HomeMy WebLinkAbout2010-01-12 Council Packet - Work SessionSituation
City of Kenai Cash Receipting Methods
The City currently does not accept credit cards as a foi,.n of payment except online for
water and sewer bills for which the customer is charged a $3.50 convenience fee.
Current Policy
The City currently accepts payments by the following means:
1. Cash or Check. Cash or checks are the only form of payment currently accepted
at City Hall, Animal Control, the Senior Center, Vintage Point, the Library, and
Police Department. There are no fees associated with the acceptance of cash or
checks.
2. Cash and Credit Cards. Cash and Credit Cards are accepted at the City Dock and
Airport. The cost for accepting credit cards is currently 2.66% of the transaction
amount and $0.25 per transaction.
3. Credit Cards. Credit Cards are accepted for water and sewer payments via the
Internet or over the phone with a third party vendor. There is no charge to the
City for this service, however customers pay a $3.50 per transaction fee for the
service. The third party retains 100 of the service fee.
4. ACH or direct withdraw from a customer bank account. Water and sewer bills,
rents, and leases can be paid directly from the customers' bank accounts monthly
with no fee to the City or the customer.
5. Payments for land sales are received via third party escrow companies.
The administration has been tasked with exploring the options available and the impact of
accepting credit cards at additional City facilities.
Solutions Considered
S b■4 Q 3
I. Increased Costs. Expanding the variety of items that can be paid over the Internet and acceptance of credit cards
at City facilities will require one -time and continuous monthly fees. The following is a breakdown of fees
associated with each option.
0.95% discount fee 0.95% discount fee 1.89% discount fee 1.89% discount fee
$0.28 per transaction fee $0.10 per transaction fee $0.38 per transaction fee $0.20 per transaction fee
Note: Both Visa MasterCard prohibit charging the customer a convenience fee based on a percentage of
the transaction. Any convenience fee must be fixed amounts and the customer must be able to pay via other
means.
iv. Online Electronic Funds Transfer
Internet Payments
taius at any racuuics wni require one -ume ana continuous stare nme. Matt time Ior setup and training is
estimated to be 100 to 200 hours and will include staff from various City depaiiments. Approximately 20 hours
per month of staff time will be required on a continuing basis to prepare data to be uploaded to the Internet.
S oxa
1. Customer Convenience. Expanding
payment methods will create greater
convenience for the customer.
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Recommendation
Solution number three is recommended. It offers customers the convenience of paying
with credit cards for the majority of City transactions while not burdening those who do
not pay by credit card with fees for those that do. Debit card transactions will be offered
on all transactions. Total estimated cost of this solution is one -time expenditures totaling
approximately $6,000 and monthly support fees of 5110.00. Revenue loss as a result is
difficult to estimate without knowing the number of credit card payments we will receive.
The maximum exposure to the City is $4.35 for water and sewer and $2,100 per year for
other transactions.
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Situation
The City of Kenai has been billing for ambulance services since 1995 and has no formal
policy of collections or bill write -off. Outstanding receivables for ambulance billings are
$644,638 through December 31, 2009 and continue to grow at approximately $100,000
per year.
Current Status
City of Kenai Ambulance Billing Policy
The City began Ambulance on May 1, 1995. Currently there is more than $644,638 in
outstanding ambulance billing fees with $340,000 of that being more than three years old.
The statue of limitations on this type of debt is six years.
Approximately 85% of those being billed for ambulance service have a 99611 zip code.
There is no specific data available to determine the precise number of patients who are
City residents vs. non residents.
The City collected 70% of billed ambulance service in 2008 and had mandatory
Medicaid/Veterans Administration write -offs of 14 Medicaid, Medicare, Veterans
Administration, or private insurance represent 93% of payments received while
representing 86% of services billed, net of mandatory write -offs. Self -pay represents 7%
of fees collected but represents 14% of the fees billed, net of mandatory write -offs. The
16% uncollected billings represents $71,745 for 2008.
Total billings for ambulance services have increased an average of 28.5% per year for the
past seven years.
The City has no formal procedure for write -off or reduction of a patient's bill.
The Finance Department currently bills all ambulance fees utilizing third party software
that has and annual maintenance cost of $995.00. The following is the current procedures
for ambulance billings at the City:
Monthly, the Fire Department submits ambulance source documents to finance for
billing Ambulance source documents are then separated by the Payee listed on the
Hospital Billing Sheet. Payee types include Medicaid, Medicare, Commercial Insurance,
Veterans Administration and Self Pay.
