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HomeMy WebLinkAbout2015-12-09 e-packetSPECIAL MEETING OF THE BUDGET SUBCOMMITTEE OF THE CITY OF SOUTH SAN FRANCISCO °azl�R� P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting will be held at: CITY HALL CONFERENCE ROOM 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA WEDNESDAY, DECEMBER 9, 2015 3:00 P.M. NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the Budget Subcommittee of the City of South San Francisco will hold a Special Meeting on Wednesday, the 9s' day of December, at 3:00 P.M., at City Hall, City Manager Conference Room, 400 Grand Avenue, South San Francisco, California 94080. Purpose of the meeting: 1. Call to Order. 2. Roll Call. 3. Public Comments. 4. Motion to approve the Minutes of the meeting of November 18, 2015. 5. Emergency Medical Services Review. carry ulem � x s �°t MINUTES SPECIAL MEETIN G OF THE H !a BUDGET SUBCOMMITTEE MITTEE O v � OF THE c4zrio CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting will be held at: CITY HALL CONFERENCE ROOM 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA WEDNESDAY, NOVEMBER 18, 2015 11:00 A.M. 1. Call to Order. TIME: 11:01 A.M. 2. Roll Call. PRESENT: Mayor Garbarino and Vice Mayor Addiego. 3. Public Comments. None. 4. Motion to approve the Minutes of the meeting of May 15, 2015. Minutes approved. 5. 2014-15 Year End Financial Results and Budget Closing Proposal. (Richard Lee, Finance Director). Finance Director Richard Lee provided background information with an economic snapshot of labor and real estate data for the subcommittee members to take into consideration while reviewing General Fund revenue sources and expenditures. Subcommittee members expressed approval and requested to see the total assessed valuation. No further direction was given. 6. Adjournment. Being no further business Mayor Garbarino adjourned the meeting at 11:24 A.M. Subm'tte• by: Approves b : r-- L. 0 i, f) Oan s ra Tupper, epu y City Clerk _ / 41 /OA ncilmember of South San Fr ci co City of' outh San Francisco Budget Subcommittee Staff Report DATE: December 9, 2015 TO: Budget Subcommittee FROM: Gerald Kohlmann, Fire Chief SUBJECT: AMBULANCE SERVICE FINANCIAL REPORT It is recommended that the City Council Budget Subcommittee accept staff's ambulance service financial report and provide direction on the proposed accounting practices and managing accounts receivable. BACKGROUND/DISCUSSION The purpose of this Staff Report is to update the City Council Budget Subcommittee on the South San Francisco Fire Department (SSFFD) advanced life support (ALS) and basic life support (BLS) ambulance service, including new financial practices. History The South San Francisco Fire Department (SSFFD) has been operating its own ambulance service since the early 1970's, and first employed paramedics in 1975. For a number of years, SSFFD operated one paramedic- level, advanced life support (ALS) ambulance to serve the community. In 1995, SSFFD added a second ALS ambulance to help serve the community's growing Emergency Medical Services (EMS) call volume. SSFFD advanced life support ambulances respond to emergency medical services calls in South San Francisco as well as other incidents in the city, such as fires. As stated above, there are now two SSFFD ALS ambulances on -duty each day. In 2005, a basic life support (BLS) ambulance was added, staffed by two contract emergency medical technicians (EMT). The BLS ambulance serves as the back -up to the ALS ambulances when they are both committed to other incidents. In this backup role, a paramedic from a SSFFD fire engine is used to transport critically ill patients to the hospital. The BLS ambulance also performs non - emergency transports as part of the EMS program operated by the City. ALS patient transports are performed by firefighters trained at the paramedic level, while BLS patient transports can be completed by either paramedic trained personnel or EMT staff. Guidelines established by Centers For Medicare and Medicaid Services (CMS) have been widely accepted to define an EMS transport as either ALS or BLS. Among those guidelines, are; the training level of personnel responding; level of medical intervention provided to the patient; medical complaint of the patient; how the emergency response is dispatched; and other factors. An ALS ambulance can respond to an EMS call but may only be reimbursed at the BLS level; also, a BLS ambulance can transport an ALS patient under certain circumstances and be reimbursed at the ALS level. Both of these billing scenarios are controlled by the services delivered to the patient. Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 2 Figure I - ALS Rescue Ambulance In 1995, due to increasing EMS call volume and growing complexities with ambulance billing processes, the City Council adopted Resolution 119 -95, which executed an agreement with Allied Information and Services Corporation (AIS) for ambulance claim coding and billing. Through a series of mergers and take - overs, AIS ultimately became Advanced Data Processing, Inc. (ADPI), which is the vendor that SSFFD uses today. ADPI, similar to other ambulance billing providers, does not pursue payment for aged accounts receivable. They defer to the ambulance provider, in this case SSFFD, to determine if a collection agency should pursue aged accounts. Figure 2 - BLS .