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HomeMy WebLinkAboutIR 7069 ti lihi-11FORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069 Von), To the Mayor and Members of the City Council A X Subject: AMBULANCE PROCUREMENT 10713 Background an Current Ambulance Contract The City entered into its current ambulance contract on April 1, 1981. The initial term of the contract was two years with a one year renewal option. During the option year of the contract , a study was conducted that recom- mended the establishment of a county-wide ambulance system. It was estimated at that time that it would take from 18-24 months to install the system. Since development of a service plan for the new system was underway when the option year was about to expire, the contract was extended for an additional year. A committee consisting of representatives from various cities throughout Tarrant County still had not developed a service plan toward the end of the second contract extension and from all indications the major issues could not be resolved in the near future. Sufficient time was not available to bid a contract prior to April 1, 1985, therefore, the contract was extended for an additional year, with the scheduled expiration date being March 30, 1986. Since the inception of the contract the system required eight frontline units, three back-up units and eight sub-stations. A brief history of the financial arrangements is outlined below: . 81-82 82-83 83-84 84-85 85-86 Subsidy $1,234,000 $1 ,398,000 $1,200,000 $1 ,200,000 $1,100,000 Fee Schedule ALS Base Rate $ 78 $ 78 $ 90 $125 $140 Non-transport Rate 39 39 39 39 39 All-inclusive ALS Rate - - 125 160 - Mileage 1.251mi . 2.00/mi . 2.001mi . Supplies The cost of individual supply items are added to the bill . (See Attachment 0 The all-inclusive charge was added in 83-84 at the request of the contractor as a means of generating additional revenue. It was dropped in 85-86 at the request of the contractor due to confusion in billings and their feeling that the desired results had not been achieved. Current Ambulance Procurement on July 23, 1985 (MxC C-9153) , the City Council voted not to renew its cur- rent ambulance contract. In addition, the City t1anager was authorized to enter into a contract with The Fourth Party, Inc. to assist in developing a strategy for competitively procuring an ambulance operator effective April 1, 1966. This firm was selected because of the work they had performed on the county-wide ambulance system and their familiarity with Tarrant County ambu- lance systems. The City Council Emergency Medical Services Committee was appointed to oversee the work of the consultants. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-6 To the Mayor and Members of the City Council Subject: AMBULANCE PROCUREMENT The Emergency Physicians Advisory Board The other regulatory body created by the ordinance is the Emergency Physicians Advisory Board (EPAB). The EPAB consists of an independent board of licensed physicians experienced in the field of emergency care. Collect- ively, the board should represent the community's best expertise in the field of emergency medicine and pre-hospital care. The EPAB is given broad regulatory, advisory, and fact-finding powers by the ordinance. It establishes the medical standards for patient care within the system, including standards for vehicles , equipment , supplies, personnel , and medical and control center protocol . It also is charged with the duty of monitoring system performance so as to assure that these medical standards are maintained. In performing this function, it may conduct both announced and unannounced vehicle inspections, conduct medical audits, and conduct intensive reviews of specific clinical types to analyze system performance. It also will monitor response time performance of the operator. In carrying out its functions, the EPAB will appoint a Medical Director who will be responsible for carrying out the policies and standards adopted by the board. The Medical Director must be a licensed physician with training and experience as a practicing emergency physician. The Medical Director also serves as a member of the -ambulance authority board - to facilitate coordination between the Authority and the EPAB. The EPAB's operations, including the salary of the Medical Director, are funded by a $3 per-run fee which is charged to users of ambulance services . System Standards The ordinance prescribes standards to be followed by the Authority and the EPAB in establishing the ambulance service system. These standards are designed to require the creation of a system with the following essential characteristics: 1. Public ownership or control of the control center and other major facilities, communications system, vehicles, on-board equipment, and other major aspects of the system's infrastructure; 2. The creation of a trade name and accounts receivable trust arrange- ment for the handling of system revenues; 3. The competitive selection of a sole-provider for ambulance services covered by the ordinance who shall operate under the established trade name. These requirements are designed to safeguard the public from the potentially devastating effects of loss or deterioriation of service by allowing the ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No, 7069-7 � JoRp To the Mayor and Members of the City Council 4F,b­-_40 ?-,r X P�� Subject: ANULANCE PROCUREMENT 1873 quick and effective takeover of the system by the Authority when the situa- tion warrants such takeover. It is also designed to assure that inefficient and potentially dangerous street-level competition is replaced by the imple- mentation of a system providing for regular competition for the market. The current two-tier system of emergency and transfer ambulances is effectively replaced by a system in which all ambulance runs are made by high-quality mobile intensive care units staffed by highly competent and trained para- medics and emergency medical technicians. This ensures that, should an emer- gency situation develop during a "routine" non-emergency run, advanced life support capability is present. The Authority is required to conduct a competitive bid process to select the operator. The actual contract with the operator must be approved by the City Council . The ordinance provides for a primary term of four (4) years. In order to provide an incentive for superior performance by the contractor, the ordinance provides that the contract may be extended for up to two additional two (2) year terms . The Authority grants a license to the contractor which has the same term as the contract. The licensed contractor is prohibited from engaging in any form of call screening and may not refuse transport of any patient to a hospital , regard- less of the patient's ability to pay. The licensed contractor must also serve all parts of the City in an equitable manner and take all necessary steps to correct any continuing pattern of apparent discrimination in response time performance to any part of the City. In the event that the public health and safety are endangered by a breach of the contract by the licensee, as determined by the Authority and the EPAB, the license may be revoked and the Authority may effect a takeover of the system. The Authority may conduct the operations of the system for the dura- tion of the emergency, but in no event longer than one (1) year. Exceptions to the Licensing Requirement Although the ordinance generally prohibits the operation of ambulance service by anyone other than the licensee, it does provide exceptions to this requirement which are based on the inherent limits to the City's jurisdiction and the recognition that in some situations the public interest may be effectively served by someone other than the licensee. The following are excepted from the licensing requirement: 1. Ambulances owned and operated by the U. S. government; 2. Mutual aid providers; 3. Industrial ambulances; 4. Ambulances owned and operated by licensed nursing homes and hospitals and used exclusively for specialized mobile intensive care or for -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No, 7069-8 X04 Eartr,�o To the Mayor and Members of the City Council us Subject: AMBULANCE PROCUREMENT inter-institutional transfer of their own patients or residents who are admitted and not charged; 5. Standby ambulances at speical events, provided no special charge is made for the transportation of any patient; 6. Ambulances owned or contracted by a hospital and used to provide inter-hospital transfers eligible for reimbursement under Medicare Diagnosis Related Grouping (DRG) regulations; and, 7. Inter-city transfers . It is important to note, however, that while- the ordinance does not require licensure of these exempt units at the present time, it does provide that the EPAB may establish standards for the special licensure of these units as well as for helicopter rescue units . This will allow, among other things, the formulation of standards which would ensure compatibility of communications equipment for enhanced disaster preparedness . Standards for Vehicles, Equipment, Supplies, Communications, oph Personnel Certification, Medical Protocol•s , Response Time The licensed contractor must meet the minimum standards set by the State of Texas for the operation of ambulances. In addition, all standards established by the EPAB which exceed the state standards must be complied with. Throughout the ordinance, the EPAB is given extensive powers to require what, in its best medical judgment, is necessary for quality patient care. Since the bid variable in the initial contract procurement is the quality of service offered, the ordinance provides for the EPAB to utilize the standards contained in the proposal offered by the winning bidder in formulating the initial standards for patient care. There are also provisions in the ordinance which allow some flexibility in negotiating adjustments to these standards if deemed necessary by the Authority or the EPAB. Insurance Provisions The ordinance prescribes insurance coverage required for the protection of the licensed contractor, the City, the Authority, and the EPAB. These insurance provisions are found in Section 6.30 of the ordinance. It must be noted, however, that while the ordinance provision requiring $10 million in umbrella coverage is certainly desirable from a theoretical standpoint, current market realities may dictate a reduction in that amount. OW. Information gained from the potential bidders at the pre-bid conference, as well as an analysis of the insurance market by the City' s Risk Management department, has indicated that policy coverage with limits in the area of $2 million is all that is practically obtainable at the present time. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-9 f ORP To the Mayor and Members of the City Council AMBULANCE PROCUREMENT Subject: Conflict of Interest Provisions The purpose behind the ordinance's conflict of interest provisions is to ensure that the persons serving on the regulatory authorities will represent the interests of the general public and the patients being served by the ambulance system, rather than the interests of the regulated providers. Accordingly, a person is prohibited from serving on the board of the Autho- rity, as a voting member of the EPAB, or as Medical Director, if that person is an officer, director, employee of, or is otherwise affiliated with , an ambulance provider or any organization which is affiliated with an ambulance provider. Transition Period It was recognized that , given the fact that the City's present ambulance con- tract expires on March 31, 1986, and that there was a need for a transitional period to allow for the full implementation of the new system, the ordinance needed to contain provisions which would allow for initial contract procure- ment and transitional arrangements in the interim period. Section IV of the ordinance sets the general effective date of the ordinance as April 1, 1986, but provides that: 1. The Fort Worth Ambulance Authority and the EPAB be establ.ished in the interim for the purpose of initial organization, conduct of the initial contract procurement process, and promulgation of initial system standards. The members of the Emergency Medical Services Sub-committee of the City Council were designated as the initial Board of Directors of the Ambulance Authority on an interim basis until April 1, 1986. 2. The City Council has the power to issue certificates of public con- venience and necessity for operation of ambulances under the old ordinance for the interim period from January 1, 1986 (the expiration date for certificates issued under the old ordinance) to April 1, 1986 (the general effective date of the new ordinance) . Office and Staffing Requirements There are not plans for the Authority to have an office. Although they will estsablish a regular meeting time, in all likelihood the meetings will take place in City Hall or some other location. As long as City Council members serve on the Authority, all mail will probably be forwarded to City Hall . If the representation changes , it might become necessary to obtain a post office box. There will be no significant staffing requirements for the Authority. The major work they will perform will be during the procurement and contract negotiation process. During the majority of the time, they will provide financial and administrative oversight of the system. A member of the City -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS JNFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-10 fop,, To the Mayor and Members of the City Council X rExA AMBULANCE PROCUREMENT Manager's staff will probably serve as liaison for the Authority and the minimum amount of staff assistance and coordination required can be handled by a management intern on a part-time basis. The reason for the lack of need for an office and staff is due to the fact that the EPAB will be performing the majority of the work to make sure the system and the contractor are operating properly. As mentioned earlier, the EPAB will select one of its members as Medical Director. The compensation level for this individual will be established by the EPAB and will be paid for from a fee of $3 per billable run that is made by the contractor. The assumption that there will be a need for an executive director, other staff and offices perhaps results from an observation of the function of ambulance authorities in other systems established by the consultant. Those systems operate what is called a Public Utility Model . The Ambulance Authority is responsible for all of the administrative aspects of the system, including billings , collections , filing of medicare and third party claims , monitoring response time data, levying late run penalties, etc. The contrac- tor is simply paid a flat monthly fee by the Authority to provide emergency medical services. In the Failsafe Franchise Model system, all of the above functions are the responsibility of the contractor, or are handled by the accounts receivable trust or the EPAB. Therefore, there is no need to set up an office. Rate Adjustments/Subsidy Trade-off Rate Adjustments The contractor's rates charged for services are subject to regulation by the Ambulance Authority, with final approval resting with the City Council . The rate regulation allows the Authority and City Council to control the maximum average total bill . If an analysis by the Authority shows that average total billings are in excess of the authorized amounts, the Authority may, at its option, either require a reduction in the contractor's rates or, if the average is not substantial , require a delay in implementation of future rate increase requests which would otherwise have been authorized, by a length of time sufficient to adjust for the amount of overbilling. During the first eighteen months of the proposed contract, no rate increases or subsidy reductions are allowed. After the first eighteen months, and annually throughout the term of the contract, the contractor may apply for and receive authorized increases in rate levels not to exceed 80 percent of the Consumer Price Index over the most recent twelve (12) months for which fiyures are then available. In addition to the automatic CPI rate increase, the contractor may request an additional rate adjustment, if the need is a result of events over which he/she has no control . For example, an abrupt and substantial LISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-11 a to)?)' To the Mayor and Members of the City Council Subject: AMBULANCE PROCUREMENT increase in Workers' Compensation Insurance, or in other insurance costs, or a change in State standards requires a substantial investment in per- sonnel and equipment. In any event, the burden of documenting the need and appropriate amount of the additional requested rate increase rests solely with the contractor. Each rate adjustment application must be approved by the Ambulance Authority and the City Council . Rate-Subsidy Trade-off After the first eighteen months of the contract, the Ambulance Authority may, under the direction of the City Council , reduce the City subsidy paid to the contractor by an amount not to exceed $250,000 during any twelve month period. In the event a subsidy reduction option is exercised by the City Council , the contractor is allowed a rate increase sufficient to recover the reduction amount. Attachment III indicates the projected rate increases that could take place due to the automatic CPI increase, and the rate 0P*► increase that could result from an increase in the CPI and lowering the subsidy by the maximum allowed $250,000 during any twelve-month period. The chart reflects a five and one-half (5 1/2) year period, which is the amount of time it would take to reduce the proposed $840,000 subsidy to zero. Impact of Loss of Market Rights for Transfer Business on Rates It is extremely difficult to determine the overall effect on rates if there is a loss of market rights to the non-emergency transfer business . In the early stages of the procurement process, the consultant indicated that if this portion of the market is not available to the contractor, it would be necessary to charge about $300 for emergency runs, assuming the $1.1 million subsidy would be available. The proposed rate assumed that the contractor would be extremely efficient, that a significant share of the transfer market would be captured (perhaps 25-30%) and that there would be a reasonable amount of regional transfer work. The rates would probably increase annually, based on the consumer price index. The sub- sidy would have to be negotiated, but there would be little likelihood that it would be lower than the $1.1 million. Page 117 of the Request for Proposal that was provided to the City Council requires that "Bidder shall define the changes to Bidder's offered performance standards, allowed maximum average billing levels , guaranteed subsidy payments , or a combination of these contract modifica- tions , which Bidder would be willing to accept in substitution for the protected non-emergency market rights now incorporated within the City's new ambulance ordinance." Therefore, until proposals are received, it will be difficult to determine the actual impact. LISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-12 opbl �g To the Mayor and Members of the City Council tiFOSr��0 Subject: AMBULANCE PROCUREMENT payments to the City within ten days after receipt of invoice from the City. The final payments to be made from the Trust are late run penalties. The contractor will be penalized for each life threatening emergency request for which the response time exceeds ten minutes for which no EPAB- approved exemption has been allowed. The Trustee of the Accounts Receiv- able Trust will deduct $10 for each minute in excess of the tenth minute up to a maximum of $100, and pay that amount to the Ambulance Authority. The most important feature of the Accounts Receivable Trust is the default switch. In the event that the Ambulance Authority determines that a major breach of contract has occurred, the Authority shall have access to the funds entering the Accounts Receivable Trust to finance continued operations of the system. This is in effect a switch that allows the trust officer to turn off Accounts Receivable funds to the contractor and divert them to the Authority. Details on how the system works is included in the Request for Proposal . Failsafe Franchise Model (FFM) Organizational Structure Attachment VI provides a graphic illustration of the organizational structure of the FFM system. One of the major differences between this chart and Attachment V is a clearer reflection of the relationship bet- ween the Emergency Physicians Advisory Board (EPAB). This Board will not only be responsible for overseeing the patient care aspects of the sys- tem, but has the authority to establish clinical standards for those operations exempted under this ordinance. Details of their responsi- bilities are included in the section that reviews the new ordinance. Summary Attachment VII provides a schedule of activities that have been completed and the timeframe for additional actions that will be required. Information related to building acquisition, the medical communications system and the contract with the Emergency Physician Advisory Board should also be coming to the City Council Within the next two to three weeks. The installation of the new system has been on a very tight timeframe. The EMS Committee, consultant and staff have made every possible effort to make sure that by April 1 , 1986 at 12:01 a.m. a system will be in place and func- tioning. Since this will be the first system of its kind to be installed in the country, the enormity of the task and the limited time to accomplish it has sometimes been overwhelming. The effort to date would not have been pos- sible without the guidance and continued involvement of the City Council EMS Committee. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ,INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-13 "AS T I , 0 " To the Mayor and Members of the City Council xr X Subject: AMBULANCE PROCUREMENT '073 payments to the City within ten days after receipt of invoice from the City. The final payments to be made from the Trust are late run penalties. The contractor will be penalized for each life threatening emergency request for which the response time exceeds ten minutes for which no EPAB- approved exemption has been allowed. The Trustee of the Accounts Receiv- able Trust will deduct $10 for each minute in excess of the tenthminute up to a maximum of $100, and pay that amount to the Ambulance Authority . The most important feature of the Accounts Receivable Trust is the default switch. In the event that the Ambulance Authority determines that a major breach of contract has occurred, the Authority shall have access to the funds entering the Accounts Receivable Trust to finance continued operations of the system. This is in effect a switch that allows the trust officer to turn off Accounts Receivable funds to the contractor and divert them to the Authority. Details on how the system works is included in the Request for Proposal . Failsafe Franchise Model (FFM) Organizational Structure Attachment VI provides a graphic illustration of the organizational structure of the FFM system. One of the major differences between this chart and Attachment V is a clearer reflection of the relationship bet- ween the Emergency Physicians Advisory Board (EPAB). This Board will not only be responsible for overseeing the patient care aspects of the sys- tem, but has the authority to establish clinical standards for those operations exempted under this ordinance. Details of their responsi- bility are included in the section that reviews the new ordinance. Summary Attachment VII provides a schedule of activities that have been completed and the timeframe for additional actions that will be required. Information related to building acquisition, the medical communications system and the contract with the Emergency Physician Advisory Board should also be coming to the City Council within the next two to three weeks. The installation of the new system has been on a very tight timeframe. The EMS Committee, consultant and staff have made every possible effort to make sure that by April 1, 1986 at 12:Ul a.m. a system will be in place and func- tioning. Since this will be the first system of its kind to be installed in the country, the enormity of the task and the limited time to accomplish it 00h, has sometimes been overwhelming. The effort to date would not have been pos- sible without the guidance and continued involvement of the City Council EMS Committee. LISSUED BY THE CITY MANAGER FORT WORTH, TEXAS J rINFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7069-14 To the Mayor and Members of the City Council Subject: AMBULANCE PROCUREMENT If additional information is desired, it will be supplied upon request . U uglas Harman City ee 4 Manager DH:jcnnn Attachments-7 ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS