-based fiduciary litigation boutique, and also the addition of two commercial litigation partners. Six attorneys will join the firm’s Dallas office and its Financial Services & Capital Markets industry unit, strengthening the firm’s complex commercial litigation and private wealth capabilities. The group includes partners Jacob Kring, Mark Fritsche, and Scott D. Weber, senior counsel Brooke Ginsburg Guerrero, counsel John R. Norris III, associate Colin R. Byrne, and law clerk Jackson Goodwin.
Formerly with Norris & Weber, Weber, Guerrero, Norris, and Byrne join Husch Blackwell’s Private Wealth group with a heavy focus on fiduciary litigation, including representing executors/administrators, guardians, and trustees in a variety of claims, assisting beneficiaries with trust and estate issues, and handling complex trust and estate administrations.
Kring and Fritsche are experienced trial attorneys who will join Husch Blackwell’s Commercial Litigation group. Both partners come from Texas-based litigation boutique Hedrick Kring Bailey and bring significant experience handling high-stakes, enterprise-threatening litigation. Their litigation practices span both plaintiff and defense work for clients across multiple industries including public corporations, private companies, and high-net-worth individuals.
“Our firm has approximately 125 lawyers in Texas, and these new arrivals bring additional depth to our bench in handling both complex and day-to-day litigation matters,” said Jacque Albus, the head of Husch Blackwell’s Financial Services & Capital Markets group. “We are in growth mode, not just in Texas, but in numerous key markets around the country, and we are extremely excited to find a group of attorneys who fit into our firm culture and will make an immediate and significant impact.”
“Closing the doors on Norris & Weber was a tough decision. The firm and its predecessor firms had existed for nearly 100 years and developed a strong reputation in the region for putting clients first,” said Weber. “In Husch Blackwell, we found a national law firm with the same client-centered orientation, a highly regarded private wealth team, and a demonstrated commitment to building an elite fiduciary litigation group. It made the decision to join forces much easier.”
“So many of our clients have litigation needs that overlap with complex legal and regulatory subject matter, ranging from real estate and franchise law to intellectual property and energy law,” said Kring. “Mark [Fritsche] and I know that a broader and more national platform with depth in all of those areas will provide immediate value to our clients, and they are going to be excited to have access to all that Husch Blackwell has to offer. We are thrilled to join the firm and look forward to helping continue its strong growth in the Dallas area.”
Jacob B. Kring focuses on high-stakes cases of great strategic, commercial, and financial importance to his clients. He routinely handles trade secret disputes, oil and gas litigation, trademark litigation, securities fraud claims, shareholder and partnership disputes, employment disputes, and real estate-related litigation. He was named a “Rising Star” from 2012 to 2020 by Texas Super Lawyers, a publication of Thomson Reuters. In 2020, Mr. Kring was recognized as one of the “Best Lawyers in Dallas” by D Magazine, and in 2018 he was recognized as one of the “Best Lawyers Under 40.”
Mark A. Fritsche represents plaintiffs and defendants in a variety of civil litigation, including partnership disputes, departing employee and non-competition lawsuits, landlord-tenant litigation, contract disputes, and commercial real estate-related litigation. His client roster includes individuals, closely held partnerships, and large corporations.
Scott D. Weber
Scott D. Weber is a veteran trusts and estates lawyer with a focus on fiduciary litigation, including defending executors/administrators, guardians, and trustees against a variety of claims and assisting beneficiaries with trust and estate issues. In 2015 and again in 2022 Best Lawyers recognized him as Lawyer of the Year in the Dallas/Fort Worth metro area for Trusts and Estates litigation. He has been a “Texas Super Lawyer” since 2006 and recognized as one of the “Best Lawyers in Dallas” by D Magazine since 2021.
When Carol Gee checked her mailbox earlier this week, she found a handwritten postcard.
It was not a letter from a friend or family member on a far-flung vacation – but rather an appeal from a realtor asking if she was thinking of selling her home.
Carol, a 73-year-old writer living with her husband in an Atlanta suburb, has been bombarded with handwritten letters, leaflets and phone calls from real estate agents and investors begging her to put her property on the market.
‘There have been times when I have been receiving cold calls all throughout the day,’ Carol said. ‘They offer all kinds of enticements – some have even offered to pay cash.’
But Carol, who has lived in the four-bedroom home for over 30 years, has absolutely no interest in selling.
Carol Gee has been inundated with letters and calls from realtors and investors asking to sell her home (pictured) in Atlanta, Georgia
It is little wonder realtors are desperately searching for willing sellers as the US faces a widespread housing shortage.
Mortgage rates are soaring – with the average 30-year fixed-rate deal lingering at 7.19 percent, according to latest data from Government-backed lender Freddie Mac.
Rocketing rates mean homeowners who are locked into cheap mortgages are refraining from selling.
This, in turn, is pushing up property prices – meaning buyers are facing the least affordable market since 2006.
Pending home sales are down 13 percent from a year ago, according to real estate company Redfin, and the total number of home sales is down 16 percent year-on-year to September.
And the housing shortage is most acute in price points that middle-income buyers can afford, according to the National Association of Realtors.
The market is short about 320,000 listings worth up to $256,000, it found, which is considered the affordability range for households earning up to $75,000 a year.
Writer Carol Gee, who has lived in her home with her husband for over 30 years, said she has no interest in selling
Carol said she is not the only person in her neighborhood who has been inundated with requests to sell her property – and homeowners across the US are being hounded by a deluge of messages from realtors.
‘Recently, I’ve noticed a significant uptick in the number of solicitations from realtors wanting to purchase these homes,’ he told DailyMail.com.
‘I receive weekly mailings, and sometimes even phone calls, urging me to consider selling due to the high demand and skyrocketing property values.’
His property in Dallas, which he purchased a couple of years ago for $200,000, is now being appraised at nearly double that amount, he said.
‘It’s clear that the housing shortage is creating a sellers market – and realtors are eager to capitalize on it,’ he added.
It comes as analysis by Bank of America (BofA) identified Dallas, alongside San Antonio and Houston, as being among the four cities facing the worst property shortages in the US.
The list was rounded out by Orlando, Florida, which is also experiencing high population growth and low housing stock.
BofA analysts tracked its internal data from the second financial quarter of the year to assess where property markets were hottest and coldest
According to BofA, the areas with the biggest housing constraints were due to their buoyant labor markets which are causing their populations to spike.
For example, in Dallas, the number of people on its nonfarm payroll has risen by 14 percent since January 2019. In Orlando, this figure has increased by 10 percent.
Nationally, nonfarm payrolls have risen by just 4 percent comparatively.
Widespread shortages in the ‘hot’ areas have caused house prices to shoot up, with Orlando seeing its home values increase by 58 percent in June 2023, compared to 2019.
Similarly in Dallas, homes had appreciated by 29 percent in value. But researchers said the property market in San Antonio was starting to ‘soften’ despite the shortages.
However there are still some parts of the US which are less impacted by shortages.
On the opposite end of the spectrum, St. Louis, Detroit and Miami were revealed to have the highest housing stock relative to their populations.
Eating disorders often start at a younger age, but they don’t solely affect this population. Recognizing this, virtual eating disorder support company Equip announced Tuesday that it is now treating adults as well as adolescents. The company also announced an investment from General Catalyst, which helped expand its platform to adults. The amount was not disclosed.
“There is a very pervasive, really dense stereotype that eating disorders only affect 15- to 25-year-old thin, White girls,” said Dr. Erin Parks, chief clinical officer and co-founder of Equip, in an interview. “That is true, it does affect them. But it is not only them.”
She added that because so few people have access to treatment, many older adults have had their eating disorder for a very long time and need support.
San Diego-based Equip, which was founded in 2019, previously focused on those ages 6 to 24. The startup is now expanding to serve people of all ages. The virtual company operates in all 50 states and is in-network with several insurance companies, including Aetna, Elevance, Optum, Cigna and UnitedHealthcare. It connects patients with a care team that includes a therapist, dietitian, physician and peer and family mentor.
Different ages require different kinds of treatment, according to Parks. With its younger patients, the company uses family-based treatment, in which the family is brought in to help care for the patient. For adults, the company is using a method called enhanced cognitive behavioral therapy, which is a highly individualized treatment that addresses thoughts, feelings and behaviors affecting the patient’s eating disorder.