\mbLdanc,� Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 3 Ambulance Emergency Responses South San Francisco ambulances provide multiple functions that support the primary responsibility of providing a rapid response to emergency (9 -1 -1) medical incidents in South San Francisco. In addition to the 9 -1 -1 initiated responses within South San Francisco, our ALS ambulances will respond to 9 -1 -1 incidents outside of the City based upon certain protocols. The crewmembers on our ALS ambulances are considered part of our daily on -duty staffing for response to all hazard types. On a routine basis, our BLS ambulance provides inter - facility transport services to clients throughout San Mateo County. ALS ambulances leaving the City occur on a reciprocal basis with American Medical Response (AMR). This reciprocal agreement provides protection to South San Francisco to ensure that every 9 -1 -1 medical call receives an ambulance, whether it is a SSFFD ambulance or an AMR ambulance. This also provides additional protection to our immediate neighbors when an SSFFD ALS ambulance may be the closest life - saving resource. Table 1 provides information about 9 -1 -1 initiated medical responses and identifies the percentage of incidents in South San Francisco where SSFFD ambulances responded. Because our crews are dual -role Paramedic Firefighters, our ambulances also respond to other incident types, such as fires and fire alarms, so the total responses by our ambulances are greater than represented in Table 1. Table 1 9 -1 -1 EMS Ambulance Responses Year 9 -1 -1 Calls Out ofArea Within SSF 2013 5384 331 93.8% 2014 5226 322 93.8% 2015* 4503 216 95.2% * As of October 30, 2015 Financial Summary ALS: Each ALS ambulance is staffed with two Paramedic/Firefighters on each of three shifts; a total of 12 personnel, at an approximate average annual personnel cost of $2,429,307. The financial summary for ALS service in FY 14 -15 is shown below in Table 2: Table 2 ALS ANNUAL COST SUMMARY Personnel Cost $2,429,307 Supplies $259,197 Total Cost $2,688,504 Revenue $1,804,887 Annual Loss ($883,617) Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 4 BLS: The BLS ambulance is staffed with two contract EMTs, usually 12 hours per day, seven days per week. The financial summary for BLS service in FY 14 -15 is shown below in Table 3: Table 3 BLS ANNUAL COST SUMMARY Personnel Cost $180,919 Supplies $31,347 Total Cost $212,266 Revenue $276,160 Annual Profit +$63,894 Staff projects ALS operational costs will increase, while BLS has trended downward, but is projected to stabilize between FY 15 -16 and FY 17 -18, per Table 4: Table 4 ALS AND BLS EXPENSE CHART $3.50 3% per annum increase N C $3.00 � ALS $2.50 $2.00 � BLS $1.50 — Average ALS Cost $1.00 — Average BLS $0.50 Cost $ 11-12 12 -13 13 -14 14 -15 Projected Projected Projected 15 -16 16 -17 17 -18 Staff has identified multiple potential revenue streams that may help further offset the cost of the ALS program. A combination of new revenue sources, additional revenue generated by the BLS ambulance program, and refined operations management may combine to greatly reduce the net impact on the general fund. Fire staff is actively working to find new ways to further serve the community and contribute to the fiscal health of the Emergency Medical Services Division. Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 5 Accounts Receivable Status The use of an outside ambulance billing company is a common practice for like -sized agencies. Billing procedures, which require a specialized knowledge of Medicare and insurance rules, make contracting -out for this specialized service a necessity. ADPI, the city's ambulance billing provider, manages each account within one of four categories: • Open — Accounts still active and being pursued by ADPI. • Frozen — Accounts with liens or on hold for further pursuit by ADPI staff. These are unpaid but have potential for payment, but await direction to return to open status or collection. • Closed — Accounts that are fully or partially paid. Some partially paid accounts may be adjusted to reflect maximum payment allowed under certain insurance coverages. ADPI staff reviews, applies appropriate adjustment, and closes the account. • Collection — Accounts with balances that ADPI is no longer pursuing, have not been sent to a third -party for collection, and are recommended for write -off approval to the City. (Hereafter referred to as aged accounts). As of October 30, 2015, SSFFD has accrued an accounts receivable balance of $7,763,032. This balance includes all ambulance billing accounts that are open, closed, frozen, or collection (aged), broken down in Table 5, below: Accounts Receivable by Status Status Accounts Balance Closed 25,963 -$653* Collection (Aged) 6,694 $5,774,987 Frozen 0 $0 Open 1,326 $1,988,698 Grand Total 34,241 $7,763,032 *Reimbursement for bill overpayment to be made to patients. Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 6 Table 6, below, shows a breakdown by year, along with an accounting of payments and prior year write -offs: Table 6 Account Year Accts. Total Payments Charges Received Remaining Write -Offs Balance Accounts Receivable Growth 1998 4 $4,055 $0 $0 $0 $4,055 $4,055 1999 3 $3,165 $0 $0 $0 $3,165 $7,220 2000 2 $1,432 $0 $841 $591 $0 $7,220 2002 2 $1,892 $286 $1,158 $447 $0 $7,220 2003 5 $6,079 $1,047 $4,685 $347 $0 $7,220 2004 19 $18,484 $5,470 $4,260 $6,873 $1,883 ? $9,103 2005 1081 $1,230,556 $666,944 $335,883 $227,729 $0 $9,103 2006 2405 $2,844,666 $1,445,727 $925,516 $473,248 $175 $9,278 2007 2378 $2,586,683 $1,234,350 $686,291 $657,313 $8,730 $18,008 2008 2518 $2,864,763 $1,413,416 $846,377 $422,771 $182,199 $200,206 2009 3306 $3,724,277 $1,695,909 $1,222,372 $52,031 $753,966: $954,172 2010 3648 $4,153,309 $1,647,091 $1,372,955 $589,778 $543,486 $1,497,658 2011 3976 $5,236,885 $1,871,489 $2,004,714 $125,389 $1,235,293 $2,732,952 2012 3778 $5,886,180 $1,947,305 $2,319,404 $1,261,868 $357,602 $3,090,553 2013 3597 $5,712,352 $1,808,395 $2,136,466 $285,786 $1,481,706 $4,572,260 2014 4112 $5,923,214 $1,974,303 $2,748,764 $49,450 $1,150,696 $5,722,956 2015 3405 $5,398,132 $1,338,396 $2,017,773 $1,887 $2,040,076 $7,763,032 Total 34239 $45,596,125 $17,050,127 $16,627,458 $4,155,509 $7,763,032 $7,763,032 Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 7 The age of these accounts is more easily seen in Table 7, below: Table 7 Current Aged Accounts Distribution $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 ■ Total $600,000 $400,000 $200,000 $0 2004 2005 2006 2007 2008 2009 2010 20112012 2013 2014 2015 As noted in Table 6, previous fire chiefs have authorized $4.16 million in write -offs. However, there is still a large balance of accounts in collection status that are awaiting further action by SSFFD and Council. In the ambulance industry, it is common to have a significant difference between what is invoiced and what is realistically collectible for several reasons. This includes improper documentation or insurance disputes. For example, insurance companies will deny a claim for insufficient documentation review, failure to meet medical necessity, or lack of patient signatures. These are items that SSFFD staff has taken steps to improve in the past year. Additionally, a large portion of the accounts receivable are attributed to "self -pay" patients who do not have insurance or the means to pay. Write-off Policy The billing process starts when ADPI creates an account based upon the Fire Department's submittal of an electronic patient care report. ADPI validates the patient, payer, and insurance information. ADPI then makes three attempts by mail, with 30 day intervals, to secure payment from SSFFD customers. After being unsuccessful in receiving payment, the account is then reclassified from open to aged status. Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 8 SSFFD has been very conservative with regard to the handling of aged ambulance accounts and has opted not to refer patients to a third -party collection agency. This practice has been at the discretion of past fire chiefs. The City does not have an ambulance billing write -off policy at this time. Moving forward, staff is taking the following steps to resolve past issues and set a transparent, accountable methodology for tracking accounts receivable in the future: • Request Council formally write off all accounts aged four or more years. Because of statute of limitations, no open account older than four years would be eligible for pursuing for collections. Aged accounts between 2004 and 2011 total $2,692,969. • Contact all customers with accounts aged 90 days to four years old in another effort to collect the remaining balance. The amount in this category is $3,082,018. • Retain a new third -party agent to handle invoicing and collections for accounts aged less than 90 days, and new accounts. • Going forward the third -party agent will pursue collection for 12 months, not just 90 days, before returning accounts to South San Francisco for write -off. • A list of uncollectable accounts, without private health information, slated for write -off will be provided to the Fire Chief for review, and the Finance Director for approval, and then sent to Council at least quarterly for Council approval of any accounts written off as uncollectable. • The write -off determination does not constitute forgiveness of the debt if at a future date payment is received by the billing company or collection agency. • On a quarterly basis, the Finance Director will update the City's financial system to reflect accounts receivable and write -off amounts, ensuring transparency and greater accountability. Collection Agent One question is yet unanswered and guidance is sought: Should South San Francisco refer non- paying accounts to a third party collection agency, a more aggressive collection effort? Such agencies typically collect an additional 4 -6% of the aged accounts. As noted, accounts aged 90 days to four years old currently total $3,082,018. With a collection agent South San Francisco may collect approximately $150,000 in additional payments. Staff Report To: Budget Subcommittee Re: Ambulance Billing Service Financial Report Date: December 9, 2015 Page 9 CONCLUSION It is recommended that the subcommittee accept staff's ambulance service financial report; and provide direction on the proposed accounting practices; and provide direction on managing future accounts receivable. By: Gerald Kohlmann Fire Chief GK:rw/bla Y - Futrell U rity Manager