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Home My WebLink About2011-03-16 PACKET 04.Q.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 3/16/11 PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD COUNCIL ACTION REQUEST To adopt the resolution to write -off Cottage Grove EMS accounts receivable in the amount of $1,197,414. STAFF RECOMMENDATION To adopt the resolution to write -off Cottage Grove EMS accounts receivable in the amount of $1,197,414. BUDGET IMPLICATION BUDGETED AMOUNT ADVISORY COMMISSION ACTION DATE REVIEWED ❑ PLANNING ❑ ❑ PUBLIC SAFETY ❑ ❑ PUBLIC WORKS ❑ ❑ PARKS AND RECREATION ❑ ❑ HUMAN SERVICES /RIGHTS ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS ❑ MEMO /LETTER: ® RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDA T ION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ G: \finance \Council Items \2011 \CC Action Form Am an write -o s.do v r y City o f Co Gr Finance To: Honorable Mayor and City Council Ryan Schroeder, City Administrator From: Robin Roland, Finance Director l e Brenda Peper, Assistant Finance Director Date: March 11, 2011 Subject: Ambulance Write -offs Introduction The Council is asked to consider approving a resolution to write -off uncollectible ambulance accounts totaling $1,197,414. Discussion We are requesting to write -off $1,197,414 in ambulance accounts this year compared to $1,095,840 last year. The write -offs are detailed below: The write offs shown above relate to multiple years of services provided because 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 the amounts are 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 other mandatory adjustment) 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 are amounts that the collection 2007 2008 2009 2010 Percentage Increase ('09 to' 10) Medicare $480,953.93 $487,305.77 $641,497.90 $729,729.00 13.75% Medicaid 186,661.86 154,519.73 243,804.00 270,738.00 11.05% Worker's Comp. 4,798.96 6,061.09 4,878.61 2,306.49 - 52.72% Other Manadatory Adj 7,324.73 4,011.13 13,241.00 8,835.00 - 33.28% Bankruptcy 3,639.69 5,519.24 2,126.00 322.00 84.85% Closed by Collection 122,105.83 164,214.00 190,292.00 185,484.00 - 2.53% Total Write-offsl 095,839.51 $1,197,414.49 9.27% The write offs shown above relate to multiple years of services provided because 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 the amounts are 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 other mandatory adjustment) 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 are amounts that 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 six 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 2008 Grove 2009 2010 2011 BLS Rate $ 924.67 $ 989.40 $ 1,104.00 $ 1,160.00 $ 1,230.00 $ 1,270.00 Medicare Reimb 309.83 312.38 324.49 338.08 331.45 340.37 Reimbursed 33.51% 31.57% 29.39% 29.14% 26.95% 26.80% ALS -1 Rate 1,198.81 1,282.73 1,368.00 1,430.00 1,520.00 1,570.00 Medicare Reimb 367.93 370.95 385.34 401.47 393.59 404.19 % Reimbursed 30.69% 28.92% 28.17% 28.07% 25.89% 25.74% ALS -2 Rate 1,429.85 1,563.00 1,650.00 1,750.00 1,810.00 Medicare Reimb 536.90 557.72 581.07 569.68 585.01 % Reimbursed 37.55% 35.68% 35.22% 32.55% 32.32% Below is information on the write -off trend for the past several years as compared to the corresponding revenue by year. 2005 2006 2007 2008 2009 2010 Totals Revenue (billed charges) 1,319,476 1,598,013 1,827,778 1,781,000 2,094,560 2,331,188 13,146,943 Write-Offs Medicare 289,861 378,524 492,645 508,955 658,515 637,458 Medicaid 101,165 200,476 177,900 161,952 269,671 215,999 Worker's Comp /Other Mandatory 8,224 10,552 12,123 10,120 14,742 8,585 Bankruptcy 2,629 0 7,897 3,777 1,117 Uncontrollable Total 401,879 589,552 690,565 684,804 944,045 862,042 Closed by Collection (Controllable) 115,887 139,873 179,072 164,700 186,443 0 Total Write Offs 517,766 729,425 869,637 849,504 1,130,488 862,042 Written Off 2010 -1,647 -2,806 - 10,297 13,791 336,331 862,042 I 1,197,4141 Written Off previously 519,413 732,231 879,934 835,713 794,157 0 4,560,461 Total Write offs 517,766 729,425 869,637 849,504 1,130,488 862,042 5,757,875; Write offs as % of Revenue Revenue Increase 11.62% 21.11% 14.38% -2.56% 14.60% 30.89% Uncontrollable 30.46% 36.89% 37.78% 38.45% 45.07% 36.98% Controllable 8.78% 8.75% 9.80% 9.25% 8.90% 0.00% Still Owing 0.00% 0.00% 0.00% 0.00% 0.00% 24.70% Controllable write -offs as % of Net Revenue Revenue 1,319,476 1,598,013 1,827,778 1,781,000 2,094,560 2,331,188 Uncontrollable write -offs 401,879 589,552 690,565 684,804 944,045 862,042 Net Revenue 917,597 1,008,461 1,137,213 1,096,196 1,150,515 1,469,146 Controllable write -offs 115,887 139,873 179,072 164,700 186,443 0 Controll. write -offs as % of Net Rev. 12.63% 13.87% 15.75% 15.02% 16.21% 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. 2010 has not been included because all the mandatory write - off's have not been accounted for as they are still working through the system. W /O's as % 42.27% 58.69% 59.28% 0.00% 62.47% Charges Write off's W /O's as % tage Grove $ 1,179,375 $ 491,900 41.71% roport 220,690 118,353 53.63% Paul Park 414,931 256,630 61.85% !y Cloud 4,040 - 0.00% of Area 8,742 1,248 14.28% 1,827,778 868,131 47.50% W /O's as % 42.27% 58.69% 59.28% 0.00% 62.47% Charges Write offs Cottage Grove $ 1,207,326 $ 510,360 Newport 231,887 136,085 St. Paul Park 334,487 198,295 Grey Cloud 2,880 - Out of Area 4,420 2,761 - 1,781,000 847,501 W /O's as % 42.27% 58.69% 59.28% 0.00% 62.47% 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 $214,000 through this program from 2004 through 2010. This program is proving to be a cost effective way to collect delinquent accounts. 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 adopted 2010 budget shows a net operating income of $9,990 Charges Write off's W /O's as % Cottage Grove $ 1,445,130 $ 725,274 50.19% Newport 255,620 158,923 62.17% St. Paul Park 370,550 235,308 63.50% Grey Cloud 9,290 - 0.00% Out of Area 14,130 4,112 29.10% 2,094,720 1,123,617 53.64% 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 $214,000 through this program from 2004 through 2010. This program is proving to be a cost effective way to collect delinquent accounts. 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 adopted 2010 budget shows a net operating income of $9,990 compared to an actual net income of $41,716 because a federal grant was received for ambulance stretchers in the amount of $32,107. Action Requested Adopt the resolution authorizing write -offs in the amount of $1,197,414. s • • 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 $1,197,414 be written off the Cottage Grove EMS accounts. Passed this 16th day of March 2011. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk g o Ell