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#2 Authorize to enter into contract with Andres Medical Billing and to increase resident ambulance rates 3% (File Res. #2012-922) CLERK-TREASURER’S OFFICE MEMORANDUM June 29, 2012 TO: City Council FROM: Jim Jensen, Fire Chief Jean Ann Wulf, City Clerk-Treasurer SUBJECT: Action on a proposed resolution authorizing the City Manager to enter into a contract with Andres Medical Billing Ltd. and to authorize a 3% increase in resident ambulance rates. (File Resolution No. 2012-922) Staff Recommendation Staff recommends that the City Council support a motion to adopt Resolution 2012-922 which authorizes the City Manager or his designee to enter into a contract with Andres Medical Billing. In addition, we recommend an increase in resident ambulance fees from $515 to $530 or 3%. City Manager Recommendation The City Manager recommends approval of the contract and the rate increase which is consistent with the budgeted increase in 2012. I further recommend that the City evaluate additional fee increases for the 2013 budget year. Suggested Motion I move to adopt resolution 2012-922 which authorizes the City Manager to enter into a contract with Andres Medical Billing and to authorize staff to increase resident ambulance rates from $515 to $530, effective August 1, 2012. BACKGROUND Billing Company In 1998, the City of Janesville contracted with Specialty Billing Services (SBS) to handle our ambulance billing program. They were experts in billing for ambulance services and had specialized software to file with Medicare, Medicaid and insurance companies. We have had a successful relationship with SBS over the past fourteen years. In 2012, SBS provided the City with a 180 day notice to terminate our billing contract. They expanded their billing business by accepting another client that needed emergency room physician billing. With this added business, they chose to drop existing customers and specialize in emergency room billings. Members of the Fire Department and the Clerk-Treasurer’s Office contacted various ambulance billing companies to find a new ambulance billing partner. We interviewed four companies: Andres Medical Billing, 3 Rivers Billing, EMS Medical Billing and Lifequest. We were comfortable with all companies that were interviewed and believe that they could provide the City with an acceptable level of service. The companies were asked to submit a bid for ambulance services to the City. Revenue Traditionally, the Fire Department and Clerk-Treasurer’s Office review our ambulance rates annually. Non-resident rates are reviewed and increased on January 1 if necessary. The non-resident rates are a part of our annual township contracts for ambulance services. These contracts are based on the calendar year. Township residents are billed directly for ambulance services. If township residents do not pay their bill, the township pays it to the City. It is then the township’s responsibility to collect from their residents. On January 1, 2012, the non-resident fee was increased from $720 to $740 or 3%. Resident rates are reviewed and increased on April 1, if necessary, after the prior year’s financial statements are issued. This year, we proposed an increase from $515 to $530 or 3%. We did not implement this increase because of the upcoming change in billing companies and the opportunity to get feedback from regional ambulance billing companies. ANALYSIS Billing Company All billing companies that we interviewed charged their customers a percentage of collections. SBS charged the City a fixed fee per invoice ($15) and a transfer fee ($2) for invoices turned over to a collection agency. The charge per invoice is no longer an industry standard and it appears that most, if not all, billing companies charge a percentage of collections. The ambulance billing companies were requested to respond to various questions and to submit their final bid by June 15, 2012. Attachment 1 summarizes the information sent by the billing companies. You will find that all fees are a percentage of collections. Andres Medical’s bid met or exceeded our requirements and was the lowest bid. Based on 2011 activity levels, we compared the fee structure between SBS and Andres Medical. In 2012, SBS received $67,300 for services rendered and Andres Medical would have received $75,600. If we would have paid Andres Medical, we would have paid $8,300 more in fees. Effective January 1, 2012, the City of Beloit (former SBS customer) contracted with Andres Medical to handle their ambulance billing services. They are very satisfied with their selection and have enhanced reporting and technology capabilities. Therefore, the Fire Department and the Clerk-Treasurer’s Office recommend that we enter into a contract with Andres Medical because we anticipate good customer service at the lowest cost of the four companies that bid to provide ambulance billing services. The proposed contract will be for three years and automatically renew annually. The City does have the ability to cancel the contract by giving 180 days notice to Andres Medical. Revenue Andres Medical believes that our ambulance fees are too low. They have suggested that the City of Janesville charge $800 for residents and $1,000 for non-residents. They have provided the City with a chart (attachment 2) of ambulance fees that are charged by other communities in our area. The average rates charged are $675 for residents and $810 for non-residents. Currently, we do not believe we can change non-resident ambulance rates. We are required to abide by the City/Township contract and the small number of non- residents that are not under contract would not make a significant difference. For resident ambulance rates, we believe that increasing our rates from $515 to $530 or a 3% increase is warranted. It is estimated that this increase would generate an additional $12,000 in revenue. Even though the ambulance rate would increase, 60% of our customers that qualify under Medicare and Medicaid would still pay the same amount. We receive the maximum allowable for ambulance services by those Federal programs. 40% of our customers that either have insurance or are self pay would be required to pay the increased amount. A significant number of self pays are turned over to our collection agency and never collected. We believe that staff should review and present a recommendation on increasing 2013 ambulance rates during budget deliberations. Additional time will allow staff to gather more information and discuss our findings with the townships. Currently, the townships believe that they are paying a significant amount of money for ambulance services. They may want to seek another ambulance provider if rates are raised. cc: Jacob Winzenz, Director of Administrative Services Eric Levitt, City Manager RESOLUTION NO. 2012- 922 A resolution authorizing the City Manager or his designee to enter into an ambulance billing services contract between the City of Janesville and Andres Medical, Ltd. WHEREAS, the Common Council of the City of Janesville desire to provide their ambulance customers with an effective ambulance billing service; and WHEREAS, the Common Council of the City of Janesville has determined that it is better to outsource ambulance billing services because of the specialized knowledge and software needed to bill Medicare and Medicaid; and WHEREAS, the Common Council has determined that it is more cost effective to have a third party bill for ambulance services; and WHEREAS, the Common Council has determined that Andres Billing is able to perform ambulance billing services for the City of Janesville at reasonable cost. NOW, THEREFORE, BE IT RESOLVED BY the Common Council that the attached proposed contract between the City of Janesville and Andres Medical is hereby approved and authorized. BE IT FURTHER RESOLVED, that the City Manager and his designee(s), on behalf of the City of Janesville, are hereby jointly and severally further authorized and empowered to negotiate, draft, review, review, modify, amend, execute, enter into, file and/or record additional agreements, amendments, documents, and letters of understanding concerning this matter, and to take whatever additional other minor actions that the City Manager may determine in his sole discretion, from time to time and at any time, necessary and/or desirable in the public interest to effectuate the intent of this Resolution. ADOPTED: Motion by: Second by: APPROVED: Councilmember Aye Nay Pass Absent Dongarra-Adams Farrell Eric J. Levitt, City Manager Kealy Liebert ATTEST: Severson Steeber Voskuil Jean Ann Wulf, City Clerk-Treasurer APPROVED AS TO FORM: Wald Klimczyk, City Attorney Proposed by: Clerk-Treasurer’s Office Prepared by: Clerk-Treasurer’s Office This Agreement is entered into as of July 1, 2012 between the CITY OF JANESVILLE, hereinafter referred to as CITY OF JANESVILLE and Andres Medical Billing, Ltd., hereinafter referred to as AMB. WHEREAS, CITY OF JANESVILLE has determined that it is in their best interest to retain the services of an outside billing service to collect monies for services rendered by CITY OF JANESVILLE. WHEREAS, AMB does hereby hold itself as being ready and able to perform a billing service program as described herein. NOW, THEREFORE, in consideration of the aforementioned promises and mutual covenants and promises stated herein, the parties hereby agree as follows: 1. AMB shall provide a separate and complete Accounts Receivable program within AMB’s computer billing system for the exclusive purpose of collections for CITY OF JANESVILLE. AMB will enter into said computer billing system, any and all ambulance trips received from CITY OF JANESVILLE. AMB shall abstract, from the documentation provided by CITY OF JANESVILLE, all diagnosis and procedure information necessary to determine the level and type of service provided, any billable diagnostic and therapeutic procedures performed, any billable supplies and ancillary services rendered, and the appropriate diagnosis codes to be billed for all ambulance run information provided by AMB by the client for that purpose. AMB will follow established billing industry guidelines, including those established by HCFA, HIPAA, and various other government programs, for ambulance services. To ensure compliance, AMB will periodically audit, on a prospective and retrospective basis, a sample of CITY OF JANESVILLE billing and clinical records. CITY OF JANESVILLE retains responsibility for providing accurate and complete documentation of clinical services provided. CITY OF JANESVILLE understands that AMB will code only from the documentation provided. 2. AMB shall provide electronic billing of Medicare and Medicaid claims. It is the responsibility of CITY OF JANESVILLE to inform Medicare and Medicaid or any changes in the company’s status. AMB will also provide electronic reporting to the city via a secured and password protected SSL web-site. 3. AMB will bill any and all appropriate commercial or third party payers as directed by CITY OF JANESVILLE. 4. AMB will invoice all patients and all supplemental private pay patients as directed by CITY OF JANESVILLE and as required by the Federal Medicare Program. Payment invoicing will be done on a billing form specific for CITY OF JANESVILLE. Invoicing/ collection activities will be conducted on the following schedule: 1st invoice within 3 days of receipt st Insurance request 30 days after 1 invoice Insurance request 20 days after previous request Statement 20 days after insurance request Final notice 20 days after statement Final letter 30 days after final notice Collection agency or write off if no results from above as pre-determined by CITY OF JANESVILLE. AMB will forward all collection accounts to the agency chosen by CITY OF JANESVILLE. 5. All monies received by AMB on behalf of CITY OF JANESVILLE will posted to the patients’ accounts on a weekly basis and deposited into bank account designated by the CITY OF JANESVILLE. All cash receipt reports will be uploaded to the SSL site as each deposit is completed. AMB will also provide a monthly cash report. All checks will be made payable to CITY OF JANESVILLE. AMB cannot cash any checks and has no access to any CITY OF JANESVILLE bank accounts. It is the responsibility of CITY OF JANESVILLE to notify AMB (on any payments received at CITY OF JANESVILLE) within seventy-two (72) hours of all payments, correspondence, explanation of benefits, etc. relating to the services heretofore described. 6. AMB will maintain 800-phone service for the purpose of run sheet and payment submission. This line will be available 24 hours a day. 7. AMB will promptly respond to all CITY OF JANESVILLE service recipient concerns related to all billing practices conducted herein. AMB will provide bi- lingual customer service representative along with bi-lingual invoices. AMB will maintain an 800-phone line for the purpose of customer service. This line will be staffed Monday through Friday from 8:30 am to 4:30 pm Central time. 8. AMB shall comply with all Federal and State regulations, ordinances and procedures governing ambulance collections. 9. AMB will submit a monthly accounts receivable aging report by payer category, which will include identifying all uncollected receivables, a payment receipt journal recap, and a monthly ticket survey, detailing all of the transports billed from the previous month. It is the responsibility of CITY OF JANESVILLE to verify these reports and provide AMB with any missing data. All reports currently within the software of AMB’s billing system will be provided to CITY OF JANESVILLE at no additional cost. All these reports will be available via the SSL site. 10. AMB shall recognize and comply with the right of authorized CITY OF JANESVILLE representatives to review any and all payment records pursuant to claims and/or collection procedures conducted herein. CITY OF JANESVILLE shall have the right to audit such reports at reasonable times. 11. CITY OF JANESVILLE agrees to pay AMB in accordance with the following fee schedule for the aforementioned service for a term of five (5) years as long as this Agreement has not been terminated: five percent (5) a. AMB shall be paid a fee of% of all payments collected. b. Payments to AMB shall be based upon revenues received in the preceding month. AMB will provide a monthly billing to CITY OF JANESVILLE calculating amounts owed to AMB based upon the above stated formula. c. Failure to pay AMB within 30 days of the monthly bill may constitute immediate termination of the contract and possible legal action at the cost of CITY OF JANESVILLE. 12. If CITY OF JANESVILLE determines it is in their best interest to use a collection agency, CITY OF JANESVILLE will deal directly with the collection agency regarding their fees. 13. It is expressly understood and agreed that AMB is an independent contractor who shall at all times maintain insurance in force as herein provided and AMB shall in all events defend and save and hold harmless CITY OF JANESVILLE from any and all liabilities, obligations, debts, charges, or judgments arising from claims, injuries or debts, charges, or judgments arising from injuries or property damage claims attributable to the activities of AMB while engaged in the performance of its duties under this Agreement. 14. This agreement shall be effective on the date hereof and shall remain in full force and effect for a term of three (3) years. Thereafter, this Agreement shall be automatically extended for successive one (1) year periods unless terminated as hereinafter set forth. All terms and provisions of this Agreement shall continue in full force and effect unless otherwise modified. Either party may terminate this agreement at any time by giving the other party 180 days written notice. Notwithstanding the aforementioned, this agreement shall be subject to immediate termination by CITY OF JANESVILLE if AMB fails to maintain insurance as in part 15. 15. AMB will maintain a one million dollars ($1,000,000.00) professional liability and general liability of at least one million dollars ($1,000,000.00), and workers compensation in an amount, which meets or exceeds the requirements of the State of Illinois. 16. If this contract is terminated prior to the three (3) year agreement, CITY OF JANESVILLE allows AMB to continue collections efforts for a period of 6 months following the contract termination, unless other arrangements have been agreed to by both parties in writing. CITY OF JANESVILLE understands that they will be responsible to pay AMB their commission on their collections during this time period in accordance with section 11(c). Proper notice may be given by certified or registered mail to: Patrick J. Mannix Chief Executive Officer Andres Medical Billing, Ltd. 3343 N. Ridge Avenue Arlington Heights, IL 60004 OR TO: At termination of the Agreement it is the responsibility of AMB to return to CITY OF JANESVILLE any and all records and documents submitted to AMB, except as required by Federal Law. IN WITNESS WHEREOF, the Responsible Party of CITY OF JANESVILLE and the Chief Executive Officer of AMB have executed this agreement. CITY OF JANESVILLE ANDRES MEDICAL BILLING, LTD. BY: BY: DATE: DATE: BY: DATE: