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Home My WebLink About2010-03-17 PACKET 08.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA FA MEETING ITEM # DATE 3/17/10 PREPARED BY Finance ORIGINATING DEPARTMENT Robin Roland COUNCIL ACTION REQUEST Write off uncollectible accounts for ambulance services 2009 STAFF RECOMMENDATION Adopt the resolution authorizing write -offs of ambulance accounts receivable for the year ended December 31, 2009 in the amount of $1,095,839. BUDGET IMPLICATION ($600,600) BUDGETED AMOUNT ADVISORY COMMISSION ACTION DATE REVIEWED ❑ PLANNING ❑ ❑ PUBLIC SAFETY ❑ ❑ PUBLIC WORKS ❑ ❑ PARKS AND RECREATION ❑ ❑ HUMAN SERVICES /RIGHTS ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS ($905,547) ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ® MEMO /LETTER: Robin Roland /Brenda Peper dated March 10, 2010 ® RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS lotfI0 Date COUNCIL ACTION TAKEN: APPROVED ❑ DENIED ❑ OTHER C: \Documents and Settings\rrolandWy Documents \City Council A 'on Form.doc J. City (:= Finance of • .•- Grove To: Honorable Mayor and City Council Ryan Schroeder, City Administrator Z' From: Robin Roland, Finance Director V Brenda Peper, Financial Analyst Date: March 10, 2010 Subject: Ambulance Write -offs Introduction The Council is asked to consider approving a resolution to write -off uncollectible ambulance accounts totaling $1,095,839. Discussion We are requesting to write -off $1,095,839 in ambulance accounts this year compared to $821,630 last year. The write -offs are detailed below: 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 whether there is mandatory assignment required. For example 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. However, the write -offs for those accounts "closed by collection" are for runs that occurred over the past couple of years. For the first four types (Medicare through Military Discount) we are only allowed to collect a small government payment and a small co- payment from the patient for the call. The amounts provided through this arrangement are a fraction of our billing rate and is lower than our cost to provide the service. The "closed by collection" calls are for our remaining patients. These amounts the collection agency feels they no longer 2006 2007 2008 2009 Percentage Increase ('08 to '09) Medicare $360,840.36 $480,953.93 $487,305.77 $641,497.90 31.64% Medicaid 185,121.89 186,661.86 154,519.73 243,804.00 57.78% Worker's Comp. 3,638.00 4,798.96 6,061.09 4,878.61 - 19.51% Military Discount 6,747.00 7,179.14 4,011.13 10,899.00 171.72% Other Manadatory Adj 1 0.001 145.591 0.001 2,342.00 Bankruptcy 5,055.00 3,639.69 5,519.24 2,126.00 - 61.48% Closed by Collection 118,790.75 122,105.83 164,214.00 190,292.00 15.88% Total Write-offsl $680,193.001 $805,485.001 $821,630.961 $1,095,839.51 33.37% 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 whether there is mandatory assignment required. For example 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. However, the write -offs for those accounts "closed by collection" are for runs that occurred over the past couple of years. For the first four types (Medicare through Military Discount) we are only allowed to collect a small government payment and a small co- payment from the patient for the call. The amounts provided through this arrangement are a fraction of our billing rate and is lower than our cost to provide the service. The "closed by collection" calls are for our remaining patients. These amounts the collection agency feels they no longer will be able to collect. This process takes over 12 months from the call date to run through the collection process. Currently if the calls are not paid within 120 days, they are sent to collection as well 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 four years. The table demonstrates that the reimbursement rate from the federal government is the same no matter what the total bill is. As our rates increase faster than the increase in the reimbursement amount, the write -off amounts will also increase. Type of Call 2006 2007 Cottage Grove 2008 2009 BLS Rate $ 924.67 $ 989.40 $ 1,104.00 $ 1,160.00 Medicare Reimb 309.83 312.38 324.49 338.08 % Reimbursed 33,51% 31.57% 29.39% 29.14% ALS -1 Rate 1,198.81 1,282.73 1,368.00 1,430.00 Medicare Reimb 367.93 370.95 385.34 401.47 % Reimbursed 30.69% 28.92% 28.17% 28.07% ALS -2 Rate 1,429.85 1,563.00 1,650.00 Medicare Reimb 536.90 557.72 581.07 % Reimbursed 37.55% 35.68% 35.22% Below is information on the write -off trend for the past several years as compared to the corresponding revenue by year. Revenue (billed charges) Nrite -Offs Medicare Medicaid Norker's Comp 3ankruptcy /Misc Uncontrollable Total dosed by Collection (Controllable) Total Write Offs Witten Off 2009 Witten Off previously Total Write offs Nrite offs as % of Revenue Revenue Increase Jncontrollable ,ontrollable Still Owing 2003 2004 2005 2006 2007 2008 2009 1,012,812 1,182,116 1,319,476 1,598,013 1,827,778 1,781,000 2,094,560 188,882 261,765 289,861 378,524 492,645 508,955 566,244 77,988 88,920 101,165 200,476 177,900 161,952 214,932 4,801 8,993 8,224 10,552 12,123 10,120 12,186 0 6,137 2,629 0 7,897 3,777 795 271,671 365,815 401,879 589,552 690,565 684,804 794,157 52,536 108,991 117,534 142,679 189,369 150,909 0 324,207 474,806 519,413 732,231 879,934 835,713 794,157 -482 -3,529 -6,915 -8,336 64,393 256,551 794,157 324,689 478,335 526,328 740,567 815,541 579,162 0 324,207 474,806 519,413 732,231 879,934 835,713 794,157 8.95% 16.72% 11.62% 21.11% 14.38% -2.56% 17.61% 26.82% 30.95% 30.46% 36.89% 37.78% 38.45% 37.92% 5.19% 9.22% 8.91% 8.93% 10.36% 8.47% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.43% 27.17% Totals 10,815, 1,095 4,560,461 ,ontrollable write -offs as % of Net Revenue Revenue 1,012,812 1,182,116 1,319,476 1,598,013 1,827,778 1,781,000 2,094,560 Jncontrollable write-offs 271,671 365,815 401,879 589,552 690,565 684,804 794,157 Vet Revenue 741,141 816,301 917,597 1,008,461 1,137,213 1,096,196 1,300,403 ,ontrollable write -offs 52,536 108,991 117,534 142,679 189,369 150,909 0 Dontroll. write -offs as % of Net Rev. 7.09% 13.35% 12.81% 14.15% 16.65% 13.77% 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. 2009 has not been included because all the mandatory write - off's have not been accounted for as they are still working through the system. Charges $ 942,723 288,784 346,230 3,442 16,834 1,598, 013 MOP as % of charges V.VV /V 7,418 44.07% 730,151 45.69% 2007 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 $190,000 through this program from 2004 through 2008. This program is proving to be a cost effective way to collect delinquent accounts. Draft Financial Statements Attached is a draft of the financial statements for the ambulance fund. These have not been audited yet so there is a chance they could change but we do not expect them to change significantly. The statement includes 6 years of history for comparison purposes. The 2009 personnel expenses are higher than the 2008 actual amounts because the 2009 billable calls increased approximately 12 %. In addition the part -time Charges Write offs W /O's as % Cottage Grove $ 1,179,375 $ 499,348 42.34% Newport 220,690 118,671 53.77% St. Paul Park 414,931 259,163 62.46% Grey Cloud 4,040 - 0.00% Out of Area 8,742 1,248 14.28% 1,827,778 878,430 48.06% 2008 Charges Write offs W /O's as % Cottage Grove $ 1,207,326 $ 534,373 44.26% Newport 231,887 139,219 60.04% St. Paul Park 334,487 200,588 59.97% Grey Cloud 2,880 - 0.00% Out of Area 4,420 2,761 62.47% 1,781,000 876,941 49.24% 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 $190,000 through this program from 2004 through 2008. This program is proving to be a cost effective way to collect delinquent accounts. Draft Financial Statements Attached is a draft of the financial statements for the ambulance fund. These have not been audited yet so there is a chance they could change but we do not expect them to change significantly. The statement includes 6 years of history for comparison purposes. The 2009 personnel expenses are higher than the 2008 actual amounts because the 2009 billable calls increased approximately 12 %. In addition the part -time paramedic program had its first full year of operation in 2009. The adopted 2009 budget shows a net operating income of $42,360 compared to an actual net income of $151,587. Action Requested Adopt the resolution authorizing write -offs in the amount of $1,095,839. /\ \R _ \ \/ \ \{ :)i \ \ j / City of Cottage Grove Analysis of Ambulance operations If we assume a billing rate of onlythat which we know we will recover from Medicare /Medicaid, the following would reflect our operations in 2009: Type of number of Reimbursement call calls Rate Extension ALS -2 81 581.07 47,066.67 ALS -1 737 401.47 295,883.39 BLS 468 338.08 158,221.44 Total Charges for Services 501,171.50 Expenses: personnel 690,065.00 commodities 83,071.00 contract services 111,442.00 bad debt expense 45,105.44 *at 9% of billed revenue administration 52,500.00 depreciation 35,875.00 Total expenses 1,018,058.44 Operating Income (loss) (516,886.94) Other income ** Investment earnings 5,872.00 Miscellaneous 15,755.00 Total Income (loss) (495,259.94) ** for this exercise the one time grant funding was ignored. 3 /10 /2010ambulance what if RESOLUTION NO. 2010 -XX RESOLUTION AUTHORIZING WRITE -OFFS OF THE COTTAGE GROVE EMS ACCOUNTS RECEIVABLE IN THE AMOUNT OF $1,095,839.00 WHEREAS, certain ambulance bills are determined uncollectable NOW, THEREFORE BE IT RESOLVED, by the City Council of Cottage Grove, County of Washington, State of Minnesota, that $1,095,839.00 be written off the Cottage Grove EMS accounts. Passed this 17th Day of March 2010. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk