Alan Spearman
The Commercial Appeal

Write-offs might be in millions
That's councilman's claim involving ambulance billing
By Jacinthia Jones
December 2, 2005

A city councilman contends cash-strapped Memphis has lost millions of dollars in uncollected ambulance fees because of late insurance claims.

In a Nov. 17 letter to city finance director Roland McElrath and Mayor Willie Herenton, Councilman Scott McCormick expressed concerns about the "alarming" number of write-offs involving the city's ambulance service.

He says that from March 2003 to September 2005, American Medibanc Inc., the city-contracted billing firm, has written off more than $2.7 million because of tardy filings.

In December 2003 alone, the councilman contends, the company wrote off more than $956,000 because of late filings. And dating back to 2001, the city could be owed as much as $5 million.

McCormick believes the city should be reimbursed for the write-offs.
"I think we need to be collecting all revenue that is due to us," McCormick said.

Advanced Data Processing Inc. (ADPI), which recently acquired Medibanc, rebuts the claims.

"I think that's not an accurate analysis, not even close," said ADPI president Doug Shamon. "There may have been some reports that may have been misinterpreted."
Shamon conceded that some write-offs are to be expected involving emergency medical transport services. "It's not unusual to have some untimely filings in this industry."

During trauma cases, emergency medical workers often aren't able to get accurate information about a patient's identity or insurance provider, Shamon said.
That can make it difficult to file claims later. On top of that, Shamon said, TennCare has an unusually narrow 90-day window in which to file claims, compared to 18 months for Medicare.

But Shamon said the volume of write-offs that McCormick asserts "is well in excess of what is actually going on."

The city has contracted with Medibanc/ADPI since 1997 to handle ambulance fee billing.

Health care insurers like Medicare and TennCare routinely deny claims for so-called "over timely filings" that are submitted past deadlines.

The city vendor is paid a percentage of the collected fees. City officials could not readily say how much the company has written off or how much it has been paid in recent years, although city budget records show the firm is expected to be paid at least $1.4 million this fiscal year.

On Nov. 16, the day before McCormick's letter, ADPI sent a letter to the city comptroller explaining that their write-offs included contractual adjustments with insurance providers like Medicare, not just late filings.

ADPI chief operating officer William DeZonia said the contractural adjustments were reported as late filings because of limitations of the old Medibanc billing system. "This is one of the reasons why we are converting your data today to the ADPI billing system," he wrote.

As early as 2001, Councilman Jack Sammons expressed his concerns with ambulance fee collections and asked for a review of collections for February 2001, which was done by Advanced Account Management.

The firm concluded then that because of late filings, the city risked "incurring permanent loss resulting from payer denials."

Memphis chief financial officer Robert Lipscomb said the city is now looking at that contract along with other contracts that may be impacting the city's budget.
"Certainly the city is always concerned about write-offs," agreed City Atty. Sara Hall.

She said the issue has been the subject of heavy lobbying at City Hall, particularly by the previous vendor which has made a number of allegations.

In February 2003, Alcon Corp. of Memphis initiated a bid protest after losing the job to Medibanc.

The mayor upheld the bid and Alcon filed suit in September 2004 to block the city from awarding a new three-year contract.

Represented by attorney Richard Fields, Alcon claims its bid was lower and that Medibanc had not performed satisfactorily under the contract.

But Hall said the city's collection rate for ambulance fees has been about 40 percent both with Medibanc as well as Alcon.

"I'm not saying that rate could or should be better or worse," she said. "I'm saying that it's not simply a case where information sat on their (Medibanc's) desk and they didn't do anything about it."

In a court hearing last May, city hired attorney Stephen Biller called the legal action by Alcon "sour grapes" and noted the involvement of council members in the matter.

"There has been a lot of fervor created by Alcon and things have just been in limbo all this time," Biller said. "There have been inquiries by certain city councilmen that all of a sudden have an interest in this matter-- both of whom are somehow connected with Mr. Fields."

City attorneys have argued that the 60-day statute of limitations had expired when Alcon filed the lawsuit, which Fields disputes.

Meanwhile, the city is in the midst of selecting a company for a new three-year contract starting in January, but that may be stalled. McCormick concludes in his letter, "Clearly, we cannot continue to do business with a company with such a poor performance record and has not carried out the specifications of their contract."

-- Jacinthia Jones: 529-2780

Ambulance fee write-offs
2000 $709,208
2001 $1,229,224
2002 $1,427,803
2003 $1,726,475
2004 $988,592

Note: Information was compiled from financial reports provided to Councilman Scott McCormick by the City of Memphis.

Medibanc officials say their write-offs include contractual adjustments with insurance providers, not just late filings.