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Home My WebLink AboutIR 7397 4 1 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7397 w}PYi,i, August 8, 1989 X04 Fo�+r,y� To the Mayor and Members of the City Council Exa Subject: CITY OF FORT WORTH AN BULUCE R WSUBSIDY OPTION!-. As a participant in the Area Metropolitan Ambulance Authority (AMAA), the City of Fort Worth annually makes a decision regarding the rates charged to its citizens and the amount of subsidy it will contribute for the provision of ambulance service. BACKGROUN When the City of Fort Worth awarded a contract for emergency medical services (EMS) on April 1, 1981, it had a subsidy of $1,234,000 and required the contractor to provide eight (8) frontline advanced life support (ALS) ambulances and three (3) back-up units. The entire subsidy went to the contractor to use at their discretion and there was little, if any, medical control related to the delivery of EMS services. When the contractor began experiencing financial , equipment and personnel difficulties in the spring and summer of 1985, the City Council made a decision not to renew the contract. Instead, a special City Council committee was created and directed to revamp the entire EMS system, with the goal of assuring that services to the Citizens of Fort worth would not be disrupted in the event of a contractor's default. On April 1, 1986, the City implemented the Failsafe Franchise Model (FFM) ambulance system that met all of the City Council 's criteria. In addition, some of the nation's strictest response time standards were imposed and mechanisms were put in place to assure that all citizens received the same level of service, regardless of ability to pay. The contractor was required to provide a minimum of eighteen (18) ambulances and the City's ambulance budget remained at $1,108,000. Of that total, $840,000 was paid as a subsidy to the contractor and $260,000 was retained by the City to pay for infrastructure improvements, such as the purchase of a building, communications equipment, etc. . In addition to the increased requirements for resources, an Emergency Physician Advisory Board (EPAB) was formed to oversee the clinical and medical aspects of the system. After the new system had been operational for less than a year, the City agreed to provide services to three (3) other municipalities. When several other municipalities expressed an interest in being participants, the City Council authorized its committee to explore the possibility of implementing a multi-jurisdictional system. All of the details were worked out and on August 1, 1988, fourteen (14) jurisdictions, including Fort Worth, began providing EMS services to their citizens under the MedStar name (See Attachment A). Administrative oversight for the system became the responsibility of the AMU Board of Directors consisting of six (6) members, four (4) of whom are appointed by the Fort Worth City. Council . Clinical oversight of the system remained the responsibility ON EPAB. Fort Worth agreed to continue its subsidy at $1,188,287, with the option of reducing it up to 10% per year after giving proper notice. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ---- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7397 110 ioar� To the Mayor and Members of the Cite Council August 8, 1989 S-,Xp,'t Subject: CITY OF FORT WORTH AMBULANCE ,073 RATE/SUBSIDY OPTION All of the other jurisdictions, except two (2), opted not to pay a subsidy but instead set the rates at a level sufficient to offset the cost of service. During the last eight and one-half years the City of Fort Worth's annual ambulance budget has averaged $1,184,000. The quality of the current system is evidenced by the fact that the contractor, Texas Lifeline Corporation, won the State of Texas' "Private Provider of the Year Award" in 1988. We have managed to implement a superior EMS system and maintain our subsidy near the average, being $1,188,287 for the 1988-89 fiscal year. As Attachment B illustrates, Fort Worth's per capita cost for EMS services is significantly lower than the major cities in the State. CRANGE Ill POLICY As indicated earlier, when the new system became operational on August 1, 1988, the City's subsidy was $1,188,287 and the rates were set at an average of $312. In addition, a membership subscription to pay for the uninsured portion of a patient's ambulance bill was offered for $49 per household. The same subscription rate was offered to the other thirteen (13) jurisdictions, although their rates and subsidies, if any, varied. Shortly after system start-up, the AMAA consultant, The Fourth Party, recommended that the City change the manner in which its subsidy was being used. The proposal involved an increase in the fees being charged, providing a senior citizens subscription discount and acceptance of Medicare assignment from eligible participants. on November 8, 1988 (M&C G-7811), the Fort Worth City Council adopted the policy changes outlined below: 1. Increased Fort Worth's average total ambulance bill from $312 to $385; 2. Reduced the membership subscription for Fort Worth citizens over 60 years of age from $49 to $20; and, 3. Authorized MedStar to accept assignment of all Medicare- eligible claims for Fort Worth citizens nom. The purpose of this policy change was to provide sufficient revenues during the start-up period to assure that the system would be financially stable. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7397 page 3 of �? ,J 0 r,.o To the Mayor and Members of the City Council August 8, 1989 Subject: CITYOf FORT WORTH AMBULANCE RATEJSUBSIDY OPTION IMPACT OF M PQLI+CY QW03 Subscription Progras About 2800 households took advantage of the discounted subscription rate during the enrollment period. A problem was created because some citizens over the age of 60 had purchased subscriptions earlier at the regular rate of $49. Additionally, with Fort north being the only city in the system offering a discount, the advertisement has been somewhat confusing and, in fact, has resulted in some citizens in other jurisdictions inadvertently receiving the discount. The estimated cost to the system for these discounts is about $81,000. Acceptance of Medicare Assignment The bulk of the City's subsidy (about $1.1 million) is currently being used to fund losses resulting from acceptance of Medicare assignment for its eligible residents. This means that the AMdAA agrees to accept 80% of the payment that Medicare allows on a bill and Write off the balance. Again, Fort Worth is the only city in the system that accepts assignment. Figures are not available regarding the number of participants that have taken advantage of this program. It is also difficult to determine the impact acceptance of assignment has had on revenues. Since acceptance of assignment results in automatically writing off amounts that we would normally attempt to collect, it is the opinion of the Acting Executive Director of the ANAA that there has been a significant negative impact on revenues since the policy was implemented (at least $1.1 million). The AMAA recently voted not to allow other jurisdictions to accept assignment and requested that Fort north consider rescinding its policy. Attachment C illustrates the impact on the system of accepting assignment: Example is an actual bill for a non-emergency transport. It shows that of a total bill of $308.43, Medicare only allows $178.70. Since they will only pay 80% of the allowable charge, or $142.96, the remaining amount of $104.73 is written off. The AM can attempt to collect the difference between the disallowed charge ($25) and the 20% that was not paid by Medicare ($35.74). Even if the $60.74 is collected, the AMU would still be writing off $44 ($104.73 - $60.74 = $43.99). Example 2 is an actual emergency transport. It shows that by accepting Medicare assignment, the AMU is writing off $165.52. Even if the co-payment of $48.60 is paid, the Authority would still be writing off $116.92. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS --- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7397 VORP To the Mayor and Members of the City Council August $, 1989 exa Subject: CITY OF FORT WORTH AMBULANCE +D t3 RATE/SUBSIDY OPTION Another complicating factor is the change in the liability provision of Section 1879 of the Social Security act that became effective October 1, 1988. It basically mandates that patients be informed prior to a non-emergency transport that the transport may be denied by Medicare. Further, the patient must sign a statement that they understand that if Medicare denies coverage, they are responsible for the bill . Since City of Port Worth residents account for about 85% of the run volume, the policies adopted directly impact the financial stability of the system. Rate Increase Although the average total bill increased from $312 to $387, the collection rate has decreased during the past six (6) months. At that time it Was about 50%. The latest estimate places it at about 44%. When the system was implemented in 1986, the collection rate was about 38%. In addition, the allowable amount that Medicare pays has not increased in 0011,; proportion to the amount of the City's fee increase. A combination of the above factors has resulted in revenues being less than projected when the new policy was adopted. The AMAA recently authorized a change in MedStar's collection policy that will result in a more agressive effort to recover fees lost through non-payment of bills. RNCON EKDATIONS After evaluating the impact of the policy change during the past nine (9) months, it is recommended that the City Council take the following action 1. Rescind the policy adopted on November 8, 1988 {MAC G-7811} by-- a. Eliminating the subscription membership rate of $20 per household and charge the system-wide rate of $49; b. Cease accepting Medicare assignments for Port Worth residents and instead encourage those citizens eligible for Medicare to participate in the subscription program, and c. Reduce the average total bill from $387 to $312. 2. Retain the subsidy at $1,188,287 for the 1989-90 fiscal year. Ip` ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 71V 11WtQ f �Of F4RF*� To the Mayor and Members of the City Council August 8, 14$9 'vs rFxa� Subject: CITY OF FORT NORTH AMBULANCE RATE/SUBSIDY OPTION 3. Notify the AMAA of the City's intention to exercise its subsidy reduction option of $135,927 effective October 1, 1990. If it appears that exercising this option will negatively impact the system, the City Council may be asked to delay its implementation. These recommendations have been discussed with the Fort Worth representatives on the Board of Directors of the AMAA, as well as the other Board members, and no opposition has been expressed. Unless otherwise directed, staff will prepare a Mayor and Council Communication implementing the above recommendations for consideration at the City Council meeting on August 15, 1989. fw, Douglas barman City Manager oe ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ATTACHMENT A MEMBER JURISDICTIONS MEDSTAR SERVICE AREA City Population Fort Worth 446,300 Blue Mound 2,100 Burleson 16,650 Haltom City 32,450 Haslet 342 Furst 33,900 Lake Wort-): 4,600 Lakeside 1,000 River Oaks 11, 950 Saginaw 8,200 Watauga 19,200 Westover Hills 669 Westworth Village 3,350 White Settlement 15,050 TOTAL POPULATION SERVED 590,761 Source: North Texas Council of Governments August 1, 1988 ATTACHMENT 8 EMS M%SURVEY-July 28, 1989 cm TYPE EF—PJUM 1988 49 BUME PER CAMA MST Fort Worth "6,100 Private tractor 11,188.288 S2.66 Abilene 107.800 Private t=artar 81581000 $1.39 162,f3l wwwt-ecmwwtm Ar ' ton 231.1ii Privateconbutor $430,000 1.79 Austin 495,017 $5.762,094 $11. il�s stf ire t $2,336, SON DaUas 1,003.520 Fire t $6,743,045 6. 2 Houston 1,729. 0 Fire t $18,000,000 $10.41 Lubbock 185,138 Private cmtractor so $0.00 San Antaeua 914,350 SM.*OrkidW Dept. $14,770,000 S16.13 da d, er r-4 4J v .. 4J u v U C r•1 a o M U C cV 0 0 cv w .-� 0r 3oou� 4.s O u0 co a •cr 4J O w at o L f, r-1 a% 0 _ r-1 a! .-1 �o 0041 401� 4011. 4* dP do �o ar r.j lr qr F-- erc4o +a o000 ui w r^y 0 ati w ac► 0 .r v �r3 0rioC4 �s ui •roo r+ cv N a -P4 .r C4 r ( r-4 r-# k 4 a 9-4 Aft .% do dO os ,n *� oaao b o000 � � coc+ ar � o0oa �+ 0 0r- ow • . tt� ri Ln C4 r- r-4 co en �rr-r � M r�l r•1 N a oc d Z d E Z W Pd rn0ar1l �f Lioo� ts. 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