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HomeMy WebLinkAboutOrdinance 10359=~ ~ ~ ~ lYS ORDINANCE NO. ~ti~~~ AN ORDINANCE APPROPRIATING $500,000.00 TO THE GENERAL FUND O1, NON-DEPARTMENTAL, ACCOUNT NO 90-56-01 AND DECREASING THE UNRESERVED, UNDESIGNATED FUND BALANCE BY THE SAME AMOUNT FOR THE PURPOSE OF ENTERING ~ITO A LOAN AGREEMENT WITH THE AREA METROPOLITAN AMBULANCE AUTHORITY, PROVIDING FOR A SEVERABILITY CLAUSE, MAKING THIS ORDINANCE CUMULATIVE OF PRIOR ORDINANCES AND RFP~EALING ALL PRIOR ORDINANCES IN CONFLICT HEREWITH, PROVIDING FOR ENGROSSMENT AND E OLLMENT, AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. That in addition to those amounts allocated to the various City departments for the Fiscal Year 1988-89 and in the Budget of the City Manager, there shall also be increased appropriations in the General Fund O1, Non-Departmental, Account No. 90-56-01 in the amount of $500,000 00; thereby decreasing the unreserved, undesignated fund balance by the same amount, for the purpose of entering into a loan agreement with the Area Metropolitan Ambulance Authority SECTION 2. Should any portion, section or part of a section of this ordinance be declared invalid, inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgement shall in no way impair the remaining portions, sections, or parts of sections of this ordinance, which said remaining provisions shall be and remain in full force and effect. SECTION 3. That this ordinance shall be cumulative of Ordinance No 10151 and all other ordinances and appropriations amending the same except in those instances where the provisions of this ordinance are in direct conflict with such other ordinances and appropriations, in which instance said conflicting provisions of said prior ordinances and appropriations are hereby expressly repealed. SECTION 4. The City Secretary of the City of Fort Worth is hereby directed to engross and enroll this ordinance by copying the caption and effective date into the minutes of the City Council and by filing this ordinance in the ordinance records of the City of Fort Worth. SECTION 5. This ordinance shall take effect and be in full force and effect from and after the date of its passage, and it is so ordained. APPROVED AS TO FORM AND LEGALITY: A~ City Attorney Date: _ _ 8/~~/~9 Adopted. /~ Effective. ~ ~~S` c t - ~w~~.«.~~_,.l .. _ . pity o ~o~°t worth, texas .f Accouwrlno-z ~ ;•_ ~~,~/~ // ~ ~/ ,~1/~e ~j ~ /~~ IJ~e/~ e TMMS-GRTAT On~PUBtIC ~lO1~Ity(q•I~Ij/ ((.J/ ®~ ~~~ ~®1lilV~~l/ (L~ ~®U U IL~ t/u'~ (L`~~~~®~ NAtE11 AOMIn16TiiMTlOn ~ ~/ DATE REFERENCE SUBJECT AUTHORIZATION TO MAKE A LOAN PAGE MANAGEMENT ~ERVICLS~l NUMBER TO THE AREA METROPOLITAN AMBULANCE , of 5 8/15/89 G-8166 AUTH RITY CITY MAHA(iE RECOMMENDATION It is recommended that the City Council Adopt the attached supplemental appropriations ordinance increasing appropriations by $500,000 in General Fund O1, Non-Departmental Account No 90-56-01, Ambulance Loan Account, from the General Fund O1 Fund Balance Authorize the City Manager to enter into a loan agreement with the Area Metropolitan Ambulance Authority in an amount not to ex- ceed 5500,000 based on the terms and conditions outlined below DISCUSSION On August 1, 1988, the City of Fort Worth joined 13 other Tarrant County cities to form the Area Metropolitan Ambulance Authority (AMAA) Of the six (6) members of the Board of Directors, four are appointed by the City of Fort Worth The City's current representatives are Willian Garrison (Chair), Garet' Gilley, Eugene McCray and Bert Wiliams Each of the jurisdictions adopted a uniform Interlocal Cooperation Agreement and Ambulance Ordinance that spelled out how emergency medical services (EMS) would be delivered within the new system Services continue to be provided under the MedStar tradename by the ambulance contractor originally hired by the City of Fort Worth's The same clinical standards are in effect that were established under the Failsafe Franchise Model that was implemented on April 1, 1986 The most significant system change involves the AMAA being responsible for billings and collections, rather than the contractor The rationale for the AMAA handling the billings and collections function is that (1) It allowed the ambulance contractor to concentrate on patient care, and (2) It would be possible for th"e Authority to build up net worth Once the net worth reached a "prudent" level, certain savings could be passed on to the residents through either reduced ambulance rates, a reduced subscription membership rate or a reduction in subsidy In order for the financial projections for the new system to be realized, the City of Fort Worth agreed to maintain its subsidy rate at the current level for at least the first year and to allow emergency transport rates of $312 The other cities that were paying a subsidy also agreed to conntinue their rate and subsidy at the current level Those cities not paying a subsidy agreed to set rates at about the $387 level and allow an annual medical CPI adjustment The financial projections were based on the assumption that about 85~ of the ambulance transports would be Fort Worth Citizens It was also anticipated that the initial collection rate would be about 50~ Any amount above that level would allow the AMAA to build up its net worth at a faster rate ., + . r ~ .. ~~, DATE REFERENCE SUBJECT AUTHORIZATION TO MAKE A LOAN TO PncEj NUMBER '. 8/15/89 G-8766 THE AREA METROPOLITAN AMBULANCE 2 _af 5 AUTHORITY ~ •°~•~'~~ CHANGE IN POLICY BY THE CITY OF FORT WORTH Historically, the Ci.ty's ambulance subsidy was used to "buy-down" the rate for all system users The City Council adopted anew policy on November 8 1988, effective January 1, 1989 The effect of this policy change was to raise the rates from 5312 to $385 and to use the subsidy instead to provzde for reduced costs for some system users, specifically a reduction in the subscription membership fee for persons over 60 years of age from 549 per household to $20 per household and implementation of a policy to accept Medicare assignment, regardless of a patient's ability to pay When this policy was adopted, it was assumed that the AMAA could continue its overall collection rate of 50~, thus significantly improving the net cash flow In the case of Medicare, it was hoped that the lower reimbursement rate would be offset by higher net collections on the non-Medicare patients The AMAA Board and its managerrient have clasely monitored the cash collections since the inception of the system They have concluded that the combined losses to the system from increased Medicare discounts and declining collections from non Medicare patients have exceeded the subsidy amount budgeted and applied to these discounts EXPLANATION OF FACTORS CAUSING THE TEMPORARY CASH FLOW SHORTFALL From August 1, 1.988 to November 1, 1988, the net worth of the system was ahead of projections During this period Texas Lifeline Corporation (TI.~C) handled the billings and collections function for the AMAA on a contract. basis until the Authority installed its own arr~ount.inct system The new Millard-Wayne ar.r.ountinq system was installed on or about. November 6 1988 Millard-Wayne and the AMAA r.onsultant, The Fourth Party, determined that it would not be necessary to rtzn the system in parallel with the TLC system The system failed at start-up and efforts to cnrrert. the problems were not successful until ]ate-December The net result is that during the period from about November 6, 1988 to late-December, the AMAA was not able to bill customers for services rendered The inability to mail bills, combined with the Christmas holidays (which is normally a slow collection period) resulted in a major slow down in revenues It was not until late January, 1989 that the AMAA was able to mail bills in a timely manner ~' .,,a,„...~x. ~... ;.~ .a . ~, ~ ,4 a A ~,,, ~t f~ DATE ~ a 8/15/89 REFERENCE SUBJECT AUTHORIZATION TO MAKE A LOAN NUMBER TO THE AREA METROPOLITAN AMBULANCE G-8166 AUTHORITY PAGE _~ of __~_ The policy changes that the City Council adopted became effective January 1, 1989 That month the AMAA's collections were the lowest since the spring of. 1986 The maior reason for the low collections has been attributed to acceptance of Medicare assignment It is projected that automatlr..aIly writing off certain charges not covered by Medicare has cost the Authority between $70,000 and $100,000 per month A related Medicare problem has been the Medicare carrier's slowness in paying the AMAA for the bills that have been submitted By the end of June, 1989,- i.n excess of $500,000 in Medicare invoices remained outstanding The AMAA also has not realized the revenue antic:;.Fated from a 50% collection rate on the higher bills Instead, the collect.ton rate has actually fallen to about 38% to 44% during the past several months In summary whi.J.e the run volume has increased moderately, the collection rate has been decreasing This is due to a combination of problems that include installation-ofJthe new accounting system, acceptance of Medicare assignment and.. ,t he delay i.n that agency's remittance of payments due, a lower subscription rate for senior citizens and an overall increase in the emergency transport rate STEPS TAKEN TO ADDRESS THE CASH FLOW SHORTFALL As a result of the problems experienced with the billings and collertions and ac.reptance of Medicare assignment the C.it.v agreed to accelerate its subsidy payment. schedule in order to provide adequate working capital to keep the svstem operational The last payment of the