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HomeMy WebLinkAbout2015-02-18 PACKET 04.G. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA IVIEETING ITEM # DATE 2/18/14 � I . PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD *********�****�*�******��*********�************* COUNCIL ACTION REQUEST Consider write offs of Cottage Grove EMS accounts receivable in the amount of $2,227,142. STAFF RECOMMENDATION Adopt the resolution to write off Cottage Grove EMS accounts receivable in the amount of $2,227,142. BUDGET IMPLICATION BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION DATE REVIEWED APPROVED DENIED ❑ PLANNING ❑ ❑ ❑ ❑ PUBLIC SAFETY ❑ ❑ ❑ ❑ PUBLIC WORKS ❑ ❑ ❑ ❑ PARKS AND RECREATION ❑ ❑ ❑ ❑ HUMAN SERVICES/RIGHTS ❑ ❑ ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: � f ADMINISTRATORS COMMENTS � r � , � �, � � : �� ►,� `�-- ity Administrator Date ***�**�***�*********���*��********************** COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER i City of Cottage Grove ` � J Finance Me111O To: Honorable Mayor and City Council Ryan Schroeder, City Administrator From: Robin Roland, Finance Director Brenda Malinowski, Assistant Finance Director ��`� Date: February 11, 2015 Subject: Ambulance Write-offs Introduction Each year, certain uncollectible ambulance accounts must be written off. These charges are a combination of Medicare and Medicaid paid accounts and other mandatory adjustments in addition to actual "bad-debt" which has previously been turned over to collection. Mandatory write-offs are considered during the budget/rate setting process and should not be deemed an indication of adverse financial circumstances. Discussion Staff requests formal authorization to write-off $2,227,142 in ambulance charges for the year ended December 31, 2014, as follows: Percentage Increase 2010 2011 2012 2013 2014 ('13 to'14) Gross Revenues: 2,230,736 2,470,154 3,240,396 3,421,529 3,860,539 12.83% W rite-off's: Medicare $729,729.00 $857,857.00 $1,190,647.00 $1,329,334.00 $1,440,104.00 8.33% Medicaid 270,738.00 283,567.00 374,392.00 421,167.00 495,854.00 17.73% Worker's Comp. 2,306.49 5,184.00 7,231.00 4,590.00 4,684.00 2.05% Other Manadato Ad' 8,835.00 13,383.00 18,438.00 11,631.00 21,061.00 81.08% Bankruptc 322.00 33.00 3,479.00 3,732.00 5,317.00 42.47% Closed by Collection 185,484.00 166,810.00 121,161.00 154,409.00 260,122.00 68.46% Total Write-offs $1,197,414.49 $1,326,834.00 $1,715,348.00 $1,924,863.00 $2,227,142.00 15.70% These write-offs relate to multiple years of service 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 payments are collected shortly after they are billed. However, the write-offs for those accounts "closed by collection" are for runs that occurred over the past couple of years. For Medicare, Medicaid, Worker's comp and "other mandatory adjustment", we are only allowed reimbursement of a small government payment and a small co-payment from the patient for the call. The amounts paid are a fraction of our billing rate and lower than the actual cost to provide the service. The "closed by collection" accounts are for ambulance call activity occurring anytime from 2011 through 2013 in amounts that the collection agency feels are no longer collectable. Accounts turned over for collection take over 12 months from the call date to go through the full collection process. Currently if an account is not paid within 120 days, it is sent to collection and/or placed in the State Revenue Recapture program for collection. Cottage Grove EMS, like