The Different Levels of Service billed are as follows:
Level I —A0429 BLS (Basic Life Support) emergency $550.00
A0428 BLS non emergency
(Transports from Hospital to Residence or Airport) $350.00
Level II A0427 ALS (Advanced Life Support) emergency $650.00
Mileage A0425 $5 50 /mile
Payee Types
Self Pay (individuals without private insurance or any form of public assistance)
Invoices are printed out and just the invoice is mailed to the Patient Included
with the bill is an inquiry to determine if the patient has some sort of insurance
(both private or public assistance). Patients are also invoiced for remaining
balances after private insurance has paid.
Medicare: Invoices are submitted electronically to Medicare on a monthly basis.
Medicaid: Invoices are submitted electronically to Medicaid on a monthly basis.
Commercial Insurance Companies: Invoices are submitted for patients per the
information provided on the hospital billing sheet. Balances remaining after
private insurance has paid are billed as self -pay.
Veterans Administration: Invoices are submitted electronically on a monthly
basis.
Patients with unpaid invoices are sent a follow -up statement, by the finance department,
indicating failure to pay will result in transfer of the bill to the City's Legal Department for
collections. The Legal Department sends a letter regarding unpaid balances.
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Recommendation
Solution #6 provides the best balance in billing and collections while providing opportunity for the
public to avoid financial hardship. A third party billing agency will be employed placing the
responsibility for patient confidentiality with experts in the field. A third party billing agency will also
provide expertise in billing public assistance programs as well as private insurance.
The solution also provides a balance between patient financial accountability and hardship created by a
service no one wants to utilize. Patients will be able to reduce or eliminate their bill based upon CPH's
Charity Care Policy. The policy adjusts patients bills based upon federal poverty guidelines. A copy of
CPH's charity care policy is attached for your review. Patients who are determined to have the ability to
pay any portion of their bill will be held accountable for the service received. A formal collection policy
will be implemented and may include in -house efforts by the City's Legal Department and third party
collection services.
Central Peninsula Hospital
250 Hospital Place
Soldotna, AK 99669
Procedure Title: Charity Care
Procedure
OP -505 Page 1 of 2
Department: Operational
Effective Date: 2/07
RESPONSIBILITY: Financial Counselor, PFS Staff and Chief Financial Officer (CFO)
Purpose
Keeping with the mission of CPGH it is considered not only necessary but also appropriate to make adjustments
to patient care charges under certain circumstances. It is not the intent of this policy to restrict this practice, but
rather to establish clear guidelines by which to accomplish this task.
Definitions
Because adjustments can occur for several reasons, it is necessary to define certain types of adjustments.
Policy
1. Charity Care: Charity care is defined as services provided to patients who are
unable to pay based on income level, financial analysis, and/or further healthcare needs based on
diagnosis. Patients who qualify for charity will
fall into one of three categories.
a. Financially Indigent A person who is uninsured or under insured and is accepted for care
with no or limited ability to pay for the services rendered based on the hospital's eligibility
criteria set forth in this policy.
b. Medically Indigent A person whose non elective medical or hospital bills after payment by
third -party payer exceed a specified percentage of a household's annual gross income as set
forth by this policy and is unable to pay the remaining bill.
c. Medicaid Recipient A person who qualifies for Medicaid, with the exception of Denali Kid
Care, within 60 days from the date of service.
1. Requests for Charity Care
a. Financial assistance requests may be made by the patient, outside healthcare providers,
community or religious groups, social services, family members and CPH staff. Charity will
not be approved prior to services being rendered.
1) Eligibility Considerations for Financial Assistance:
Financial assistance is generally secondary to all other financial resources
available to the patient including insurance, government programs, third party
liability, and personal assets.
Family size. (number of individuals living in household)
Employment status and future earning capacity.
Full financial assistance will usually be provided to a patient/guarantor with a
gross annual household income 200th percentile of the Federal Poverty
Level for Alaska.
Documentation Requirements
Partial financial assistance may be provided to a patient /guarantor with a gross
annual household income that ranges between the 201st the 400` percentile of
the Federal Poverty Level. of Alaska. See Exhibit A
Existing liquid assets indicative of resources to pay the patient's bill.
Cosmetic and other services that are not medically necessary are not eligible
for charity care.
Credit report with open lines of credit indicative of resources to pay the
patient's bill.
Other catastrophic circumstances may be considered in charity decision. (CFO
determination only)
Medicaid eligibility within 60 days of service can be proof of indigence,
except for recipients of Denali Kid Care (DKC). DKC recipients must fill out
a Financial Application. During the Medicaid process applicants are screened
for eligibility using income and asset information; the DKC Program does not
consider assets in qualification which makes the DKC coverage not
recognized by Medicare as an official determination of indigence.
Medical Indigence Evaluate additional circumstances
o Medical bills combined, is greater than 30% of annual gross income.
o The hospital may consider other financial assets and liabilities of the
person when determining the ability to pay.
o A determination of a person's ability to pay the remainder of the bill
will be based on whether the patient reasonably can be expected to pay
the account in full over a 2 year period.
1. For patient /guarantor who is not self employed:
a. Financial Statement (exhibit A)
b. Brief written or typed explanation of applicant's circumstances
c. Bank statements for the last 3 months including checking, savings, certificates of deposit, etc.
d. Last two years tax returns including W -2's
e. Most recent pay stub indicating year -to -date earnings and /or unemployment check stubs or
determination letter
f. Denial letter from the Division of Public Assistance
2. For patient /guarantor who is self employed
a. Financial Statement (exhibit A)
b. Brief written or typed explanation of applicant's circumstances
c. Last two years Business Tax Returns including, if any, IRS Forms 1120, 1120S, 1065 or
1049 Schedule C
d. Last two years Personal Income Tax return, including, if any, IRS Forms 1040, 1040ES, or
1040EZ
e. Calendar year -to -date Balance Sheet and Income Statement (Earnings Statement) for
personal business, ending with the month prior to application for financial assistance
f. List of personal assets, liabilities and household expenses
g. Bank statements for the last three months for both business and personal use, including
checking, savings, certificates of deposit, etc.
Charity Care Page 2 of 4
Determination
Definitions
1. Determination of eligibility will be made by the PFS Department within 30
working days, after receipt of all necessary information, to make determination. A determination of
eligibility for financial assistance may be made without a completed assessment form if the patient
or information is not reasonably available and eligibility is warranted under the circumstances.
2. Patients who qualify for Medicaid, not including Denali Kid Care, may
qualify for a charity adjustment of their co -pay after
Medicaid has made payment. If no payment is received for Lack of eligibility
in the Medicaid Program, the patient will need to fill out a Financial Assistance application.
3. Patients will be notified of financial assistance determination by phone or in
writing.
4. Approval of charity care is based on need and requires CFO and PFS Director
signatures regardless of the dollar amount shown on the financial assistance
approval worksheet.
5. Approved Financial Applications are valid for 3 months from the date of
deteiiuination. Services rendered after 3months, will require additional
documentation to support the need of continued financial assistance.
6. If partial financial assistance is approved and the agreed upon payment plan is
not abided by, the account will revert back to the original charges.
Federal Poverty Level (FPL) An income level judged inadequate to provide a family or individual with the
essentials of life. The figure is adjusted to reflect changes in the Consumer Price Index. Alaska FPL is
additionally adjusted to meet the geographic location of the state.
Household A household consists of all the persons who occupy a housing unit (house or apartment), whether
they are related to each other or not. If a family and an unrelated individual, or two unrelated individuals, were
living in the same housing unit, they would constitute one household.
Charity Care Page 3 of 4
in
House
1
6
7
2007
Alaska Fed. Poverty Guide
100%
$1,065
$1,427
$1,790
$2,515
$2,877
$3,602
200%
$2,130
$3,580
$4,304
$5,030
$5,754
$3,240 $6,480
$7,204
251- 300%
$3,195
$4,281
$5,370
$7,545
$8,631
$9,720
$10,806
301 -400%
$4,260
$5,708
$7,160
$10,060
$11,508
$12,960
$14,408
REFERENCE: CP -127 "Charity Care"
Ryan K Smith, CEO Date
Review Dates: 2/97, 9/01
Original Date of Procedure: 2/91
00%
Assistance
40%
Assistance
10%
Assistance
Revision Dates: 5/91, 7192, 9/96, 2/98,
08/02, 11/04, 2/07
Charity Care Page 4 of 4
RENAL ALASKA
PUBLIC NOTICE
The Kenai City Council will meet in a work session on Tuesday,
January 12, 2010 to discuss Kenai Fire Department needs, ambulance
billing and collection policies, and acceptance of use of credit cards
for transactions with the City.
The work session will be held in the Kenai City Council Chambers,
located at 210 Fidalgo Avenue, Kenai and will begin at 6:00 p.m. The
public is invited to attend.
The work session is open to the public. Contact the Kenai City
Clerk's office at 210 Fidalgo Avenue, Kenai, 283 -7535, extension 231
with questions.
Carol L. Freas, City Clerk D/
Publish: 1/8/2010