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Home My WebLink About2008-04-02 PACKET 04.E.REQUEST OF CITY COUNCIL ACTION CQUNCIL AGENDA MEETING y�/�z� ITEM # DATE » p PREPARED BY: Finance Ron Hedberc� ORIGINATING DEPARTMENT STAFF AUTHOR .��,t��«��,,.��,�,t�.��.��«�� COUNCIL ACTION REQUEST: Adopt resolution to write-off Cottage Grove EMS accounts receivable in the amount of $805,485.00 STAFF RECOMMENDATION: Adopt resolution to write-off Cottage Grove EMS accounts receivabie in the amount of $805,485. BUDGET IMPLICATION: BUDGETED AMOUNT ADVISORY COMMISSION ACTION: ❑ PL.ANfVING ❑ PUBLIC SAFETY ❑ Pu�uc woRKs ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORiTY ❑ SUPPORTING DOCUMENTS: i� . � REV�EWEL� ❑ ❑ ❑ ❑ ❑ ❑ ❑ ACTUALAMOUNT ApPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS: � , City Administrator � DEN(ED ❑ ❑ �_} ❑ ❑ ❑ ❑ c� � a`l �o� Date k k k * * * * * k * * * * * k k * * * * * * k * k # k * * * �k * * * * i rt * * * * * 'k * % R * * COUNCIL ACTION TAKEN: [�APPROVED ❑ DENIED ❑ OTHER � ,� ♦ , City of Cottage Grove MemO � Finance To: From: Date: Subject: Introduction Honorable Mayor and City Council Ryan Schroeder, City Administrator Ron Hedberg, Finance Director Brenda Peper, Financial Analyst March 12, 2008 Ambulance Write-offs The Council is asked to consider approving a resolution to write-off uncollectible ambulance accounts tataling $805,485. Discussion We are requesting to write-off $805,485 in ambulance accounts this year compared to $680,193.00 last year. The write-offs are detailed below: �Medicare � �Medicaid ( �Worker's Comp. � �Military Discount � �OtherManadatoryAdj � �Bankruptcy � �Ciosed by Collection ( ( Total Write-offs� 2004 $257,741.56 84,844.85� 3,174.95 � 6,997.99 0.00 1, 546.22 101,157.98 $455,463.55 2005 2006 2007 $296,129.76 $360,840.36 $480,953.93 110, 587.50 185,121.89 186,6fi 1, 86 2,959.21 3,638.00 4,798.96 6,877.51 6,747.00 7,179.14 0.00 0.00 145.59 7,157.98 5,055.00 3,6$9.69 100, 755.04 118,790.75 122,105.83 �524,467.00 $680,193.00 $805,485.00 f�ercentage Increase. ('06 to'07) 3329%� 0.83%� 31.91 %� 6.40%I � -28.00%� 2.79%) 18.42%I The write offs shown above for each year relate to multiple years of services provided. The timing of the write-offs each year varies by the type of call and wheiher there is mandatory assignment required. For examp(e the write-offs related to Medicare and Medicaid are for runs over the past 12 months because we know the amounts will be collected shortly after the billing process starts. The write-offs for thase accounts "closed by collection" are for runs that accurred over the past couple of yesrs. For the first four types (Medicare through Military} we are not allowed ta cafiect from the patient beyond a small co-pay for the call. For tnese calls, we only receive what the federal government will pay. The arr�ounts provided through this arrangement are a fraction of our billing rate and is lower than our cost to provide the service. The remaining item "closed by collection" is for calis for our remaining patients, and the amounts written off are the amounts the collection agency feels they no longer will be able to collect which takes over 12 months from.the cail date to run through the collection process. Currently if the calls are not paid within 120 days they are sent to collection as weli as placed in the State Revenue Recapture program for collection. The Medicare write-offs have increased since 2002 when Cottage Grove EMS was required to accept assignment for Medicare payments. Medicare / Medicaid continues to pay a predetermined dollar amount no matter what our rates are set at. The table below includes an example outlining the Medicare reimbursement amounts for the past three years. The table demonstrates that the reimbursement rete from the federal government is the same no matter what the total bill is and as our rates increase faster than the increase in the reimbursement amount the write-off amounts will also increase. Type of Call 2005 2006 2007 Cottage Grove BLS Rate $ 840.61 $ 524.67 $ 989.40 Medicare Reimb 269.95 309.83 312.38 At the Cottage Grove % R2imbursed 32.11 % 33.51 % 31.57% f Resident Rate medicare AL5-1 reimburses approximately Rate 1,089.83 1,188.81 1,28273 28-31%ofthecharge Medicare Reimb 363.50 :s67.93 370.95 % Reimbursed 33.35% 3C3.69% 28.92% Out of Area inciudes SPP and Newport BLS Rate Medicare Reimb % Reimbursed ALS-1 -CG Rate Rate Medic.are Reimb % Reimbursed 2,000,000 1,500.000 1,000,000 500,000 1,457.79 269.95 18.52% 1,457.79 363.50 24.94% 1,72Q 19 1,840.60 309.83 312.38 At the Non-Resident Rate 1$.01% 16.97o�o �----�-��--rnedioarereimburses approximately 17-20°/ of 1,720.19 1,840.60 thecharge 367.93 370.95 21.39% 20.15% Revenues versus Medicare/Medicaid write-off's _--- 2002 2003 2004 2005 2006 2007 —�— Revenue —■--Medicare Write-offs --s--Medicaid Write-off's Below is information on the write-off trend for the past several years as compared to the corresponding revenue by year. . Revenue (billed charges) W rite-Off s Medicare Medicaid Worker's Comp Bankruptcy/Misc Uncontrollable Total Closed by Collection (Controllable) Total Write Offs W ritten Off 2007 W ritten Off previously Totai Write offs W rite offs as % of Revenue Uncontroilable Controliable Stiil Owing 2003 2004 2005 2006 2007 Totals 1,012,812 1,182,116 1,319,476 1, 598,013 1,825, 032 188,882 261,765 289,001 379,024 437,316 77,988 88,920 101,165 198,406 156,921 4,066 4,556 8,224 10,552 1,251 734 10,511 2,629 0 10,964 271,670 365,752 401,019 587,982 606,452 56,054 114,990 126,776 112,296 0 327,724 480,742 527,795 700,278 606,452 -7,504 -9,337 29,220 186,654 606,452 805,485 335,228 490,079 498,575 513,624 0 1.837.506 327,724 480,742 527,795 700,278 606,452 2,642,991 26.82% 30.94% 30.39% 36.79% 33.23% 5.53% 9.73% 9.61% 7.03% 0.00°/a 0.00% 0.00% 0.00% 3.43% 22.89% Controllabie write-offs as % of Net Revenue Revenue 1,012,812 1,182,116 1,319,476 1,598,013 1,825,032 Uncontrollabiewrite-offs 271,670 365,752 401,019 587,982 606,452 Net Revenue 741,142 816,364 918,457 1,010,031 1,218,580 Controllable write-offs 56,654 114,990 126,776 112,296 Controll. write-off's as % of N0t Rev. 7.56% 14.09% 13.80% 11.12% Staff has tracked the revenue (charges) versus write offs by each City for the past three years. Grey Cloud Township reimburses the City for their write offs so these have not been included. 2007 has not been included because all the mandatory write- off's have not been accounted for as they are still working tnraugh the system. Cottage Grove fVewport St. Paul Park Grey Cloud Out of Area Charges $ 827,259 208,880 251,211 3,150 28,976 1, 319,476 2005 Ma�datory WIO's 208,954 74,279 102,079 13,072 398, 384 2006 Cottage Grove Newport St. Paui Park Grey Cloud Out of Area Charges $ 942,723 288,784 346,230 3,442 16,834 1,598,013 Mandatory W/O's 275,914 139,486 166,959 5,623 587,982 as % of charges 33.78% 50.18% 51.81 % 0.00% 46.02°/a 40.00°/a � 1 as °/a ot charges 34.21 % 58.69% 56 39% 0.00% 46.23 % 43.13%) I In 2004 the City started placing delinquent patient ambulance accounts, if we have a social security number, in the State Revenue Recapture Program for collection. The City has been able to collect approximately $117,300 through this program fram 2004 through 2007. This program is proving to be a cost effective way to collect delinquent accaunts. Write-off's as a Percentage of Revenue 4Q% 30% � –�– Uncontrollable 20% –�– Controllable 10% — �""..:.'..._ .. ....__.... Q% 2000 2001 2002 2003 2004 2005 2006 2007 The controllable write-off percentage wili increase for 2006 and 2007 as we continue te collect the balance still awing for these two years and the final determinatian t�f uncollectible accounts. We expect that the percent uncollectible for these "contrmllabl� write-off amounts" to be approximately 10% once the collection process has been completed, which can take up to 16-18 months from the run date. These may be accounts that we are waiting for insurance information from the patients so that we can bill insurance companies, or we may be waiting for insurance money. Some of these