budgeted susbsidy of $1,188,287 was paid on July 10, 1989 In February of 1989, the AMAA consultant provided new long-range financial projections and recommended that an "austerity plan" be adopted which would result in deferred payments on outstanding debts to certain creditors This step was taken in order to allow the system revenues to "catch-up" to the new projections While the AMAA was able to meet or exceed the plan through May, 1989, significant cash shortfalls have been experienced in June and July At the Authority's meeting on June 28, 1989, the staff was directed to implement a more aggressive collection procedure that is anticipated to improve the collection rate Arcording to the new procedure, patients will have about 75 days, instead of .90 days, to pay outstanding bills If no effort i.s made by the patient to pay the bill, debtors with assets will be taken to small claims rourt to enforce the obligation DATE s~l,5~s9 REFERENCE SUBJECT AUTHORIZATION TO MAKE A LOAN NUMBER G-8166 AUT~HORITYEA METROPOLITAN AMBULANCE PAGl~ ~. 4 or 5 ,. At the same meeting, the Authority agreed to recommend to the City Council of Fort Worth that its policy adopted on November 8, 1988 be rescinded This recomendation was presented to the City Council during the Pre-Council meeting on August 8, 1989 and M&C G-8162 has been placed on today's agenda for approval Every effort has been made to maximize the revenues generated by the system There has not sufficient time to realize the impact of recent changes in the collection policy nor the proposed changes in the City of Fort Worth's policy, sf adopt:ed In the meantime, the AMAA is in need of a sufficient amount of working capital to sustain its operation for the coming months while the effects of the prior. policies are being reversed Since Fart Worth residents account for about 85~ of the system's transport: volume, the AMAA has requested that the City Council give consideration to making a one year loan to help mitigate the temporary cash flaw shortfall PROPOSED TERMS AND CONDITIONS OF THE LOAN It is recommended that the City Council authorize the City Manager to enter into a loan agreement with the Area Metropolitan Ambulance Authority i.n an amount not to exceed 5500,000 based on the terms and conditions outlined below The subsidy recommended in the 1989-90 fiscal year budget will remain at. the current level of funding It is anticipated that the subsidy will be paid in equal monthly installments beginning October 1, 1.989 Although up to $500,000 will be made available under this agreement, requests for advancements will be made by the Board, or designated Board representative(s), prior to disbursements The possibility exists that the entire amount will not be needed, if the effect of the combined r.hanges outlined above result in amore positive cash flow sooner Adequate checks and balances will be in place to determine the need for the advancement since three members of the City Council are represented on the AMAA Board of Directors Outlined below are the general terms and conditions of the loan 1 The City will make available funds in a total amount not to exceed 5500,000 to the AMAA during the term of the agreement, 2. The term of the agreement will be for one (1) year; 3. AMAA will draw upon the funds in such amounts and at such times deemed necessary by a majority of the Board, DATE ~ REFERENCE suB~ECT AUTHORIZATION TO MAKE A LOAN PAGE NUMBER TO THE AREA METROPOLITAN AMBULANCE 5 5 8/15189 G-8166 AUTH I Y of 4 Authority will pay interest monthly nn the unpaid balance of 8 5~ per annum calculated to a daily rate Provided, this in- terest rate shall be adjusted at the end of the term sa as not to exceed the normal rate of return earned on invested City funds during the term of the agreement, as determined by the City Treasurer, and, 5 The principal amattnt: borrowed shall be due and payable at the end. of the term However, Authority shall have the right to pre- pay all or any part of the principal prior to the end of the term FINANCING Sufficient fund; are available for transfer from the General Fund O1. Fund Balance Upon adoption of the supplemental appropriation ordinance, sufficient funds will be available ~n General Fund01, Nan-Departmental Account No 90-56-01 for proposed loans to the Area Metropolitan Ambulance Authority. The Unreserved, Undesignat:ed Fund Balar)ce of the General Fund O1 will be 518,025,784 after this transfer APPROVED BY cir~r cou~ci~ AU6 15 1999 City iiec><etntt~ of ehs Cite o! Fort Worth, Treeo~ SUBMITTED FOR THE GER'S A I DISPOSITION BY COUNCIL. PROCESSED BY BY O FFICE gob Terrell ^ APPROVED ORIGINATING ^ OTHER (DESCRIBE) DEPARTMENT HEAD• Bob Terrel 1 CITY SECRETARY FOR ADDITIONAL INFORMATION CONTACT Terrell 6143 Adopted rdin$nce No. DATE