Computer Software Update

Welcome to a series of articles on how to select and implement the proper HME software program for your business. It is my goal over the next few issues to help you walk through the proper steps to evaluate and select the best program possible for your business. This task is daunting at best, and is one that you should consider carefully before you enter into it.

With the computer programs and training available today, computer software is easy to learn, easy to use and the most cost efficient method available. To begin this process, you need to ask yourself why are you looking for software for your HME business. You will probably answer this one of four ways:

1. Your business is using a billing service or clearing house.

There are usually two problems with utilizing a billing service. First, many billing services are in the business of billing for doctors. They believe since you bill on a 1500 form, they can do the billing for you. Can their programs send the CMNs electronically? If not, they probably should not be doing the billing for you. If they are on the DMERC's approved billing service and clearing house list, you can be assured they can send both your claims and CMNs electronically. Second, if your claim volume gets very large, then it becomes expensive to utilize a billing service.

A billing service is a cost effective option for companies in one of the two groups: First, companies that bill less than 50 claims per month; second, HME providers who are new to the HME business and don't know a lot about the Medicare and Medicaid rules and regulations. The only danger is that since someone else is doing your billing for you, you probably are not generating the necessary paperwork required by Medicare and Medicaid. Unfortunately, ignorance of the Medicare and Medicaid rules is no excuse. If you are audited by one of these agencies and it is found that your records are not compliant with the Medicare or Medicaid rules and regulations, you will have to refund all money paid to you on these claims plus penalties and interest.

How can you determine if you need to switch from a billing service or clearinghouse to your own in-house software program? If your business is billing 51-99 claims per month, you should seriously explore bringing your billing in house. If you are billing 100 plus claims per month, you should definitely bring your billing in house. There is a reason that more billing services start up every day there is money to be made, and they are making it off of you. By the time you get to the 100 claims per month mark, it isjust as cost effective to hire a knowledgeable HME biller.

Billing services and clearinghouses don't do anything to help you track your CMNs, physician orders and other required documentation. Many also don't do anything to help you track accounts receivable, and none of them can do anything to help you track inventory.

2.Your business is billing manually on paper

Please be mindful that as of Oct. 16, 2003, if you have 10 or more full time equivalent (FTE) employees, federal law requires that you file your claims electronically. The manual/paper method is one of the most time consuming methods available to you. You are preparing delivery tickets, physician's orders, CMNs and claims all on paper. You have probably grown tired of the paper chase, but are just afraid to make the jump into the computerized world of HME.

3.Your business is using one or more free or inexpensive programs.

My experience has shown that many new or cost conscious HME businesses start out using the free DMERC software. You find out that it cannot bill Medicaid claims, so you begin using your state's free Medicaid electronic billing software. But you still can't print 1,500 forms for commercial carriers, so you purchase an inexpensive medical office billing software program to print 1,500 forms and maybe even handle accounts receivable.

As your business grows some more you want to start tracking your inventory, issuing purchase orders, keeping track of accounts payable and keeping up with your financial statements using a general ledger program. Your business grows some more, and you realize that you are having to enter the same information two, three or even four times to bill insurance and the patient. Your original idea to start small or save some money has backfired due to excessive duplication of information over two, three or even four systems.

4. Your business is using a software program designed specifically for the HME industry. You have chosen a software program designed specifically for the HME industry. But since that initial purchase a number of things may have changed about your business and you have grown unhappy with the program selected.

There are usually two sources for this dissatisfaction. First, you don't believe that a program will perform the function that you need. Sometimes this belief is true, but my experience again has shown that many times the truth is that there is no one who is currently employed at your business who was trained directly by the software vendor from whom you purchased your software. What you have is loss of knowledge from your staff training themselves. I was recently at a conference where industry educator, Miriam Lieber, stated that it always costs you much less money, time and headaches to get additional training than it does to purchase a whole new system. Before you go out and invest in a new program, consider bringing in a trainer from your software vendor for two to four days.

The second source of dissatisfaction comes from the fact that your business grows in both size and products carried. The program that you purchased initially was great, but it does not meet the needs of your company today.

Now that you know why you are looking for software, the next step is to develop a list of features that you need for your program to perform. Maybe your business is a home healthcare agency and HME business or you are an HME business about to expand into the pharmacy area to provide nebulizer and other Medicare covered medications. You need a program that does both of these functions, shares some data or at least has an interface to transfer information between the two programs.

HME businesses have money tied up in three areas staff, inventory and accounts receivable. A good HME software program should be able to help you with tracking your inventory. You should be able to automatically keep up with the quantities you have on hand, set up minimum quantity levels to trigger automatic ordering through an integrated purchase order system and a maximum level to limit the quantity ordered automatically. You should be able to track serial numbers for both sale and rental items. You should be able to depreciate rental items and track maintenance on rental items. In addition, if you sell oxygen, the system should track the changing lot numbers of cylinders. A good HME software program should be able to help you keep up with your accounts receivable. This program, at a minimum, should track A/R aging by patient and by carrier and send out paper patient statements. A good program also should offer an option to send statements electronically to totally bypass printing statements, stuffing statements, attaching postage and mailing the statements. A good A/R program also should allow you to generate a DSO (Days Sales Outstanding) report so that you can track on average how long it takes from the date of service until you can bill the claim (your CMN and physician's order lag), from the date the claim was billed until date paid (time it takes a carrier to pay you) and from the date of service until date paid (classical DSO calculation). These DSO reports allow you to focus on paper work delays or carrier delays.

In a future article, we will take a more in-depth look more at features that you need to consider when looking for software. In the mean time, you need to create a list of other features that you feel are important. In general, a good program should handle 80 percent of the general features on your list and all the must do features. The must do features should not exceed 5 percent of your total features.

This article originally appeared in the March 2004 issue of HME Business.

About the Authors

Bob Radvanovsky, CISM, CIFI is a member of the Chicago Chapter of the FBI?s INFRAGARD organization, and is an active participant with several online security-focused magazines and discussion forums. He has an MS in Computer Science from DePaul University in Chicago. He has been awarded several professional certifications in the fields of information technology and security, including that of Certified Information Forensics Investigator for specialization in criminal IT forensics management. He has special interests and knowledge in matters of critical infrastructures, and has published a number of articles and whitepapers on the topic. He has been significantly involved in establishing security training and awareness programs through his company, Infracritical.

Deborah V. DiBenedetto, MBA, R.N., COHN-S/CM, ABDA, is president of DVDiBenedetto & Associates Ltd. and president of the American Association of Occupational Health Nurses and senior consultant for Medgate Inc. She can be contacted at (914) 771-5152, or by visiting


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