all other medical service providers, has been required to accept assignment for Medicare payments since 2002. Medicare/Medicaid pays a predetermined dollar amount no matter what billing rate is charged. The table below reflects Medicare reimbursement amounts for the past six years. As our rates increase (4%) faster than the increase (1.3%) in the reimbursement amount, the write-off amounts also increase. Type of Call 2009 2010 2011 2012 2013 2014 Cottage Grove BLS Rate $ 1,160.00 $ 1,230.00 $ 1,330.00 $ 1,440.00 $ 1,530.00 $ 1,590.00 4% Medicare Reimb 338.08 331.45 340.37 352.96 355.79 360.34 1.3% % Reimbursed 29.14% 26.95% 25.59% 24.51% 23.25% 22.66% ALS-1 Rate 1,430.00 1,520.00 1,640.00 1,770.00 1,880.00 1,960.00 4% Medicare Reimb 401.47 393.59 404.19 419.13 422.50 427.90 1.3% °/a Reimbursed 28.07% 25.89% 24.65% 23.68% 22.47% 21.83% ALS-2 Rate 1,650.00 1,750.00 1,890.00 2,040.00 2,160.00 2,250.00 4% Medicare Reimb 581.07 569.68 585.01 606.64 611.51 619.33 1.3% % Reimbursed 35.22% 32.55% 30.95% 29.74% 28.31% 27.53% The following chart reflects annual write-off's compared to the corresponding revenue � by year for the past several years. ; Prior Years 2011 2012 2013 2014 Totals Revenue (billed charges) 2,470,154 3,240,396 3,421,529 3,860,539 12,992,618 Write-Offs Medicare 873,419 1,241,815 1,256,502 1,343,342 4,715,078 Medicaid 298,011 370,208 427,431 450,418 1,546,068 Worker's Comp/Other Mandatory , 16,081 24,915 19,527 21,195 81,718 Bankruptcy 217 4,253 4,427 2,326 11,223 Uncontrollable Total 0 1,187,728 1,641,191 1,707,887 1,817,281 6,354,087 Closed by Coliection (Controllable) 128,643 196,263 296,613 0 621,519 Total Write-Offs 0 1,316,371 1,837,454 2,004,500 1,817,281 6,975,606 Written Off2014 -14,686 -7,376 -13,215 445,138 1,817,281 2,227,142 Written Offpreviously 0 1,323,747 1,850,669 1,559,362 0 4,733,778 Total Write-offs -14,686 1,316,371 1,837,454 2,004,500 1,817,281 6,975,606 Write-offs as % of Revenue Revenue Increase 10.73% 31.18% 5.59% 12.83% Uncontrollable 48.08% 50.65% 49.92% 47.07°/o Controllable 5.21 % 6.06% 8.67% 0.00% StillOwing 0.00% 0.00% 0.00% 20.97% Controllable write-offs as % of Net Revenue Revenue 2,470,154 3,240,396 3,421,529 3,860,539 Uncontrollable write-offs 1,187,728 1,641,191 1,707,887 1,817,281 Net Revenue 1,282,426 1,599,205 1,713,642 2,043,258 Controllable write-offs 128,643 196,263 296,613 Controll. write-offs as % of Net Rev. 10.03% 12.27% 17.31% Staff also tracks the revenue (charges) versus write-offs by City of service. The following charts cover the past three years. Grey Cloud Township reimburses the City for their write-offs so these have not been included. 2014 data is not included as all mandatory write-offs have yet to be accounted for in the system. 2011 Charges Write-offs W/O's as % Cottage Grove $ 1,800,545 $ 906,458 50.34% Newport 259,665 173,072 66.65% St. Paul Park 398,100 230,523 57.91% Grey Cloud 4,112 - 0.00% Out of Area 7,732 4,604 59.54% 2,470,154 1,314,657 53.22% 2012 Charges Write-offs W/O's as % Cottage Grove $ 2,388,192 $ 1,346,418 56.38% Newport 324,370 181,780 56.04% St. Paul Park 485,503 291,606 60.06% Grey Cloud 10,278 - 0.00% Out of Area 32,051 9,299 29.01 % 3,240,394 1,829,103 56.45% 2013 Charges Write-offs W/O's as % Cottage Grove $ 2,521,152 $ 1,443,333 57.25% Newport 380,265 247,977 65.21% St. Paul Park 453,729 287,428 63.35% Grey Cloud 7,214 - 0.00% Out of Area 59,169 23,646 39.96% 3,421,529 2,002,384 58.52% Since 2004 the City has placed delinquent patient ambulance accounts with the State Revenue Recapture Program for collection. This program recovers payments from funds receivable by the patient from the state, such as income tax or property tax refunds. A cost effective way to collect delinquent accounts, the City receives approximately $30,000 in payments annually through this program. Draft Financial Statements Attached is a draft of the year end ambulance fund financial statements. These statements are un-audited and may change, although not significantly. The statements include four years of history for comparison purposes. The adopted 2014 budget contained a net asset decrease of $114,940 compared to an actual projected net asset increase of $169,756. Action Requested Adopt the resolution authorizing write-offs in the amount of $2,227,142. CTTY OF COTTAGE GROVE, NIINNESOTA co�.�za� sc�DUi.E oF xEVErluES, E��sES .�rm UNAjJDITED CHANGES IN FLTND NET ASSETS _� �1"I'_ COTTAGE GROVE EMS F'UND For The Yeazs Ended December 31, 2014, 2013, 2012, 2011, and 2010 Operating revenues: Chazges for services Less: Mandatory write-offs Net chazges for services Other revenues (outside employment) Total operating revenues Operating e�cpenses: Operaring and maintenance: Personal services Personal services (outside employment) Commodities Contractual services Bad debt expense Bad debt allowance Administrative and general: Other charges- administrative chazge Depreciation Total operating expenses Operaring income (loss) Nonoperating revenues (expenses): Inveshnent earnings Loss on fixed asset County reimb for training and equip. Federal Grant Miscellaneous Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfer to General Fund Total transfers Change in net assets Net assets - January 1 Net assets - December 31 Year ended Budget December 31, 2014 2014 $3,095,700 $3,838,582 (1,553,500) (1,965,577) 1,542,200 1,873,005 4,000 29,120 1,546,200 1,902,125 1,043,780 1,013,106 27,078 78,400 106,130 155,680 160,528 227,000 267,375 - 33,900 67,600 74,000 1,572,460 1,682,117 (26,260) 220,008 $6,000 $12,831 - 12,858 18,739 6,000 44,428 (20,260) 264,436 (94,680) (94,680) (94,680) (94,680) (114,940) 169,756 1,540,144 $1,709,900 Yeaz ended Budget December 31, 2013 2013 $2,744,700 $3,399,157 (1,375,400) (1,766,722) 1,369,300 1,632,435 4,000 79,141 1,373,300 1,711,576 901,660 919,046 75,189 72,900 97,026 145,460 165,917 207,000 158,141 55,200 55,200 52,600 65,765 1,434,820 1,536,284 (61,520) 175,292 $2,300 ($6,79�) - 13,265 - 422 1,896 2,300 8,790 (59,220) 184,082 (3,000) (3,000) (3,000) (3,000) (62,220) 181,082 1,359,062 $1,540,144 Year ended December 31, 2012 $3,223,055 (1,590,706) 1,632,349 3,952 1,636,301 826,837 89,273 133,862 124,640 54,100 66,030 1,294,742 341,559 $3,346 17,096 20,442 362,001 (4,800) (4,800) 357,201 1,001,861 $1,359,062 Year ended December 31, 2011 $2,451,450 (1,160,024) 1,291,426 3,952 1,295,378 759,068 78,299 123,373 165,746 20,000 52,500 57,312 1,256,298 39,080 $5,905 (25,855) 4,594 (15,356) 23,724 (3,600) (3,600) 20,124 981,737 $1,001,861 Yeaz ended December 31, 2010 $2,228,646 (1,011,930) ' 1,216,716 1,216,716 724,406 81,288 121,742 185,163 7,000 52,500 52,389 1,224,488 (7,772) $4,221 32,107 12,293 48,621 4Q849 2,345 (7,609) (7,609) 35,585 946,152 $981,737 RESOLUTION NO. 15- � RESOLUTION AUTHORIZING WRITE-OFFS OF THE COTTAGE GROVE EMS ACCOUNTS RECEIVABLE IN THE AMOUNT OF $2,227,142 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 $2,227,142 be written off the Cottage Grove EMS accounts. Passed this 18th day of February 2015. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk