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Best Practices in HME: FINANCIAL BENCHMARKING

Best Practices in HME: FINANCIAL BENCHMARKING. 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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Best Practices in HME: FINANCIAL BENCHMARKING

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  1. Best Practices in HME: FINANCIALBENCHMARKING

  2. 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

  3. 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 80’s • TARGET = MID 40’S – MID 50’S

  4. 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%

  5. A/R AGING AVERAGES • CONTRIBUTING FACTORS TO “BUCKET CREEP” • Intake accuracy • Insurance verification / eligibility • Documentation • Electronic vs. paper billing • Co-insurance collection • Collection aggression

  6. DENIAL RATES • INDUSTRY AVERAGE = 26% • Rehab +15% = 41% • O2 -8% = 18% • DME +2% = 28% • SAME CONTRIBUTING FACTORS AS “BUCKET CREEP”

  7. 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%

  8. DOC TURNAROUND • FAXING OK AS OF 9/27/2002 • http://www.cms.hhs.gov/transmittals/downloads/R30PI.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…….

  9. 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

  10. 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

  11. HME BILLING STAFF • Rides with gross revenue & product selection / claim volume • 1 biller for every $500,000 to $750,000 • 80/20 BILLER’S RULE: • 20% time spent “banging keys” • 80% time spent working A/R • OTHER RESPONSIBILITIES? • Customer service, retail, inventory…

  12. 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

  13. BRUCE BROTHIS • Allegient Billing & Consulting, Inc. • bbrothis@allegientbilling.com • HME Services of ABC • outsource billing • HME consulting • Compliance audits • A/R “clean-up” assistance • Accreditation Preparation

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