Best Practices in HME: FINANCIAL BENCHMARKING

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Best Practices in HME FINANCIALBENCHMARKING
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DSO (Days Sales Outstanding)

• Net revenue for period / days in period daily
  net revenue
• Net A/R balance last day of period / daily net
  revenue DSO
• XYX Supply Co. 1/1/08-6/30/08
• Net Revenue 7,525,000
• Net A/R Balance 6/30/08 2,135,000

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DSO (Days Sales Outstanding)

• 1/1/08 thru 6/30/08 182 days
• 7,525,000 / 182 41,346.15 (daily net revenue)
• 2,135,000 / 41,346.15 51.64 DSO
• INDUSTRY AVERAGE MID - HIGH 80s
• TARGET MID 40S MID 50S

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A/R AGING AVERAGES

• A/R reporting buckets
• Typical Current, 30-60, 60-90, 90-120 and over
  120 days
• Target averages
• Current 35-40 30-60 25-30
• 60-90 15-20 90-120 10-15
• Over 120 days 5-10

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A/R AGING AVERAGES

• CONTRIBUTING FACTORS TO BUCKET CREEP
• Intake accuracy
• Insurance verification / eligibility
• Documentation
• Electronic vs. paper billing
• Co-insurance collection
• Collection aggression

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DENIAL RATES

• INDUSTRY AVERAGE 26
• Rehab 15 41
• O2 -8 18
• DME 2 28
• SAME CONTRIBUTING FACTORS AS BUCKET CREEP

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CLAIM PROCESSING ERRORS

• Most Recent CERT (Comprehensive Error Rate
  Testing) Period Ending 9/30/2007 8.2
• Region A 5.9
• Region B 5.3
• Region C 10.0 (PGBA 12.3 Cigna 7.7)
• Region D 11.6

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DOC TURNAROUND

• FAXING OK AS OF 9/27/2002
• http//www.cms.hhs.gov/transmittals/downloads/R30P
  I.pdf
• Document tickler file
• Computerized / Manual
• EVERY 2 TO 3 BUSINESS DAYS
• Best Practice DAILY
• Social Security Act - Section 1842(p)(4) MANDATES
  physician compliance with your paperwork. But.

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CLAIM SUBMISSION

• Depends on company size
• MINIMUM 3X WEEKLY
• Best Practice - DAILY
• YEILDS
• Earlier detection of transmission errors
• Smoother cash flow
• Greater recurring rental frequency

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COLLECTION AGGRESSION

• Dates below are based on SUBMISSION DATES
• Frequency to work outstanding balances
• Medicare (EMC) 21 Days
• Commercial Paper 45 Days
• Commercial (EMC) 30 Days
• Private Pay 30 Days
• Private Pay 1099C

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HME BILLING STAFF

• Rides with gross revenue product selection /
  claim volume
• 1 biller for every 500,000 to 750,000
• 80/20 BILLERS RULE
• 20 time spent banging keys
• 80 time spent working A/R
• OTHER RESPONSIBILITIES?
• Customer service, retail, inventory

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ABN Advance Beneficiary Notice of Non-Coverage

• New ABN mandatory 3/1/09
• 3 main uses of the ABN
• LOL Limitation on Liability
• Medical Necessity
• Upgrades
• more expensive, deluxe or excess features the
  physician did NOT order
• Waiving Medicare benefits
• Now OPTION 2
• http//www.cms.hhs.gov/BNI/02_ABNGABNL.asp

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BRUCE BROTHIS

• Allegient Billing Consulting, Inc.
• bbrothis_at_allegientbilling.com
• HME Services of ABC
• outsource billing
• HME consulting
• Compliance audits
• A/R clean-up assistance
• Accreditation Preparation