04-07-2015 - Item 05 - Ambulance Billing ServiceCity qf West Covina
Memorandum
AGENDA
ITEM NO S
DATE April 7,2015
TO: Mayor and City Council
FROM: Tom Mauk
Interim City Manager
BY: Dennis Swink
Interim Director of Finance
SUBJECT: AMBULANCE BILLING SERVICE
RECOMMENDATION:
It is recommended the City Council award the contract for ambulance billing services to Wittman
Enterprises of Sacramento, California at 5% of net receipts and authorize the Mayor to execute the
agreement.
DISCUSSION:
The City of West Covina currently has an ambulance billing contract with Wittman Enterprise at
a rate of 6% net collections. During the 2014-2015 Fiscal Year budget process, City Council
requested the City go to bid for ambulance billing services. On August 5, 2014, staff sent out a
Request for Proposal for ambulance billing services. The request was sent to nine (9) different
vendors-, four (4) via mail and five (5) via email as well as posted on our web page and published
in the San Gabriel Valley Tribune. The closing date for the proposal was August 26, 2014. Three
vendors responded with proposals. The proposed rates ranged between 4.25% and 5.80%. On
December 10, 2014, staff interviewed all three vendors and conducted a reference check.
Proposal P ates
'Company: 'A�&Co
FYs 20 13-2
lect
Rate,
Rate:Yalue,,-. .
Comments�,,-
hitennedik
SI,9J9,800
4.25%
$82,441.50
Electronic Processing
�'Wittm'an
$1,939,800
5.00%
S96,990.00
Electronic Processing*
-wiffi nan,
$1,9 J9,800
5.50%
$106,689.00
Manual Processing
��Lif6'Que§t-__'�
$1,939.800
5.80%
$112,508.40
Electronic Processing
*During their interview Wittman offered to charge their electronic processing rate for manual or
electronic processing.
0 0
City staff also requested vendors to provide an average gross collection rate to demonstrate each
company's effectiveness at collecting payments. The collection rate is the percentage of total
revenues collected, the higher the rate the better. Collection rates ranged ftom 47.2% to 27.1%.
California has the highest ambulance bills in the nation and is among the lowest in gross
collections. Life Quest has the greatest return at an average of 47.2%, however they currently do
not have any clients in California and have not had the opportunity to work with Medi-Cal.
Wittman Enterprises has the next highest collection rate at an average return of 36%. Inten-nedix
has the lowest average gross collection rate at 27.1 % for their California clients. A calculation of
the average gross collection rate and the vendor rate reveals that the City will receive more revenue
with Wittman than Intennedix. For example, if the City has $ 1,000 in total revenue and Wittman
receives 16% or S360 and then charges a 5% rate the City will receive S342 in revenue. With
Intermedix, if the City has S 1,000 in total revenue and receives 2 7. 1 % or $2 71 and then charges a
4.25% rate the City will receive S259.48 in revenue. Based on this calculation Wittman would
produce 8.25% more in revenue to the City than Intennedix.
Company Average Collection Rates
ompany�
:A"Verage tjmYRat'e.-,
C'offiffients-
Li
47.2%
Currently No California Clients
41itfii�di�&
36%
Currently Has California Clients
,.h�teii�a�dix,
27.1%
Currently Has California Clients
After a thorough review it is the opinion of City staff that ambulance billing services should stay
with our current provider, even though they are not the lowest bidder. Wittman Enterprises has
been our vendor since 2004. Information gathered during our reference check supported Wittman
Enterprises. The company has a proven track record with both the City and its residents. They
have excellent reports and are highly knowledgeable. They provide us with excellent client and
customer service. All three vendors had high marks in collections. In regards to customer and
client services, Wittman was highly reconunended. A change in vendors will result in an
approximate 6th month transition period, during which time new revenue will not be received. All
of the forms required for ambulance billing will be need to be redone including Medicare and
Medical paperwork. This transition would require a significant amount of staff hours. Wittman
is a known factor which requires minimal staff time. The cost of a transition and the unknown
number of staff hours to maintain could potentially be higher than the saving of a lower bid. Based
on reference checks and the feedback provided it is the belief of Finance and Fire staff that
Wittman Enterprises should be awarded the contract. If awarded our current rate of 6% will reduce
to 5%.
ALTERNATIVES:
1. Hire one of the other responding vendors.
? Direct staff to negotiate a lower price with current vendor.
3. Send out a new Request for Proposal.
0
FISCAL IMPACT:
Wittman currently charges a 6% rate of net collections. If awarded this contract they would reduce
this to a new electronic rate of 5% regardless of whether we do manual or electronic processing'
Based on last fiscal year's revenues this will result in additional revenue to the city of S19,3398.
Prepared by:
Michelle Mansour
Management Analyst 11
Reviewed by:
Dennis Swink
Interim Director of Finance
Reviewed by:
Larry NVIOM
Fire Chief