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Home My WebLink About2016-03-16 PACKET 08.A. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 3/16/16 , � 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$2,454,561. STAFF RECOMMENDATION: Adopt the resolution to write off Cottage Grove EMS accounts receivable in the amount of $2,454,561. 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: ADMINISTRATORS COMMENTS: � �� ' '� f° �� ,',,� �� __.� ' City Administrator ate * * * � * * * � * * � * * * * * * * * * * � * * * * * * * * � * * * * * * � * * * * * * * � * * COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER City of Cottage Grove � Finance MemO To: Honorable Mayor and City Council Charlene Stevens, City Administrator From: Robin Roland, Finance Director - Brenda Malinowski, Assistant Finance Director Date: March 10, 2016 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$2,454,561 in ambulance charges for the year ended December 31, 2015, as follows: Percentage Increase 2011 2012 2013 2014 2015 ('14 to'15) Gross Revenues: 2,470,154 3,240,396 3,421,529 3,860,539 3,860,490 0.00% W rite-off's: Medicare $857,857.00 $1,190,647.00 $1,329,334.00 $1,440,104.00 $1,584,086.00 10.00% Medicaid 283,567.00 374,392.00 421,167.00 495,854.00 604,365.00 2�.88% Worker's Comp. 5,184.00 7,231.00 4,590.00 4,684.00 7,241.00 54.59% Other Manadato Ad' 13,383.00 18,438.00 11,631.00 21,061.00 16,325.00 -22.49% Bankruptcy 33.00 3,479.00 3,732.00 5,317.00 3,996.00 -24.84% Closed b Collection 166,810.00 121,161.00 154,409.00 260,122.00 238,548.00 -8.29% Total Write-offs $1,326,834.00 $1,715,348.00 $1,924,863.00 $2,227,142.00 $2,454,561.00 10.21% 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 2012 through 2014 for the accounts that have not been collected yet. 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 (3%) faster than the increase (1.8%) in the reimbursement amount, the write-off amounts also increase. Type of Call 2010 2011 2012 2013 2014 2015 Cottage Grove BLS Rate $ 1,230.00 $ 1,330.00 $ 1,440.00 $ 1,530.00 $ 1,590.00 $ 1,640.00 3% Medicare Reimb 331.45 340.37 352.96 355.79 360.34 366.76 1.8% % Reimbursed 26.95% 25.59% 24.51% 23.25% 22.66% 22.36% ALS-1 Rate 1,520.00 1,640.00 1,770.00 1,880.00 1,960.00 2,020.00 3% Medicare Reimb 393.59 404.19 419.13 422.50 427.90 435.53 1.8% % Reimbursed 25.89% 24.65% 23.68% 22.47% 21.83% 21.56% ALS-2 Rate 1,750.00 1,890.00 2,040.00 2,160.00 2,250.00 2,320.00 3°/o Medicare Reimb 569.68 585.01 606.64 611.51 619.33 630.38 1.8°/o % Reimbursed 32.55% 30.95°/a 29.74% 28.31% 27.53°/a 27.17% The following chart reflects annual write-off's compared to the corresponding revenue by year.for the past several years. Prior Years 2012 2013 2014 2015 Totals Revenue(billed charges) 3,240,396 3,421,529 3,860,539 3,860,490 14,382,954 Write-Offs Medicare 1,241,815 1,256,502 1,534,147 1,393,281 5,425,745 Medicaid 370,208 427,470 540,647 514,097 1,852,422 Worker's Comp/Other Mandatory 24,915 19,527 25,181 19,584 89,207 Bankruptcy 4,253 4,427 3,089 3,233 15,002 UncontrollableTotal 0 1,641,191 1,707,926 2,103,064 1,930,195 8,570,104 Closed by Collection (Controllable) 189,138 271,429 240,843 50,000 751,410 Total Write-Off's 0 1,830,329 1,979,355 2,343,907 1,980,195 9,443,351 Written Off2015 -19,990 -7,125 -25,145 526,626 1,980,195 2,454,561 WrittenOffpreviously 1,837,454 2,004,500 1,817,281 0 5,659,235 Total Write-offs -19,990 1,830,329 1,979,355 2,343,907 1,980,195 8,133,786 Write-offs as%of Revenue Revenue Increase 31.18% 5.59% 12.83% 0.00% Uncontrollable 50.65% 49.92% 54.48% 50.00% Controllable 5.84% 7.93% 6.24% 1.30% StillOwing 0.00% 0.00% 0.00% 15.53% Controllable write-offs as%of Net Revenue Revenue 3,240,396 3,421,529 3,860,539 3,860,490 Uncontrollablewrite-off's 1,641,191 1,707,926 2,103,064 1,930,195 Net Revenue 1,599,205 1,713,603 1,757,475 1,930,295 Controllablewrite-off's 189,138 271,429 240,843 Controll.write-offs as%of Net Rev. 11.83% 15.84% 13.70% 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. This has proved to be a cost effective way to collect delinquent accounts, and the City received approximately $39,000 in payments through this program in 2015. Draft Cash Flow Statement Attached is a draft of the year end ambulance fund cash flow statement. This statement has not been audited and may change, although not significantly. The statement include four years of history for comparison purposes. Cash increased in 2015 by approximately $80,000. Action Requested. Adopt the resolution authorizing write-offs in the amount of$2,454,561. CTTY OF COTTAGE GROVE,MINNESOTA STATEMENT OF CASH FLOWS Cottage Grove EMS Fund Unaudited For The Year Ended December 31,2015,2014,2013,and 2012 -DRAFT� ' Cottage Grove EMS Fund 2015 2014 2013 2012 Cash flows fi�om operating activities: Receipts fi•om customeis and users $ 1,539,946 $ 1,620,400 $ 1,499,657 $ 1,283,631 Payment to suppliers (235,332) (274,293) (262,525) (212,767) Payment to employees (1,144,020) (1,055,922) (984,509) (831,139) Miscellaneous revenue 7,234 21,597 15,583 17,096 Net cash flows from operating activities 167,828 311,782 268,206 256,821 Cash flows fi•om noncapital financing activities: Transfeis out (94,680) (94,680) (58,200) (58,900) Net cash flows fi•om noncapital financing activities (94,680) (94,680) (58,200) (58,900) Cash flows from capital and related financing activities: Acquisition of capital assets - (175,006) (30,058) - Net cash flows fi•om capital andrelatedfinancingactivities - (175,006) (30,058) - Cash flows from investing activities: Investment earnings 6,791 12,831 (6,793) 3,346 Net cash flows fi•om investing activities 6,791 12,831 (6,793) 3,346 Net increase(decrease)in cash and cash equivalents 79,939 54,927 173,155 201,267 Cash and cash equivalents-Januaiy 1 882,201 827,274 654,119 452,852 Cash and cash equivalents-December 31 $ 962,140 $ 882,201 $ 827,274 $ 654,119 RESOLUTION NO. 16- RESOLUTION AUTHORIZING WRITE-OFFS OF THE COTTAGE GROVE EMS ACCOUNTS RECEIVABLE W THE AMOUNT OF $2,454,561 WHEREAS, certain ambulance bilis are determined uncollectable NOW, THEREFORE BE IT RESOLVED, by the City Council of Cottage Grove, County of Washington, State of Minnesota, that $2,454,561 be written off the Cottage Grove EMS accounts. Passed this 16th day of March 2016. Myron Bailey, Mayor Attest: Joe Fischbach, City Clerk