accaunts may not be collected under the normal billing prncess so they will be turned over to coliection and eventually the State Revenue Recapture Program. Draft Financiai Statements Attached is a draft of the financial statements for the ambulance fund. These have rrot been audited yet so there is a chance they could change but we do not expect them ta change significantly. The statement includes 5 years of history for comparison purposes. Charges for services increased $234,000 in 2007, and $110,000 of fhis change is the 2007 rate increase and $62,000 is from additional mileage charges. !n 2007 ambulance staff began to record the actual mileage from the patient pick-up paint to the hospital. Prior to 2007 mileage was calculated from the edge of town to the hospital. The Medicare acceptance (mandatory wr�te-downs) continues to be a challenge for the operation of this fund. The 2007 expenses are lower than the 2006 actual amounts mainly because of a reduction in the percent of time police paramedics charge to the ambulance fund that was approved during the 2007 budget process. in an effnrt to return the ambulance fund back to profitability, the rates were increased in 2006 and 2007(7%) and the allocation of Police Officer/Paramedics time was reduced from 25% of their time in 2004 to 15% in 2007. This allocation will be 12% fcar 200$. The adopted 2007 budget shows a net operating income of $59,195 compared to an actu�l net income of $120,781. Actinn Requested Adopt the resolution authorizing write-offs in the amount af $805,485. c�rv oe corr.�cs cxove, n�mnesors CObIP.4R.47I\'GSCHF;DULFOFREVliN('�F1 t�PPNSC:SAND CHAN .ES i� Fi➢Vl) NE�C ASSF.7S t'O]'TAtiP t}ROVt ENSFCSD For The Years Ended Decemher 31, 20UR,'_UU l, ?000, :UUS , 2W4 and 20oi Operabngre�ennrs a,amcs fur s<nacea Less \tavJamry wntr-of$ Ne[ charges im sercses (lther�ecennea "1'n�el nperaUny tt�cm�c< C�ernhng e�penae� Operanng anim;uvteuaucr Petamial +ereices CnmmnJ�6c� t'nvtraimal,ercues Gtlie� diaig�c.�. M1ad Jcht 4dmmishahve anJ general O�her charges- adnnmstrahve eh.rtge Depreci�tion 7o�al opersting e'.penses Operamiy* income floss) Nrnope�aryngra�enarsfc�pen=e.0 6neamunt ea�ninga Rent lqr,rrllanmes Toteinmioperabngievenne.(e�Pense+) In�onm Qnss) before conmhnnmis and han�ferc l�tdlP�'CIO OC[ ditC[S Nc[ assets - lanuary I \et assets - Dacembe� 31 Budget �008 s� ca�sno (527 g00) 1,1?],GW 370n 1,126,300 C,�3(.R(�0 Sb.�oO ll 5,/90 150,UW 52,SOo 46.7(w 1 107 650 IS,G50 s 0 1X.65U Yeareuded Budget llcccmbcr3t, ?007 '007 $Il53,900 $1,F7(1,031 IS°��,_>UU) tb79.73`J) t,123,7V0 7.131.IY5 3,600 i 1'_8,306 1.731.195 G59,"I00 5�7,784 ?2,5�5 62,111 lOd.'70 9]R09 I50,0o0 Iti5,837 52,SUO 5? Sno SqIUO ?�,365 1.069,Ini I,OIU.J14 SJ,IYS P'0.781 $ - $5.3)1 - '_1,'_0-i 0 ?2.5�5 S'1,195 li3d56 �5}.;Sh Sbi O1N s��x,ao� Year ended December 31, '_006 bI,5Rhft78 ISSR,JG2) I.0?8.116 1.02A.JIC 0'_ l 907 4J.7oi 1'_3,Ri2 737.17i 52,500 3').572 1,027701 7�5 S5,7o8 i'_.058 1Z146 17,R81 17.88I id7.167 Ssns,o�x 1"ea� ended Pcienihe� 37, '_005 R1,311,d$7 �.}i3]t?) 8F7,745 3,G02 8'J7.337 L'6,i?? J4,3tin � �9]95 I ii.67+ 5'_JU0 i? 333 IA'i s9S (130.odS) ga.9�<, i.7')4 `1,704 1110,9J�{1 (7�� 94J1 tiGR,ll i $Sa7.I h7 1'earended Peremher S I. '_�01 'S1.183.GpG 1354,30n) 829 30U g?n,300 n'7,G77 JO.uli 135,C}0 oS,;yS >-'.son ss,acx 190l.663 Q �i, iG8) 583Ro JJ9' 1i.173 Q o.lJ 90) �IUJ.790� v $boS, 7 7 I UNAUDITED -DRAFT- 1'ear ended Den:mbeF 31, 2003 51.01�7.')Jt 13��.i3]1 6S7,FOG cxz3o�• sxor�ue 36,7.+'_ L'7I1�) ISl,lau 51,500 JR,�l2 99? 0°0 (x0 5S.17o A,�F6 13JI) 10.721 (?`3k.-19t) (2nX,S')3) I,L'u]9a $R3'3U1 RESOLUTION NO. 08- RESOLUTION AUTHORIZING WRITE-OFFS OF THE COTTAGE �R9V� �M� A6G41JNTS R€C�IVA�[�€ IfV TH� AM01J►VT 9F $805,485 WNEREAS. certain ambulance bills are determined uncaliectable NOW, THEREFORE BE 17 RESOLVED, by the City Council of Cottage Grove, County of Washington, State of Minnesota, that $805,485 be written off the Cottage Grove EMS accounts. Passed this 19th day of March 2008. Sandra Shiely, Mayor Attest: Caron M. Stransky, City Clerk