Parks said that when it comes to adults, individual treatment is often the best way to go because they may not have a support group. Sometimes when adults have been sick for a long time, they’ve “pushed away” a lot of their family and peers, or they may be too busy with work to build that support group.
There are other virtual solutions for eating disorders as well, including Arise and Within. Arise offers coaching with a care advocate who has lived experience with an eating disorder, therapy, nutrition counseling, group support and psychiatry. Within provides access to a care team that includes dietitians, therapists, nurses and peers.
The expansion to adults was powered by a recent investment by General Catalyst. In total, Equip has raised more than $75 million. With the funding, the company brought on a new president, Nikia Bergan. It also updated its technology and trained its providers in treating adults. In addition, it’s planning to use the funding to gain more Medicaid contracts, Parks said.
Equip considers itself an alternative to brick-and-mortar eating disorder treatments, which often require patients to stay at the treatment facility for a certain period. Parks said the benefit of a virtual program is that patients can be treated as they live their normal lives.
“[If you take] someone out of their life and give them a bunch of skills, then all of the sudden they plop back into their life and have all these triggers that they aren’t equipped to deal with,” Parks argued. “One of the great things about getting treatment while still being able to go to school, still being able to go to your job, still being able to parent your kids, is that you get to work with your providers on your real-life triggers as they come up.”
Parks is likely looking to replicate the positive results it claims to have achieved in the adolescent population in this new, adult population. In its annual outcomes report published earlier this year, the company cited that 81% of its adolescent patients reached or maintained their target weight within one year.
Photo credit: Bohdan Skrypnyk, Getty Images
The commercial market has been slower to adopt value-based care than the public market, but there are ways to move the process along successfully, executives said Monday.
During a panel at the Oliver Wyman Health Innovation Summit 2023 held in Chicago, healthcare leaders discussed the challenges and opportunities in advancing value-based care in commercial health plans. The panelists were Mark Hansberry, senior vice president and chief marketing officer of HealthPartners; Ellen Kelsay, president and CEO of Business Group on Health; and Tiffany Albert, senior vice president of health plan business at Blue Cross Blue Shield of Michigan.
Bloomington, Minnesota-based HealthPartners, which is an integrated healthcare organization serving more than 1.8 million members, has had some success with value-based care in the commercial space, Hansberry claimed. He shared five rules for scaling value-based care in the commercial market:
1. Payers and providers in a value-based arrangement need to have a shared understanding of what value is for patients, Hansberry said.
“You have to have a universal definition of what value means so that when clinicians look at you as a payer … they need to acknowledge that what you’re saying a clinical outcome is is actually a good clinical outcome, a good measure of performance,” he stated.
2. It’s important to ensure that the providers in the value-based arrangement are able to and willing to take the risk associated with value-based care.
“Most care systems weren’t built to actually manage risk,” Hansberry said. “That wasn’t their job. Their job was to take care of sick people. Now we’re asking them to do something else. How do you actually support those individuals on that journey?”
3. Payers need to support providers engaging in value-based care with “real-time, actionable data and consultation,” Hansberry said.
“It’s not just a data dump or a big Excel file that you pass over and you say good luck with it,” he stated. “Because, by the way, if they perform well in those value-based contracts, you do too as a payer. You want them to perform well. So you want to provide them with good, insightful, actionable data that’s risk-adjusted, that is connected to their practice — not just an amorphous health system — but to their practice so they can take action on those insights. But then you also want to supplement that with that consultation along the way.”
4. The incentives in the value-based contract must be aligned to “enable that [provider] to reap the benefits of the value that they’re creating for those members,” according to Hansberry.
5. Ultimately, a value-based contract comes down to trust between all the parties. But Hansberry noted that this is easier for HealthPartners as an integrated health system.
“We’re fortunate because we’re both a health plan and a care system,” he said.
He added that success in value-based care doesn’t happen overnight, which is partially why it’s difficult to scale.
“It takes time to build trust,” Hansberry stated.
Photo: atibodyphoto, Getty Images