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HomeMy WebLinkAboutIR 8996INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8996 dtg T"146 To the Mayor and Members of the City Council Date: December 2, 2008 Page 1 of 3 SUBJECT: MedStar Cost/Revenue Per Transport This informal report is provided to respond to questions raised at the City Council MedStar briefing of September 2, 2008. The questions concerned data shown on a graph depicting MedStar's cost per transport and the revenue per transport, the addition of static ambulance posts, and the level and continuation of an ambulance service subsidy. Revenue /BilUCost Per Transport Chart The original chart (attached) included in the presentation was intended to show general financial benchmarks. It was not intended to support a recommendation or request or to show any relationship between the three data elements. The three data elements displayed were Average Bill, Revenue per Transport, and Cost per Transport. The intent was to show what these amounts were and how they had changed over a ten -year period. The Average Bill is the system -wide average (all cities) of the charges for both emergency and non - emergency transports. The Revenue per Transport is the average amount of payments received per bill for all emergency and non - emergency transports, again system -wide. The Cost per Transport is the average cost per transport, which is calculated by dividing total system expenditures by total number of transports, both emergency and non - emergency. The data on the original graph showed that for FY 07 -08 the cost per transport was $326.00 and the revenue per transport was $306.00. Upon investigation it was found that these two numbers had been mistakenly reversed, with the correct cost per transport being $306.00 and the correct revenue per transport being $326.00. The Average Bill was correct. Attached is a corrected graph, labeled Revised. Jack Eades, MedStar Executive Director, met with Council Members Jordan and Scarth to review this revised graph. A question, which was raised during the Council session, was how the Cost per Transport could be less than Revenue per Transport. At the time the Authority's budget is prepared, it is not unusual to have budgeted revenues per transport lower than budgeted cost per transport. The loss is recovered in subsidies from member cities. In FY 07 -08, MedStar has had an exceptional year with collections, and the Revenue per Transport has exceeded MedStar's Cost per Transport. Static Ambulance Locations A question was raised regarding the possibility of adding MedStar stations throughout the City (referred to as static locations), especially where response time is a problem. MedStar has two static ambulance locations — Fire Station 33 (14650 Statler Blvd.), and 2421 Westport Parkway. MedStar is studying the feasibility of adding additional static ambulance posts and the Fire Department is identifying fire stations that can house ambulances. Subsidy Level and Continuation The EMS Interlocal Cooperative Agreement entered into by all municipalities participating in the MedStar system establishes the Area Metropolitan Ambulance Authority and establishes certain procedures such as setting ambulance fees and subsidies. The recent Fitch and Associates evaluation of the MedStar system describes the rate/subsidy process: ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8996 K &l- T To the Mayor and Members of the City Council Date: December 2, 2008 Page 2of3 SUBJECT: MedStar Cost/Revenue Per Transport The Interlocal Agreement allows the individual participating jurisdictions to set the level of subsidy and the rates that will be charged in that community. At the time of the Interlocal Agreement's development, this provision provided flexibility for each community to independently choose the subsidy contributed and /or user fees charged. It was thought that the impact of this provision would be revenue neutral to the Authority. In subsequent years, given the significant changes to federal and state healthcare reimbursement programs, this is no longer the case. The impact of this decision and a recommendation to change this provision in the Interlocal Agreement is outlined in the section of the report titled System Finance. If current levels of emergency medical services are to continue, some level of subsidy from all MedStar member cities will most likely be needed. As the Fitch and Associates report recommends: A minimum subsidy per capita should be established. The option of allowing member Cities to choose the subsidy rate mix is no longer effective. A floor per capita funding level should be established that all member communities contribute. The rational for this recommendation is that MedStar was created during a very different economic period. The policy offered communities the option of choosing their subsidy and rate mix. The premise was that if a community chose a lower subsidy, the additional revenue from rates would make up the difference. At the time it was a reasonable policy decision. However, post implementation of the Medicare Fee Schedule, MedStar is no longer allowed to balance bill. As a result, MedStar shifted the cost of uncompensated care to commercial payers. (e.g. while a Medicare recipient in a member community is being billed at a higher rate, the net receivable from the account is low due to the mandatory adjustments.) In some cases, these communities are more difficult to serve and contribute only the net fees collected by MedStar. The floor level subsidy should not be less than the contribution of the largest member and should be annually adjusted at the average percentage increase in participating communities' annual budgets. The Ambulance Authority is developing a revised EMS Interlocal Cooperative Agreement that addresses the issue of minimum subsidy levels for all participant cities. For Fiscal year 2008 -09, City Council approved a subsidy of $3,630,882, for MedStar for emergency transport services. The subsidy will result in an average estimated bill of $1,146.00 per transport for emergency ambulance services. Based on the $5.17 per capita subsidy provided by the City, the average bill for emergency services should be $1,079.00 as set out in Medstar's schedule of charges. However, setting the average estimated bill at the higher amount per transport will provide for additional capital to MedStar that will be used to fund the deployment of additional ambulances in the Fort Worth area during this fiscal year. The base bill for non - emergency services provided in Fort Worth will be set at $703.00 per transport. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS Original Average Bill vs Revenue Per Transport vs Cost Per Transport $1,134 1150 1075 ------- -- - - - 1000 - 925 - - 850 97 775 - — - __.._ -SZ3 --- -- --- ---- 700 - 625 - - --- 46J2 'm 550 - --- -------- --- 475 A30 325 400 - -------- 5233 -- $281 6 250 -S2?2---S326-- 1 175 - $240 $239 ----- 100 - --------- 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 Average Bill a Revenue Per Transport —*— Cost Per transport I i5o 925 850 -75 MY() 625 5,50 475 400 325 1 Oki Revised Average Bill vs Revenue Per Transport vs Cost Per Transport ISSUED, BY, THE CITY MANAGER FORT WORTH, TEXAS