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Home My WebLink About2012-03-21 PACKET 04.C.REQUEST OF CITY COUNCIL ACTION COUNCIL MEETING DATE 3/21/12 AGENDA ITEM# -----7.c 12 Finance ORIGINATING DEPARTMENT Robin Roland DEPARTMENT HEAD COUNCIL ACTION REQUEST: To adopt the resolution to write-off Cottage Grove EMS accounts receivable in the amount of $1,326,834. STAFF RECOMMENDATION: To adopt the resolution to write-off Cottage Grove EMS accounts receivable in the amount of $1,326,834. BUDGET IMPLICATION: BUDGETED AMOUNT ADVISORY COMMISSION ACTION: DATE ❑ PLANNING ❑ PUBLIC SAFETY F PUBLIC WORKS ❑ PARKS AND RECREATION F HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY R SUPPORTING DOCUMENTS: MEMO/LETTER: RESOLUTION: ❑ ORDINANCE: F ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ACTUAL AMOUNT REVIEWED APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ El El El ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ADMINISTRATORS COMMENTS: 4 1!'ity Administrator Date COUNCIL ACTION TAKEN: FIAPPROVED ❑ DENIED FIOTHER GAfinance\Council ltems\2012\CC Action Form Ambulance write-offs.doc City (M Finance of • •- Grove To: Honorable Mayor and City Council Ryan Schroeder, City Administrator From: Robin Roland, Finance Director Brenda Peper, Assistant Finance Director VR Date: March 9, 2012 Subject: Ambulance Write -offs Introduction •i The Council is asked to consider approving a resolution to write -off uncollectible ambulance accounts totaling $1,326,834. Discussion We are requesting to write -off $1,326,834 in ambulance accounts this year compared to $1.197.414 last vear. 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 2008 2009 2010 2011 Percentage Increase '10to'11) Medicare $487,305.77 $641,497.90 $729,729.00 $857,857.00 17.56% Medicaid 154,519.73 243,804.00 270,738.00 283,567.00 4.74% Worker's Comp. 6,061.09 4,878.61 2,306.49 5,184.00 124.76% Other Manadatory Ad' 4,011.13 13,241.00 8,835.00 13,383.00 51.48% l Bankruptcy 1 5,519.241 2,126.00 322.00 33.00 - 89.75% Closed b Collection 164,214.00 190,292.00 185,484.00 166,810.00 - 10.07% Total Write-offsl $821,630.96 $1,095,839.51 $1,197,414.49 $1,326,834.001 10.81% 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 31238 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 2011 Totals Revenue (billed charges) 2,917,489 1,827,778 1,781,000 2,094,560 2,331,188 2,470,142 13,422,157 Medicare 668,385 492,645 508,955 660,085 738,752 754,993 Medicaid 301,641 177,900 161,952 269,671 244,910 254,656 Worker's Comp /Other Mandatory 18,776 12,123 10,120 15,997 11,804 14,093 Bankruptcy 2,629 7,897 3,777 1,117 0 33 Uncontrollable Total 991,431 690,565 684,804 946,870 995,466 1,023,775 Closed by Collection (Controllable) 251,352 174,817 155,307 166,298 205,011 Total Write Offs 1,242,783 865,382 840,111 1,113,168 1,200,477 1,023,775 Written Off 2011 -4,408 -4,255 -9,393 - 17,320 338,435 1,023,775 1,326,834 Written Off previously 1,247,191 869,637 849,504 1,130,488 862,042 0 4.958.862 Total Write offs 1,242,783 865,382 840,111 1,113,168 1,200,477 1,023,775 6,285,696 Write offs as % of Revenue Revenue increase 2,917,489 14.38% -2.56% 17.61% 11.30% 5.96% Uncontrollable 33.98% 37.78% 38.45% 45.21% 42.70% 41.45% Controllable 8.62% 9.56% 8.72% 7.94% 8.79% 0.00% Still Owing 0.00% 0.00% 0.00% 0.00% 0.00% 20.43% Controllable write -offs as % of Net Revenue Revenue 2,917,489 1,827,778 1,781,000 2,094,560 2,331,188 2,470,142 Uncontrollable write -offs 991,431 690,565 684,804 946,870 995,466 1,023,775 Net Revenue 1,926,058 1,137,213 1,096,196 1,147,690 1,335,722 1,446,367 Controllable write -offs 251,352 174,817 155,307 166,298 205,011 0 Control. write -offs as % of Net Rev. 13.05% 15.37% 14.17% 14.49% 15.35% 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. 2011 has not been included because all the mandatory write - offs have not been accounted for as they are still working through the system. Write off's W /O's as % $ 820,232 51.1 159,269 61.3 204,323 60.E 3,990 1,187, 814 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 $243,000 through this program from 2004 through 2011. 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 adopted 2011 budget contained a net operating loss of $83,455 Charges 2008 $ 1,603,506 vport Charges Write offs W /O's as % Cottage Grove $ 1,207,326 $ 504,213 41.76% Newport 231,887 134,463 57.99% St. Paul Park 334,487 195,345 58.40% Grey Cloud 2,880 - 0.00% Out of Area 4,420 2,761 62.47% 1,781,000 836,782 46.98% Write off's W /O's as % $ 820,232 51.1 159,269 61.3 204,323 60.E 3,990 1,187, 814 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 $243,000 through this program from 2004 through 2011. 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 adopted 2011 budget contained a net operating loss of $83,455 Charges 2009 $ 1,603,506 vport Charges Write off's W /O's as % Cottage Grove $ 1,445,130 $ 712,403 49.30% Newport 255,620 157,317 61.54% St. Paul Park 370,550 233,237 62.94% Grey Cloud 9,290 - 0.00% Out of Area 14,130 3,662 25.92% 2,094,720 1,106,619 52.83% Write off's W /O's as % $ 820,232 51.1 159,269 61.3 204,323 60.E 3,990 1,187, 814 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 $243,000 through this program from 2004 through 2011. 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 adopted 2011 budget contained a net operating loss of $83,455 Charges tage Grove $ 1,603,506 vport 259,540 Paul Park 336,820 !y Cloud 22,186 of Area 8,684 2,230,736 Write off's W /O's as % $ 820,232 51.1 159,269 61.3 204,323 60.E 3,990 1,187, 814 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 $243,000 through this program from 2004 through 2011. 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 adopted 2011 budget contained a net operating loss of $83,455 compared to an actual net income of $31,082 because call volume was 10% higher than budgeted. Action Requested Adopt the resolution authorizing write -offs in the amount of $1,326,834. j :)[ \ \\ \ \\ )$ /§\ )!!l ; :: , ! ;_a� \ \ >! :, ! ( / / RESOLUTION AUTHORIZING WRITE -OFFS OF THE COTTAGE GROVE EMS ACCOUNTS RECEIVABLE IN THE AMOUNT OF $1,326,834 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 $1,326,834 be written off the Cottage Grove EMS accounts. Passed this 21 ST day of March 2012. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk